Paladin Energy Ltd · ASX:PDN
Paladin Energy — Paladin Resources — Shareholder Meeting (November 2006)
53 slides from Paladin Energy's shareholder meeting presentation, Nov 21, 2006
Slide 1: AGM Presentation cover letter to ASX
GRAND CENTRAL 1ST FLOOR, 26 RAILWAY ROAD PALADIN RESOURCES LTD 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: 48039 21 Novemb
Slide 2: The New Energy In The Market
PALADIN RESOURCES LTD The New Energy In The Market John Borshoff – Managing Director ANNUAL GENERAL MEETING 21 November 2006 1
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 • Introduction & Paladin Status – John Borshoff • Langer Heinrich – Garnet Halliday (Head of Operations) • Uranium market – Dustin Garrow (Marketing Director) • Future Outlook & Expectation – John Borshoff 3
Slide 5: Nuclear revival – rapid change 2002 to 2006
Nuclear revival –rapid change 2002 to 2006 4
Slide 6: Market Cap 2003-2006
Paladin Market Cap 2003-2006 A$6,000 A$5,000 A$4,000 P D N $ M K T C A P (0 0 0 's ) 4th largest ASX 3000 listed WA company A$3,000 A$2,000 1000 A$1,000 200 3 A$0,000 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 YEAR 5
Slide 7: Paladin Today
Paladin Today • An S&P/ASX 200 company - market cap A$3.1bil – Morgan Stanley Capital International World Index (MSCI) – 31 May 06 – dual listed on TSX • Commissioning Langer Heinrich Uranium Mine (Namibia) – market leader sales contracts in place • BFS, Kayelekera Uranium Project (Malawi), due Dec
Slide 8: Multi Layered Activities - 2006-07
Paladin Multi Layered Activities - 2006-07 Evaluating ongoing opportunities M&A / Project Generation Evaluation VUL JV Valhalla Uranium Ltd Acquisition projects Kayelekera BFS / Expl new tenements Exploration new tenements Kayelekera Pre Devel/Construction Construction +Resource drilling Resource Up
Slide 9: Capital Structure
Capital Structure 12 Month Trading Chart (AUD) (to 20 November 2006) SHARES AND OPTIONS 496M (POST VUL) – fully paid 20.6M – unlisted options (ex A$1.00 - A$5.50) 12 MTH TRADING RANGE A$1.00 – A$6.30 RECENT SHARE PRICE A$5.50 AVERAGE MONTHLY TRADING VOL ASX – 57M TSX – 24M CASH IN HAND A$25M MARKET
Slide 10: Board and Management
Board and Management 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 Secretary Ron Chamberlain CFO Brendan O’Hara Special Projects Garnet Halliday Head of Opera
Slide 11: Paladin Project Locations
Paladin Project Locations 10
Slide 12: Langer Heinrich Uranium Project
LANGER HEINRICH URANIUM PROJECT GARNET HALLIDAY 11
Slide 13: Safety
Langer Heinrich Uranium Pty Ltd Safety • 1 million man-hours without LTI • Comprehensive inductions and strict PPE compliance • Full emergency response plans implemented • Operation implementing OSHA 18001 safety standards • Radiation Management Plan implemented • Operator training completed – 1st A
Slide 14: Environmental
Langer Heinrich Uranium Pty Ltd Environmental • No reportable incidents • National Parks & Wildlife Dept relationship sound • Construction & Operations EMP implemented & audited • Back ground monitoring continues: – Air – Water – Flora and Fauna • Environmental Management System fully functional • E
Slide 15: Mine Planning Inventory
Langer Heinrich Uranium Pty Ltd Mine Planning Inventory • Mineralised strike length 15km • All Details drilled to Inferred Resource level – awaiting final estimation • Mine planning inventory on all resources mid 07 – new mine design to initiate long term strategic mine planning – development of str
Slide 16: Mining
Langer Heinrich Uranium Pty Ltd Mining • Mining Contractor mobilised to site July 05 • 1 yr mine area defined ( top soil stored) • 1st Blast 6th October • Grade control completed for 1st 6 months of mine production – RC drill program to 20m – Strong correlation of Radiometric results to resource dat
Slide 17: Project Key Dates
Langer Heinrich Uranium Pty Ltd Project Key Dates • Mining Licence approved July 05 • Construction mobilisation & establishment Sept 05 • Site civil works started Jan 06 • Mining commenced Aug 06 • Staged commissioning initiated 22 Aug 06 • Project Completion target 22nd Dec 06 • Ramp up to design J
Slide 18: Project Status
Langer Heinrich Uranium Pty Ltd Project Status • Total project +95% complete • Johannesburg EPCM team demob, all focus on site • Schedule for practical completion 22 Dec 06 • Power supply - All equipment energized • Water supply- Pipe line flowing to design • Site laboratory operational • Stage comm
Slide 19: Commissioning Status
Langer Heinrich Uranium Pty Ltd Commissioning Status • Crushed material to stock pile • Scrubber rotated and ore fed • All screens and attritioner mechanical run with ore • Water circuit tested through scrubber to tails pumps • Leach tank all water filled, agitators run and heating commenced • CCD w
Slide 20: Operation
Langer Heinrich Uranium Pty Ltd Operation • Mining well established achieving mine plan • LHU operational team fully recruited – 114 quality LHU employees trained, ready and able – Only 4 non Namibians – 50% with direct and indirect uranium experience – 40% with project start up experience • All key
Slide 21: Summary
Langer Heinrich Uranium Pty Ltd Summary • Always a tight, fast track project • Project team on target to achieve project handover of plant & equipment to LHU operations as planned 22nd December 06 • At 95% complete project Estimate to Complete remains within the BFS US $ 92 million project budget •
Slide 22: The Uranium Market
THE URANIUM MARKET DUSTIN GARROW 21
Slide 23: The Role of Marketing
The Role of Marketing • Paladin views itself as a long-term, reliable supplier of uranium to the world’s commercial nuclear power plants • The marketing of uranium is conducted in an environment of multi-year (term) delivery commitments • Each utility’s nuclear fuel purchasing and management program
Slide 24: The Role of Marketing
The Role of Marketing • Unlike most other uranium production companies, Paladin marketing function fully integrated into overall corporate planning and management • Two senior uranium marketing professionals with a combined 50 years of industry experience in all uranium buying regions • Located in N
Slide 25: The Nuclear Fuel Cycle
The Nuclear Fuel Cycle Uranium Mining and Milling Waste Management Program Producers, world-wide, sell U3O8 to utilities and traders. Spent Fuel Storage U3O8 55 Gal. drums = 850 lbs U3O8 at Reactors Spent Fuel Conversion to UF6 Reprocessing Light Water Power Reactors 14 Ton cylinders = 8,000 kg UF6
Slide 26: Nuclear Power Revival
Nuclear Power Revival • Improved plant operations (capacity factor) • Reactor safety • Operating license extensions • Cost of competing fuels • Growing recognition of climate change • Need for increased electricity generation (especially in developing countries) 25
Slide 27: World Nuclear Capacity
World Nuclear Capacity (September 2006) 442 Reactors 370,721 Mwe 31 Countries 175 - 180 million pounds U3O8 required 26
Slide 28: Reactors Under Construction
Reactors Under Construction (September 2006) 28 Reactors 22,510 Mwe 12 Countries 27
Slide 29: Longer Term Prospects
Longer Term Prospects • China • Finland • France • India • Japan • Russian Federation • South Korea • Canada (?) • United Kingdom (?) • United States (?) 28
Slide 30: World Nuclear Capacity Forecast
World Nuclear Capacity Forecast (World Nuclear Association - 9/05) 750 700 650 600 550 Gwe 500 450 400 350 300 250 20 20 20 20 20 20 20 20 20 20 20 20 20 20 04 06 08 10 12 14 16 18 20 22 24 26 28 30 Lower Reference Upper 29
Slide 31: World Uranium Requirements
World Uranium Requirements (World Nuclear Association - 9/05) 400 375 350 M illion lbs U 3O 8 325 300 275 250 225 200 175 150 125 20 20 20 20 20 20 20 20 20 20 20 20 20 05 07 09 11 13 15 17 19 21 23 25 27 29 Lower Reference Upper 30
Slide 32: World Uranium Production and Consumption
World Uranium Production and Consumption 1946-2005 200 180 160 MillionP ounds U 3O8 140 120 100 80 60 40 20 0 19 19 19 19 19 19 20 80 90 46 50 60 70 00 Production Consumption 31
Slide 33: Uranium Production - 2005
Uranium Production - 2005 (Total – 109.1 million lbs U3O8) Others 8% Uzbekistan 6% Canada 29% Namibia 8% Kazakhstan 10% Russia 8% Australia Niger 23% 8% 32
Slide 34: Global Uranium Production
Global Uranium Production 1996 - 2005 120 110 100 90 80 million pounds U3O8 70 60 108.9 104.7 50 91 92.8 91.5 94.5 93.7 92.6 87.7 40 80.8 30 20 10 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 33
Slide 35: Cigar Lake Construction Delay
Cigar Lake Construction Delay • Construction of Cigar Lake Mine began January 2005 • Operations planned to begin early 2008; Annual production rate of 18.0 million pounds U3O8 • October 22, workings flooded • At least a one year delay in operations 34
Slide 36: Uranium Market Balance
Uranium Market Balance 2006-2015 2000 1800 1600 1400 m illion pounds U 3O 8 1200 1000 800 600 400 200 0 Requirements )Primary Production (existing/development Secondary Supplies Needed 35
Slide 37: Uranium Price Trend
Uranium Price Trend 2003 - Present $70.00 $70.00 $65.00 $65.00 $60.00 $60.00 $55.00 $55.00 $50.00 $50.00 US$/lb U3O8 $45.00 $45.00 $40.00 $40.00 $35.00 $35.00 $30.00 $30.00 $25.00 $25.00 $20.00 $20.00 $15.00 $15.00 $10.00 $10.00 $5.00 $5.00 Jan-03 Jan-04 Jan-05 Jan-06 Average U3O8 Spot Price Long-Te
Slide 38: Kayelekera Uranium Project
KAYELEKERA URANIUM PROJECT 37
Slide 39: Kayelekera Project Status
Kayelekera Project Status • Team fully established in country • BFS completion Dec 06 (GRD Minproc - study engineers) – optimising existing feasibility study – mining studies finalised – met work near finalised – environmental, geotech, hydrology, tailings studies near finalised – prospective new te
Slide 40: Kayelekera Proposed mine site layout
Kayelekera Proposed mine site layout 39
Slide 41: Kayelekera Uranium Project
Kayelekera Uranium Project Key input parameters from Feb 05 PFS Parameter Value Annual throughput 1,000,000t Average grade 0.1% U3O8 Process recovery 90% Process route Acid leach / SX Annual production 2.3Mlb U3O8 Mine life 10 years BFS LIKELY TO INCREASE ANNUAL PRODUCTION TOTAL TO 2.5 TO 3.0MLBS U3
Slide 42: Valhalla Uranium Ltd
VALHALLA URANIUM LTD PALADIN RESOURCES LTD 41
Slide 43: Valhalla Takeover
Valhalla Takeover Details of offer • All scrip (share) bid – 3.16 VUL shares for 1 PDN share • Offer price value for VUL of A$173.9M (US$130M) – 41% premium on VUL 20 day VWAP – A$5M cash in VUL • Main resource base - Valhalla & Skal Deposits, Queensland – VUL Joint Venture share amounts to 37.3Mlbs
Slide 44: Future Outlook & Expectation
FUTURE OUTLOOK & EXPECTATION 43
Slide 45: Paladin Delivers
Paladin Delivers • 2005 we said: – commence Kayelekera BFS 9 – complete Langer dual list Canada 9 – complete Heinrich BFS 9 – grant of Langer Heinrich mining lease 9 – smooth transition to development 9 – restructure / strengthen Board 9 • 2006 we said: – strengthen management 9 – complete Langer He
Slide 46: Production Schedule
Production Schedule Plenty of upside Project Production Start Production Vol. (U3O8) million pounds LANGER HEINRICH September 2006 2.60 (Stage 1) KAYELEKERA August 2008 2.30 LANGER HEINRICH September 2008 1.10 (Stage 2) 6.00Mlb Potential to expand these projects to a total production of 7.5Mlb for 2
Slide 47: Langer Heinrich 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$222M Royalty 2% US$ 3.1M US$ 4.4M Operating costs US$ 39M US$ 55.5M Operating surplus (pre-tax) US$ 113.9M (A$152M) US$162.1M (A$216M) CASH OPERATING
Slide 48: Project Pipeline Today
Project Pipeline Today Asset base depth & a solid growth schedule 2012 2009/10 Q3 / 2008 Inventory U3O8 220 Mlb Plus upside 47
Slide 49: Project Development
Project Development Establishing appropriate team capabilities BFS CONSTRUCTION - US$92M PRODUCTION – 2.6Mlb pa (1,180 TPA) - 15 YEAR PLUS PRODUCTION PRE-FEASIBILITY BFS BFS ~ US$2.3M CONSTRUCTION 1,000 TPA (2.3Mlb) for UPDATE 10 YEARS Through Project Generation Activities PRE-FEASIBILITY BFS CONSTR
Slide 50: Paladin – A Leader with Hidden Depth Rising
Paladin – A Leader with Hidden Depth Rising SITUATION AS YOU SEE IT • Strong project pipeline • Two uranium mines scheduled • Extensive uranium experience Paladin + • Strong project development team Valhalla PALADIN AS WE SEE IT NEED FOR GROWTH • Have an aggressive strategy for growth – become a wor
Slide 51: Why Paladin?
Why Paladin? • Foresight • Commitment • Expertise • Timely development programmes • Full project pipeline • Strong expansion strategy via M&A • Geographic diversity • Credible track record • Do what we say/say what we do 50
Slide 52: Conclusion
Conclusion BECOME A MAJOR GLOBAL URANIUM SUPPLIER • Focused uranium energy company – large resource base in 5 deposits - 220Mlb – excellent resource upside potential – strength through geographic diversification – expertise and funding to deliver • Quality project in Langer Heinrich – production sch
Slide 53: Contact Details
PALADIN RESOURCES LTD Contact Details Grand Central, 1st Floor, 26 Railway Road SUBIACO, WESTERN AUSTRALIA, 6008 Telephone: +61 8 9381 4366 Facsimile: +61 8 9381 4978 Mobile: +61 419 912 571 Email: john.borshoff@paladinresources.com.au Website: www.paladinresources.com.au 52
Paladin Resources — Shareholder Meeting (November 2006) on 6ix