Paladin Energy Ltd · ASX:PDN
Paladin Energy — H1 FY2017 Earnings Presentation
26 slides from Paladin Energy's earnings presentation, Feb 14, 2017
Slide 1: Half Year Conference Call Presentation cover letter
PALADIN ENERGY LTD ACN 061 681 098 Ref: 421589 14 February 2017 ASX Market Announcements By Electronic Lodgement Australian Securities Exchange 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam 31 December 2016 Half Year Conference Call Presentation Attached please find the presentation in relation to
Slide 2: December 2016 Half Year Results
PALADIN ENERGY LTD December 2016 12 December, 2016 Half Year Results 15 February 2017 Private and Confidential Paladin Energy | December 2016 Half Year Results | 0
Slide 3: 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 res
Slide 4: Paladin
Paladin A GLOBAL URANIUM LEADER OWNS LANGER HEINRICH A STRATEGIC TIER ONE MINE OPTIMISATION SUCCESS FOR SUSTAINABILITY THROUGH THE CYCLE BALANCE SHEET STRENGTH AND FLEXIBILITY* BEST SENIOR LEVERAGE TO URANIUM UPSIDE *Assuming Restructure Proposal announced 10 January 2017 completes Paladin Energy |
Slide 5: Global Uranium Leader
Global Uranium Leader Resources (measured, indicated and inferred, mlbs) Production (mlbs)1 1,023 28 27 889 23 758 611 447 12 344 10 8 271 6 89 85 84 77 58 18 Uranium One Kazatomprom Cameco Areva BHP Billiton Rio Tinto Paladin Berkeley Deep Yellow Bannerman Toro Penninsula Energy Kazatomprom Areva P
Slide 6: Langer Heinrich A Strategic Tier One Mine
Langer Heinrich A Strategic Tier One Mine First Quartile C1 Cash Cost1 Top 10 Uranium Mine 2 by Production 4th largest open-pit +20 Year Mine Life3 38.9mlb Cumulative production Source: 1. UxC Uranium Production Cost Study – August 2015 Paladin Energy | December 2016 Half Year Results | 4 2. TradeTe
Slide 7: Results Overview and Optimisation Success
Results Overview and Optimisation Success 1 Paladin Energy | December 2016 Half Year Results | 5
Slide 8: Half Year to December 2016 Highlights
Half Year to 31 December 2016 Highlights References below to 2015 are to the equivalent half year ended 31 December 2015 Production 2.500mlbs US$25.96/lb ASP Increase from 2.342mlb in 2015 Decrease from US$40.54/lb in 2015 Up 7% Down 36% C1 Cash Cost US$16.25/lb Sales 2.125mlbs Decrease from 2.499ml
Slide 9: Half Year to December 2016 Cash Flow
Half Year to 31 December 2016 Cash Flow 70.0 60.0 59.2 (35.1) 50.0 40.0 US$m 30.0 4.5 26.7 (6.3) 20.0 20.0 (1.5) (14.1) 10.0 0.0 30 Jun 2016 LHM free cash flow Corporate, Restructuring costs Interest paid Revolving Credit Proceeds on sale of 31 Dec 2016 balance exploration, KM Facility Drawdown non-
Slide 10: Half Year to December 2016 EBITDA Variance Analysis
Half Year to 31 December 2016 EBITDA Variance Analysis 20 17.0 (31.0) 15 Revenue variance COS variance 10 1.9 5.7 5 0.8 2.2 US$m 18.4 (0.2) 0.1 0 -5 -10 (3.5) -15 -20 H1 FY2016 Uranium sales Sales volume Unit cost of Interest income Exploration Administration Fixed KM C&M H1 FY2017 EBITDA price vari
Slide 11: Optimisation Success: Significant C1 Cost Reductions
Optimisation Success: Significant C1 Cost Reductions Optimisation has resulted in a reduction in C1 Cash Costs to a record low of US$16.25/lb C1 Cash Cost (US$/lb) 35 30.55 30 26.50 28.52 27.66 25.27 25 20 US$/lb Record Low 16.25 15 Mining Curtailment 10 Flash Splash (3QFY17) - US$0.25/lb stand-alon
Slide 12: Optimisation Success: Exploration and Other Controllable Costs
Optimisation Success: Exploration and Other Controllable Costs Exploration and other controllable costs have been significantly reduced and are expected to hit a "run rate" of c. US$11m per year from FY18E Exploration 43.9 Reduction of c. 75% December quarter, sold stake in Deep Yellow and 26.4 th
Slide 13: Balance Sheet Strength – Restructure Proposal
Balance Sheet Strength – Restructure Proposal 2 Paladin Energy | December 2016 Half Year Results | 11
Slide 14: Key Terms of Restructure Proposal
