NRC-NMA Uranium Workshop Fletcher Newton Executive Vice President, Corporate and Strategic Affairs

NRC-NMA Uranium Workshop
Denver - April 30, 2008
Fletcher Newton
Executive Vice President,
Corporate and Strategic Affairs
Uranium One Inc.
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 www.sedar.com 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 www.uranium1.com
2
1.
Nuclear Build
2.
Uranium Supply and Demand
3.
Uranium Price
The Rise of Nuclear Power
World Nuclear Electricity Production
3,000
2,500
TWh
2,000
1,500
1,000
500
20
05
20
03
20
01
19
99
19
97
19
95
19
93
19
91
19
89
19
87
19
85
19
83
19
81
19
79
19
77
19
75
19
73
19
71
0
Source: WNA
Compound annual growth rate of 9.5% since 1971
4
Global Nuclear Reactor Fleet
Currently there are 439 reactors with a capacity of 372 GWe of electricity
5
Importance of Nuclear Power
78.0
2006 Electricity Generated by Nuclear (%)
47.5
38.6
19.4
18.4
15.9
15.8
U.S.
U.K.
Russia
Canada
30.0
Japan
Germany
Korea Rep.
Ukraine
France
31.8
16% of global electricity is generated by nuclear reactors
Source: WNA
6
Power Generation is Largest Source of
Greenhouse Gas Emissions
Greenhouse Gas Emissions of Selected Energy Chains
Lignite
Hard Coal
Oil
Natural Gas
Natural Gas CC
Cogeneration - Diesel
Cogeneration - Gas
Cogeneration - Wood
Nuclear
Hydro
Wind (onshore)
Wind (offshore)
Photo Voltaic
0.0
0.2
0.4
0.6
Kg (CO2-equivalent)/kWh
0.8
1.0
1.2
Source: OECD, Nuclear Energy Agency (2007)
Nuclear – the only proven alternative for low-carbon base load power
7
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
0
20
40
60
80
Number of Reactors
100
120
140
Source: WNA, March 2008
New build expected to drive longer-term increases in demand for uranium
8
Nuclear Renaissance Becoming a Reality
Worldwide Nuclear Reactor Fleet
650
ƒ These three countries
represent over 50% of
global reactor
construction
600
Number of Reactors
ƒ Russia, China and India
are leading the way with
19 reactors currently
under construction
550
500
450
20
08
20
09
f
20
10
f
20
11
f
20
12
f
20
13
f
20
14
f
20
15
f
20
16
f
20
17
f
20
18
f
20
19
f
20
20
f
400
Source: WNA, Macquarie Research
Purchase of uranium for initial cores precede reactor start-ups by ~4 years
9
Improved Performance from Current
Reactor Fleet
U.S. Nuclear Generation Capacity Factor
(per cent)
95
85
75
65
55
45
35
2007f
2004
2001
1998
1995
1992
1989
1986
1983
1980
1977
1974
25
1971
ƒ 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%
ƒ The U.S. has been the capacity
performance leader with 18 reactors
achieving more than 99%
ƒ Electricity production from nuclear
rose by the equivalent of 30 large
new nuclear plants from 1999-2006,
with no net additions to the nuclear
fleet
Source: WNA; NEI
Capacity factors are approaching maximum utilization
10
1.
Nuclear Build
2.
Uranium Supply and Demand
3.
Uranium Price
Historical Over-production of Uranium
80
Military Use
70
Commercial Use
50
200
Production
150
Inventory Build-Up
40
100
30
20
10
Some Military Stockpiles and
Warhead Dismantling Coming
Back As Secondary Supplies
0
millions of pounds U3O8
thousands of tonnes U
60
Inventory Draw-Down
50
0
1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Source: TradeTech
Past over-production has led to large secondary supply
12
Historical Primary Production
Primary Uranium Production vs. Reactor Requirements
70,000
Primary Production
Reactor Requirements
60,000
Tonnes U
50,000
40,000
30,000
20,000
10,000
20
05
20
02
19
99
19
96
19
93
19
90
19
87
19
84
19
81
19
78
19
75
19
72
19
69
19
66
19
63
19
60
19
57
19
54
19
51
19
48
19
45
0
Source: WNA
Reactor requirements have exceeded primary production for 15 consecutive years
13
Uranium Supply Primary Sources
2007 World Primary Uranium Supply – 41,195 tonnes U
Other, 2.1%
Canad a
23. 0%
South Africa, 1.3%
China , 1.8%
A u s tralia
20. 8%
Ukraine, 2.1%
USA, 4.1%
Kazakh s tan
16. 2%
Uzbekistan, 5.6%
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
Secondary Uranium Supply
2007E World Secondary Uranium Supply – 19,900 tonnes U
1%
3%
HEU (ex-military)
6%
Re-enriched Tails
Russian Government Stocks
13%
34%
MOX
USEC
18%
U.S. TVA
U.S. DOE
25%
Source: UxC
Secondary supply is very large; few producers control primary supply
15
U.S. DOE Inventory Evolution
millions of pounds U3O8
0
20
40
60
80
100
120
140
Original
1997-1998 Russian
HEU Feed*
Bought by GNSS
Transferred to TVA
Sold by USEC 2005
Sold by DOE 2006
Energy Northwest Tails Program
Sold in August 2007
DOE "Commercial"
Inventory**
1995-1996 Russian
HEU Feed
Natural U Available Now
Depleted
Available on March 24, 2009
U.S. HEU
Off-spec Non-UF6
Available after enrichment
cleanup or downblending
0
10
20
30
thousands of tonnes U
* In moratorium until after March 24, 2009.
