A Unique Platform Positioned for the Future John Borshoff Managing - - PowerPoint PPT Presentation

A Unique Platform Positioned for the Future

John Borshoff – Managing Director/CEO

BMO Capital Markets 2015 Global Metals & Mining Conference, Miami 22-25 Feb 2015

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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 resource potential, exploration drilling, exploitation activities and events

• r developments that Paladin Energy Ltd (the “Company”) expects to occur, are forward-looking statements.

Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking

• statements. Factors that could cause actual results to differ materially from those in forward looking statements include market prices,

exploitation and exploration successes, and continued availability of capital and financing and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. Readers should not place undue reliance on forward-looking information. The Company does not assume any obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise. In the following presentation, for those deposits that are reported as conforming to the Joint Ore Reserves Committee (JORC) 2004 or 2012 code, the terms Inferred Mineral Resources, Indicated Mineral Resources, Measured Mineral Resources, Ore Reserves, Proved Ore Reserves, Probable Ore Reserves and Competent Person are equivalent to the terms Inferred Mineral Resources, Indicated Mineral Resources, Measured Mineral Resources, Mineral Reserves, Proven Mineral Reserves, Probable Mineral Reserves and Qualified Person, respectively, used in Canadian National Instrument 43-101 (NI 43-101). The technical information in this presentation that relates to Exploration Results, Mineral Resources and Ore Reserves is based on information compiled by David Princep B.Sc. and Simon Solomons B.E., both of whom are Fellows of the Australasian Institute of Mining and Metallurgy. Messrs Princep and Solomons each have sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that they are undertaking to qualify as Competent Persons as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”, and as Qualified Persons as defined in NI 43-101. Messrs Princep and Solomons are full-time employees of the Company and consent to the inclusion of the relevant information in this announcement in the form and context in which it appears. Previous tonnages, grades, assays and other technical data relating to the Oobagooma deposit are taken from historical records prior to the implementation of the current NI 43-101. While the data is believed to have been acquired, processed and disclosed by persons believed to be technically competent, they were estimated prior to the implementation of NI 43-101 and are therefore regarded as historical estimates for the purposes of NI 43-101 and as an exploration target for the purposes of JORC disclosure. A Qualified Person as defined in NI 43-101 has not done sufficient work to classify the historical estimate as current Mineral Resources. The Company is not treating the historical estimates as current Mineral Resources as defined in NI 43-101 and for this reason the historical estimates should not be relied upon. At present, the Company considers that these resources have no equivalent classification under NI 43-101 and should therefore be considered as unclassified. The historical information is presented on the basis that it may be of interest to investors.

Presentation Outline

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Key Achievements and Update Uranium Market Project Update Positioned for the Future

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Paladin: A Unique Platform Positioned for the Future

Who is Paladin?

• World’s top seven producer, mkt cap ~US$525M
• Employs 1,100 staff and contractors
• Only substantial new producer to emerge in the past 30 years
• Total production approaching 38Mlb U3O8 (2007‐2014)
• Head office in Perth

What is its track record?

• Only company to have successfully developed two greenfield

conventional mines in past 20 years

• First of kind technical innovation at Langer Heinrich (alkaline leach)

and Kayelekera (resin‐in‐pulp) has given Paladin competitive advantage

• Invested $1.5bn in project pipeline via acquisition and organic growth
• Assembled and preserved a strong technical team with expertise

across all aspects of the uranium business Strong partnerships created $200mm prepayment agreement 25% asset JV of its flagship Langer Henrich Mine Cornerstone investor in 2014 placement and largest shareholder

Mlb

ARMZ/Uranium One Cameco Rio Tinto Rest of World KazAtomProm Areva Navoi Paladin BHP Billiton

Paladin is the world’s only independent pure play uranium producer

6.2 8.0 8.8 11.8 21.4 23.5 23.5 24.5 27.4

Government Ownership

Diversified miners Miner with upstream assets 83% of production from top 8 producers but produce ~90% of the global production (2013 production)

Share of production from majors

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Project Locations – A Global Footprint

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DRAFT – PRIVATE & CONFIDENTIAL

Key Paladin Achievements Achieve strong

• perational

performance Deleverage the balance sheet Establish sustainable cash flows Take advantage

• f future price

resurgence Significant ongoing cost reductions and production optimisation at LHM (2012-15)

  

Long term sales deal with EdF, a leading global nuclear utility (US$200M prepayment) (Aug 12)

  

LHM and KM project finance refinancing - US$60M (Jan 14)

