Peninsula Energy Limited · ASX:PEN
Peninsula Energy — Mines and Money Hong Kong 2014
68 slides from Peninsula Energy's conference presentation, Mar 27, 2014
Slide 1: Company Presentation cover letter to ASX
For personal use only 27 March 2014 Companies Announcement Office Via Electronic Lodgement COMPANY PRESENTATION Please find attached a copy of the presentation by Peninsula Energy Limited's Executive Chairman, Mr John (Gus) Simpson for the 2014 Mines and Money Conference in Hong Kong. A copy of the
Slide 2: ASX's Next Uranium Producer - Mines and Money 2014
For personal use only ASX’s NEXT URANIUM PRODUCER Mines and Money 2014 Presentation
Slide 3: Disclaimer & Competent Person
Disclaimer & Competent Person For personal use only 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 containe
Slide 4: Peninsula Overview & Highlights
Peninsula Overview & Highlights For personal use only • Peninsula will be the ASX’s next uranium producer with production from its Lance project in Wyoming • Peninsula has a low risk, clear path to production in 2014 • Significant operating margins achievable even at the current uranium price • Stro
Slide 5: Corporate Overview
Corporate Overview For personal use only Capital Structure 1 year share price & volume history Shares on issue 3,420m Share price 3.5c Market capitalisation $120m Cash & undrawn debt $20m Drawn Debt US$9m Enterprise value $119m Shareholding % holding Pala Investments 13.44% BlackRock Funds 9.00% ARE
Slide 6: Wyoming Peer Company Valuations
Wyoming Peer Company Valuations For personal use only $25 140 Enterprise Value / lb • Peninsula trading at 60-90% discount (EV / 120 $20 lb basis) to North American listed peers 100 Resources (million lbs) $15 – Karoo resource excluded from Peninsula EV EV / lb (USD) 80 60 / lb as market is not givi
Slide 7: Management
Management For personal use only Team already in place to support Peninsula as a producer Management Corporate & USA Gus Simpson Strong strategic leader, extensive background in resources, corporate finance and Executive Chairman management; 25 years experience in USA, Asia, Africa and Australia Alf
Slide 8: Management
Management For personal use only Management – South Africa Glenn Black Senior management engineer; 30 years experience with De Beers in mine construction and COO, CEO South Africa operations in Africa John Simpson Senior mining engineer , 40 years experience, 20 years of which were at a senior mine
Slide 9: Company Overview
Company Overview For personal use only First production Q4 2014 from Lance, Wyoming Emerging uranium producer with established project pipeline • Flagship Lance Projects in Wyoming – construction commenced • Karoo Project in South Africa – positive scoping study recently completed Lance: Wyoming USA
Slide 10: Lance Exploration Target Additional Disclosure
Lance Exploration Target Additional Disclosure For personal use only Exploration Target The Lance Projects cover a significant proportion of the Powder River Basin Basin Cretaceous sandstones of Wyoming, which are believed to represent an Exploration Target of between 158 and 217mlbs U3O8 which incl
Slide 11: Lance Exploration Target Additional Disclosure
Lance Exploration Target Additional Disclosure For personal use only Basis of Grade and Tonnage Range Determination With a database of approximately 7,500 drillholes together with several decades of geological research the level of exploration activity on which the Exploration Target is based, is co
Slide 12: Karoo Exploration Target Additional Disclosure
Karoo Exploration Target Additional Disclosure For personal use only Basis of the Exploration Target The Exploration Target is based on a combination of Exploration Results and proposed exploration programs. Please note that in accordance with Clause 17 of the JORC (2012) Code, the potential quantit
Slide 13: Karoo Exploration Target Additional Disclosure
Karoo Exploration Target Additional Disclosure For personal use only This resource tonnage is distributed over a cumulative strike length of 23km representing approximately 0.80 million tonnes/km. The Exploration Target is based on a combination of: • the total cumulative prospective strike length o
