Peninsula Energy Limited · ASX:PEN
Peninsula Energy — Investor Presentation (July 2016)
32 slides from Peninsula Energy's investor presentation, July 2016
Slide 1: Uranium Production Steadily Expanding
URANIUM PRODUCTION STEADILY EXPANDING URANIUM DELIVERIES ABOVE MARKET PRICE July 2016
Slide 2: Disclaimer & Competent Person
Disclaimer & Competent Person This presentation is provided on the basis that the Company nor its representatives make any warranty (express or implied) as to the accuracy, reliability, relevance or completeness of the material contained in the Presentation and nothing contained in the Presentation
Slide 3: Presentation Summary
Presentation Summary Uranium production steadily increasing Strong fundamentals Project expansion underpin growth to lift production in uranium market Experienced board Committed offtake and management above market prices Advancing second project in South Africa 3
Slide 4: Business Plan
Business Plan Peninsula’s plan is to be a uranium producer with multiple sources of supply in established mining economies with low cost, long life mines backed up by a well-recognized marketing arm dealing directly with the utilities Start operations in the • Effective production commenced in March
Slide 5: Uranium Mining in Wyoming
Uranium Mining in Wyoming Wyoming very supportive of uranium extraction – multiple ISR operations in region 5
Slide 6: Well Field Development Drilling
Well Field Development Drilling Production well drilling 6
Slide 7: Monthly Production
Monthly Production Note: Adjusted June 2016 production represents production for June including estimated loss of production during 7 day outage for main trunkline flange failure. 7
Slide 8: Operating Performance to Date
Operating Performance to Date • Sales − Delivered 16,000 lbs to converter in May 2016 − Delivered 100,000 lbs to utilities in 1H, 2016 − 8.2m lbs U3O8 now under contract; WAP $55/lb; Revenue US$445,000,000 − Current production levels support Stage 1 forecast achieved during H1 2017 − 200,000 to 300,
Slide 9: Operating Performance to Date
Operating Performance to Date • Central Processing Plant – Operating to design specification – Capture rate of uranium on resin in ion exchange columns is exceeding expectations (recoveries show 7.5 lbs uranium per cu.ft. resin vs forecast of 6 lbs/cu.ft.) – Average U3O8 grade in fluid leaving the C
Slide 10: Stage 1 Operating Performance to Date
Stage 1 Operating Performance to Date • Consistent flow rates have confirmed permeability • Targeted injection rate of NaCO2 at header house units 1 & 2 first achieved on 10 March 2016 • U3O8 recovery increased 600% over 17 weeks (133lbs – 786lbs per day; header house units 1 and 2 now exceeding 100
Slide 11: US & EU Utility Contract & Spot Volumes
US & EU Utility Contract & Spot Volumes • Spot price visibility attracts the attention of the investment community • Reality is that Term market volumes far outweigh Spot volumes • Pre-GFC and pre-Fukushima utilities committed to buy significant volumes under Term contracts over and above their stra
Slide 12: Corporate Overview
Corporate Overview Capital Structure 1 year share price & volume history Shares on issue 176m Share price $0.68 Market capitalisation $120m Cash $9.2m Undrawn Inventory Finance $16m Shareholding* % holding Resource Capital Fund VI 21.6% Pala Investments 12.1% BlackRock Funds 7.9% J P Morgan 4.8% Res
Slide 13: Project Development - Valuation Curve
Project Development - Valuation Curve 13
Slide 14: Trading below peers on a cash flow basis
Trading below peers on a cash flow basis P/2017E EPS 40.0x 30.0x P/2017E EPS Producer Average: 17.8x 20.0x 10.0x - Paladin Energy Areva Ur-Energy Cameco Peninsula Energy Producers Producer Average P/2017E EBITDA 20.0x EV/2017E EBITDA 15.0x Producer Average: 9.0x 10.0x 5.0x - Areva Ur-Energy Paladin
Slide 15: Undervalued on a resource basis
Undervalued on a resource basis EV / Total Resource (US$/lb U3O8) 5.00 4.00 (US$/lb U3O8) 3.00 Producer Average: 2.28 2.00 Average: 1.65 1.00 - Cameco Ur-Energy NexGen Denison Fission Uranium Energy Paladin Berkeley Toro Peninsula UEX Corp Manhattan GoviEx Energy Mines Uranium Energy Fuels Energy En
Slide 16: Lance – Financial Metrics
Lance – Financial Metrics Strong economics: IRR of 36% and average cash cost US$29.16/lb Key financial metrics 1 Progressive cost improvement US$/lb Unlevered NPV 8% US$288m All-in Sustaining Costs 3 Cashflow positive H1 2017 IRR 36% Feasibility Study (Apr 12) $36.60 Stage 1 CAPEX 2 US$33m Optimisat
Slide 17: Production and Cost Profile
Production and Cost Profile Klbs U3O8 Production Profile USD/lb All-in-Cash Costs 2,500 50 Delivery Commitments under Signed Contracts 2,000 40 Inventory 41 1,500 30 30 29 1,000 20 500 10 0 0 2016 2017 2018 2019 2020 2021 2022 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 • Ramp-up of U3O8 product
Slide 18: All-in Costs per Pound U3O8
