NRC-NMA Uranium Workshop

Transcription

1 NRC-NMA Uranium Workshop Denver - April 30, 2008 Fletcher Newton Executive Vice President, Corporate and Strategic Affairs Uranium One Inc.

2 Cautionary Statement Certain of the statements made herein are forward-looking and subject to important risk factors and uncertainties, many of which are beyond the corporations ability to control or predict. Forward-looking statements are necessarily based on a number of estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, among others: uranium and gold price volatility; impact of any hedging activities, including margin limits and margin calls; discrepancies between actual and estimated production, between actual and estimated reserves and resources and between actual and estimated metallurgical recoveries; costs of production, capital expenditures, costs and timing of construction and the development of new deposits, success of exploration activities and permitting time lines; changes in national and local government legislation, taxation, controls, regulations and political or economic developments in Canada, the United States, South Africa, Australia, Kazakhstan or other countries in which the corporation does or may carry out business in the future; risks of sovereign investment; the speculative nature of uranium and gold exploration, development and mining, including the risks of obtaining necessary licenses and permits; dilution; competition; loss of key employees; additional funding requirements; and defective title to mineral claims or property. In addition, there are risks and hazards associated with the business of uranium and gold exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion losses (and the risk of inadequate insurance or inability to obtain insurance, to cover these risks), as well as the factors described or referred to in the section entitled Risk factors in Uranium One s Annual Information Form for the year ended December 31, 2007 which is available on SEDAR at and which should be reviewed in conjunction with this document. Accordingly, readers should not place undue reliance on forward-looking statements. The corporation undertakes no obligation to update publicly or release any revisions to forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events. For further information about Uranium One, please visit 2

3 1. Nuclear Build 2. Uranium Supply and Demand 3. Uranium Price

4 The Rise of Nuclear Power 3,000 World Nuclear Electricity Production 2,500 2,000 1,500 TWh 1, Source: WNA Compound annual growth rate of 9.5% since

5 Global Nuclear Reactor Fleet Currently there are 439 reactors with a capacity of 372 GWe of electricity 5

6 Importance of Nuclear Power Electricity Generated by Nuclear (%) France Ukraine Korea Rep. Germany Japan U.S. U.K. Russia Canada Source: WNA 16% of global electricity is generated by nuclear reactors 6

7 Power Generation is Largest Source of Greenhouse Gas Emissions Lignite Hard Coal Oil Natural Gas Natural Gas CC Cogeneration - Diesel Cogeneration - Gas Cogeneration - Wood Nuclear Hydro Wind (onshore) Wind (offshore) Photo Voltaic Greenhouse Gas Emissions of Selected Energy Chains Kg (CO 2 -equivalent)/kwh Source: OECD, Nuclear Energy Agency (2007) Nuclear the only proven alternative for low-carbon base load power 7

8 New Build World-wide 354 Reactors are currently under construction, planned, or proposed and about 75% of these are located in only seven countries China Russia USA South Africa India Under Construction Planned Proposed Ukraine Japan Number of Reactors Source: WNA, March 2008 New build expected to drive longer-term increases in demand for uranium 8

9 Nuclear Renaissance Becoming a Reality 650 Worldwide Nuclear Reactor Fleet Russia, China and India are leading the way with 19 reactors currently under construction These three countries represent over 50% of global reactor construction Number of Reactors f 2010f 2011f 2012f 2013f 2014f 2015f 2016f 2017f 2018f 2019f 2020f Source: WNA, Macquarie Research Purchase of uranium for initial cores precede reactor start-ups by ~4 years 9

10 Improved Performance from Current Reactor Fleet In 2006, 12 countries operated at capacity factors in excess of 80% and about 1/3 of the world s reactors operated in excess of 90% The U.S. has been the capacity performance leader with 18 reactors achieving more than 99% Electricity production from nuclear rose by the equivalent of 30 large new nuclear plants from , with no net additions to the nuclear fleet U.S. Nuclear Generation Capacity Factor (per cent) f Source: WNA; NEI Capacity factors are approaching maximum utilization 10

11 1. Nuclear Build 2. Uranium Supply and Demand 3. Uranium Price

12 Historical Over-production of Uranium thousands of tonnes U Military Use Commercial Use Production Inventory Build-Up Some Military Stockpiles and Warhead Dismantling Coming Back As Secondary Supplies Inventory Draw-Down millions of pounds U3O Past over-production has led to large secondary supply 0 Source: TradeTech 12

