Financial Community Presentation - Energy Resources of Australia · 2016. 5. 18. · Energy Resources of Australia Ltd • Operations based in the Northern Territory of Australia

Energy Resources of Australia Ltd

Financial Community Presentation

ERA, Positioned for GrowthRob Atkinson, Chief Executive

Steeve Thibeault, Chief Financial Officer

November 2009

2

ERA has two adjoining leases on Aboriginal land ERA has two adjoining leases on Aboriginal land surrounded by, but separate from, World surrounded by, but separate from, World

Heritage Kakadu National Park in the Heritage Kakadu National Park in the Northern Territory of AustraliaNorthern Territory of Australia

ERA respectfully acknowledges the Mirarr, ERA respectfully acknowledges the Mirarr, Traditional Owners of the land on which the Traditional Owners of the land on which the

leases (and Ranger Mine) are situatedleases (and Ranger Mine) are situated

3

Forward looking statementsForward looking statements

This presentation contains statements which may include predictions as to the future, and which may constitute forward-looking statements within the meaning of Australian or US securities laws. Such statements include, but are not limited to, statements with regard to capacity, future production and grades, projections for sales growth, estimated revenues and reserves, targets for cost savings, the construction cost of new projects, projected capital expenditures, the timing of new projects, future cash flow and debt levels, the outlook for minerals and metals prices, the outlook for economic recovery and trends in the trading environment and may be (but are not necessarily) identified by the use of phrases such as “will”, “expect”, “anticipate”, “believe” and “envisage”.

By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and may be outside ERA’s control. Actual results and developments may differ materially from those expressed or implied in such statements because of a number of factors, including levels of demand and market prices, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, operational problems, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, and activities by governmental authorities such as changes in taxation or regulation.

The information in this presentation relating to exploration results is based on information compiled by Greg Rogers, who is a member of the Australasian Institute of Mining and Metallurgy. Greg Rogers is a full-time employee of the company and he has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Greg Rogers consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

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Safety Safety –– All Injury Frequency Rates All Injury Frequency Rates

0

1

2

3

4

2002 2003 2004 2005 2006 2007 2008 2009 YTD

Freq

uenc

y R

ate

Per 200,000 hours worked

5

OutlineOutline

• Company Background

• Sustainable Development

• Operational and Financial Performance

• Expansion

• Exploration

• Outlook

• Summary

6

Energy Resources of Australia LtdEnergy Resources of Australia Ltd• Operations based in the Northern Territory of

Australia

• Almost three decades of uranium mining experience at Ranger mine: world’s second largest uranium mine with over 100,000 tonnes produced to date

• World class resources with significant expansion opportunities

• Remote location in a culturally sensitive region

• Product sold only to countries with safeguards agreements in place

• Indigenous employment has doubled over last two years and represents almost 20 per cent of workforce

• ERA’s annual production of uranium oxide— Fuel for approximately one per cent of world’s

electricity and equivalent to 90 per cent of Australia’s annual electricity consumption

— Saving of 220 million tonnes of GHG emissions

• 68.4 per cent owned by Rio Tinto

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ERA leasesERA leases

Scale: 10 Kilometres

Scale: 10 kilometres

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JabilukaJabiluka depositdeposit

• One of the largest undeveloped uranium ore- bodies in the world

• Accessible by underground mining

• Long term care and maintenance agreement signed in early 2005

• Will only be developed with consent of Traditional Owners

GUNBALANYA

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Current operations overviewCurrent operations overview

Current mining operations

Tailings storage facility

Exploration drilling Ranger 3 Deeps

Process water treatment plant

Demonstration trial landform

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OutlineOutline




• Expansion

• Exploration

• Outlook

• Summary

11

Indigenous employmentIndigenous employment

0

20

40

60

80

100

120

2004 2005 2006 2007 2008 2009 YTD¹

Num

ber

8%

10%

12%

14%

16%

18%

20%

Per c

ent o

f wor

kfor

ce

Number

Percentage

¹as at September 2009

Perc

en

tag

e o

f w

ork

forc

e

12

Australian GovernmentAustralian Government Supervising ScientistSupervising Scientist’’s Overviews Overview

“…During the year there were no reported incidents that resulted in any environmental impact off the immediate

minesite. The extensive monitoring and research programs of the Supervising Scientist Division confirm that the environment has remained protected through

the period...”

Source: Supervising Scientist 2009. Annual Report 2008-2009. Supervising Scientist, Darwin

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Trial process water evaporation facilityTrial process water evaporation facility

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OutlineOutline




• Expansion

• Exploration

• Outlook

• Summary

15

0

5

10

15

20

25

'03 '04 '05 '06 '07 '08 '09H1

ERA productionERA production

Mining

• Current Ranger 3 pit expected to be

mined out in 2012; processing to

continue until 2020

—Build up of stockpiled ore for

future processing

• Removal of approximately 3 million

tonnes of unplanned material from

the pit wall in 2009 and 2010

Processing

• Full year production expected to be

in line with normal levels

• Laterite and radiometric sorter

plants have been commissioned

0

2,000

4,000

6,000

'03 '04 '05 '06 '07 '08 '09H1

U3 O8 drummed (tonnes)

Material moved (million tonnes)

Ore

Waste

Source: ERA

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South wall instabilitySouth wall instabilityPhoto : June 2009

Known area of potential instability to be removed

40 m10 m 20 mNew cutback limit Previously approved mine crest

Proposed extension to the pit crest

Not expected to have significant impact on

uranium production in 2009

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Earnings and sales volumesEarnings and sales volumes

127.6

118.876.1

43.640.737.019.9

0

50

100

150

200

250

'03 '04 '05 '06 '07 '08 '09 H1

1031

5,2595,605 5,688 5,760

5,324 5,272

2,280

0

1,000

2,000

3,000

4,000

5,000

6,000

'03 '04 '05 '06 '07 '08 '09 H1

Underlying Earnings, A$m Sales, tonnes Uranium Oxide

Source: ERA1. Insurance settlement of A$103 million

221.8

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ERAERA’’s sales contract positions sales contract position

• Contracts are generally:—3 to 5 years in duration—First delivery 2 to 4 years

after agreement

• Contracts contain a mixture of pricing mechanisms:

—Fixed price/base escalated—Linked to market indicators—Negotiated prices

• Contracts made at less buoyant times have been steadily replaced by higher- performing contracts

11.19 13.68 16.00 18.36

25.06

32.53

48.02

0

10

20

30

40

50

60

FY2003

FY2004

FY2005

FY2006

FY2007

FY2008

1H2009

US$/lb

Average realised uranium price

Source: ERA

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Raw materials and consumablesRaw materials and consumables

• Diesel costs reduced due to weaker oil price

• Acid prices dropped and expected to stabilise

• Significant portion of the lime cost is related to transportation

LimeMang-anese

Acid

Other

Diesel

Manganese

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Major projects 2007 Major projects 2007 -- 20092009 (A$ million)(A$ million)

Laterite Processing Plant 44

Pit Extension 52

Radiometric Plant 18

Tailings Delivery System 18

Tailings Storage Facility 43

Water Treatment Plant 27

Other 11

Total 213

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OutlineOutline




• Expansion

• Exploration

• Outlook

• Summary

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Heap leach project statusHeap leach project status

• ERA Board approval given for the next phase (feasibility study) in

October 2009 ($36 million)

• Feasibility study commenced 2 November 2009, team located in

Brisbane

• The Environmental Impact Statement (EIS) guidelines from the

Northern Territory and Commonwealth Governments have been

issued and work is well underway to complete the EIS

• Key dates:

— Completion of the feasibility study Q4 2010

— ERA Board approval H1 2011

— Project implementation 2011 – 2012

— Project completion Q1 2013

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Heap leach flow chartHeap leach flow chart

Waste material returnedto exhausted Pit

BINDING

CONCENTRATION

CRUSHING

Stack

HEAP LEACHINGReclaim Irrigate

URANIUM OXIDEPRODUCTION

Transfer to existing plant

ORE STOCKPILE

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Stockpile

Crushing

Binding

Heap leachingStack

IrrigateReclaim

• Ore is collected from the stockpiles using an excavator and trucks.

Concentration

• The crushed ore ranges in size from 1mm (fine) to 40mm (coarse).

• The crushed ore is mixed with diluted acid to join the fine and thecoarse products together. This improves the ability of the acidsolution to flow through the heap.

• The material is piled approximately 4 - 6 metres high and regularlyirrigated with a diluted acid solution.

• After approximately 60 - 80 days the leaching cycle is completedand the waste rock from the heap is removed.

• The removed waste rock is trucked to final disposal.

• The leached solution from the heap is concentrated and transferredto the existing production facility to complete its transformation intouranium oxide.

• The remaining leached solution (empty of uranium oxide) is recycledback to the heap leach process.

Heap leach projectHeap leach project

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Environmental controls for heap leachEnvironmental controls for heap leach

• Environmental controls based on Best

Practicable Technology

• Full containment of process water including

extreme wet weather events

• All infrastructure will have multiple levels of

protection

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OutlineOutline




• Expansion

• Exploration

• Outlook

• Summary

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Ranger 3 Deeps exploration target Ranger 3 Deeps exploration target

Pit #3

Future exploration target

Estimated current resource

Conceptual location of decline

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Ranger 3 Deeps updateRanger 3 Deeps update

• Order of Magnitude study in progress with expected completion by mid 2010

• Exploration decline designed with portal positioned in the south east quadrant of the pit outside of the final pit wall

• Exploration decline has been designed not to compromise current mining operations

• Underground drilling will focus on improving knowledge of the Ranger 3 Deeps and exploring possible extension of the resource at depth

• Target is for the exploration decline development to commence mid to late 2010 with underground drilling commencing 2011

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OutlineOutline




• Expansion

• Exploration

• Outlook

• Summary

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Market outlookMarket outlook

• Near term— Spot prices to remain volatile in an uncertain market

o Supply disruptions adding to volatility

o Spot price does not reflect long-term fundamentals

— Western utilities largely covered for next few years

o Near term demand remains discretionary and price- sensitive

• Longer term— Financial crisis likely to delay or impede new mining projects

o Weak uranium prices and weak US dollar, makes new projects uneconomic

— Market will be heavily dependent on Kazakhstan expansions

— Significant exploration is under way

— Economic crisis will slow new reactor build in the West, but probably not in China

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Prices have weakened, but longPrices have weakened, but long--term term outlook remains positiveoutlook remains positive

$0

$20

$40

$60

$80

$100

$120

$140No

v-06

Jan-

07M

ar-0

7M

ay-0

7Ju

l-07

Sep-

07No

v-07

Jan-

08M

ar-0

8M

ay-0

8Ju

l-08

Sep-

08No

v-08

Jan-

09M

ar-0

9M

ay-0

9Ju

l-09

Sep-

09

U 3O

8 ($/

lb)

Spot price Long term price

Spot prices will remain volatile subject to market events and perceptions

Long term prices firm despite spot

weakness

Rapid rise in spot price driven by speculators

Source: Ux Consulting, TradeTech

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Demand outlook is positiveDemand outlook is positive

World Reactors (Sep 09)

No. Capacity (GWe)

Operating (◄►) 436 373

Constructing (▲)

49 44

Planned (▲) 136 150

Proposed (▼) 277 289

WNA , September 2009 (change since June 2009 in brackets)

USA: 104 reactors operating, 8 new

reactors by 2020?

India: 6 reactors under construction (by 2010), aiming for 20-30GWe by 2020, 50GWe by 2050.

China: latest forecast as much as 86GWe by 2020, up from 75GWe.

Russia: 31 reactors operating in 2008; growth plans have

slowed due to economy.

>20 reactors planned

6-20 reactors planned

3-6 reactors planned

<3 reactors planned

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WNA supplyWNA supply--demand outlookdemand outlook

0

50

100

150

200

250

300

350

400

2009 2014 2019 2024 2029

(M lb

s U

3O8)

Existing production

Secondary supplies

Under development

Planned Supply

Prospective Supply

WNA reference case

WNA high case

Some potential for near-term over-supply remains marginal. To meet prospective demand a significant number of new projects need to be developed quickly

Source: WNA Supply and Demand 2009-30

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OutlineOutline




• Expansion

• Exploration

• Outlook

• Summary

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SummarySummary

• Uranium market remains robust

• ERA has reliably supplied uranium oxide for 30 years

• Lease areas contain world class ore bodies, including one of

the world’s largest undeveloped resources

• Heap Leach project well advanced

• Other exciting development opportunities

—underground

—exploration potential

• Opportunities are adjacent to current infrastructure

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Financial Community Presentation - Energy Resources of Australia · 2016. 5. 18. · Energy Resources of Australia Ltd • Operations based in the Northern Territory of Australia

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