All-in Costs per Pound U3O8 60 PEN Delivered Contract Price (CY16-CY20) 50 Current Term Price 40 US$/lb 30 Current Spot Price 20 10 0 Stage 1 Stage 2 Lance Projects AISC Resource Replacement Sales & Marketing Corporate • Lance Projects All-in Sustaining Cash Cost reduces from $41 to $31-32/lb – end
Slide 19: Scalable Production Development
Scalable Production Development • Lance Projects JORC - 2012 Code compliant 54 million lb U3O8 resource base and licenced to produce up to 3 million lbs. p.a., allows the ability to increase production quickly – No pre-stripping or mining development required – Production wells access the ore body d
Slide 20: Rapid Resource Growth at Lance
Rapid Resource Growth at Lance Lance JORC - 2012 Resource (53.7mlbs U3O8 ) 60 Inferred 50 37 Indicated 37 Measured 40 Million lbs U3O8 30 30 22 16 20 13 11 11 10 7 8 6 4 4 4 4 4 5 0 Mar02010 Jul 2010 Jan 2011 Jul 2011 Mar 2012 Dec 2012 Peninsula Holes 281 600 805 1,106 1,854 2,250 Historic NuBeth JV
Slide 21: Lance – Exploration Target
Lance – Exploration Target Large Resource potential: 70+ years mine life • Current JORC-2012 Compliant Resource 53.7mlbs U3O8 • 13 historic resources • 22 roll fronts extend for a combined linear strike length of 194 miles (312km) • Exploration Target 158-217mlbs U3O8 Please note that in accordance
Slide 22: Company Overview - Management
Company Overview - Management Peninsula team has extensive experience in mine development & uranium sales Gus Simpson Strong strategic leader, 9 years working in aspects of the uranium business, extensive background in resources, Managing Director/CEO corporate finance and management; 25 years’ expe
Slide 23: Board of Directors
Board of Directors John Harrison: Non-Executive Chairman: Mr Harrison brings to Peninsula a wealth of experience and resource sector knowledge acquired over a 45 year career including 20 years of investment banking in London. During this time Mr Harrison has developed an extensive international cont
Slide 24: Investment Highlights
Investment Highlights • Peninsula is producing uranium at the Lance Projects • The Company has a low risk, clear path to production expansion • Significant production volume in Term contracts • Est. US$17.50 per pound margin over all-in costs @ Stage 2 steady state production • Strong financial supp
Slide 25: Uranium Supply/Demand - Today
Uranium Supply/Demand - Today Global Uranium Supply vs. Demand (mlbs/yr) 300 275 250 Today 225 Mlbs/yr U3O8 200 175 150 125 100 75 50 25 0 2012A 2013A 2014A 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E Secondary Supplies Existing Mines Forecast New
Slide 26: Nuclear Provides Significant Baseload in Developed Nations
Nuclear Provides Significant Baseload in Developed Nations United States of America Western Europe Russia Korea / Japan Renewables Other Renewables Other Renewables Other Renewables Other 7% 2% 9% 4% Hydro 0% 3% Hydro 3% 7% 6% 6% Nuclear Hydro Nuclear Hydro 19% Nuclear 16% 16% Nuclear 7% 28% 27% Coa
Slide 27: Disproportionate Mix of CO2 producing Fossil Fuels in Developing Nations
Disproportionate Mix of CO2 producing Fossil Fuels in Developing Nations China India Middle East Eastern Europe Other Nuclear Renewables Other Nuclear Hydro Coal Renewables Other Renewables 0% 2% 5% 2% 3% 2% 0% 4% 1% 3% Hydro Hydro Nuclear Hydro 17% 11% 18% 11% Oil Gas 2% Gas 37% 8% Gas 20% Gas Coal
Slide 28: Uranium Demand - Outlook
Uranium Demand - Outlook Electricity Generation and Uranium Consumption 436 Reactors • Global Nuclear Generation Capacity will Annual Uranium Demand 378,995 increase 70% over the next 15 years - Mwe from 378,995Mwe to 635,806Mwe 66,883 Generation Capacity tonnesU • 3 Reactors complete in CY15, 67 16
Slide 29: Outlook
Outlook Near Term Long Term Many reasons to expect price increase Expected $60 plus Term contract price in 2016/17: during 2017-19 : - Return of utility contracting - Need reasonable risk-adjusted return on required new projects well in - India – strategic reserve established advance of shortfall -
Slide 30: Karoo Projects Overview
Karoo Projects Overview JORC (2012) Compliant resource 56.9m lbs eU3O8 at 1,108ppm • Located in the Karoo region of RSA, approx. 400km to 600km E-NE of Cape Town • Known uranium and molybdenum mineralised province • 4,650 km2 over Permian sandstones • 322 km2 of freehold land • Freehold land covers
Slide 31: Karoo Projects Scoping Study
Karoo Projects Scoping Study Positive Karoo scoping study; Pre-Feasibility study well advanced • Scoping Study completed on Karoo Eastern Sector Projects in South Africa – Combined open cast and decline mining – Acid processing route is the most efficient and cost effective – Decision to proceed to
Slide 32: Basis of Production and Financial Information
Basis of Production and Financial Information Inputs from the Feasibility Study, Optimisation, Wellfield Optimisation and Scalable Plant Studies have been applied to the financial model for the Lance Projects. Ore Reserves are yet to be determined. Key parameters applied are: • Mining Methodology: T