Peninsula Energy Limited · ASX:PEN
Peninsula Energy — 2015 Mines and Money Conference Hong Kong
45 slides from Peninsula Energy's conference presentation, Mar 25, 2015
Slide 1: Companies Announcement Office cover letter
25 March 2015 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 2015 Mines and Money Conference in Hong Kong. A copy of the presentation will also
Slide 2: Building a Global Uranium Supply Company
BUILDING A GLOBAL URANIUM SUPPLY COMPANY March 2015 Presentation
Slide 3: 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 4: Update on Recent Trends
Update on Recent Trends 1) Olympic Dam mill shutdown & Rossing fire - A mill shutdown due to electrical failure at the largest of three operating mills at Olympic Dam threatens 3-4m lbs of global uranium supply in 2015 (~10% spot demand). Details are still emerging from a fire at Rossing's product r
Slide 5: Business Plan
Business Plan Build a uranium producer with multiple sources of supply in established mining economies with low cost, long life mines backed up by a sophisticated well recognized trading arm dealing directly with the utilities 1. Utilities are seeking security of supply through diversity of supply –
Slide 6: Uranium – Supply & Demand History
Uranium – Supply & Demand History Spot price is US$38.75/lb, long term contract price is US$49/lb 5
Slide 7: Uranium Supply
Uranium Supply Two sources: • Primary (mines) 150,000,000 lbs U3O8 • In-situ leach 44% • Underground 29% • Open Pit 20% • By-product 7% • Secondary (already mined) 50,000,000 lbs U3O8 • Tails re-enrichment & underfeeding ~50% • Government stocks ~33% • MOX/RepU ~17% Source: UxC, WNA, IAEA. 6
Slide 8: Primary Uranium Supply – Global Sources
Primary Uranium Supply – Global Sources Global Uranium Production by Country (mlbs U3O8 – 2014E) Top 10 Uranium Mines (mlbs - 2014E) China, 3.9 , 2.7% Ukraine, 2.5 , 1.7% South Africa, 1.5 , USA, 4.6 , 3.1% 1.0% Rossing, 3.5 , 2% Rabbit Lake, 4.2 , 3% Piargunsky, 5.1 , 3% Other, 2.7 , 1.8% Langer He
Slide 9: Primary Uranium Supply - Outlook
Primary Uranium Supply - Outlook Global Primary Supply Forecast (mlbs/yr U3O8eq) 250 225 Global Mine SUpply (Mlbs/yr) 200 Today 175 150 125 100 75 50 25 0 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2
Slide 10: Secondary Uranium Supply - Outlook
Secondary Uranium Supply - Outlook Global Secondary Supply Forecast (mlbs/yr U3O8eq) 65 60 Today 55 Secondary Supplies (Mlbs/yr U3O8eq) 50 45 40 35 30 25 20 15 10 5 0 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2
Slide 11: Supply - Contractions
Supply - Contractions • Supply Contractions – Kazakhstan 3Q y/y production drop; signed first LTC with China and India – Paladin shuts down Kayelekera; – 25% of Langer Heinrich production now diverted to Chinese – Cigar Lake – Rio Tinto aging mines; Rossing production down by 50% – BHP Olympic Dam U
Slide 12: Uranium Demand - Outlook
Uranium Demand - Outlook Electricity Generation and Uranium Consumption • Global Nuclear Generation Capacity 437 Reactors will increase 70% over the next Annual Uranium Demand 377,728 decade - from 377,728Mwe to Mwe 636,693Mwe 65,908 Generation Capacity tonnesU • 70 Reactors under construction & 183
Slide 13: Uranium Demand – Global Consumers
Uranium Demand – Global Consumers Global Operating Nuclear Capacity by Country (GW gross, 2014E) Prospective Reactor Counts by Category, February 2015 Japan, 0, 0% Rest of World, 102, 240 29% USA, 103, 29% 210 180 Proposed 150 Planned Middle East/Africa, Under Construction 4, 1% 120 India, 6, 2% 90
Slide 14: Uranium Supply/Demand - Outlook
Uranium Supply/Demand - Outlook Global Uranium Supply vs. Demand (mlbs/yr) 300 275 250 225 Today Mlbs/yr U3O8 200 175 150 125 100 75 50 25 0 2012A 2013A 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E Secondary Supplies Existing Mines New Mines T
Slide 15: Price Outlook – Long Term
Price Outlook – Long Term Expect US$70/lb by 2017/2018E in order to support badly-needed new mines • Strong global demand growth • Insufficient mine growth • Dwindling secondary supplies • Significant deficit at decade’s end • Need reasonable risk-adjusted return implied on new projects well in adva
Slide 16: Price Outlook – Near-term
Price Outlook – Near-term • Less clear • But many reasons to expect price jump in 2015: • Return of utility contracting • Japanese restarts • Supply disruptions • Accelerating grid connections • More China construction deals, domestic + export • India finally joining the party, settling liability is
Slide 17: Return of Utilities – Contracting Slowdown since 2012
Return of Utilities – Contracting Slowdown since 2012 • Spot volumes – internationally-dominated market – steady at 40mlbs/yr (~50% churn) • However, term market (producer/utilities) incredibly quiet in 2013 350 300 Market Volume (Mlbs U3O8) 250 200 150 100 50 0 2005 2006 2007 2008 2009 2010 2011 20
Slide 18: Return of Utilities – High Uncovered Requirements
Return of Utilities – High Uncovered Requirements • 2018/2019-onwards (3-4 years out) are particularly uncovered • Utilities must resume normal levels of purchasing to cover these needs • Typical contracting window is >3 years ahead (fuel cycle, physical delivery time + buffer) • Uncovered requireme
Slide 19: The Nuclear Fuel Cycle
The Nuclear Fuel Cycle Source: World Nuclear Association (WNA) 18
Slide 20: Return of Utilities - US Uranium Forward Contracts
Return of Utilities - US Uranium Forward Contracts 19
Slide 21: Japanese Restarts – A Psychological Catalyst
Japanese Restarts – A Psychological Catalyst • Pre-Fukushima: 54 reactors, 47 GW, 21 Mlbs/yr demand (now zero) • Government guiding 1/3rd to 2/3rd return by 2020 • Sendai 1&2 and Takahama 3&4 approved and expected online ‘15 • Positive read-throughs on inventories and delivery deferrals Expected Ope
Slide 22: Potential Supply Disruptions – Cigar Lake
Potential Supply Disruptions – Cigar Lake • World #2 mine by 2017E • 6-8mlbs guidance in 2015E; further decreased to 3-4mlbs • Freezing issues could worsen in our view 21
Slide 23: Potential Supply Disruptions – Geopolitical Risk Rising
Potential Supply Disruptions – Geopolitical Risk Rising Global Sources of Mine Supply – 2004A (mlbs U3O8) Global Sources of Mine Supply – 2014E (mlbs U3O8) Other, 17.7 , Other, 14.6, North America, 12.2% 14.1% 27.6 , 18.9% West Africa, North America, 11.7 , 8.0% West Africa, 32.3, 31.3% 8.5, 8.2% Au
Slide 24: Slowing Kazakh Growth
Slowing Kazakh Growth • Meteoric growth finally slowing • Costs at new projects much higher than existing mines 65 60.5 60.6 60.6 60.6 Kazakh Production (Mlbs/yr) 58.5 59.3 60 55.5 55 50.6 50 46.4 45 40 36.4 We see limited growth until prices Mlbs U3O8 35 rise because: 30 22.1 • Kazatomprom guidance
Slide 25: Uranium Equities – Strong Historic Correlation with Ux Price
Uranium Equities – Strong Historic Correlation with Ux Price Producers and juniors have traded in-line with spot uranium Juniors have had the most torque Source: UXC, Raymond James Ltd., Capital IQ 24
Slide 26: Uranium Equities – Recent Correlation Breakdown
Uranium Equities – Recent Correlation Breakdown • Correlation has broken down since mid 2014 – we believe it could correct later in 2015 Source: UXC, Raymond James Ltd., Capital IQ 25
Slide 27: Uranium Equities – Positive Outlook
Uranium Equities – Positive Outlook • Anticipate strong year for uranium • Spot price rebound has stared • Utilities are re-entering long Term Contract market • Focus on producers and quality juniors with: • Strong news flow • Balance sheet strength • Production • Leverage to rebound PENINSULA ENERG
Slide 28: Corporate Overview
Corporate Overview Capital Structure 1 year share price & volume history Shares on issue 6,907m Share price 2.0c Market capitalisation $138m Cash $48m Undrawn debt $18m Debt $1m Shareholding % holding Resource Capital Fund VI 20.9% Pala Investments 12.3% BlackRock Funds 9.3% J P Morgan 6.7% AREVA 3.
