Paladin Energy Ltd · ASX:PDN
Paladin Energy — Q3 2013 Earnings Presentation
23 slides from Paladin Energy's earnings presentation, Nov 15, 2013
Slide 1: September Quarter Results Conference Call and Investor Update
Langer Heinrich Mining Operation September Quarter Results Conference Call and Investor Update 15 November 2013 John Borshoff – Managing Director/CEO Alan Rule – CFO Mark Chalmers – EGM, Production
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 Outline Company Status and highlights – John Borshoff Paladin Supply/Demand Outlook – John Borshoff Financial Review – Alan Rule Operations Update – Mark Chalmers Conclusions – John Borshoff 2
Slide 4: Company Status and Sept Qtr Highlights
Company Status and Sept Qtr Highlights Health and safety — extended period of 5 star safety performance impacted by 2 fatalities — full review of all aspects of safety within the group underway Improving operational performance — mines operating at record levels — production costs continue to trend
Slide 5: Presentation Outline
Presentation Outline Company Status and Highlights – John Borshoff Paladin Supply/Demand Outlook – John Borshoff Financial Review – Alan Rule Operations Update – Mark Chalmers Conclusions – John Borshoff 4
Slide 6: Supply is the Real Issue Going Forward
Supply is the Real Issue Going Forward Uranium market remains subdued — short term supply surplus from excess enrichment capacity and Japanese inventory reduction — current uranium price and depressed financing environment pushing back already delayed projects — outside Kazakhstan, Paladin provided
Slide 7: Project Development Cost Escalation
Project Development Cost Escalation CAPEX blowout will constrain new supply US$ CAPEX per Annual lb Production $250 Forecast $200 Actual $150 $100 $50 $0 Design 2007/8 LHM 2011 2012 LHM 2013 Husab Toro Mkuju Criteria Stage 1 + 2 Kayelekera Stage 3 in construction not started not started Capital $170
Slide 8: Supply Deficit Certain even with Price Escalation
Supply Deficit Certain even with Price Escalation Supply/demand balance Widening deficits start in 2016 — under a moderate price increase scenario, supply deficit would be equivalent to 31Mlb pa by 2020 Current excess supply can mitigate initial future deficits through inventory buildup, but shortag
Slide 9: Presentation Outline
Presentation Outline Company Status and Highlights – John Borshoff Paladin Supply/Demand Outlook – John Borshoff Financial Review – Alan Rule Operations Update – Mark Chalmers Conclusions – John Borshoff 8
Slide 10: Profit & Loss quarter ended 30 September 2013
Profit & Loss quarter ended 30 September 2013 Sales revenue of US$69.2M — 1.673Mlb sold at average realised price of US$41.38/lb — anticipated sales of approximately 2.6Mlb in the December quarter 2013 Gross loss of US$14.9M — KM inventory impairment of US$12.0M Site non-production costs of US$1.9M
Slide 11: Additional Cost Reductions Implemented
Additional Cost Reductions Implemented Focus on corporate cost reductions — corporate overhead and exploration costs cut by US$10.8M, reduction of 24% over FY13 — discretionary capital expenditure reduced by US$12.4M Significant cost reductions and production optimisation at site Langer Heinrich Kay
Slide 12: Cash Flow
Cash Flow quarter ended 30 September 2013 Cash and cash equivalents of US$125.0M Cash inflow from operating activities of US$3.4M — LHM & KM generated cash inflow before working capital of US$1.8M — US$19.2M invested in working capital — US$1.6M interest payments on borrowings Cash outflow from inve
Slide 13: Presentation Outline
Presentation Outline Company Status and Highlights – John Borshoff Paladin Supply/Demand Outlook – John Borshoff Financial Review – Alan Rule Operations Update – Mark Chalmers Conclusions – John Borshoff 12
Slide 14: September Quarterly Highlights
September Quarterly Highlights Production Combined production of 2.044Mlb Production of 1.43Mlb above budget LHM Record recovery of 88.7% Ability for de-risked production expansion Production of 0.615Mlb (9% below budget) KM Lower production due to annual maintenance shutdown Sustainable production
Slide 15: Langer Heinrich Project Update
Langer Heinrich Project Update Actual Budget Actual Three successful production capacity FY13 FY14 Sept’13 expansions completed qtr — 5.2Mlb with Stage 3 starting mid 2012 Ore processed 3.54Mt 3.65Mt 0.87Mt — currently producing above budget — Sept quarter >5.7Mlb pa rate Ore feed grade 812ppm 753pp
Slide 16: Langer Heinrich Quarterly Production
Langer Heinrich Quarterly Production LHM Quarterly Production & Feed Grade 1600 1200 1400 Stage 3 Capacity U₃₃O₈₈ Production (000) 1000 1200 Grade (ppm) 800 1000 800 600 600 400 400 200 1429 1353 1419 1230 1193 1052 1290 1322 200 796 650 674 686 693 655 842 928 927 900 933 896 849 0 0 Jul-Sept Jan-M
Slide 17: Kayelekera Project Update
Kayelekera Project Update Production capacity of 3.3Mlb U3O8 pa Actual Budget Actual FY13 FY14 Sept’13 — operating at design post August planned shut qtr Ore 1.3Mt 1.4Mt 0.27Mt processed First modern resin-in-pulp (RIP) uranium Ore feed 1,143ppm 1,194ppm 1,264ppm processing facility grade Recovery 8
Slide 18: Kayelekera Quarterly Production
Kayelekera Quarterly Production Design Capacity KM Quarterly Production and Feed Grade 800 2,000 1,800 700 22 Days Planned U₃O₈ Production (000lb) Maintenance 1,600 600 1,400 Grade (ppm) 500 1,200 400 1,000 800 300 600 200 400 100 200 74 145 229 515 463 534 606 566 396 632 725 726 639 772 762 789 61
Slide 19: Presentation Outline
Presentation Outline Company Status and Highlights – John Borshoff Paladin Supply/Demand Outlook – John Borshoff Financial Review – Alan Rule Operations Update – Mark Chalmers Conclusions – John Borshoff 18
Slide 20: What Paladin Brings to the Nuclear Industry Table
What Paladin Brings to the Nuclear Industry Table Demonstrated achievement building 2 uranium mines in 8 years De-risked operational performance at Langer Heinrich and Kayelekera Proven management and technical capability Langer Heinrich is a world class flagship project with 20+ years production Cl
Slide 21: Re-engagement for a stake in Langer Heinrich
Re-engagement for a stake in Langer Heinrich Negotiations restarted to sell a minority stake in Langer Heinrich — initial process to sell minority interest in Langer Heinrich terminated early August — rejuvenated engagement with a prominent group of nuclear industry players — value expectations refl
Slide 22: Outlook
Outlook Production optimisation ongoing in tough market environment Cost reduction programmes continuing to identify further savings Sale process for a minority interest in Langer Heinrich progressing well Paladin’s wider strategic value being recognised Fundamental uranium market supply constraints
Slide 23: 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 Team