Thank you for standing by, and welcome to the Paladin Energy and Fission Uranium Investor Call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. In the interest of time, we do ask that participants limit themselves to asking two questions. I would now like to hand the conference over to Mr. Ian Purdy, Chief Executive Officer of Paladin Energy. Please go ahead.
Thanks very much, and thanks everyone for joining us on this exciting call. I'd like to firstly introduce Ross McElroy to our call. Ross is over in Kelowna at the moment on the west coast of Canada. Ross, thanks very much for staying up tonight and joining us.
It's a pleasure to be here on this call, and very excited about what we're about to talk about. Happy to join you, Ian.
Thanks, Ross. Also with us, Anna Sudlow, our CFO, and Alex Rybak, the Chief Commercial Officer of Paladin. In today's presentation, Ross and I will provide an overview of the transaction. In particular, we'll focus on the benefits to both shareholders and the compelling rationale for this strategic combination. And we'll also briefly discuss the process and the timeline for completion of the transaction. We'll leave plenty of time for Q&A after the presentation. And to make sure we reach out to every shareholder in all jurisdictions, we'll be hosting a second call later this evening, and that'll give a chance for, in particular, the North American and the Canadian shareholders to hear from Ross and myself as well. So if I can ask to turn to Slide 6 , please. Just quickly, I'll point out the deal highlights of the Paladin and Fission combination.
It is an all-scrip proposal to acquire Fission Uranium Corp by Paladin Energy via a Canadian plan of arrangement. The consideration is a 30% premium offered to Fission shareholders based on the 20-day VWAP. There's no Paladin shareholder approval required. Post-closing, Paladin shareholders will own approximately 76% of the combined company, and Fission shareholders will own approximately 24%. We're targeting completion in the September 2024 quarter, and pleased to say the transaction is supported by all directors on the Paladin side and also by the Fission Board of Directors. In parallel with the transaction, Paladin has applied to list on the TSX. We see that as a really important commitment on our part to the Fission shareholders and also gives us an opportunity to expand our global presence and our global market reach. Turning to Slide 7, we will be a clean energy leader.
We will absolutely be one of the top independent listed uranium companies in the world. Firstly, we're a proven uranium producer. The Langer Heinrich mine has been successfully returned to commercial production, and we look forward to a successful 17-year life of mine underpinned by reserves. Pleased to say the ramp-up's gone incredibly well. We're now three months into the ramp-up, and very pleased to note that our first customer shipment is expected in July in a couple of weeks' time, and we'll be taking advantage of the strong uranium market fundamentals. We expect to reach our nameplate capacity of 6 million pounds during financial year 2026. We also have a world-class growth pipeline. Firstly, we've got life extension work commencing at Langer Heinrich. The Patterson Lake project is a world-class project in a world-class jurisdiction.
We're incredibly pleased to have the opportunity to combine that with our strong portfolio of assets. The work done on Patterson Lake is first-class, and it's currently going through a FEED phase, and the work done to date has been exceptional. We expect to be successful in combining with Fission and to deliver production in 2029 from that particular project. We also have the Michelin project, which is on a different time frame. We've commenced the PFS at Michelin. When you look at the global portfolio and the exploration opportunity in all of the leading Western uranium jurisdictions, I'd suggest it's the best in market. We'll have a strong, dynamic, large company backing us.
We estimate the U.S. market cap to be $3.5 billion when we combine very strong cash and liquidity, expanded global capital markets footprint, and very importantly, increased development funding options for the PLS project, which are underpinned by our Langer Heinrich production and our world-class customer book. This transaction also embeds us in our recently appointed ASX 100 index status. The operational and development expertise of both companies is incredibly complementary. I've had the benefit of working with Ross and his team. We've done extensive work over the last six months. Likewise, Ross has had the benefit of seeing my team and visiting Langer Heinrich. And Ross and I both agree that the combination of the two companies and the two teams will deliver benefits and results across the portfolio.
We're clearly committed to governance and ESG, and both our companies have a clear purpose to provide a zero-carbon fuel source to our global customers. Turning to Slide 8, the beauty of this transaction is it's a compelling strategic rationale. It's simple, it's straightforward, and it's compelling. I'd like to step through the rationale. We've summarized it in six compelling points. Firstly, turning to Slide 9, we will have a world-class production and growth pipeline. If you look at this slide, you can see how well the projects fit together from our production at Langer Heinrich to the development-ready Patterson Lake South, along with the PFS Michelin, and then, as I mentioned, an outstanding global exploration portfolio in the three top Western uranium jurisdictions.
If you look at the production pipeline growth chart at the bottom, we expect to have dual-producing assets by the end of this decade in the two top uranium Western jurisdictions in the world. In longer term, we see further opportunity for more production. Turning to Slide 10, we are creating a leading Canadian development hub. Firstly, I'll ask Ross to talk about his world-class project at Patterson Lake.
Thank you, Ian. Yes, pleased to talk about PLS. So just to put a little bit of context where we are, we're in the Athabasca Basin in Canada. That's the northern part of the province of Saskatchewan. It is often recognized as one of the premier uranium districts in the world, a globally important supplier to uranium, and has been so for some 70 years or so of continuous uranium production. So the PLS project is located in the southwest side of the basin. We made a discovery there about 12 years ago. We found extremely high-grade mineralization sitting on surface in radioactive boulders, which we were able to turn into a very large deposit. We've outlined around 130 million pounds of high-grade uranium, so just under 2% overall U3O8 grade. We've moved the project through feasibility studies.
So just over a year ago, we completed our feasibility study, and it shows it promises to be a very, very low-cost operator, one of the lowest costs globally, looking at sub-$10 a pound U.S. operating costs and all-in sustaining of around just under $14 U.S. a pound. And we've outlined a 10-year mine life. And I think for us, the important point also to make here is from where we sit right now, we're about five years from production. So as Ian mentioned earlier in the conversation, we're on target here to be producing asset by 2029 and with an average annual output at PLS of just over 9 million pounds a year for what we've currently outlined as a 10-year mine life, but we see substantial growth opportunities on this deposit as well. Go ahead, Ian.
Thanks, Ross. Briefly, the Michelin Project is on the east coast of Canada in Labrador. Again, a good project. It's on a different time scale. Ross and his team will be able to bring value to the Michelin development timeline as well. We'd look to time Michelin to come into that window for potential development in the 2030s after we have Fission and Patterson Lake up and running. Just to be absolutely clear, we are all in on Patterson Lake South. We fully endorse the work that Ross and his team has done, and we are committed to bringing this asset into production along with Ross and his team by the end of 2029. Turning to Slide 11, we're going to have an amazing global uranium resource, quite an impressive number, 544 million pounds, 1 billion pounds. The second largest in the Western world behind Cameco.
If you look at the quality of those resources and the jurisdiction, they are absolutely standalone in the uranium space today. That's a massive opportunity. Ross and his team bring some fantastic exploration experience in Canada and an amazing track record as well. Turning to Slide 12, look, I think everyone on the call today is right on board with the uranium market fundamentals, strong uranium demand, which is being driven by global decarbonization. The question at the moment is the tightness in supply. Where are the new projects coming from? We see PLS as one of the projects that will start to bridge the gap between supply and demand. We think PLS will be part of the solution, and we're very confident we can bring that into production and find customers to underpin that development and to underpin the delivery of that project.
Looking at Slide 13, when you combine the two companies, we'll have a starting market capitalization of about AUD 3.5 billion. As I mentioned, Paladin's recently been put into the ASX 100. This consolidates our position there. We have an exceptional global register, lots of support out of North America, lots of support out of Europe, Asia, and obviously very strong support in our home market of Australia. What this transaction does is just enhances our global position across the globe. As I mentioned, companies in production of this scale are incredibly rare, and it'll give us further access to the highly institutionalized international register that we've got. It'll broaden our investor base, and we're absolutely committed to the TSX listing, which is great for the Fission shareholders, but also great for our North American ambitions.
