Toro Energy

Overview

Countries worldwide are working towards decarbonisation and paying more attention to clean energy sources. Russia’s invasion of Ukraine also ignited a global discussion about energy security and fossil fuel reliance, especially in Europe, where Russia has long been the primary oil and gas supplier. As a result, governments are now looking at all viable clean energy sources, including solar, wind and nuclear power. Recently, Japan, Germany, the U.K and the U.S. have revisited their nuclear energy strategies to reduce fossil fuel production and reliance while improving energy security.

The renewed interest in and support for nuclear power has bolstered demand for uranium, an essential mineral for nuclear power reactors. Currently, there are 340 proposed new nuclear reactors globally. Combined with existing reactors, the world will soon require 62,400 tonnes of uranium, which converts to 73,698 tonnes of uranium oxide. It’s projected that global uranium production will need to double by 2040 to keep up with demand.

Australia produces 12 percent of the world’s uranium, behind Canada (13 percent) and Kazakhstan (43 percent). It is also home to the Wiluna Uranium Project, a well-established uranium resource of 62 million pounds of ore located in Western Australia.

The Wiluna Uranium Project is the flagship asset of Toro Energy Limited (ASX:TOE), a uranium exploration and development mining company with projects across Western Australia. Toro’s portfolio also includes assets prospective for nickel, gold and base metals.

With unique challenges and risks associated with uranium projects that can delay development, Toro Energy has worked to address key risk areas for the Wiluna Uranium Project. To date, the project has received state and federal approval and been granted mining leases, allowing Toro Energy to focus on process design and project costs.

The Wiluna Uranium Project includes four key deposits: Lake Maitland, Centipede, Millipede and Lake Way. The Lake Maitland deposit is amenable to a beneficiation process, which maximises yield with simple screening and de-sliming before ore proceeds to the leach phase. The Lake Maitland deposit is subject to a joint venture partnership with two Japanese corporations, Japan Australia Uranium Resource Development Co. Ltd. (JAURD) and Itochu.

The Lake Maitland deposit has been successfully optimised to incorporate vanadium production — a mineral used to manufacture steel alloys, aircraft and nuclear reactors. Introducing vanadium production has a marginal cost of an additional AU$5.7 million CapEx.

A scoping study on Lake Maitland has returned excellent results (AU$610 million NPV pre-tax) and indicated potential for strong financial returns, including a short payback period of 2.5 years, 41 percent internal rate of return and low capital operating cost estimates. The Lake Maitland deposit is a globally competitive uranium operation that is estimated to produce 22.8 million lbs U3O8 (and 11.9 million lbs of V2O5 vanadium pentoxide as a by-product).

Toro Energy also owns the Dusty Nickel Project in Western Australia. Diamond drilling at the project has confirmed a 15-kilometre strike of massive nickel sulphides. Completed assays indicate up to 9 metres at 2.07 percent from 250.90 metres, along with 2 metres at 4.01 percent. The asset is on the Yandal Greenstone Belt, creating additional exploration opportunities to confirm suspected gold deposits.

Toro Energy is led by a management team and board of directors with extensive experience in the mining industry. The team's combined expertise includes working at major mining houses, exploration companies, uranium mining operations, corporate financing and government and community relations.

Company Highlights

• Toro Energy is a uranium exploration and development company with promising assets in Western Australia.
• The company is led by a management team and board of directors with direct experience in the uranium mining industry.
• The Wiluna Uranium Project has been de-risked and optimised to include vanadium as a by-product.
• The Lake Maitland deposit within the Wiluna Uranium Project has been optimised with a beneficiation process, which was introduced to maximise yield by refining raw ore before it proceeds to the leach phase.
• Scoping study for proposed stand-alone Lake Maitland Uranium-Vanadium operation shows potential for strong financial returns.
• Lake Maitland is subject to a joint venture with two Japanese companies, JAURD and Itochu. The partnership allows these companies to earn interest on the asset after reaching an investment threshold.
• Toro Energy also owns 100 percent of the Dusty Nickel Project, confirmed to contain a 15-kilometre strike of massive nickel sulphides. The asset also includes suspected gold targets to be confirmed with future exploration.

Key Projects

The Wiluna Uranium Project

Toro Energy’s flagship asset is located 30 kilometres from the town of Wiluna in central Western Australia. The region contains approximately 84 million pounds of uranium oxide, 62.7 million pounds of which are within the project’s area. The asset has been de-risked and optimised to improve yield and introduce vanadium as a by-product. The company is currently developing a mining schedule to estimate future production costs.