 

KM care & maintenance, leading to cost reduction / asset preservation (US$35M saving

• ver 2 years)

(Feb 14)

  

Michelin M&I Resource increased by 25% and

• pen pit M&I grades increased by 36%

(May 14)



Minority equity stake sale in LHM (US$190M) and establishing a successful partnership with CNNC, a major Chinese nuclear utility (July 14)

 

Strategic investor & entitlement offer (US$170M) (Dec 14)

 

Up to US$150M CB issue & US$300M Tender Offer (Feb 15)

  Material Achievements have De-Risked Paladin

6 KEY FOCUS AREAS - WE ARE TICKING THE BOXES

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Balance sheet strengthened

— initiatives to de-risk the balance sheet have been successful, boosting cash

balances to US$334M in half year (and to US$484M post US$150M CB)

— net debt decreased by 48% to US$305.6M — gearing ratio down to 40% from 58% June 2014

Gross profit of US$3.9M (2013*: gross loss of US$29.3M)

— gross US$ C1 costs for the half year were 5% lower than 2013* — admin, marketing and non production costs of US$10.2M, 23% on 2013* — total exploration expenditure of US$3.1M, 14% on 2013*

Cost reduction and optimisation initiatives ongoing

— FY15 corporate costs cut by US$2.4M, 17% over FY14 (in addition to US$7.4M

reduction over FY13)

— FY15 exploration costs cut by US$1.0M, 12% over FY14 — executive/senior management 10% pay reduction extended for another 12 months — targeting gross US$ C1 cost reductions of 6% over FY15

*references to 2013 are to the equivalent six months ended 31 December 2013

Financial Status December 2014 Half Year

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DRAFT – PRIVATE & CONFIDENTIAL

Previous uncertainty around US$300M CB repayment has overshadowed Paladin’s business case in recent times

—

undue pressure on Paladin share price

—

taken the focus away from Paladin’s achievements, positioning and quality asset pipeline

—

potential strategic partners have wanted to see a solution

New US$100M CB with potential US$50M upsize provides essential de-risking and related benefits

—

7% coupon, 25% premium, 5 year vanilla CB

—

surplus cash out to 2017 post full repayment of $300M CB

—

clear path to negotiate with strategic partners, unclouded by refinancing risk

—

$50M upsize will only be given to a potential strategic partner if real tangible benefits offered

—

share price free to trade with uranium price movements and reflect underlying asset values

—

management can now focus on optimising production and delivering further strategic objectives

$274M CB maturing 2017 will be dealt with in timely fashion to avoid uncertainty

US$300M CB Tender Underway

(ready to capitalise with stronger balance sheet)

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De-risking of the balance sheet will enable full strategic value of Paladin to be realised placing Paladin in a position of strength for current strategic discussions

Presentation Outline

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Key Achievements and Update Uranium Market Project Update Positioned for the Future

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The Company expects that the demand/supply gap will eventuate in next 12-18 months and only widen over the following 6 years

2015

Excess supply largely depleting Supply disruptions continuing +16Mlb - lag effect of 2014 lost production through cutbacks and new production disruptions Utilities are vastly uncovered beyond 2017

— fuel cycle planning requires contracting

to commence in 2015

4 reactors currently approved for restart

— 4 to 6 additional reactors by late 2015 — more than 20 reactors by end of 2017

2014

Excess supply affected price Supply disruptions surfacing +12Mlb of annual production taken

• ut of spot market via cutbacks and
• ffsets into term contracts

Utility long-term contracting at historical lows

— 10yr average 150Mlb pa — but 2013 only 20Mlb & 2014 only 82Mlb

Japanese reactors remained off line

2015 – Changing Dynamics Will Initiate Price Revival

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Uranium Supply and Outlook

(Uranium price should normalise to pre-Fukushima level within 2 years)

The significant supply shortfall now appears inevitable and is expected to result in major uranium price increases

A near/medium term supply shortage appears unavoidable post 2015. New primary supply will have to contribute ~70Mlb to meet demand requirements before 2020

32 36 48 58 69

2014 2015 2016 2017 Long Term

US$/lb Consensus price projections – no price incentive exists

China:

• China has confirmed its ambitious nuclear programme, to expand capacity from

18GW in 2014 to 58GW by 2020. Currently 27 nuclear reactors under construction

• Will become the world leader in nuclear growth and base capacity by 2025

Japan:

• Sendai 1 & 2 received all necessary approvals with restart expected Q2 2015.