Turning to Slide 14, we've got an incredible synergy between our approach to our local communities. Ross and his team have done incredible work with the First Nations. Ross saw some of the work we've done with our local community in Namibia, and the two companies are committed to that collective approach with all stakeholders, and we see great alignment and synergies between our two approaches. So finally, turning to Slide 15, this is a deal that creates value for all shareholders. We've got the enhanced project development pipeline, multi-asset production by the end of the decade, leading diversified presence across all leading mining jurisdictions, increased exposure to the midterm, short-term, and long-term uranium fundamentals, as well as increased scale and a global profile with a TSX listing and a leading ASX listing as well. In particular, to Fission shareholders, we're offering an attractive 30-day premium.
The Fission shareholders are invited to come along for the journey with us. We're offering 24% of the combined company. We're offering a TSX listing, and we're offering incredible upside and future opportunities to continue their journey with us. The exposure and the exploration upside at PLS is fantastic, and we're de-risking Fission and PLS development, which is being underpinned by our Langer Heinrich production in our customer offtake book. And I think, as I said, really importantly, we're just enhancing our global footprint, not only from a uranium production point of view, but from an equities marketing point of view. I'll leave it there, and please, if I can ask the operator to commence the question process.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. A reminder that we do ask participants to limit themselves to asking two questions. Your first question comes from Regan Burrows from Bell Potter Securities. Please go ahead.
Good day, Ian and Ross. Thanks for the overview there. Perhaps just one for you first, just on the timing. Obviously, with Langer Heinrich coming into production and things sort of looking good there, just curious why sort of the transaction and why now? Whether you sort of have any comments there.
Thanks, Regan. Look, it's a very good question. Ross and I actually started talking, I think Ross was at least six months ago. And one thing we recognized immediately in our early conversation was the synergy and the benefits of combining the two companies. And certainly, that's something that's grown and become stronger as we've worked through the project process. But what Ross and I agreed was six months ago, it was actually too early for both companies to do a transaction. Ross was fully supportive that we needed to get Langer Heinrich successfully up and running, which we've now done. So that was really important for us. And Ross had some significant milestones on his approval process that he needed to get away.
As we've kept the conversation going, I think both Ross and I came to the point where we said, "Okay, now that our businesses are in great shape and we've got our bases covered, now's the time to do the serious work on this transaction." We did that work. Alex Rybak led that from our point of view. It's a very thorough process. And I think, Regan, you can see by the proposal today, it's a compelling combination with benefit for all shareholders. So in conclusion, the timing's right for us, the timing's right for Ross, and the timing's right for our shareholders.
Okay, thanks for that. Just another one, just in terms of the register for Fission, obviously you guys need 66% of Fission shareholders to approve. Are you confident that you've got the support?
Regan, we are, yes. Look, we're very confident. We've done a lot of work. Ross knows his register very well. And we're very confident. Also, I'll note that these types of transactions, which are supported by boards in Canada, have a very high closure rate. So we're extremely confident. We believe our shareholders will also be very supportive of the combination. And Ross, over to you on your thoughts of your support from your shareholders.
Sure, thank you, Ian. Yeah, no, we're very confident that we'll be able to. We think this is a very good, strong deal for shareholders. And you're right, we'll require 66 2/3 approval of the shareholder vote. We're confident we'll get that. I think this is a deal that makes a lot of sense. It makes a lot of sense to me. It makes a lot of sense to Ian for all the reasons that we've put out here today. We think that our shareholders are going to see the same value in combining these two exceptional companies into one even more exceptional company. So certainly a situation where one and one is significantly more than two. I mean, this is one and one is three, four. It's just a transaction that makes an awful lot of sense, and our shareholders are going to recognize that as well.
Great. Thanks for that. I'll rejoin the queue.
Thank you. Your next question comes from Shannon Sinha from Morgan Stanley. Please go ahead.
Hi, thanks for the opportunity. Interesting deal. I was just wondering what the synergies are that you see between these two projects, if you could give a bit more detail on what they are.
