Uranium Investment Pure Commodity Play. June 2016

Transcription

1 Uranium Investment Pure Commodity Play June 2016

2 Cautionary Statements This presentation contains certain forward-looking statements and forward-looking information based on the current internal expectations, estimates, projections, assumptions and beliefs of Uranium Participation Corporation ( Uranium Participation Corp. or the Corporation ). Forward-looking statements generally can be identified by the use of forward-looking terminology such as may, will, expect, intend, estimate, anticipate, plan, should, believe or continue or the negative thereof or variations thereon or similar terminology. By their very nature, forward-looking statements involve numerous factors, assumptions and estimates. A variety of factors, many of which are beyond the control of Uranium Participation Corp., may cause actual results to differ materially from the expectations expressed in the forward-looking statement. These factors include, but are not limited to, volatility and sensitivity to market prices for uranium, demands for nuclear power and the impact of change in foreign currency exchange. Additional information about the material factors or assumptions on which forward-looking information is based and the material risk factors that may affect actual results is contained in the Corporation s Annual Information Form dated May 11, 2015, included under Risk Factors. These and other factors should be considered carefully, and readers are cautioned not to place undue reliance on these forwardlooking statements. Although management reviews the reasonableness of its assumptions and estimates, unusual and unanticipated events may occur which render them inaccurate. Under such circumstances, future performance may differ materially from those expressed or implied by the forward-looking statements. Except where required under applicable securities legislation, Uranium Participation Corp. does not undertake to update any forward-looking information or statement. This presentation contains information and statistics relating to the global uranium and nuclear power industries. With respect to information and statistics derived from third-party publications and reports, while the Corporation believes these third party sources are reliable as of their respective dates, the information and statistics has not been independently verified by the Corporation or any of their affiliates or advisers. Such information and statistics may be inaccurate and we cannot assure you the degree of accuracy with which such information and statistics are stated or compiled. None of the Corporation, nor any of its affiliates or advisers, makes any representation as to the accuracy or completeness of such information and statistics. Readers should not place undue reliance on any of such information and statistics contained in this presentation. TSX: U 2

3 Investment Strategy Primary objective: to achieve appreciation in the value of its uranium holdings through increases in uranium price Investment strategy: to buy and hold uranium inventories and not to actively speculate on uranium prices Investor profile: commodity focused or generalist investors looking for direct exposure to uranium prices UPC holds physical uranium in inventory No mineral resource or project risks No mine or processing operating risks At least 85% of the net proceeds of any equity offering is to be invested in uranium holdings TSX: U 3

4 Business Structure & Activities UPC (TSX: U) is a publically traded corporation UPC is not an ETF or closed or open end fund Activities are directed by an independent Board of Directors Denison Mines Inc. serves as the Company s Manager, under a management services agreement, and takes direction from the UPC Board of Directors Purchase or sale of uranium holdings at Board s discretion Ability to manage premium/discount to Net Asset Value (NAV) 1 NCIB: to repurchase of shares if trading at a discount Shelf prospectus: to issue equity if trading at a premium Standard corporate reporting and fiduciary responsibilities (1) Subject to applicable regulatory approval(s) TSX: U 4

5 Uranium Investment Portfolio As at May 31st, 2016 Investments in Uranium Quantity CAD$ Fair Value Uranium oxide in concentrate (U 3 O 8 ) 9,470,024 lbs $338,056,000 Uranium hexafluoride (UF 6 ) 1,903,471 KgU $190,837,000 (1) Total Investments in Uranium $528,893,000 U 3 O 8 Average Fair Value per lb. CAD$ Fair Value In Canadian dollars (2) $35.70 In United States dollars $27.25 UF 6 Average Fair Value per KgU. CAD$ Fair Value In Canadian dollars (2) $ In United States dollars $76.53 (1) The fair value of UF 6 has been reduced by $1,167,000 to reflect the risk associated with the remaining material held at the USEC Facility, as further described in the Company s MDA for the period ended Feb. 29, 2016 (2) Canadian dollar denominated fair market values are based on month-end spot prices published by Ux Consulting Company, LLC translated at the month-end noon exchange rate of $1.31. TSX: U 5