Key Terms of Restructure Proposal Restructure Proposal is a holistic and long lasting solution Item Comments Debt for equity US$145 million of the 2017 and 2020 Convertible bonds converted to equity (pro rata) Conversion price of A$0.05. but increased share issue to bondholders if equity raising
Slide 15: Indicative Timeline
Indicative Timeline Date Event Late February Bondholder meeting convened for March Late March Bondholder meeting to be held Launch equity raising Late April Shareholder meeting to approve all resolutions to give effect to restructure Conditions satisfied, new shares and bonds to be issued
Slide 16: Stronger, More Flexible Balance Sheet
Stronger, More Flexible Balance Sheet Debt reduced by US$145m and additional likely proceeds from sale of Manyingee stake to bring in US$85-95m new cash (expected to conclude late March / early April) New Equity Issue: Earliest debt maturity deferred to 2022 and reduced from US$212m (previousl
Slide 17: Key Outcomes
Key Outcomes Assuming Restructure Proposal goes Now ahead US$355.3m Net Debt1 US$150m2 31-Dec-16 30-Jun-17 1.5 Years 4-5Years Average Tenor US$24.4m US$9.9m Annual Interest Cost US$29-31/lb US$26-28/lb3 All-in Expenditure Institutional share ownership 53% Long-term holders Sovereign wealth funds
Slide 18: Best Senior Leverage To Uranium Upside
Best Senior Leverage To Uranium Upside 3 Paladin Energy | December 2016 Half Year Results | 16
Slide 19: Uranium is Unsustainable at US$20-25/lb
Uranium is Unsustainable at US$20-25/lb Contracts are rolling off industry-wide and the spot price is too low to cover costs for most Global uranium cost curve vs forecasted achieved price (US$/lb) Global uranium cost curve vs forecasted achieved price (US$/lb) 100% 5% 40 90% 38 32% 80% 36 70% 62% 3
Slide 20: Positive Catalysts Are Happening
Positive Catalysts Are Happening Positive supply and demand changes are already driving prices off CY16 lows Key catalysts Historical uranium price (US$/lb) $80.00 KazAtomProm announced (in January), it +42% increase since $30.00 plans to cut 2017 uranium production by November 2016 10% (equates t
Slide 21: Medium and Long-Term Rationale for Stronger Uranium Prices is Compelling
Medium and Long-Term Rationale for Stronger Uranium Prices is Compelling Broker consensus uranium price forecast (US$/lb) Broker commentary 70 The deal [restructuring] is also positive in that it should enable PDN to trade through this period of uranium price weakness, which we believe is not sustai
Slide 22: Unique Leverage Through Potential Volume Growth
Unique Leverage Through Potential Volume Growth Our fully built capacity plus pipeline provides unique growth potential Potential volume growth within existing capacity (mlbs) Future Pipeline 16 14 Michelin 12 MT Isa 10 mlbs 2.50 7.50 Manyingee 8 6 1.00 4.00 4 2 - LHM Curtailment Undwinding of KM un
Slide 23: Strategy and Outlook
Strategy and Outlook 4 Paladin Energy | December 2016 Half Year Results | 21
Slide 24: Strategy
Strategy MAXIMISE LHM OPERATING CASH FLOWS THROUGH CONTINUED OPTIMISATION INITIATIVES WHILST PRESERVING THE INTEGRITY OF THE LONG-TERM LIFE OF MINE PLAN MAINTAIN KM AND EXPLORATION ON A “MINIMAL EXPENDITURE, CARE AND MAINTENANCE BASIS” MINIMISE CORPORATE AND ADMINISTRATIVE COSTS COMPLETE BALANCE SHE
Slide 25: Revised FY2017 Guidance
Revised FY2017 Guidance Amended LHM mine plan Production in excess of 4.0mlb to enhance operating vs 3.8-4.0mlb previously level cash flows LHM C1 US$16.50-18.50/lb “All in” US$29-31/lb vs US$17-19/lb previously (no change) March Quarter US$14m corporate costs, KM care and Sales 700,000lb-800,000lb
Slide 26: Paladin Energy Ltd – Contact Details
Paladin Energy Ltd – Contact Details Head Office Level 4, 502 Hay Street Subiaco Western Australia 6008 PO Box 201, Subiaco Western Australia 6904 Telephone: +61 (0) 8 9381 4366 Facsimile: +61 (0) 8 9381 4978 Email: paladin@paladinenergy.com.au Website: www.paladinenergy.com.au Investor Relations An