Slide 14: Business Plan
Business Plan For personal use only Production target of 8-10mlbs U3O8 – BEFORE 2022 • Mirror and meet the requirements of the power utilities - Utilities want diversity and security of supply – Diversity & security = multiple suppliers with multiple uranium sources located in multiple stable and se
Slide 15: Uranium Mining in Wyoming
Uranium Mining in Wyoming For personal use only Wyoming very supportive of uranium extraction – multiple ISR operations in region 14
Slide 16: Lance Project Overview
Lance Project Overview For personal use only • Located in strong uranium mining jurisdiction • Proven ISR technology: – ISR produced 45% of the world’s uranium 2012 – 4 ISR plants already operating in Wyoming & 2 more under construction • Constructing a 2.3mlbs per annum ISR operation in 2 stages: –
Slide 17: Rapid Resource Growth at Lance
Rapid Resource Growth at Lance For personal use only Resource grown from 5mlbs to 54mlbs U3O8 in 4 years: Modern delineation cost ~$1/lb Lance JORC Resource (U3O8 mlbs) 60,000,000 2,250 No. PEN Holes Inferred 1,854 4,738 No. NuBeth Holes1 4,738 50,000,000 Indicated Measured 1,106 4,738 40,000,000 80
Slide 18: Two Stage Production Ramp-up
Two Stage Production Ramp-up For personal use only 2.5 • Low-risk path to Ability to increase production on future production price increases 2.0 Stage 2 Annualised Production Rate (mlbs) Start • Lance cashflow positive 2018 or 2022 from Q4 2015 1.5 • Option to accelerate 1.0 expansion Stage 1 start
Slide 19: Lance – Strong Financial Returns
Lance – Strong Financial Returns For personal use only Strong economics: pre-tax IRR of 34% and average cash cost US$30.65/lb Key financial metrics Pre-tax NPV 8% US$328m Payback 3.4 years Cashflow positive Year 2 Pre-Tax IRR 34% Initial CAPEX 1 US$68m Financial Metrics – 2.3mlbs p.a. *US$ per annum
Slide 20: Basis of Production and Financial Information
Basis of Production and Financial Information For personal use only Inputs from the Feasibility Study, Optimisation and Wellfield Optimisation Studies have been applied to the financial model for the Lance Projects. Ore Reserves are yet to be determined. Key parameters applied to the Wellfield Optim
Slide 21: Lance Capex Requirements
Lance Capex Requirements For personal use only Low capital intensity and staged capex requirements Process Plant & Wellfield CAPEX to design production US$ rate by Production Unit To be funded by equity Ross Production Unit (2014 / 15) (1,150klbs p.a.) $68m & project finance debt facility Kendrick P
Slide 22: Lance Project Funding
Lance Project Funding For personal use only Notes • US$22m in senior secured notes from BlackRock for pre-licence construction • US$9.4m drawn; further US$12.6m available for drawdown • Notes have a coupon of 11% Debt • Approx. $50-60m in senior debt planned • Discussions on senior secured debt faci
Slide 23: Lance Uranium Sales Strategy
Lance Uranium Sales Strategy For personal use only Strategic partnering: Achieve diversity of supply across & within suppliers • PEN Marketing company formed – Spot Price $35.00 – Producer Term Price $50.00-$55.00 • Planned sales structure – 40-50% to a strategic partner + investment – 30-40% to 3-4
Slide 24: Lance – Strong Exploration Potential
Lance – Strong Exploration Potential For personal use only Large Resource potential: 70+ years mine life • 13 historic resources • 22 roll fronts extend for a combined linear strike length of 194 miles (312km) 23
Slide 25: Karoo Projects Overview
Karoo Projects Overview For personal use only High grade U3O8 & Molybdenum in proven area • Located in the Karoo region of RSA, approx. 400km to 600km E- NE of Cape Town • Known uranium and molybdenum mineralised province • 7,800 km2 over Permian sandstones • 32,176 hectares of freehold land • Freeh
Slide 26: Karoo JORC Resource
Karoo JORC Resource For personal use only JORC compliant Resource March 2014 Large resource potential – 100+ year mine life Classification eU3O8 (ppm) Tonnes eU3O8 eU3O8 CUT-OFF (million) (ppm) (million lbs) Indicated 600 8 1,242 21.9 Inferred 600 15.3 1,038 35 Total 600 23.3 1,108 56.9 Classificati
Slide 27: Karoo Scoping Study