Slide 29: Uranium Mining in Wyoming
Uranium Mining in Wyoming Wyoming very supportive of uranium extraction – multiple ISR operations in region 28
Slide 30: Company Overview - Projects
Company Overview - Projects Emerging uranium producer with established project pipeline • Flagship Lance Projects in Wyoming – Fully Funded, Fully Permitted and construction commenced • Karoo Projects in South Africa – positive scoping study recently completed; PFS underway Lance: Wyoming USA • Low
Slide 31: 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 32: 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 33: 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 34: 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 35: Company Overview - Management
Company Overview - Management 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 Alfred
Slide 36: Scalable Production Development
Scalable Production Development • Nature of ISR lends itself to scalable expansion – Lance Projects JORC Code compliant resource base (54m lbs) supports the ability to increase rates of production quickly – No pre-stripping or mining development is required – production wells access the ore body dir
Slide 37: Pro Forma Project Cash Flow
Pro Forma Project Cash Flow (All amounts are in NOMINAL terms) 2015 2016 2017 2018 2019 2020 2021 2022 Production ('000 lbs) 100 650 800 1,250 1,750 2,350 2,350 2,350 Average Price per Pound Sold (USD/lb) * 53 56 60 64 67 67 70 Revenue (USD'm) 0.0 35.3 46.4 70.7 110.3 172.9 165.3 163.4 All-in Operat
Slide 38: Lance – Financial Returns
Lance – Financial Returns Strong economics: IRR of 36% and average cash cost US$29.16/lb Key financial metrics Unlevered NPV 8% US$288m Cashflow positive Year 2 IRR 36% Stage 1 CAPEX 1 US$33m 1st Quartile All-in Costs @ 2.3mlbs p.a. *US$/lb Royalties and indirect taxes $6.28 Operating costs $11.48 R
Slide 39: Lance – Exploration Target
Lance – Exploration Target Large Resource potential: 70+ years mine life • 13 historic resources • 22 roll fronts extend for a combined linear strike length of 194 miles (312km) • Exploration Target 158-217mlbs U3O8 Please note that in accordance with Clause 17 of the JORC (2012) Code, the potential
Slide 40: Karoo Projects Overview – Land Holding
Karoo Projects Overview – Land Holding 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 • Freehold lan
Slide 41: Karoo Projects Overview
Karoo Projects Overview High grade near surface mineralisation Work completed to date Current & future strategy Historic Completed 2011-14 2015-18 • Drill-defined 99mlbs U3O8 at • 1,245 holes re-probed or drilled • 7,800km2 of Permian Sedimentary Sequences 1,050 ppm by Peninsula for QAQC and JORC re
Slide 42: Investment Highlights
Investment Highlights Major sector re-rating expected due uranium supply contraction combined with increased new demand and utility contracting. Peninsula re-rating due to commencement of production 2015 • Project funding fully committed and secured • Peninsula will be the ASX’s next uranium produce
Slide 43: Uranium Demand - Outlook
Uranium Demand - Outlook Global Operating Nuclear Capacity (GW gross, end of period) 650 580 600 563 544 Global Operating Nuclear Capacity (GW) 550 520 504 500 Today 456 471 483 437 445 419 429 450 398 410 385 400 368 353 347 344 351 350 300 250 200 150 100 50 0 2011A 2012A 2013A 2014E 2015E 2016E 2
Slide 44: Appendix - Lance JORC Resource
Appendix 1 - Lance JORC Resource 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 15,675,085
Slide 45: Appendix - Karoo JORC Resource
Appendix 2 - 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
Peninsula Energy — 2015 Mines and Money Conference Hong Kong on 6ix