** Currently contaminated with Tc-99, but in moratorium until after March 24, 2009.
40
50
Source: TradeTech
16
Uranium Market Expected to Remain Tight
Over the Near-to-Mid Term
Uranium Market Supply/Demand Outlook
Millions of pounds U3O8
250
Secondary Supply
Primary Supply
Reactor Requirements
200
150
100
50
0
2005
2006
2007f
2008f
2009f
2010f
2011f
2012f
Source: UxC, Macquarie Research
17
Utilities Expected to Purchase Uranium in
Advance of New Reactor Start-ups
Utilities Uncovered Uranium Requirements
120
Millions of pounds U3O8
100
Non-U.S. Utilities
U.S. Utilities
80
60
40
20
0
2008f
2009f
2010f
2011f
2012f
2013f
2014f
2015f
2016f
2017f
Source: UX Consulting, January 2008
18
Slow Primary Supply Response to Rising
Prices
120
120
110
104.7
100
91
92.8
87.7
90
94.5
93.7
102.7
100
92.6
80.8
80
80
70
60
60
50
40
40
US$ per pound U3O8
millions of pounds U3O8
91.5
107.1
108.9
30
20
20
10
0
0
1996
1997
1998
1999
2000
2001
Primary Production
2002
2003
2004
Price (US$/lb)
2005
2006
2007
Source: WNA, UxC
19
New Primary Uranium Supply –
Where Will it Come From?
800
US$30.80/lb to US$50.00/lb
US$15.40/lb to US$30.80/lb
Less than US$15.40/lb
Reasonably Assured Resources
(thousands of tonnes U)
700
600
500
400
300
200
100
China
Mongolia
Ukraine
Uzbekistan
Russian Fed.
Brazil
Niger
Namibia
South Africa
United States
Canada
Kazakhstan
Australia
-
Source: 2006 IAEA Red Book
Growth in uranium production largely from the world’s largest resource jurisdictions
20
New Primary Uranium Supply –
Where Will it Come From?
35
12
30
25
9
20
6
15
Millions of pounds U3O8
ƒ Furthermore,
production ramp-ups
from large projects in
Canada and Australia
40
15
Tonnes U
ƒ Over the next few
years Kazakhstan,
followed by Africa and
the U.S. are expected
to be leaders in supply
growth
Kazakhstan Uranium Production
10
3
5
0
0
2002
2003
2004
2005
2006
2007
2008f 2009f 2010f
Source: WNA, Kazatomprom
21
China’s Uranium Supply/Demand Situation
8
20
15
10
6
Production
Requirements
High
Middle
Low
4
5
2
0
0
2020e
1990
1995
2000
2005
2010e
2015e
thousands of tonnes U
millions of pounds U3O8
Supply
Import Contracts
Source: TradeTech
Going from self-sufficient to large import dependence
22
Current Supply Sources and Markets
Spot
Market
=15%
Long-Term
Market
=85%
Primary
Supply
=60%
Secondary
Supply
=40%
1%
14%
59%
26%
Source: TradeTech
23
1.
Nuclear Build
2.
Uranium Supply and Demand
3.
Uranium Price
Nuclear Renaissance and Constrained Supply
Leading to Higher Uranium Prices
Uranium Price History
$14
U3O8 Spot Price
U3O8 Term Price
SWU Value
Conversion
$140
$120
$12
$10
$100
$8
$80
$6
$60
$4
$40
08
20
07
20
06
20
05
20
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
19
19
19
19
19
96
$0
95
$0
94
$2
93
$20
92
$ per pound U3O8, or per SWU
$160
Source: Trade Tech, UxC
Near-term needs at utilities are generally covered resulting in the current
disconnect between spot and long term prices
25
Questions?