Peninsula Energy Limited · ASX:PEN
Peninsula Energy — Investor Presentation (July 2016)
52 slides from Peninsula Energy's investor presentation, July 2016
Slide 1: Uranium Production Steadily Increasing
URANIUM PRODUCTION STEADILY INCREASING 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: Cautionary Note Regarding United States Security Laws
Cautionary Note Regarding United States Security Laws This presentation does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities of Peninsula Energy Limited, in any jurisdiction in which such offer, solicitation or sale would be unlaw
Slide 4: 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 4
Slide 5: Corporate Overview
Corporate Overview Capital Structure 1 year share price & volume history Shares on issue 176m Share price $0.60 Market capitalisation $105m Cash $7.6m 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% Glo
Slide 6: 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 sales arm dealing directly with utilities • Effective production commenced in March 2016 Start operations in the •
Slide 7: Monthly Production
Monthly Production Note: Adjusted June 2016 production represents production to 30 June including estimated loss of production during 7 day outage for main trunkline flange failure based on achieved production rates. 7
Slide 8: Performance to Date
Performance to Date • Key Performance Metrics − Delivered 16,000 lbs U3O8 to converter in May 2016 − Delivered105,000 lbs U3O8 to utilities in 1H, 2016 − 8.2m lbs U3O8 now under contract; WAP $55/lb; Projected Revenue US$445,000,000 − 200,000 to 300,000 lbs U3O8 production forecast for CY2016 − Curr
Slide 9: Performance to Date
0 50 100 200 250 300 350 150 400 14-May-16 16-May-16 18-May-16 20-May-16 22-May-16 24-May-16 26-May-16 28-May-16 Performance to Date 30-May-16 Header House 1 1-Jun-16 3-Jun-16 5-Jun-16 7-Jun-16 9-Jun-16 11-Jun-16 13-Jun-16 15-Jun-16 Header House 2 17-Jun-16 19-Jun-16 21-Jun-16 23-Jun-16 25-Jun-16 27
Slide 10: Performance to Date
0 5 10 15 25 30 40 45 20 35 14-May-16 16-May-16 18-May-16 20-May-16 22-May-16 24-May-16 26-May-16 Performance to Date 28-May-16 30-May-16 Header House 1 1-Jun-16 3-Jun-16 5-Jun-16 7-Jun-16 9-Jun-16 11-Jun-16 13-Jun-16 15-Jun-16 Header House 2 17-Jun-16 19-Jun-16 21-Jun-16 23-Jun-16 25-Jun-16 27-Jun-
Slide 11: Operating Performance to Date
Operating Performance to Date • Central Processing Plant – Operating to design specification – Capture rate of uranium on resin in ion exchange columns is exceeding expectations (recoveries show 7.5 lbs uranium per cu.ft. resin vs forecast of 6 lbs/cu.ft.) – Average U3O8 grade in fluid leaving the C
Slide 12: Stage 1 Operating Performance to Date
Stage 1 Operating Performance to Date • Consistent flow rates have confirmed permeability • Targeted injection rate of NaCO2 at header house units 1 & 2 first achieved on 10 March 2016 • U3O8 recovery increased 600% over 17 weeks (133lbs – 786lbs per day; header house units 1 and 2 now exceeding 100
Slide 13: Project Development - Valuation Curve
Project Development - Valuation Curve 13
Slide 14: Undervalued on a resource basis
Undervalued on a resource basis EV / Total Resource (US$/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 15: 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 16: Uranium Mining in Wyoming
Uranium Mining in Wyoming Wyoming very supportive of uranium extraction – multiple ISR operations in region 16
Slide 17: 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 18: Lance – Financial Metrics (FS's 2012-2014)
Lance – Financial Metrics (FS’s 2012-2014) 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) $36.60 Stage 1 CAPEX 2
Slide 19: Production and Cost Profile
Production and Cost Profile Klbs U3O8 Production Profile USD/lb All-in-Cash Costs 2,500 50 Delivery Commitments under Signed Contracts 2,000 40 Inventory 41 1,500 30 30 29 1,000 20 500 10 0 0 2016 2017 2018 2019 2020 2021 2022 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 • Ramp-up of U3O8 product
Slide 20: All-in Costs per Pound U3O8
All-in Costs per Pound U3O8 60 PEN Delivered Contract Price (CY16-CY20) 50 Current Term Price 40 US$/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 21: Lance – Exploration Target
Lance – Exploration Target Large Resource potential: 70+ years mine life • Current JORC-2012 Compliant Resource 53.7mlbs U3O8 (51.2Mt at 476ppm U3O8) (refer Appendix 3) • 13 historic resources • 22 roll fronts extend for a combined linear strike length of 194 miles (312km) • Exploration Target 158-2