Thanks very much for the question. Interesting, as Ross said, this is a one plus one equals three or four. I'll be totally blunt on this. We're not looking for synergies. We're looking for growth. We're looking for the strategic rationale, and we're looking at the benefits for both shareholders. We intend to keep Ross and his whole team. They've got a fantastic capability in Canada. We intend to TSX list, which shows our commitment to the Fission and shareholders, but also provides an opportunity to expand our footprint in North American equity markets. And we intend to put the resources into PLS. So this project is all about growth, about opportunity, and building a large, globally significant uranium powerhouse. If you count on one hand the number of globally listed production uranium companies, you won't need many fingers.
This establishes us right at the top of the pile, just up there, a little bit behind Cameco, but not too far. This is all about growth. This is all about strategic fit, and this is all about the future.
Great, thanks for that. Maybe if I could just ask about Fission, what offtake? Is there any offtake agreements in place, and what may be the plan for you guys for the additional volumes that you'll add on?
Look, I might ask Alex Rybak to answer that one, our Chief Commercial Officer.
Yeah, thanks, Ian. So Fission have an offtake with CGN, which is one of the leading Chinese utility companies on par with our partner, CNNC. They're also an 11.6% shareholder in Fission, and they will become a smaller shareholder in the combined entity. So we obviously look forward to them becoming or continuing being a customer of the combined entity, and we'll have those dialogues with them after we close the deal.
I think what I can say is Ross and I share the same, what I'd call, fundamental view of uranium markets. We are firm believers that you need to do the technical work first. You need to have your customers in place before you commit to development, and you need to have a world-class customer book to underpin a uranium operation and project given the small size of the spot market. One of the things we bring, which de-risks the PLS project, is we bring a world-class customer book that we've built up through our work at Langer Heinrich, and those customers will be very interested to underpin the PLS project at the right time.
Great, thanks. Just one quick follow-up. What was the size of the offtake with CGN?
It's 20%.
20%, okay, great. That's all from me. Thank you.
Thank you.
Thank you. Your next question comes from James Bullen from Canaccord Genuity. Please go ahead.
Thanks. Congratulations, Ian, Ross. I must say you sound remarkably fresh, which is a bit of a surprise. Just a quick question for you, Ross, around the draft EIS went in, I think it was in March. Obviously, down here in Australia, we don't know a huge amount about the permitting process in Canada. I was hoping if you could talk to any feedback there and any potential hurdles that you've got to get over to get the full environmental approval.
Yeah, so the environmental approval, you're right. The key part of that is the EIS, the environmental impact statement that we submitted in early March. For our project, it's reviewed or approved strictly at the provincial level. So that's unique amongst other developers that are going through the same process in the Athabasca Basin. So we do only require the provincial approval, and we anticipate receiving that by September of this year. So that's a huge step along the way on the permitting path. The next, of course, will be getting the federal approval through the CNSC, and that's for the construction, building of the mine, construction, and that. But the environmental assessment, which is the first phase of the major permitting step, that's well underway. As you say, we submitted early March. We anticipate September to have a ruling, a favorable ruling on the project.
So we're kind of halfway through that process right now.
Great, thank you.
James, from our point of view, we obviously did a lot of technical due diligence work, and we had Canadian specialist advisors look at the regulatory framework and Ross's plan and his published plan. And what really pleases us, Ross and his team have taken a fundamental approach to this, very similar to our approach at Langer Heinrich, where we are committed to bringing the project into operations, as is Ross and his team. And the timetable they've put in place is realistic and supported by the legislative processes in Canada. Ross has had questions in the past, "Why is it taking till 2029 when others can do it quicker?" And the answer to that from where we're sitting is Ross has actually based his timetable on what is appropriate for the legislative processes and what is achievable. So hats off to Ross and his team.
They've taken a serious approach with an intent to deliver, and we support Ross with his timetables and his process.
Thanks, Ian. Thanks, Ross. And just, I guess, a bit of a follow-up. You are quite close to NexGen. Is there any opportunity for sharing of infrastructure, or alternatively, is there any risk that a regulator or somebody forces you to share infrastructure, thinking primarily around the mill there?
Yeah, well, let me start with the, yeah, sorry. Let me start with the last question first. There's no risk. I mean, projects are allowed to develop independently. There's no restrictions on number of mills, that type of situation. So we're able to build the infrastructure up as is required for mine development at PLS. Are there potential synergies? I mean, you're nearby. The projects sit about five kilometers apart. And there are certainly shared roads, potential for shared roads, and other opportunities. But really, our mandate is just to, we're very focused on our project, building PLS into being an operating mine by 2029. And as Ian mentioned, we're very confident in our timelines. But no, I don't see any restrictions on the regulatory side for being able to build the infrastructure that's required for this site. And we'll always look for opportunities that make sense.
But right now, this is our path forward.
That's appreciated. Thank you, Ross. Thank you, Ian.
Thank you. Your next question comes from Daniel Roden from Jefferies. Please go ahead.
Hi, Ian. And Ross, congratulations on the transaction. I was just wondering, with Langer Heinrich kind of coming into production, I guess, now, what's the expectations for development funding for the Patterson Lake project? Is it all cash flow from Langer Heinrich? What assumptions go into that cash flow? And is there any potential for debt funding being introduced into the mix as well?
Thanks, Daniel. I'll get Anna Sudlow, our CFO, to answer that one.
Thanks, Daniel. So look, as you're aware, the PLS funding requirement is about CAD 1 billion. I would say we've got plenty of optionality around how we fund that. But the thing to note, I guess, is that there's not a lot of material spent until 2027, so we've got plenty of time. As you mentioned, we've got cash flow from Langer Heinrich, which we can rely on. We're selling material into an improving uranium market. We've also got very good banking relationships. We put in place that debt in January this year. So I think it's fair to say we've got plenty of time. We've got lots of options in front of us, and we're very confident we can secure the funding we need, and we've got plenty of time to do so.
Awesome. Perfect. Thank you very much. And if we could try and sneak in another one just on Langer Heinrich is ramping up. Those that have been to site have seen how impressive the asset's performing and going. And is there any sense that we can get some color on, I guess, what FY 2025 looks like and how the asset is kind of able to produce that cash flow that's required for that funding?
Daniel, thanks. I'm so glad you asked that question. We've had a few queries because we were planning on putting out some guidance for financial year 2025 right about now. Hopefully, this all explains why we're a little bit delayed with that. Pleased to say that the plans for Langer Heinrich are looking great. The guidance has all come together well, but clearly, with the transaction, it's a change. So maybe I'll ask Anna to just give you some color on what to expect going forward.
Yeah, thanks, Daniel. So yes, we haven't released our guidance. And as Ian mentioned, we're working with Fission on the offering circular for the shareholders, and that will have a lot of the Paladin information in it for a much further dated period than just FY 2025. So you just need to bear with us as, I guess, we coordinate those processes. Look, I would say that we've done a lot of work on our guidance. I'm pretty happy with the work that we've done, and things are looking, I guess, in line with our expectations, but you'll have to wait a couple more weeks, I'm afraid.
Very close, Daniel. Very close. And you'll have more information than you can model.
No trouble. Thank you very much. Just confirming that circular will be released around the July 23rd , is it?
Yeah, look, that's the convention. We're quite well advanced, so we'll get that out as soon as we can because that really starts the clock on the shareholder vote, but consider that a backstop date.
Very good. I'll pass it on. Thank you very much.
Thank you. Once again, if you wish to ask a question, please press star one. Your next question is a follow-up question from Regan Burrows from Bell Potter Securities. Please go ahead.
Hi, again, Ian and Ross. Apologies, most of my questions were answered before, but potentially just one more, just in terms of rationalization of the portfolio. Obviously, there's a lot of balls in the air now, combining two businesses. Just sort of thinking how you're sort of thinking about the other sort of maybe later or earlier exploration assets. Are they still core to the business, or are you sort of thinking potentially parking those?