Karoo Scoping Study For personal use only Recent positive Karoo scoping study; Feasibility study commenced in Q4 2013 • Scoping Study completed on Karoo Eastern Sector Projects in South Africa – Combined open cast and decline mining – Alkaline preferred development path – Decision to proceed to Pre-
Slide 28: Karoo – Attractive Cost of Production
Karoo – Attractive Cost of Production For personal use only @ 3.0 m lbs per annum (Unescalated; 2013$) USD / lb (USD'm) Production Rate (m'lbs per annum) 3.0 Open Cut Mining $10.08 $30 Underground Mining $6.39 $19 Mine Technical & Support $1.50 $4 Processing $15.92 $48 Indirect Costs $0.22 $1 Produc
Slide 29: Karoo Development Schedule
Karoo Development Schedule For personal use only Karoo Development target CY2016/2017 2010 2011 2012 2013 2014 2015 2016 2017 Resource Definition ✔ ✔ ✔ ✔ ✔ (JORC conversion) Internal Conceptual ✔ Study Ext. Scoping Study ✔ ✔ ✔ PFS/BFS Project Financing Construction Commissioning Production Expanded
Slide 30: Uranium Production vs Consumption
Uranium Production vs Consumption For personal use only Uranium consumption has exceeded production for many years but recycled supplies have left the market in oversupply – sources of recycled materials are now almost exhausted Key sources of recycled materials nearly exhausted: • Down blended weap
Slide 31: Nuclear Power – the best solution
Nuclear Power – the best solution For personal use only Location of USA & Europe nuclear plants • Nuclear power provides the best solution for a non- polluting 24:7 base load power source. • Over 430 existing nuclear plants, focused in Europe, North America, Russia, South Korea and Japan. • 1.7 bill
Slide 32: Global reactor Growth & Uranium Demand
Global reactor Growth & Uranium Demand For personal use only Electricity Generation and Uranium Consumption • Global Nuclear Generation Capacity will increase 70% over the next decade - from 374,067Mwe to 636,693Mwe • 71 Reactors under construction & 173 new Reactors planned • Annual Uranium Demand
Slide 33: Chinese Nuclear Generation 2012-2020
Chinese Nuclear Generation 2012-2020 For personal use only Between 2010 and 2013, China purchased ~$15B of U3O8 ~308 million pounds U3O8 (35 times 2012 consumption levels) China’s demand for U3O8 is forecast to increase over 19 times by 2020 Source: World Nuclear Association; China Guongdong Nuclear
Slide 34: Investment Highlights
Investment Highlights For personal use only Major sector and company re-rating expected from uranium supply deficit combined with Peninsula commencing production • Peninsula will be the ASX’s next uranium producer • The Company has a low risk, clear path to production • Significant operating margins
Slide 35: Head Office
For personal use only Head Office Unit 17, Level 2 100 Railway Road Subiaco WA 6008 ASX’s NEXT Telephone: +61 8 9380 9920 Facsimile: +61 8 9381 5064 URANIUM Website PRODUCER www.pel.net.au Email contact info@pel.net.au
Slide 36: Appendix
For personal use only Appendix
Slide 37: Lance JORC Resource
Lance JORC Resource For personal use only Grade Recovered eU3O8 Mineability eU3O8 Recovery Classification Tonnes (ppm U3O8 (lbs) (lbs) factor (lbs) factor U3O8) 50.4% Measured 4,142,950 495 4,520,159 0.8 3,616,128 0.8 2,892,902 Indicated 11,532,135 497 0.8 10,112,761 0.8 8,090,209 12,640,951 M+Ind 1
Slide 38: Lance Development Model
Lance Development Model For personal use only Proven technology – ISR produces 45% of world uranium • ISR is a low cost non-disruptive method of recovering uranium as yellow cake • Building a 2.3mlbs per year ISR operation • Inclusive of – Ion exchange facility – Centralised resin stripping, drying
Slide 39: Lance ISR Process Flow
Lance ISR Process Flow For personal use only Proven technology: 7 operating mines and 4 operating ISR plants in Wyoming & 2 more under construction 38
Slide 40: Lance – Permitting Schedule
Lance – Permitting Schedule For personal use only Permitting ahead of regulatory schedules Key: Black = granted Blue = awaiting final grant • WDEQ Permit to Mine − Technical reports completed − Environmental reports completed − Licence application deemed complete − Environmental and technical review
Slide 41: Directors
Directors For personal use only Strong Board delivering competence, experience and drive Gus Simpson Strong strategic leader, extensive background in resources, corporate finance Executive Chairman and management; 25 years experience in USA, Asia, Africa and Australia Alfred Gillman Fellow AusIMM (C
Slide 42: Karoo Development Model
Karoo Development Model For personal use only Conventional open pit and decline mining • Multiple production faces Open Pit and Decline Mining with central processing facility at Rystkuil • All sites within hauling Alkaline Added Water Added distance • Planning development in 2016/2017 41
Slide 43: Power Generation and Industrialisation
Power Generation and Industrialisation For personal use only • The 19th century industrial revolution in Western Europe and North America saw 200 million people move from an agrarian based economy to a urban/industrial world. It was followed by the eradication of famine, epidemics; it precipitated m
Slide 44: Power Utilities Construction Cost
Power Utilities Construction Cost For personal use only Power utilities concerns are around future supply & supply concentration When capex is included uranium is less than 2% of costs 43
Slide 45: USA Electricity Production Costs 2012
USA Electricity Production Costs 2012 For personal use only
Slide 46: Pre-License Construction - update
Pre-License Construction - update For personal use only • WDEQ Permit to Mine cleared the way for commencement of allowable pre-license construction – Central Processing Plant site and civil works – Completion of administration building – Installation of hydrogeologic monitoring wells – Development
Slide 47: Construction status - CPP pad preparation
Construction status - CPP pad preparation For personal use only 46
Slide 48: New Ross CPP all weather access road
New Ross CPP all weather access road For personal use only 47
Slide 49: Construction Status
Construction Status For personal use only 48
Slide 50: Construction Status
Construction Status For personal use only 49
Slide 51: Construction Status
Construction Status For personal use only Fabrication status of 2nd bank ion exchange columns as at 19 March 2014. 50
Slide 52: Completed IX column
Completed IX column For personal use only 51
Slide 53: Completed first bank of IX columns
Completed first bank of IX columns For personal use only 52
Slide 54: Yellow cake drying unit undergoing refurbishment
Yellow cake drying unit undergoing refurbishment For personal use only 53
Slide 55: JORC Table 1- Lance Projects
JORC Table 1- Lance Projects For personal use only JORC Code, 2012 Edition – Table 1 The table below is a description of the assessment and reporting criteria used in the Lance Project Mineral estimation that reflects those presented in Table 1 of The Australasian Code for the Reporting of Explorati
Slide 56: JORC Table 1- Lance Projects
JORC Table 1- Lance Projects For personal use only Sample Analysis method All PFN grades were determined by PFN and reported as U3O8. PFN grade determinations assume no disequilibrium effects as PFN directly measures fission U235 isotope. No grade cutting was applied as the grades are derived from c
Slide 57: JORC Table 1- Lance Projects
JORC Table 1- Lance Projects JORC Code, 2012 Edition – Table 1 For personal use only The table below is a description of the assessment and reporting criteria used in the Lance Project Mineral estimation that reflects those presented in Table 1 of The Australasian Code for the Reporting of Explorati
Slide 58: JORC Table
For personal use only JORC Table 1
Slide 59: JORC Table
For personal use only JORC Table 1
Slide 60: JORC Table
For personal use only JORC Table 1
Slide 61: JORC Table
For personal use only JORC Table 1
Slide 62: JORC Table
For personal use only JORC Table 1
Slide 63: JORC Table
For personal use only JORC Table 1
Slide 64: JORC Table
For personal use only JORC Table 1
Slide 65: JORC Table
For personal use only JORC Table 1
Slide 66: JORC Table
For personal use only JORC Table 1
Slide 67: JORC Table
For personal use only JORC Table 1
Slide 68: Head Office
For personal use only Head Office Unit 17, Level 2 100 Railway Road Subiaco WA 6008 ASX’s NEXT Telephone: +61 8 9380 9920 Facsimile: +61 8 9381 5064 URANIUM Website PRODUCER www.pel.net.au Email contact info@pel.net.au