Slide 22: Lance Exploration Target Additional Disclosure
Lance Exploration Target Additional Disclosure 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 includes 54mlbs of existin
Slide 23: Lance Exploration Target Additional Disclosure
Lance Exploration Target Additional Disclosure 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 considered to be high. T
Slide 24: 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 25: 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 26: Scalable Plant Layout
Scalable Plant Layout Green = Stage 1 development Blue = Stage 2 & 3 development Red = Optional future equipment to increase CPP capacity to 3.0mlbs pa 26
Slide 27: Sales and Marketing Strategy
Sales and Marketing Strategy • Strategy – Align Peninsula with major utilities requirements – Progressively commit production to term contracts – Optimise revenue & reduce pricing risk • Peninsula Uranium Limited (UK) – Peninsula has established Peninsula Uranium Limited (PUL), a dedicated uranium s
Slide 28: Karoo Projects Overview
Karoo Projects Overview JORC (2012) Compliant resource 56.9m lbs eU3O8 at 1,108ppm (23.3Mt at 1,108ppm) (refer Appendix 4) • 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
Slide 29: 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 30: Karoo Exploration Target Additional Disclosure
Karoo Exploration Target Additional Disclosure 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 quantity and grade of the ”Ex
Slide 31: Karoo Exploration Target Additional Disclosure
Karoo Exploration Target Additional Disclosure 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 of the undrilled sectio
Slide 32: 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 33: Appendices
PENINSULA ei pect APPENDICES = -—
Slide 34: Appendix - Nuclear Provides Significant Baseload in Developed Nations
Appendix 1 - 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
Slide 35: 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 36: 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 37: 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 - Reasonable risk-adjusted return required for new projects well in - India – strategic reserve established advance of shortfall - Conv
Slide 38: 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 39: Appendix – Lance Photos
Appendix 2 – Lance Photos Drummed Lance U3O8
Slide 40: Loaded Resin Trailer
Loaded Resin Trailer Resin Transfer Equipment 40
Slide 41: Ion Exchange Columns
lon Exchange Columns PENINSULA#)
Slide 42: Plant and Well Fields Commissioning
Plant and Well Fields Commissioning Flowing water through plant 42
Slide 43: Reverse Osmosis Plant
Reverse Osmosis Plant Reverse Osmosis Equipment 43
Slide 44: NRC Pre-Production Inspection
NRC Pre-Production Inspection Completed 25 November 44 NRC inspection inside CPP
Slide 45: Lance Stage 1 Construction Complete
Lance Stage 1 Construction Complete Pipe racks and ion exchange column Ion exchange columns Piping inspection Piping and valves from waste tank to DDW 45
Slide 46: Lance Stage 1 Construction Complete
Lance Stage 1 Construction Complete Completed CPP building 46
Slide 47: Lance Stage 1 Construction Complete
Lance Stage 1 Construction Complete Resin transfer water pumps installed in CPP Chemistry lab Controls for carbon dioxide storage tank Spectrometer unit in chemistry lab 47
Slide 48: Well Field Development
Well Field Development Trunkline from CPP to well fields Inside header house Oxygen injection system Inside completed header house at first mining unit Main trunk-line installed from CPP to wellfields 48
Slide 49: Well Field Development Drilling
Well Field Development Drilling Production well drilling 49
Slide 50: Appendix 3 - Lance JORC Resource
Appendix 3 - Lance JORC Resource Grade Recovered eU3O8 Mineability eU3O8 Recovery Classification Tonnes (ppm U3O8 (lbs) (lbs) factor (lbs) factor U3O8) 50.4% Measured 495 4,520,159 0.8 3,616,128 0.8 2,892,902 4,142,950 Indicated 11,532,135 497 0.8 10,112,761 0.8 8,090,209 12,640,951 M+Ind 15,675,085
Slide 51: Appendix - Karoo JORC Resource
Appendix 4 - Karoo JORC Resource 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 Classification Sector
Slide 52: Appendix - Board of Directors
Appendix 5 - 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 inter