Oh, absolutely. Not Regan. We love them all. It's like saying, "Which child do you want to give away?" Not happening. The portfolio just works so well. We've got a producing asset in Langer Heinrich that's going to be pushing out cash starting next month. We've got a serious project that'll be ready for development 2027- 2029, which we'll go after. The Michelin Project is PFS, which is fantastic, but low spend. And the exploration potential will wind up and wind back as we choose to, depending on our priorities, our free cash, and our targets. The Australian assets, fantastic assets. We're not working them at the moment. There's no require to work them, but they're fantastic long-term optionality. We've got a project pipeline that is in production today that could theoretically be producing uranium by 2060. I'll be long gone.
I think Ross might still be here, but no, we've got no intention to rationalize our portfolio.
Okay, got it. And just essentially following on what Anna was saying about expenditure around PLS not sort of being until 2027, I guess, Ross, if you get the final sort of approvals in September this year, what's the focus for that asset over the next couple of years? I guess, what's sort of holding you back from advancing that construction timeline?
No, well, the construction timelines are really guided by the whole regulatory process. And as I mentioned earlier, the next step here is to receive approval from the CNSC, which is the Canadian Nuclear Safety Commission. So from where we sit right now, you wouldn't have that full approval for likely another full two to two and a half years. So really, the timelines that we're talking about here, they're realistic and driven by the regulatory process. So what we're doing at the operations level right now, we're basically close to completing our front-end engineering, our FEED process, and be transitioning to detailed engineering, which is essentially getting yourself ready for mine build. So we'll be in a position to be ready, but we'll have early stage development of the project in 2026.
But as Anna had mentioned, talking about the need for capital, that really doesn't start coming in until 2027, in that time, 2027, 2028, to be in a position to be a producer by 2029. So we're very, very confident in these timelines. I've said the same timelines for several years, and we still find ourselves right on track with being right in that position.
Okay. If I could just sneak one in there, obviously going through the FEED process, do you anticipate, I guess, that capital build changing potentially?
No, no. I think we're very comfortable. We had an extremely solid feasibility study. Our front-end engineering work is gone according to plan. We're seeing no real surprises at all in any of our assumptions and estimations that we've made along the way. So we're quite comfortable. I think if anything, we'll probably be surprised on the upside. But yeah, I don't see any reason for changing or increasing our capital needs as we've already outlined in the feasibility study.
Great. I'll leave it there. Thanks, Ross and Ian.
Thank you. In the interest of time, your next question is the final question. Your next question is from Daniel Roden from Jefferies. Please go ahead.
Good afternoon again, guys. Thanks for taking my last question. I was just wondering if you could provide any color on the assumed uranium price that was used in the valuation of the transaction.
I'll hand over to Alex Rybak.
Yeah, look, it's probably a bit of a theoretical question because we are both uranium companies and exposed to that positive dynamic. But we've looked at a number of uranium price forecasts published by TradeTech, UxC, as well as broker consensus. So there's a range sort of out there. But as I said, we both are pure uranium companies.
I think, Daniel, what I will say, because I've already been asked this question a couple of times, the question was, "How do you feel about doing this transaction at this point in the cycle?" It's interesting. This is a transaction that Ross and I agree we would do at any point in the cycle. It just makes sense putting those assets together. We've got world-quality assets that stack up in the full cycle. And the combination and the opportunity this provides and the scarcity factor of large global uranium producers with growth prospects and exposure to the upside on uranium, as I said, you can count on less than one hand. So it's an opportunity that we would do in any point of the cycle. It works now in this point of the cycle. It'll work at any point in the cycle.
No worries. Thank you very much, Ian. And congratulations again.
Thanks.
Thank you.
Thank you. I'll now hand back to Ian Purdy for closing remarks.
Look, thanks very much, everyone. Really appreciate the opportunity. We're creating a global leader, a clean energy leader, and we're creating value for all shareholders. I'll leave it there. Thank you, Ross and Anna and Alex for joining us on the call. Thanks, everyone, for your time. Please, any further questions, reach out to either company, our advisors, and we'll love to take you through more detail on the deal. Thanks, everyone.
That does conclude our conference for today. Thank you for participating. You may now disconnect.