Energy Resources Of Australia Ltd. Class A · ASX:ERA
Energy Resources Of Australia Ltd. Class A — H1 2011 Earnings Presentation
36 slides from Energy Resources Of Australia Ltd. Class A's earnings presentation, Aug 4, 2011
Slide 1: Presentation to the Financial Community: 2011 Half Year Results
Presentation to the Financial Community For personal use only 2011 Half Year Results
Slide 2: Forward-looking statement
Forward-looking statement This presentation has been prepared by Energy Resources of Australia Ltd (“ERA”) and consists of the slides for a presentation concerning ERA. By reviewing/attending this presentation you agree to be bound by the following conditions. For personal use only Forward-looking s
Slide 3: Acknowledge Traditional Owners
For personal use only Acknowledge Traditional Owners The mining operations of Energy Resources of Australia Ltd (ERA) are located on Aboriginal land and are surrounded by, but separate from, Kakadu National Park ERA respectfully acknowledges the Mirarr, Traditional Owners of the land on which the Ra
Slide 4: Outline
For personal use only Outline • Executive summary • 2011 Half Year Results • Uranium market outlook • Ranger 3 Deeps project • Exploration • Water management • Funding 3
Slide 5: Executive summary
Executive summary • H1 2011 revenue and net loss of $245 million and $122 million respectively For personal use only – Underlying earnings of $(22) million, after adjusting for the negative impact of a one-off low grade inventory adjustment of $99 million – Results heavily impacted due to suspension
Slide 6: Update on business strategy
For personal use only Update on business strategy – Ensure the business is focused on the most strategically important and value enhancing activities Cost savings and – First phase of targeted cumulative cost savings of $150 million by end of 2014 ($60 million of savings targeted by end of business
Slide 7: Update on business strategy cont.
Update on business strategy cont. – Investment in Brine Concentrator to progressively reduce process water inventories to support future production and For personal use only rehabilitation as previously announced in April 2011 – Brine Concentrator pilot facility progressing well and almost complete
Slide 8: Outline
For personal use only Outline • Executive summary • 2011 Half Year Results • Uranium market outlook • Ranger 3 Deeps project • Exploration • Water management • Funding 7
Slide 9: Safety
Safety All injury frequency rate (AIFR) and lost time injury frequency rate (LTIFR) For personal use only 5 4.5 Frequency rate (per 200,000 hrs worked) 4 3.5 3 2.5 AIFR LTIFR 2 1.5 1 0.5 0 1. 2004 2005 2006 2007 2008 2009 2010 2011 1. 12 month rolling average (2011 year to date LTIFR is zero) 8
Slide 10: Operational performance
For personal use only Operational performance H1 2011 H1 2010 Change Material mined (million tonnes) 4.2 4.3 - 3% Ore mined (million tonnes) 0.2 0.3 - 22% Ore treated (million tonnes) 0.3 1.3 - 80% Average mill head grade (%) 0.21 0.15 + 40% Mill recovery (%) 87.9 88.9 - 1% Production drummed– U3O8
Slide 11: Financial overview
For personal use only Financial overview H1 2011 H1 2010 Change Net profit/(loss) after tax - $ million (121.7)* 22.7 -637% Underlying earnings - $ million (22.3) 22.7 - 198% Revenue from sales of uranium oxide - $ million 235.6 209.6 + 12% Net cash flow - $ million (2.6) (88.4) + 97% Capital expend
Slide 12: Average realised sales price (US$/lb)
Average realised sales price (US$/Ib) Strong long term prices combined with the completion of a legacy contract provided ERA with a record average realised sales price only 70 $60.82 60 $52.84 use $50.19 50 $48.02 $44.79 40 For personal US$/lb $35.69 $30.97 30 20 10 0 2008 H1 2008 H2 2009 H1 2009 H2
Slide 13: Half year net profit (loss) after tax (2011 vs 2010)
Half year net profit (loss) after tax (2011 vs 2010) For personal use only 51 (29) $(53) Inventory Drawdown $(41) Purchase of Product 60 $(12) Other Cash Costs (5) (74) $ 32 Raw Materials 23 20 (22) (122) 5 (99) A$ Million (20) 7 (60) (100) (140) 2010 Sales Price FX on Sales Sales Cash Costs Evaluat
Slide 14: Rehabilitation provision
Rehabilitation provision • ERA is committed to ensuring the Ranger Project Area is rehabilitated to the required and agreed standard For personal use only • The Ranger s41 Authority requires ERA to cease all mining and processing operations at the Ranger Project Area by 2021, with rehabilitation to
Slide 15: Ranger Production Range
Ranger Production Range Current operations including Pit 3 (ending at the end 2012) and excludes Ranger 3 Deeps For personal use only 5,000 Tonnes 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 - 14
Slide 16: Ranger Project Area reserves and resources summary – July 11
Ranger Project Area reserves and resources summary – July 2011 • Significant reclassification from reserves to Ranger Project Area Ore Reserves Tonnes of For personal use only resources Reconciliation Uranium Oxide • Primarily caused by two issues: Reserves as at 31 December 2010 29,800 – Comprehens
Slide 17: Outline
For personal use only Outline • Executive summary • 2011 Half Year Results • Uranium market outlook • Ranger 3 Deeps project • Exploration • Water management • Funding 16
Slide 18: Positive uranium market outlook in the longer term
Positive uranium market outlook in the longer term • Near term impact of Fukushima For personal use only – Immediate loss of demand in Japan – Germany moving from life extension to probable early shutdown – Some slowing of reactor builds in the short term, while countries assess safety learnings – N
Slide 19: Outline
