Slide 1: ASX cover letter: Paladin Presentation
PALADIN RESOURCES LTD GRAND CENTRAL 1ST FLOOR, 26 RAILWAY ROAD SUBIACO WESTERN AUSTRALIA 6008 A.C.N. 061 681 098 PO BOX 201, SUBIACO WESTERN AUSTRALIA 6904 TELEPHONE: (+61 8) 9381 4366 FAX: (+61 8) 9381 4978 EMAIL: paladin@paladinresources.com.au Web: www.paladinresources.com.au Ref: 55329 20 March
Slide 2: Overview of Paladin's Offer for Summit Resources Limited
PALADIN RESOURCES LTD Overview of Paladin’s Offer for Summit Resources Limited John Borshoff – Managing Director March 2007 1 (v1)
Slide 3: Disclaimer
Disclaimer 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 resource potential, exploration drilling, exploitation activities and e
Slide 4: Presentation Outline
Presentation Outline • Paladin Offer Summary • Benefits of the Offer to Summit Shareholders • Overview of the Uranium Market • Overview of Paladin • Conclusion 3
Slide 5: Paladin Offer Summary
Paladin Offer Summary • 100% scrip offer for all the Ordinary Shares of Summit • 1 Paladin share for every 2.04 Summit shares • Represents attractive 34% premium to Summit’s 10 day VWAP (based on Paladin’s 5 day VWAP) at the date the offer was announced • No minimum acceptance condition • Conditions
Slide 6: Pro Forma Capitalisation
Pro Forma Capitalisation Paladin Summit New Paladin Share Price (A$) prior to offer 10.30 4.00 10.30 announcement Ordinary Shares outstanding (m) 501.0 197.4 Options (m) 19.6 8.4 Fully Diluted Shares (m) 520.6 205.8 621.5 Fully Diluted Market cap (A$m) 5,362.2 823.2 6,401.4 Cash as at Dec 06 (A$m) 3
Slide 7: Benefits of the offer to Summit shareholders
Benefits of the offer to Summit shareholders • Significant premium • Shares in uranium producer • Maintain upside to Australian uranium policy change • Paladin’s financial strength • Paladin’s management expertise • Paladin’s reputation to deliver (LHU, KK) • Paladin’s U3O8 marketing skills and pres
Slide 8: Enterprise Value per lb
EV/lbs U rA si Fo a E rs n 0 10 20 30 40 ys erg M y M et Lt d eg al a s C or S u U ra m ni p m um i Lt Po Pa t Re la d so w di u er n rc te R ch es es U ou rc ra ni e um s * Based on closing price on 26 February 2007 C En am Co er e c rp gy o M C or et al p U s Au R C ro La ra -E o ra m ne rp rg id
Slide 9: Change in Market Capitalisation
Market Cap Pa US$000's la di n R C es am ou 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 rc ec o es C - or Pa 10 p la 0% 13,731 di n ac R US$ Millions es qu ou i re En rc d er es gy -E R xi es st ou in rc g es * Based on closing price on 26 February 2007 Au U st rA ra si lia a En D er gy en is
Slide 10: Change in Resource
Lbs U308 En er Pa gy la R C di es am n o R SX urc eco 0 50 100 150 200 250 es R o U es C Pa urc ra Au orp n 924 la e s di s - ium tra n 1 O lia R es 00% ne ou In rc acq c 567 271 es u Au - E ired ro x 225 ra U r U is En As raM ting i 196 St e r ia ra gy En n In th m R er c or eso gy L e u t En Min r
Slide 11: Comparative Liquidity
Comparative Liquidity Paladin’s liquidity is significantly better than Summit’s Comparison of Average Daily Trading Values of Paladin and Summit A$ Million(s) $30 $26.2 $25 $20 $17.7 $15 $10 $5 $1.7 $0 Ave daily trading value for Ave daily trading value for Ave daily trading value for Paladin on TSX
Slide 12: Summit Project Timing & Economics Comments
Summit Project Timing & Economics Comments Summit comments on project timing Summit states production from the Mt Isa Project will start in 2010* Paladin’s considers this overly optimistic and 2012+ is a more realistic expectation − Dependent on change of policy in any event − Once policy changes… r
Slide 13: Litigation
Litigation • Summit alleges: – Valhalla disclosed confidential JV information in its prospectus dated December 2005. • However, Summit waited nine months after the alleged breach and then did so only on the announcement of Paladin’s offer for Valhalla • Resolute and Mt Isa assert information in ques
Slide 14: Comparison of Major Uranium Deposits
Comparison of Major Uranium Deposits 20.0% 18.0% Cigar Lake 16.0% McArthur River 14.0% 12.0% Grade (%) 10.0% 8.0% 6.0% 4.0% 2.0% Olympic Dam 0.0% 0 1,000 2,000 3,000 4,000 5,000 Contained U3O8 (Mlbs) 1.2% Rabbit Lake 1.0% 0.8% Grade (%) 0.6% Jabiluka 0.4% Kintyre Honeymoon Michelin/Jacques 0.2% Kaye
Slide 15: Overview of the Uranium Market - Nuclear revival
Overview of the Uranium Market - Nuclear revival –rapid change 2002 to 2006 14
Slide 16: Nuclear Generating Capacity
Nuclear Generating Capacity September 2006 & future In Operation (currently) Currently • 442 Reactors • 370,721 Mwe (16% world electricity) Remainder 20% Canada • 31 Countries South Korea 3% • 180Mlbs U3O8 required 5% Germany 6% Under construction United States Russia 26% • 28 Reactors 6% • 22,510 M
Slide 17: Global Uranium Production/Demand
Global Uranium Production/Demand Uranium Market Balance Production 1996 - 2005 2006-2015 120 2000 110 100 1800 90 1600 m ill io n p o u n d s U 3 O 8 80 1400 million pounds U3O8 70 1200 60 108.9 104.7 50 91 92.8 91.5 94.5 93.7 92.6 1000 87.7 40 80.8 800 30 600 20 400 10 200 0 0 1996 1997 1998 1999 2
Slide 18: The Nuclear Reactor Fleet (1965 to 2050)
The Nuclear Reactor Fleet (1965 to 2050) from death to glory 800 Future growth possibility 700 600 Current projection 500 DRAMATIC Reactors TURNAROUND 400 ? 300 Dying/stagnating industry. (dismal outlook reinforced 200 over 20 years) ? WNA 01 forecast (ref case) 100 WNA 05 forecast (ref case) Reacto
Slide 19: New Pricing Regime / Key Events
New Pricing Regime / Key Events US$90/lb* Uranium players operating with very strong competition for uranium assets Period of extreme downturn & destruction of U supply industry 70’s/80’s period of Cigar Lake oversupply & Flooding inventory build up MacArthur Lake Mine Flooding * Source: http://www.
Slide 20: Production Scenario for 2020
Production Scenario for 2020 for top 10 existing uranium mines vs requirement 2005 Production Production Centre Country 2020 Production Mine Status (million lbs U3O8) KEY LAKE/MCARTHUR RIVER Canada 18.7 22 FINAL STAGES RANGER (JABILUKA from 2012) Australia 13.0 15 50% DEPLETED PRIARGUNSKY Russia 7.8
Slide 21: Overview of Paladin Today
Overview of Paladin Today • An S&P/ASX 100 company - market cap US$4.2bn (A$5.25 – at the date prior to the offer) • Ramp up stage underway at Langer Heinrich Uranium Mine (Namibia) – market leader sales contracts in place • Construction of Kayelekera Uranium Project (Malawi) – April 2007 start • M&
Slide 22: Paladin Share Price Performance
Paladin Share Price Performance Uranium Paladin Daily Closing Share Price Sector* down (ASX) 11.3% post bid $12.00 $10.00 Share Price ($) $8.00 $6.00 ` $4.00 $2.00 Mar-06 May-06 Jul-06 Nov-06 Jan-07 Mar-07 Sep-06 Paladin Share Price * Sector – includes ASX, TSX and TSX Venture Exchange companies wit
Slide 23: Board and Management
Board and Management Most comprehensive team outside majors Directors Rick Crabb Chairman John Borshoff Managing Director Sean Llewelyn Non-Exec Director George Pirie Non-Exec Director Ian Noble Non-Exec Director Management Gillian Swaby Corporate Secretariat Corporate & Ron Chamberlain CFO Finance
Slide 24: Advanced Paladin Projects
Advanced Paladin Projects Each one a company maker LANGER HEINRICH KAYELEKERA VALHALLA/SKAL MANYINGEE OOBAGOOMA PROJECT PROJECT PROJECT PROJECT PROJECT Location / Equity Namibia Malawi Queensland, Australia West Australia West Australia 100% 100% decreasing to 50% 100% 100% ex GENCOR 85% ex QML ex T
Slide 25: Paladin Stated Resources (JORC and non-JORC)
Paladin Stated Resources (JORC and non- JORC) Resource Contained U3O8 Contained U3O8 Deposit Location Interest (%) Grade (%) JORC Status Mt (t) (Mlbs) Measured, Langer Namibia 100% 80.6 0.06 47,930 105.7 Indicated & Heinrich Inferred Measured & Kayelekera Malawi 100% 18.7 0.06 - 0.09 15,655 34.5 Ind
Slide 26: Paladin Project Locations
Paladin Project Locations 25 25
Slide 27: Project Pipeline 2006
Project Pipeline 2006 Assets acquired & projects developed Langer Heinrich Uranium Mining ? Operation 2012 2009/10 (Ramping up) Sept 2008 Inventory U3O8 Current: 223.6 Mlb With 100% of Summit: 267.1Mlb 26
Slide 28: Project Development
Project Development Establishing appropriate team capabilities BFS CONSTRUCTION - US$92M PRODUCTION – 2.6Mlb pa (1,180 TPA) - 15 YEAR PLUS PRE-FEASIBILITY PRODUCTION BFS BFS ~ US$2.3M CONSTRUCTION 1,000 TPA (2.3Mlb) for UPDATE 10 YEARS Through Project Generation Activities PRE-FEASIBILITY BFS CONSTR
Slide 29: Langer Heinrich Uranium Project
LANGER HEINRICH URANIUM PROJECT 28
Slide 30: Langer Heinrich
Langer Heinrich Project status • Total project US$125M (US$92M CAPEX & US$21M working cap) • Resources increased from 95Mlb to 105Mlb U3O8 • Key uranium sales contracts in place (7Mlb over 6 yrs) – price sharing above ceiling price – significant leverage to uranium price • Production team 97% Namibi
Slide 31: Langer Heinrich Project Key Performance Parameters
Langer Heinrich Project Key Performance Parameters STAGE 1 STAGE 2 Production U3O8 2.6Mlb 3.7Mlb Sales Price /lb US$60 US$60 Annual revenue US$156M US$222M Royalty 3% US$ 4.68M US$ 6.6M Operating costs (US$17/lb) US$ 44M US$ 62.9M Operating surplus (pre-tax) US$ 107.3M (A$136M) US$152.5M (A$193.5M)
Slide 32: Geology, Resource Drilling, BFS Mine Area
Geology, Resource Drilling, BFS Mine Area 2005 BFS Mine model Resource Addition Plant Area 2006 Resource Addition 31
Slide 33: Kayelekera Uranium Project
KAYELEKERA URANIUM PROJECT 32
Slide 34: Kayelekera Project
Kayelekera Project Historical • One of the best undeveloped uranium projects in Africa • Final feasibility by giant UK power utility in 1990 – complete feasibility study and supporting project on hand Current • Development Agreement approved • BFS/EIA submitted to Govt late Feb 07 for mining approva
Slide 35: Land Holdings
Land Holdings Resource status Measured and Indicated 15.31Mt @ 0.09% - 13,630t U3O8 (31.1Mlb) New Tenements Inferred Kayelekera 3.40Mt @ 0.06% - 2,040t U3O8 Deposit (4.5Mlb) Exploration Targets Resources JORC / NI 43-101 compliant NEW TENEMENTS • Three new blocks granted – 1,140 km2 • Highly prospec
Slide 36: Development Agreement
Development Agreement Fiscal and operational stability breakthrough • 10 year fiscal and operational stability period • 15% carried equity in project company (against tax off set) • 27.5% corporate tax / 10% resource rent tax reduced to zero • Royalty rate 1.5% (yrs 1-3) and 3% (yrs 4+) down from 5%
Slide 37: Board Approves Project Go-Ahead
Board Approves Project Go - Ahead Awaiting Government Mining Licence approval PROJECT PARAMETERS FROM POSITIVE BFS • 11 year project life • Annual production 3.3Mlb U3O8 (yrs 1 to 7) & 1.17Mlb thereafter • CAPEX US$185M with room for optimisation – 1.5Mtpa at 0.11% U3O8 with 90% recovery – acid leac
Slide 38: Kayelekera Project construction schedule
Kayelekera Project construction schedule • Experienced construction team in place – Langer Heinrich group • November 2006 to February 2007 – Major long lead item acquired (Dominion SAG Mill) – Pioneer works planned and scheduled • March 2007 to June 2007 – EPCM project engineer selection, FEED compl
Slide 39: Production Schedule
Production Schedule Plenty of upside Project Production Start Production Vol. (U3O8) million pounds LANGER HEINRICH September 2006 2.60 (Stage 1) KAYELEKERA September 2008 3.30 LANGER HEINRICH September 2008 1.10 (Stage 2) 7.00Mlb Potential to expand these projects to a total production of 7.5Mlb to
Slide 40: Uranium Trading Entity
Uranium Trading Entity • Paladin establishing a uranium trading entity designed to take advantage of fundamental uranium market changes • Initial charter to acquire and manage natural uranium inventory • Change agent for term uranium market • Develop creative commercial strategies with reasonable ri
Slide 41: Conclusion
Conclusion DEVELOP PALADIN INTO A MAJOR GLOBAL URANIUM SUPPLIER • Focused uranium energy company (have an ei nrich Oob agoo er H ma excellent starting basis) La ng Valhalla – large resource base in 5 deposits - 220Mlb Database – strong resource upside potential Manyingee Bigrlyi Kayelekera – strengt
Slide 42: Contact Details
PALADIN RESOURCES LTD Contact Details Mr John Borshoff Grand Central 1st Floor, 26 Railway Rd (Managing Director) Subiaco Western Australia 6008 Mobile: +61 (0) 419 912 571 PO Box 201, Subiaco Email: john.borshoff@paladinresources.com.au Western Australia 6904 Telephone: +61 (0) 8 9381 4366 Facsimil