ARMZ Uranium Holding Co.: An emerging Asia leader in uranium mining
Dmitry Shulga, Director, External Affairs & Investor Relations Asia Mining Congress 2009, March 2009
ARMZ in Russian Nuclear Industry ARMZ
• Uranium mining and supply • Worldwide mining and exploration • World’s №2 in uranium resources • World’s №5 in uranium production Energoatom
• Nuclear power plant
ROSATOM
operation, generation and sales
TENEX
• Uranium enrichment, export sales • 40% of world’s uranium Full nuclear fuel cycle, NPP construction, power generation
TVEL
• Nuclear fuel fabrication, export sales • 17% or world’s nuclear fuel market (every 6th reactor)
enrichment capacity
ARMZ Today 2008 Uranium resources, thou. tons (in-situ) Paladin Energy 2% VostGOK 3%
Others 11%
Navoi Uranium One 3%
BHP Billiton 33%
4%
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2nd in uranium resources
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5th in uranium production
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Russia’ s only uranium mining company
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ARMZ owns Priargunsky - the world’s largest mine as for aggregated historical U production - over 130 thousand tons of uranium
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Highly diversified by mining technology and geography – Russian miners use all known uranium mining methods – Exploration and mining projects in 3 continents 14 thousand employees in production sites and service companies
Kazatomprom 7% Cameco 7% Rio Tinto 9% AREVA 10%
ARMZ 538 11% nd 2 place
2008 Uranium production, tons CAMECO 16% AREVA 16%
Rio Tinto 18%
Paladin Energy 2%
Kazatomprom 11%
Others 13%
Uranium One 3%
Navoi 5%
BHP Billiton 8%
• ARMZ 3687 8% 5th place
ARMZ Global Presence 11
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6 7 1
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Operational and under construction facilities 1. Priargunsky 2. Khiagda 3. Dalur 4. Akbastau (Karatau) 5. Zarechnoe
Planned facilities 6. Elkon 7. Gornoe 8. Olovskaya
Exploration ventures and prospective projects 9. Mongolia 10. Canada 11. Russia
12. Namibia 13. Armenia 14. Ukraine
Growth Results 2006-2008
• Number of subsidiaries and projects increased from 4 to 18
• 16% growth of uranium output in two years • 4-fold growth of uranium resources • 16 uranium deposits licensed • New joint ventures set up to mine, drill and explore for uranium in Russia and abroad, new management and service companies in operation
Vitim Uranium Ore District Khiagda Ore Field: Koretkonde
Kolichikan
Namaru
Istochnoe Vershinnoe
Dybryn
Khiagda Teyrahskoe
Baunt Region, Buryatia, Russia 190 km from the city of Chita Deposits Type – “sandstone” in paleochannels Include 8 uranium ore deposits U Reserves: 32 215 t (C1+C2) U Resources: 15 325 t (P1) U Resources Expansion Potential: 100 thou. tU Ore grade: 0,05 % Mining method: acid ISL Planned U mine capacity 2000 tU/y Cost of production: under $40 p/lb
Elkon: World’s Largest New Planned Uranium Production Center Elkon Uranium Field Elkon Elkon Plateau Severnaya Interesnaya
Neprohodimoe Druzhnoe Kurung
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Lunnoe
1 - Mesozoic intrusions; 2 - Cambrian platform carbonate formations; 3 - Pre-Cambrian metamorphites and granitoids; 4 – Blastomylonites 5 - Revived old fractures; 6 - Mesozoic tectonic zones; 7 - Uranium Deposits
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Elkon district Deposits - Elkon Ore Field In-Situ U resources - 344 thou. t Au Reserves – 140 t Ore grade - 0,146% U, 0,84 g/t Au Mining Method – Underground Current status - Projected
Plant capacity Initially 2.2 Mtpa, processing ore from Elkon Plateau and Kurung, Potential to expand to 4.5 Mtpa to process ore from all 5 mines
Plant recovery Uranium 89.6% Gold 43.4% Silver 35.8% Molybdenum 38.9% (from Druzhnoye mine
Recoverable uranium resources in Elkon district amount to 5.3% of world known uranium resources, which makes it second biggest U deposit
Elkon: Current Status •Pre-feasibility study by SRK Consulting to be complete in late April, 2009 •3D modeling complete •DCF modeling complete •Expertise of Russian and international research consultancies fully employed • New technical solutions developed to lower cost of production to less than $100 per kilo U •Resource classification to JORC and Normative N43-101 to be complete by end of spring 2009