6 Uranium Price History Current uranium prices similar to price levels in 2005, prior to rapid rise in spot and long-term prices in 2007 on significant cyclical contracting volumes Source: UxC Consulting Company, LLC ( UxC ) TSX: U 6

7 Uranium Price History Source: UxC TSX: U 7

8 Premium (Discount) to NAV Is investor perception a good indicator for uranium price movements in the near future? Source: Company Data TSX: U 8

9 Dramatic Growth in Nuclear Energy Operable & Pipeline Reactors 440 units currently operable (30 countries) 65 new reactors under construction 173 on order or planned 337 proposed China Investing USD$78Bn by 2030 Plans to build 110 reactors by 2030 India: 25% nuclear energy by 2050 Japan recovery gaining strength 5 units expected back in commercial operation this year 24 more in process of licensing restart Source: UxC, World Nuclear Association ( WNA ), The Independent TSX: U 9 TSX: U 9

10 China s 13 th 5-Year Plan More than a thousand new nuclear reactors may be constructed and commissioned by 2050 (Agneta Rising, director general of WNA) Accelerating construction plans 32 reactors in operation 22 under construction (+69%) 42 planned (+200%) 170 proposed (+731%) 6-8 reactors to be approved each year 29 GWe currently 58 GWe by (+100% from today) 150 GWe by 2030 (+417% from today) Focus on air pollution crisis and COP21 Moratorium on new coal power plants Source: UxC, World Nuclear Association ( WNA ), The Independent TSX: U 10 TSX: U 10

11 Growth in Nuclear Power Capacities + 41% Expected global nuclear capacities increasing by 41% from 2015 to 2030 (~3%/year on avg.) Growth is driven by emerging Chinese & Indian nuclear energy programs with a primary objective of increasing sources of clean power Source: UxC TSX: U 11

12 +75% of 2025 Requirements Uncovered Uncovered demand reaches ~25% in 2019 and rises dramatically thereafter Utility long-term contracting volumes required to return to normal levels (+200 Mlbs/year) to replace long-term contracts from which are falling off long-term contracting levels remained low, with <100 Mlbs/year Source: UxC TSX: U 12

13 Strong Uranium Market Fundamentals Analysts and industry experts point to looming supply shortfall Existing production sources generally flat around 150 Mlbs/year Timing depends on demand growth and ability for new mine production to emerge and fill the gap Will new production be incentivized if prices remain low? Source: UxC TSX: U 13

14 Uranium Pure Play Potential UPC is a unique investment opportunity Company buys and holds physical uranium inventories and does not to actively speculate on uranium prices Provides investors with pure uranium play potential with no exposure to mineral resource, project or mine operating risk UPC offers exposure to commodity price change Spot price spike in 2007 associated with significant long-term contracting cycle with many of those 8-10 year contracts expected to fall off in coming years Uncovered demand reaches ~25% by 2019 and rises to +75% by 2025 suggesting need for significant long term contracting UPC is trading at a significant discount to NAV Negative stock sentiment despite strong fundamental case for potential supply shortage and upward pressure on uranium prices TSX: U 14

15 Corporate Information Market Summary Management & Directors Exchanges TSX: U David Cates (President & CEO) Shares Outstanding (1) M Mac McDonald (Chief Financial Officer) Warrants (1) nil Scott Melbye (VP Commercial) Options (1) nil Fully Diluted Shares (1) M Paul J. Bennett (Director) Share Price (2) CAD$4.30 Thomas Hayslett (Director) Market Cap (2) CAD$ M Jeff Kennedy (Director) Daily Trading Volume (3) 394,668 shares Garth A.C. MacRae (Director) (1) As of May 5, 2016 per UPC s Feb. 29, 2016 Annual Report (2) Based UPC share prices as of May 31, 2016 and shares outstanding above (3) Average daily trading volume over the 3 months ended May 31, 2016 Ganpat Mani (Director) Richard H. McCoy (Chairman) Proudly managed by: TSX: DML NYSE MKT: DNN TSX: U 15

16 Investor Update TSX: U For Further Information: Phone: x366 info@uraniumparticipation.com Online: