russian uranium mining industry diversification...
TRANSCRIPT
Russian uranium mining industry diversification strategy
08.06.2011
Alexander Boytsov, Deputy director general, ARMZ Uranium Holding
Uranium demand and atomic energy growth
The main factors of demand/supply relationship
Reactor related
uranium demandAdditional demand
Secondary sourcesUranium mining
• Countries’ policy in atomic energy
• Trends in new NPPs construction
• NPP’s operation time extension
• NPPs decommissioning
• HEU-LEU Program
• US policy in the uranium inventory reduction and stock balance selling
• Policy in spent fuel and HEU recycling
• Favorable uranium prices
• Sufficient and qualitative uranium resources
• Sufficient uranium production capacities
• Staffing
• Uranium as a trading commodity (stocks trading)
• Energy companies stockpiles
Key issue of the atomic energy development –
sustainable and long-term uranium supply
SUPPLY
DEMAND
Historical uranium production vs NPPs demand
The last 20 years – uranium production covered about 40% of uranium demand.
The difference was covered by inventories and secondary sources.
Low uranium prices did not stimulate uranium production.
0
10000
20000
30000
40000
50000
60000
70000
80000
U, t
on
s
Accumulation
of U
inventories
Uranium production
NPPs U requirements
68 ths tU
54 ths tU
Consumption
of inventories
Since 1945 Ths. tU
Produced 2 468
Consumed 1 919
Stockpiled 549
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120
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цена спот
цена по долгосрочным контрактам
USD per pound of U3O8
spot price
long-term price
Projected U requirements to 2030
WNA 2009 Nuclear Fuel Market Report:
Reactors requirements growth from 68,000 to 104,000 tU to 2030 (53%)
Uranium production needs to increase from 54,000 to 99,000 tU
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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Добыча урана Вторичные источники
Общие потребности
WNA,2009, средний сценарийДополнительный спрос (складские запасы АЭС, закупки инвестиционныхи хеджевых фондов)—порядка 5% от реакторных потребностей
tU
WNA 2009, reference scenarioAdditional demand (inventories, investors, hedge funds) – 5% of plant requirements
U
production
Secondary sources
Total U requirements
Uranium production capabilities to 2030
5WNA,2009, reference
Stages of the uranium industry development 2010- 2020 - reactor demand covered by uranium production after 2020 - uranium production shortage after 2025 – decrease of uranium production and production capacity shortage
(decommissioning of some mines due to U resources depletion)
Uncovered demand -
«window of opportunities»
tU
production
1679
832
566 545472
296 284 279 276 224
853
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1200
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18002260
609 543430 398 392
131 140
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U resources is a key factor for sustainable development
of uranium production
leading companies will produce about 1.8
million tons of uranium in 2009-2030 (U
resource consumption - 37%)
62% of the total U resources by 2030 will be
in the Olympic Dam (copper-main
commodity)
U resources of primary uranium mines will
be reduced by 2030 more than two fold
Uranium resources by leading companies, th.tU Uranium resources by countries, th.tU
Total U resources –
4925 th.t (in-situ)
World recoverable U
resources - 6306 th.t
(IAEA/OECD-2009)
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2009 2030
Paladin Energy
Uranium One
Cameco
Rio Tinto
Казатомпром
Areva
АРМЗ
BHP Billiton
Exhausting of U resources by leading companies th.tU
Kazatomprom
ARMZ
World recoverable U
resources - 6306 th.t
(IAEA/OECD-2009)
World uranium production at a glance
ARMZ uranium output 2007-2010
ARMZ+U1 – third place in U production
ARMZ – U1 alliance holds third place in2010 global uranium production afterKazatomprom and Cameco.
As for U production growth rating,ARMZ – U1 alliance holds second placeamong largest uranium producers.
The main uranium output growth wasdue to development of JVs inKazakhstan
Russia ranked sixth among countriesby uranium production
3527 3687
4624
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2007 2008 2009 2010 (АРМЗ
+ Uranium
One)
tU
7157
AR
MZ
tU
10608
8770
71576620
4276
2347 2300 20881453 1120
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World uranium production in 2004-2010, tU
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2004 2005 2006 2007 2008 2009 2010
Others
USA
Uzbekistan
Niger
Russia
Namibia
Kazakhstan
Australia
Canada
40251 4155739357 41102
43648
5030554000
tU
ARMZ Highlights 2006-2010
On
e o
f th
e w
orld
’s U
lead
ers
8
• Priargunsky• Dalur• Khiagda
• Priargunsky• Dalur• Khiagda
Individual mines in Russia ARMZ Uranium holding development started
•Elkon
•Olovskoe
•Gornoe
•Akbastau
•Zarechnoe
•Rusburmash
•Lunnoe
• Priargunsky• Dalur• Khiagda
•Elkon
•Olovskoe
•Gornoe
•Akbastau
•Zarechnoe
•Rusburmash
•Lunnoe
•Karatau
•UGRK
•ESK
•Armenia
•Namibia
Production assets development
• Priargunsky• Dalur• Khiagda
•Elkon
•Olovskoe
•Gornoe
•Akbastau
•Zarechnoe
•Rusburmash
•Lunnoe
•UGRK
•ESK
•Armenia
•Namibia
U1 assets:
•Karatau
•Inkai
•Akdala
•Kharasan
•USA
•Australia
International holding development
Acid plant atPriargunskycommissioned,Priargunsky’s mine#8 construction isunderway
Mining andprocessing complexescommissioned atDalur and Khiagda
All-season bridgeconstructed throughVitim River
Exploration and designingactivities for new uraniumdeposits in Russia (Elkon,Olovskoe, Gornoe) areunderwaySpecial service companies(Rusburmash, ESK) established
ARMZ projects pipeline
Designing / Exploration
Construction
Exploration / Perspective
10Источник: АРМЗ
ARMZ strategy —through
diversification to world’s leadership
Production
AkbastauZarechnoe
ElkonGornoeOlovskayaLunnoe
Mongolia
Armenia
Namibia
HoneymoonUS ISLN.Kharasan
U1
PriargunskyDalur
KaratauAkdalaS.Inkai
U1
Khiagda
U1
Why Uranium One?
Track record and high profile among the sector’s
public companies
Highest standards of corporate governance
Best in class management (bringing mines into operation, significant experience in M&A)
Best in class assets with lowest cash cost (Kazakhstan)
Significant growth prospectives
Widest diversification of assets (projects on 3
continents: America, Asia and Australia)
ARMZ New M&A Target - Mantra Resources
Asset
Quality
• Sandstone-hosted deposit located within
the Karoo sediments
• Multiple stacked mineralized horizons of
variable thickness at shallow depths (i.e.
less than 100 m)
• Relatively low technical risk based on
preliminary scoping study and
metallurgical work
• No drilling and blasting required
• Government has been very supportive of
the mining industry
Assets Overview
Exploration
Upside
• Significant resource increase potential
within existing licenses
• Nyota Prospect only covers 100 km2 of
3,250 km2 land package
• 100 km2 of airborne radiometric anomalies
detected
• Higher grade mineralization has been
observed at surface in outcrops and
trenches
PFS
LOM Production ~3.7 mm lbs U3O8 per
annum
Mine Life12 years, with potential to
increase
Mining Grade 308 to 586 ppm U3O8
Recovery85% recovery and low acid
consumption
LOM Avg Cash
CostUS$28.06 / lb U3O8
Development
CapexUS$298.1 million
Handa
Bahi North
Mkuju River
Mbamba Bay
Regional Karoo
Targets
ZVP Mozambique
TANZANIA
MOZAMBIQUE
Project Geography
PFS results overview
12
The flagship Mantra’s Mkuju River project (Tanzania) is low cost, near term
production, significant potential to increase resources and life of mine.
ARMZ – U1 alliance potential
13
ARMZ — Uranium One will be one of the leading global uranium producer. It preliminary ranks second in production volume by 2015.
Further U resources strengthening, especially in the lowest cash cost category.
The increase in market capitalization and the ability to attract investment, using all the market mechanisms.
Excellent potential for further ARMZ – Uranium One growth.
Deal with the Uranium One is the first and most important step in ARMZ strategy
Source: UxC data, ARMZ evaluation
13,0
11,5
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Kazatomprom Rosatom plus Uranium One
Areva Cameco Rio Tinto Rosatom 2009 Paladin
Uranium production in 2015, thou tU
ARMZ2009
ARMZ+ U1
ARMZ attributable resources , tU
ARMZ-U1 alliance+ Mantra –first place in U mining
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Before U1 deal After U1 and Mantra deals
Tanzania
Australia
USA
Kazakhstan
Russia
609 th tU
779 th tU
> 80 USD/kgU
< 80 USD/kgU
> 80
< 80
Resources increased by28% , incl. 68% growth with cash cost < 80 USD/kg U
13.9Mantra
ARMZ strategy – sustainable leadership
Div
ersif
ied
prod
ucer w
ith
w
orld
-cla
ss a
ssets
•Russian uranium deposits
•Effective low-cost uranium production assets abroad
Diversification in prospective non-uranium metals (REE, gold, zirconium, etc.)
Sustainable uranium supplies
Exploration activities over the world