Preliminary estimates indicate definite benefits for potential investors
1=Elkon mine 2=Elkon Plateau mine 3=Kurung mine 4=Neprokhodimoye mine 5=Druzhnoye mine 6=Processing plant
World economic & financial crunch: How U miners are affected Uranium prices
U Miners Share Price
World economic & financial crunch: How U miners are affected (cont.) Primary Uranium Producers • Ramping up uranium production • Expanding existing mines and mills, acquisition of new facilities • Acquisition of exploration companies with attractive projects • Establishing joint ventures in exploration for and mining of uranium
Planned and Junior Uranium Producers • Maintaining or scaling down uranium production plans • Lack of financial resources for project development/ Raising capital becoming increasingly difficult • Plans to build new mines delayed or abandoned
ARMZ Weathering the Crisis Expanding Resource Base Uranium Production
•Supported by Ministry of Natural Resources and Federal Agency of Resources & Mining, ARMZ implements a program for Russia’s uranium resource base expansion •Exploration and resource base expansion at operational mines and facilities under construction in Russia and Kazakhstan: Priargunsky, Dalur, Khiagda, Akbastau, and Karatau
Acquisitions ARMZ purchased assets from Effective Energy N.V. (Netherlands) to become world’s second largest uranium miner in terms of uranium reserves
•Exploration for uranium within existing tenements of planned facilities, as per license agreements: Elkon, Gornoe, Olovskaya •Exploration for uranium deposits in Africa: «SWA Uranium Mines» Joint Venture, Namibia
In the face of the world economic and financial crisis, ARMZ has expanded its plans rather than curtailing them
ARMZ Competitive Advantages in Times of Crisis Demand for uranium guaranteed by Stateowned Rosatom
Direct financial aid from the State budget
ARMZ Advantages
Debt financing completely backed up by assets
ARMZ Crisis Management • • •
Slashing production and management expenditure at mining facilities Increasing production efficiency through use of advanced machinery, materials, and technologies, deployment of modern mining equipment Cutting production costs, bringing up product competitiveness
Asia and the Pacific: Uranium Market
Power Generation by Nuclear
Uranium Requirements
Uranium Production Volume
• 109 out of world’s 439 operating nuclear reactors • Overall capacity of 79,6 GWe • Overall nuclear capacity to increase to 190,4 GWe by 2030 (IAEA)
•Current: 15 thou tU in 2008 •Forecast: increase to 40 thou tU in 2030
•Current: 900 tU in 2008 •Forecast: increase to 2 000 tU in 2030
Asia and the Pacific: U Demand & Supply
Huge misbalance – to reach 95% in the foreseeable future - between demand for U by nuclear reactors and supply of locally produced uranium
Uranium required in 2030 (F): 40 thou tU
Uranium required in 2008: 15 thou tU
Locally sourced 900 tU
Locally sourced 2000 tU
Russian Nuclear in Asia and the Pacific •Building 2 nuclear reactors of 1000 MWe each •Agreement to build 4 additional NPRs at Kudankulam nuclear power station •Agreement to build nuclear power stations of Russian design at new sites •Protocol to supply nuclear fuel to nuclear power stations in India (2 thou tU over 5 years for $780 million) •Tianwan Phase 1 constructed by Russia in commercial operation •Tianwan Phase 2 construction planned •Construction of Uranium Enrichment Facility Phase 4, deliveries of Russian enriched uranium product worth $1,5 billion •Negotiations re. agreement on cooperation in peaceful nuclear energy •Atomic energy deal between Atomenergoprom and Toshiba Corp. re construction of joint uranium enrichment plants in Japan and other Asian countries
Why Asia Mining? • ARMZ introductions to Asia and the Pacific mining business community • Sharing info re. ARMZ uranium projects • Highlighting importance of nuclear and uranium for Asia and the Pacific • Getting in contact with potential partners in uranium mining and exploration: miners, consultants, fund managers, investors
THANK YOU