For personal use only Outline • Executive summary • 2011 Half Year Results • Uranium market outlook • Ranger 3 Deeps project • Exploration • Water management • Funding 18
Slide 20: Further exploration potential exists within mineral resource
Further exploration potential exists within Ranger 3 Deeps mineral resource For personal use only • The Ranger 3 Deeps mineral resource has 34,000 tonnes of contained uranium oxide (at a cut-off grade of 0.15% uranium oxide) • Future exploration target zone provides further upside potential for reso
Slide 21: The exploration decline provides access to explore for significant resource upside
The exploration decline provides access to explore for significant resource upside • Potential beyond the known mineral For personal use only resource • Includes areas not accessible from Pit 3 surface including - – Northern extension under Magela Target 1 Creek (Target 1) – Deeper resource along in
Slide 22: Exploration decline indicative milestones
For personal use only Ranger 3 Deeps – indicative milestones Milestones Target Date Exploration decline approval August 2011 Award site preparation work August 2011 Targeted commencement of draft Environmental Impact Statement and associated studies 2012 Box cut excavation and completion October 201
Slide 23: Exploration decline approval process
Ranger 3 Deeps exploration decline approval process • Ranger 3 Deeps exploration decline For personal use only – ERA Board approval received – An application has been submitted to the Minesite Technical Committee and the Northern Territory Department of Resources and extensive consultation has been
Slide 24: Pathway to potential production at Ranger 3 Deeps
For personal use only Pathway to potential production at Ranger 3 Deeps Prove up business Stakeholder ERA Board approval for case for mine Ranger 3 Deeps Consultation development exploration decline • Construct exploration • Continue to fulfil decline commitments to • Identify additional environment
Slide 25: Outline
For personal use only Outline • Executive summary • 2011 Half Year Results • Uranium market outlook • Ranger 3 Deeps project • Exploration • Water management • Funding 24
Slide 26: ERA exploration – Ranger Project Area past drilling 1987-2011
ERA exploration – Ranger Project Area past drilling 1987-2011 • A number of anomalies over the Ranger Project Area were identified, but For personal use only drilling depths at around 150 m were relatively shallow and resulted in incomplete knowledge of the Ranger Project Area – Exploration focused
Slide 27: Significant advancements in exploration techniques
Significant advancements in exploration techniques There have been significant advancements in exploration techniques since the early exploration drilling of the For personal use only Ranger Project Area: – Geochemical – using low level detection techniques on a wide range of path finder elements (v
Slide 28: Georgetown deep structural target
Georgetown deep structural target Georgetown structure • Potential repeat of a mineralised structure has been intersected to the east of the For personal use only Ranger 3 Deeps resource • Three significant zones of mineralisation have been intersected to date 25 9 D1 R3 D7 PD P P A’ R3 R3 A Mineral
Slide 29: Expected expenditure of $40 million for expanded exploration program
Expected expenditure of $40 million for expanded exploration program on Ranger Project Area For personal use only Jabiluka • 2011 Ranger exploration program in progress and further significant Cahill exploration activity planned for 2012-2014 Kombolgie • Three prospective areas being targeted: 1. Ra
Slide 30: Outline
For personal use only Outline • Executive summary • 2011 Half Year Results • Uranium market outlook • Ranger 3 Deeps plan • Exploration • Water management • Funding 29
Slide 31: 2010-11 wet season impact
2010-11 wet season impact • Processing operations at the Ranger mine For personal use only recommenced on 15 June 2011, following a temporary suspension due to an increase in process water inventory following the significantly above average 2010-11 wet season – From 1 September 2010 to 23 May 2011,
Slide 32: Strategy for water management improvements
Strategy for water management improvements • ERA’s water management strategy involves a number of For personal use only initiatives relating to process water management and treatment • The outlined expenditure will support the future of the ongoing business, and further underscores ERA’s commitment
Slide 33: The Brine Concentrator will provide additional capacity to treat process water
The Brine Concentrator will provide ERA with additional capacity to treat and reduce process water For personal use only Brine Concentrator – Conceptual Flow Sheet • Water management and treatment is a critical component of ERA’s operational and rehabilitation plans for Ranger • ERA believes the Bri
Slide 34: Outline
For personal use only Outline • Executive summary • 2011 Half Year Results • Uranium market outlook • Ranger 3 Deeps plan • Exploration • Water management • Funding 33
Slide 35: Long term funding
Long term funding • In order to undertake ERA’s business strategy, long term funding will be required For personal use only – ERA has engaged an external financial adviser and is well advanced in developing its long term funding options – Rio Tinto has indicated that subject to its usual internal ap
Slide 36: Summary
Summary • Strong safety performance For personal use only • Tough first half – Weather impacts – Suspension of processing plant operations – Negative adjustment on reserves, inventory and rehabilitation provision • Successful restart of processing plant operations • Board approval to proceed with th
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