Paladin Energy Ltd · ASX:PDN
Paladin Energy — Q3 2012 Earnings Presentation
28 slides from Paladin Energy's earnings presentation, Nov 13, 2012
Slide 1: September Quarter Results Conference Call and Investor Update
September Quarter Results Conference Call and Investor Update 13 November No ember 2012 John Borshoff – Managing Director/CEO Alan Rule – CFO Mark Chalmers – Executive General Manager Manager, Production Dustin Garrow – Executive General Manager, Marketing
Slide 2: Disclaimer and Notes for JORC and NI 43-101 Mineral Resources and Ore Reserves
Disclaimer and Notes for JORC and NI 43- 101 Mineral Resources and Ore Reserves This presentation includes certain statements that may be deemed “forward-looking statements”. All statements in this presentation, other than statements of historical facts, that address future production, reserve or re
Slide 3: Presentation Outline
Presentation O tli Outline Company Status & Highlights John Borshoff Market Outlook – Dustin Garrow Financial Review – Alan Rule Project Update – Mark Chalmers Conclusions – John Borshoff 2
Slide 4: Paladin – Ticking All The Boxes
Paladin – Ticking All The Boxes • Mining Mi i operations ti achieving hi i nameplate l t (guidance ( id h ld) held) • Production innovation and optimisation underway • Cost cutting measures gaining traction (US$60-80M) • First part of strategic initiatives completed with LTC and prepayment package w
Slide 5: The Inevitable Supply Train Wreck
The Inevitable Supply Train Wreck Prior to Fukushima we were looking at a supply deficit within this decade. We are now looking at a supply train wreck In 2010 the market forecasted a wave of new projects, most before 2015 Today, nearly all major uranium development projects have been deferred, canc
Slide 6: Presentation Outline
Presentation O tli Outline Company Status & Highlights John Borshoff Market Outlook – Dustin Garrow Financial Review – Alan Rule Project Update – Mark Chalmers Conclusions – John Borshoff 5
Slide 7: Uranium Market Status
Uranium Market Status CY2012 spot market volume likely to be around 40Mlb U3O8 which is well below average of over 50Mlb U3O8/year since 2008 Post-Fukushima spot price settled into narrow trading range ($51.00- 52.00/lb U3O8) from July 2011 to July 2012 Inventory sales by limited number of market pa
Slide 8: Spot Market Demand and Supply
Spot Market Demand and Supply Utility sector remains important regarding near near-term term demand but has accounted for less than half of total spot purchasing for several years Utility demand on a global basis (not just U.S.) U S ) will increase entering the new calendar year Spot purchasing by b
Slide 9: Market Outlook & Price Triggers
Market Outlook & Price Triggers Chinese nuclear programme re-engaging re engaging following 18 month hiatus (post-Fukushima safety review); installed capacity forecast for 2020 expected to be no less than 60GWe and growing from there Measured restarts of Japanese reactors anticipated during CY13; an
Slide 10: The New Supply Problem
The New Supply Problem Current prices are suppressing investment and delaying new production: At current prices prices, new available supply is barely sufficient to maintain 2012 total supply capacity New projects can offer supply, but significantly higher prices are required to incentivise developm
Slide 11: Presentation Outline
Presentation O tli Outline Company Status & Highlights John Borshoff Market Outlook – Dustin Garrow Financial Review – Alan Rule Project Update – Mark Chalmers Conclusions – John Borshoff 10
Slide 12: Profit & Loss Quarter ended 30 September 2012
Profit & Loss Quarter ended 30 September 2012 % Change 30 Sept 2012 30 Sept 2011 US$M US$M Revenue Sales Revenue (41%) 61.0 102.7 Other Revenue - 0.3 0.3 Total Revenue (41%) 61.3 103.0 Cost of Sales 40% (56.3) (93.0) Impairment of inventory - (2.6) - Gross Profit (76%) 2.4 10.0 Other income (29%) 1.
Slide 13: Profit & Loss Quarter ended September 2012 (cont.)