NRA recently approved Takahama 3 & 4 and expect restart later in 2015

• Japan is on track to restart 30-32 of its nuclear reactor fleet by 2019

Others:

• Middle East, India, Russia significant growth regions

Source: Company information, broker research reports

Mine supply achievement 2004-2014

Paladin

Mine supply achievement required to 2015-2025

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Presentation Outline

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Key Achievements and Update Uranium Market Project Update Positioned for the Future

Langer Heinrich Project Update

Production

—

strong and stable production 5.59Mlb in FY14

—

• utlook
• scale issue resolved
• further operational improvements expected
• targeting overall recovery of 88% in FY15
• long term target is high recovery from lower leach grade

FY15 guidance adjusted 5.2Mlb–5.5Mlb U3O8 Optimisation and innovation for further unit cost reduction

—

current initiative is bicarbonate recovery project (nano-filtration circuit similar to Kayelekera acid recovery) – commissioning underway

—

• ther focal areas:
• further reagent consumption reductions (2 more stages)
• beneficiation
• target <$22/lb by FY17

—

reduced cost will come through cost savings and increased recovery

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Actual 6 Months Dec’14 YTD Actual Sept Qtr Actual Dec Qtr Ore processed 1.66Mt 0.745Mt 0.917Mt Ore feed grade 769ppm 765ppm 773ppm Recovery 83.0% 80.7% 84.8% U3O8 production 2.331Mlb 1.027Mb 1.304Mlb

Kayelekera Project Strategically Placed

Transition to Care & Maintenance smoothly completed

—

water management plan approved

—

treated water release licensed to internationally recognised standard

Restart feasibility study underway

—

technical risk is low

• proven process
• proven resource

—

strong cash generator with short lead time (9 months)

—

future grid power now top government priority (further savings of US$4/lb and work has commenced)

Government of Malawi support strong

—

Paladin committed to restart when uranium price justifies

—

further carefully targeted exploration planned

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DRAFT – PRIVATE & CONFIDENTIAL

Key Pipeline Projects being Advanced

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Field Leach Trial (FLT) application being developed ISR project targeting 2Mlb pa U3O8 production

– existing mining lease – Paladin has the expertise to develop – advancing hydrogeological, metallurgical test work, etc – low operating cost

2018 development target (price dependent) Significant room for resource expansion in the region Michelin project area mineral resources 100.8Mlb U3O8 Measured and Indicated and 39.8Mlb U3O8 Inferred

– drilling has successfully upgraded Michelin deposit Measured & Indicated mineral resource by 25% to 84Mlb U3O8, with 23Mlb U3O8 remaining in Inferred

2021 development target (price dependent)

– Paladin believes the project has the potential to be placed amongst the world’s largest economically viable uranium projects – likely to start at around 5Mlb pa with expansion potential

Expect further mineral resources to be discovered within existing tenements

MANYINGEE WA MICHELIN DEPOSIT Canada

Presentation Outline

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Key Achievements and Update Uranium Market Project Update Positioned for the Future

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DRAFT – PRIVATE & CONFIDENTIAL

Paladin continues to strengthen strategic alliances

— partnership with HOPU announced — discussions ongoing with major nuclear utilities — Paladin has established a clear and realistic roadmap for discussions — decision on preferred utility/strategic partner to be made in the near future

Paladin rationale

— strategic alliance with major nuclear utilities creates a stronger company — able to attract high interest through its unique global platform and achievements — provides opportunity for funding to leverage growth

Strategic partner rationale

— opportunity to jointly develop a world class asset pipeline — ability to leverage off Paladin’s know-how and achievements — access to market-leading technical capabilities and intellectual property — opportunity to secure arm’s length off-take agreements from Paladin share of

production

Paladin objective

— Paladin is engaged in discussions with a number of nuclear utilities and related

• rganisations for establishing a strategic alliance for which results are expected in

the first half of 2015

Strategic Alliance Next Step to Unlock Value

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Conclusions and Outlook

FY2015 guidance revised to 5.2Mlb - 5.5Mlb U3O8 2015 priorities

– focus on optimisation of operations and achieving production targets – continue cost rationalisation at operations and corporate level – remain positioned to take advantage of the future uranium price resurgence – finalise strategic growth plan by forming a key alliance – establish a “win-win” situation for growth and sector consolidation

Paladin’s current operations and pipeline projects

– maintain readiness for expansion when incentive prices are sufficient – leverage into growth via strategic alliance

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THANK YOU!

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