Project Highlights:

• De-Risked Uranium Project: Uranium projects create new risks that can hinder reaching full production. Toro Energy has taken every opportunity to de-risk the asset by acquiring state and federal approval, securing mining leases, and identifying a simple yet effective mining process. Additionally, a JORC 2012-compliant resource estimate confirms a total measured, indicated and inferred 62.7 million pounds of uranium oxide and 68.3 million pounds of vanadium.
• Uranium Exploration assets: Toro also 100 percent owns three exploration projects that have a total uranium resource of 28.2 million lbs in Western Australia at Nowthanna, Dawson Hinkler and Theseus.
• Lake Maitland Pit Expansion: A 2022 pit expansion campaign increased the potential of uranium ore and the asset’s value by US$608 million in potential gross product value. The campaign included:
  • New pit shell (revised pit rim cut-off grade of 109 ppm uranium oxide) stretching beyond bounds of current stated resource at a 200 ppm uranium oxide cut-off. A significant lowering of the uranium oxide grade for the potential Lake Maitland ore (631 ppm to 380 ppm uranium oxide);
  • Potential ore increasing from 13.2 Mt to 35.2 Mt (up 167 percent);
  • Life of Mine increasing from 10.1 to 17.6 years (up 74 percent);
  • Potential uranium oxide production increasing from 15.8 million lbs to 23.5 million lbs (up 50 percent);
  • 12.2 million lbs of vanadium pentoxide by-product produced (at an assumed price of US$5.67/lb vanadium pentoxide).
• Scoping study at proposed Lake Maitland Uranium-Vanadium operation: Conducted by mining engineers at SRK Consulting Australasia and metallurgical and processing engineers at Strategic Metallurgy, the result highlights the project’s potential for robust financial returns (assumes a US$70/lb U3O8, US$5.67/lb V2O5 price and a US$:AU$0.70 exchange rate):
  • Net present value pre-tax of approximately AU$610 million at a discount rate of 8 percent; internal rate of return of 41 percent; rapid payback period of 2.5 years;
  • Mine life of approximately 17.5 years;
  • Annual average production approximately 1.3 million lbs uranium oxide (100 percent indicated resource) and 0.7 million lbs vanadium pentoxide (100 percent inferred resource); total production approximately 22.8 million lbs of uranium oxide and 11.9 million lbs of vanadium pentoxide;
  • Low C1 operating cost of US$15.84/lb uranium oxide in years 1 to 7 when high-grade uranium resource is being processed;
  • Strong life of mine C1 operating cost of only US$23.10/lb uranium oxide;
  • Low AISC of US$20.32/lb U3O8 over the first seven years; and
  • Low US$28.02/lb U3O8 over life of mine.
• Robust Local Infrastructure: The asset is within an established mining centre, which means much of the required infrastructure is readily available. The project has access to power and water, which reduces initial development costs.
• Joint Venture Partnership: Toro Energy has entered into a joint venture partnership with the JAURD and Itochu for its Lake Maitland deposit. Both corporations have the right, but not the obligation, to earn a combined 35 percent interest in the project upon contributing US$39.6 million and an additional proportionate share of expenditure thereafter, once a positive final investment decision has been made based on a definitive feasibility study.

The Dusty Nickel Project – Discoveries of Massive Nickel Sulphides

The company’s Dusty Nickel Project is located near the Lake Maitland uranium deposit and contains two key target areas: Dusty Nickel and Yandal One. The project is on the Yandal Greenstone Belt and is 50 kilometres east of the world-class Mt. Keith Nickel Deposit. A completed diamond drilling campaign confirmed a 15-kilometre strike length of massive nickel sulphides, 7.5 kilometres of which is an unbroken length.

Project Highlights:

• Four Discovery Locations Identified: Only 1.4 kilometres of the unbroken length has been tested at a single depth, and have already identified four discovery locations of massive and semi-massive sulphides: Dusty, Houli Dooley, Jumping Jack and Dimma.
• Yandal One Gold and Base Metal Asset: Located only 20 kilometres northeast of the world-class Bronzewing Gold Mine, the Yandal One asset creates a unique exploration opportunity on the Yandal Greenstone Belt. The asset spans 243 square kilometres, yet it has been relatively untested since 1972. An airborne magnetic survey and ground gravity survey have identified more than 70 target zones for follow-up exploration.
• Continued Diamond Drilling Underway: Additional diamond drilling exploration is underway throughout the Dusty Nickel project. The exploration campaign is testing additional targets along strike and testing the up and down dip of known intersects.

Management Team

Richard Homsany - Executive Chairman

Richard Homsany has extensive experience in the resources industry, having been the executive vice-president for Australia of TSX-listed Mega Uranium Ltd since April 2010. He has worked for North Ltd, an ASX top 50-listed internationally diversified resources company in operations, risk management and corporate, prior to its takeover by Rio Tinto Ltd.

Homsany is an experienced corporate lawyer and certified practising accountant (CPA) advising numerous clients in the energy and resources sector, including public listed companies. He was corporate partner at international law firm DLA Phillips Fox (now DLA Piper), where he advised clients on a range of transactions and matters including capital raising, IPOs, stock exchange listing, mergers and acquisitions, finance, joint ventures, divestments and governance.

He is a fellow of the Financial Services Institute of Australasia (FINSIA) and a member of the Australian Institute of Company Directors. He has a commerce degree and honours degree in law from the University of Western Australia, and a graduate diploma in finance and investment from FINSIA (State Dux).

Homsany has significant board experience with public listed companies in Australia and Canada. He is the chairman of ASX-listed copper explorer Redstone Resources Ltd. and TSX-V listed iron ore and gold explorer Central Iron Ore Limited. Homsany is currently the chairman of the Health Insurance Fund of Australia Limited.

Michel Marier - Non-Executive Director

Michel Marier joined Sentient in 2009 as an investment manager. Before joining Sentient, Marier worked eight years in the private equity division of la Caisse de dépôt et placement du Québec. Marier holds a Master’s Degree in Finance from HEC Montreal and is a CFA charter holder.

Richard Patricio - Non-Executive Director

Richard Patricio is the CEO and president of Mega Uranium Ltd., a uranium-focused investment and development company with assets in Canada and Australia.

In addition to his legal and corporate experience, Patricio has built a number of mining companies with global operations. He holds senior officer and director positions in several junior mining companies listed on the TSX, TSX Venture, AIM and NASDAQ exchanges. He is currently also a director of NexGen Energy Ltd (TSE:NXE, Mkt Cap. CAD$2.7b). He previously practised law at a top-tier law firm in Toronto and worked as in-house general counsel for a senior TSX-listed company. He received his law degree from Osgoode Hall and was called to the Ontario bar in 2000.

Katherine Garvey - Legal Counsel and Company Secretary

Katherine Garvey is a corporate lawyer who has significant experience in the resources sector. Garvey advises public (both listed and unlisted) and proprietary companies on a variety of corporate and commercial matters including capital raising, finance, acquisitions and disposals, Corporations Act and ASX Listing Rule compliance, corporate governance and company secretarial issues. She has extensive experience drafting and negotiating various corporate and commercial agreements including farm-in agreements, joint ventures, shareholders’ agreements, and business and share sale and purchase agreements.

Garvey is a senior associate at Cardinals Lawyers and Consultants, a corporate and resources law firm in West Perth, and company secretary of the Health Insurance Fund of Australia Limited. Garvey is also legal counsel (Australia) to TSX-listed Mega Uranium Ltd, and company secretary to TSXV-listed Central Iron Ore Ltd.

Dr. Greg Shirtliff - Geology Manager

Dr. Greg Shirtliff is responsible for the management and direction of the geology and resources of Toro’s Wiluna Uranium Project.

Shirtliff has more than 15 years’ experience in the geology and geochemistry of uranium, including a PhD in uranium geochemistry from the Australian National University. Since his studies, Shirtliff has spent more than nine years in various roles in the uranium industry, from environmental, mine geology and resource to exploration and project management in both mining and exploration. He spent several years at ERA-Rio Tinto’s Ranger Mine, and was also the senior geoscientist at Cameco Australia, where he managed a diverse portfolio of projects in uranium deposits and styles of mineralisation throughout Australia, Canada and the US.

Marc Boudames - Financial Controller

Marc Boudames is experienced in statutory financial reporting, taxation, ERP systems, business analytics, corporate transactions, due diligence, mergers & acquisitions, finance, joint ventures and divestments. He previously worked at RSM Bird Cameron, as general manager –finance & administration for ASX-listed Redport Ltd and Mega Uranium Ltd (Australia), a Canadian TSX-listed mining and equity investment company focused on global uranium properties and multi-mineral exploration. He has worked for multiple companies across various industries, including listed and public companies associated with the mining and oil & gas sectors, such as WesTrac, CB&I and Spotless Group.