Profit & Loss Quarter ended 30 September 2012 (cont.) Revenue of US$61.3M — 1.224Mlb sold at average realised price of US$50/lb — expectation of sales of 2.7Mlb in December 2012 quarter Gross margin from operations of US$2.4M — average cost of sales of US$46/lb before KM inventory impairment — KM in
Slide 14: C1 Cost of Production – Langer Heinrich
C1 Cost of Production – Langer Heinrich US$/lb Klb 33 1,400 1,200 1 000 1,000 32 800 600 31 400 200 30 0 Mar-12 Jun-12 Sep-12 Mar-12 Jun-12 Sep-12 U3O8 produced - Klb 1,052 1,322 1,290 C1 costt off production d ti - US$/lb 32 4 32.4 32 2 32.2 31 8 31.8 13
Slide 15: C1 Cost of Production - Kayelekera
C1 Cost of Production - Kayelekera US$/lb Klb 54 800 53 700 52 600 51 500 50 400 49 300 48 200 47 100 46 0 Mar-12 Jun-12 Sep-12 Mar-12 Jun-12 Sep-12 U3O8 p produced - Klb 725 726 639 C1 cost of production - US$/lb 52.7 52.2 49.0 14
Slide 16: Balance Sheet & Cash Flow
Balance Sheet & Cash Flow Quarter ended 30 September 2012 Cash and cash equivalents of US$144.3M Cash inflow from operating activities of US$54.8M US$54 8M — receipt of proceeds of US$52M in July from June 2012 sale — proceeds from long term contract US$50M Cash outflow from investing activities of
Slide 17: Cost Reductions
Cost Reductions Cost reductions of US$60M to US$80M targeted over 2 years Langer Heinrich — remainder of FY13 – target US$10M – 7.5% — FY14 – target US$10M – 7.5% Kayelekera — remainder i d off FY13 – target t t US$10M – 7.5% 7 5% — FY14 – target US$20M – 15% Exploration – target FY13 US$4M – 20% Co
Slide 18: Presentation Outline
Presentation O tli Outline Company Status & Highlights John Borshoff Market Outlook – Dustin Garrow Financial Review – Alan Rule Project Update – Mark Chalmers Conclusions – John Borshoff 17
Slide 19: Quarterly Highlights
Quarterly Highlights Maintained low Lost Time Injury Frequency Rate of 1.0 Safety Combined production 1.929Mlb Production 97% of nameplate excluding KM planned shutdown Production of 1.29Mlb 1 29Mlb (99% of nameplate) LHM Proven ability to process lower grade and still maintain nameplate production
Slide 20: Langer Heinrich Project Overview
Langer Heinrich Project Overview Three successful production capacity Design Criteria Stage 2 Stage 3 expansions complete: Ore Throughput 2.5Mtpa 3.5Mtpa — 2.6Mlb (Stage 1) - 2008 Leach 1.5Mtpa 2.1Mtpa — 3.7Mlb (Stage 2) - late 2009 Throughput — 5 2Mlb (Stage 3) – early 2012 5.2Mlb O Feed Ore F d Gr
Slide 21: Langer Heinrich: Operational Update
Langer Heinrich: Operational Update Consistently producing at or above Stage 3 nameplate rate — two full f ll quarters now at S Stage 3 rates — feed of 754ppm for quarter was a solid outcome and was 10.2% lower than June quarter feed grades — recoveries solid at 86.8% which is above budget Post quar
Slide 22: Langer Heinrich Production
Langer Heinrich Production LHM Quarterly Q arterl Production Prod ction & Feed Grade 1400 1,200 1200 000) 1,000 oduction (0 1000 ade (ppm) 800 800 600 600 U₃O₈ Pro Gra 400 400 200 Jul-Sep 1290 Oct-Dec 1193 Jan-Mar 1052 Apr-Jun 1322 200 796 650 674 686 693 655 842 928 927 900 933 896 849 0 - Jul-Sep
Slide 23: Kayelekera Project Overview
Kayelekera Project Overview Production capacity of 3.3Mlb U3O8 pa Design Criteria Ore Throughput 1 5Mtpa 1.5Mtpa Project ramp-up complete and running at Leach Throughput 1.5Mtpa or near nameplate Ore Feed Grade 1100ppm Recovery 87% First modern resin-in-pulp uranium processing facility U3O8 Producti
Slide 24: Kayelekera: Operational update
Kayelekera: Operational update Reduced production in September 12 quarter due to annual planned maintenance shutdown — planned shutdown equated to 135,000lb reduced production — on an available operating day basis the plant achieved 94% of design rate Acid p plant producing p g above design g capabi
Slide 25: Kayelekera Quarterly Production
Kayelekera Quarterly Production KM Quarterly Production and Grade Profile 7 day industrial action² 16 days planned Plant shutdown maintenance3 750 for 6 weeks¹ 1,400 1 200 1,200 600 on (000lb) 1,000 Grade (ppm) 450 800 O₈ Productio 300 600 400 150 200 U₃O 74 145 229 515 463 534 606 566 396 632 725 7
Slide 26: Presentation Outline
Presentation O tli Outline Company Status & Highlights John Borshoff Market Outlook – Dustin Garrow Financial Review – Alan Rule Project Update – Mark Chalmers Conclusions – John Borshoff 25
Slide 27: Strategic Initiatives
Strategic Initiatives Paladin has entered into a landmark long-term long term contract with EdF - the largest utility in the world operating 58 nuclear power plants in France — 13.73Mlb U3O8 — US$200M prepayment for a portion of the off off-take take (US$50M received in October with the remainder by
Slide 28: Corporate Outlook
Corporate Outlook Expected sales of 2.7Mlb in December quarter Focused on further cost optimisation at both operational and corporate level Innovation driving continuous improvements at both LHM and KM to maximise recoveries and production Pipeline projects – maintaining readiness for expansion when