13 Historical Primary Production 70,000 60,000 Primary Uranium Production vs. Reactor Requirements Primary Production Reactor Requirements 50,000 Tonnes U 40,000 30,000 20,000 10, Source: WNA Reactor requirements have exceeded primary production for 15 consecutive years 13

14 Uranium Supply Primary Sources 2007 World Primary Uranium Supply 41,195 tonnes U Other, 2.1% South Africa, 1.3% China, 1.8% Ukraine, 2.1% USA, 4.1% Uzbekistan, 5.6% Canada 23.0% Australia 20.8% Kazakhstan 16.2% Namibia, 7.0% Niger, 7.7% Russia, 8.3% Source: UxC Four countries accounted for 68% of world production; eight countries accounted accounted for 93% of world production 14

15 Secondary Uranium Supply HEU (ex-military) 2007E World Secondary Uranium Supply 19,900 tonnes U 1% 3% Re-enriched Tails 6% Russian Government Stocks MOX 34% 13% USEC U.S. TVA U.S. DOE 25% 18% Source: UxC Secondary supply is very large; few producers control primary supply 15

16 U.S. DOE Inventory Evolution Original Bought by GNSS Transferred to TVA Sold by USEC 2005 Sold by DOE 2006 Energy Northwest Tails Program Sold in August 2007 Natural U Available Now Available on March 24, 2009 millions of pounds U3O Available after enrichment cleanup or downblending thousands of tonnes U * In moratorium until after March 24, ** Currently contaminated with Tc-99, but in moratorium until after March 24, Russian HEU Feed* DOE "Commercial" Inventory** Russian HEU Feed Depleted U.S. HEU Off-spec Non-UF6 Source: TradeTech 16

17 Uranium Market Expected to Remain Tight Over the Near-to-Mid Term Millions of pounds U 3 O Uranium Market Supply/Demand Outlook Secondary Supply Primary Supply Reactor Requirements f 2008f 2009f 2010f 2011f 2012f Source: UxC, Macquarie Research 17

18 Utilities Expected to Purchase Uranium in Advance of New Reactor Start-ups Utilities Uncovered Uranium Requirements Non-U.S. Utilities U.S. Utilities Millions of pounds U 3 O f 2009f 2010f 2011f 2012f 2013f 2014f 2015f 2016f 2017f Source: UX Consulting, January

19 Slow Primary Supply Response to Rising Prices millions of pounds U3O US$ per pound U3O Primary Production Price (US$/lb) Source: WNA, UxC 19

20 New Primary Uranium Supply Where Will it Come From? US$30.80/lb to US$50.00/lb US$15.40/lb to US$30.80/lb Less than US$15.40/lb Australia Kazakhstan Canada United States South Africa Namibia Niger Brazil Russian Fed. Uzbekistan Ukraine Mongolia China Reasonably Assured Resources (thousands of tonnes U) Source: 2006 IAEA Red Book Growth in uranium production largely from the world s largest resource jurisdictions 20

21 New Primary Uranium Supply Where Will it Come From? Over the next few years Kazakhstan, followed by Africa and the U.S. are expected to be leaders in supply growth Furthermore, production ramp-ups from large projects in Canada and Australia Tonnes U Kazakhstan Uranium Production f 2009f 2010f Millions of pounds U 3 O 8 Source: WNA, Kazatomprom 21

22 China s Uranium Supply/Demand Situation 20 8 millions of pounds U3O Supply Import Contracts Production Requirements High Middle Low thousands of tonnes U e 2015e 2020e Source: TradeTech Going from self-sufficient to large import dependence 22

23 Current Supply Sources and Markets Spot Market =15% Primary Supply =60% Secondary Supply =40% 1% 14% Long-Term Market =85% 59% 26% Source: TradeTech 23

24 1. Nuclear Build 2. Uranium Supply and Demand 3. Uranium Price

25 Nuclear Renaissance and Constrained Supply Leading to Higher Uranium Prices $ per pound U 3 O 8, or per SWU $160 $140 $120 $100 $80 $60 $40 $20 U3O8 Spot Price U3O8 Term Price SWU Value Conversion Uranium Price History $14 $12 $10 $8 $6 $4 $2 $ Source: Trade Tech, UxC Near-term needs at utilities are generally covered resulting in the current disconnect between spot and long term prices $0 25

26 Questions?