Transcription of Finance News Network Interview with Toro Energy Limited (ASX:TOE) Managing Director, Dr Vanessa GuthrieLelde Smits: Hello I’m Lelde Smits for the Finance News Network and joining me from uranium developer Toro Energy Limited
(ASX:TOE) is Managing Director, Dr Vanessa Guthrie. Vanessa welcome back to FNN.
Dr Vanessa Guthrie: Thank you very much.
Lelde Smits: The uranium spot price is up about 50 per cent since the middle of this year. Why the gain and do you believe it’s sustainable?
Dr Vanessa Guthrie: We’ve seen it’s very welcome news, what we’re seeing with the uranium spot price moving. And we’ve also seen the long term contract price move up in recent weeks, as well. This is mainly because the utilities are now returning to the market, as we’ve seen some of the Japanese reactor restart approvals coming through from the Japanese Government. It’s a long way to go, let’s be clear that we have a good movement in the spot price. But we do believe that the sustainable growth in this price, comes on the back of structural reform that will happen in the market in 2015.
Lelde Smits: Following the Fukushima disaster of 2011, Japan has recently approved the restart of two nuclear reactors. What does this tell you about the industry?
Dr Vanessa Guthrie: It really signals the start, the return of the Japanese nuclear market. And on the back of this of course, there are another 19 nuclear reactors that have applied for restarts as well. So we believe that we will start to see from 2015, the Japanese nuclear power industry back on its feet again.
Lelde Smits: Looking closer at the Company, Toro has just announced a $20 million cash injection from global investment group Sentient. What is the structure of the deal?
Dr Vanessa Guthrie: The first part is a $10 million placement direct into Toro at eight cents a share. The second part is a $10 million fund direct into
the project at Wiluna, and the purpose of these funds is to improve the processing technology that Wiluna has. And the third part of the deal is an acquisition by Toro of some of Sentient’s uranium assets, particularly Strateco Resources Incorporated, which is a TSX listed company (TSX:RSC) in Canada.
Lelde Smits: Toro also continues to receive financial backing from your key South African shareholder, The RealFin Investment Fund. What do you believe they find most compelling about Toro’s story?
Dr Vanessa Guthrie: RealFin, when they came into our stock last December as well as Sentient have both expressed that the thing they like most about Toro, is the strength of our management team. Our technical voracity, the thoroughness with which we apply science to our work and also the strength of our permitting and approvals, and stakeholder relationships, that’s been the key. The second part of course, is that they really value Wiluna as a near term production asset. And as they have said to us, Toro is the company that delivers when it says it will deliver. That’s what’s really encouraged them to come in further through this deal.
Lelde Smits: How long will the Company continue to be cash backed as a result of these deals?
Dr Vanessa Guthrie: We have now three to four years of solid cash backing, which gives us the time to get Wiluna into the market. We believe in that timeframe, the uranium price will have turned particularly with the recent signals improving spot price. And that means that we can bring Wiluna to production and into the market, in a market where there is nobody else that will be able to deliver in the same timeframe.
Lelde Smits: How does Toro plan to use the funds raised?
Dr Vanessa Guthrie: We have three levels to manage. Firstly, we of course have working capital which will keep us at the corporate level focused not only on Wiluna, but also on our Canadian assets. Secondly, of course now we have funds to develop into Wiluna itself, in particular the $10 million fund that will improve the processing route and hopefully the costs. This is what we’re targeting, is the project costs. And finally, it gives us funds to go looking to build the asset base of the Company even further, by looking at other assets around the world that might increase our global footprint.
Lelde Smits: Finally Vanessa, when do you expect to make a final investment decision on Wiluna and how long before first production?
Dr Vanessa Guthrie: Wiluna is really positioned at the front of the queue. It’s the only project, it’s most advanced in Australia, it’s permitted, it’s ready to come into production. All we need to do now is finance it and then build it. It’s about two years from first production, from when we make our final investment decision. Final investment decision is very dependent upon the market recovery.
So while we start to see green shoots of new uranium prices recovering, this is really starting to send a signal that hopefully we’ll be able to make final investment decision, in the next 12 months. And be able to build the project and come into first production, towards the back end of this decade.
Lelde Smits: Vanessa Guthrie, thank you for the update from Toro Energy.
Dr Vanessa Guthrie: Thank you.
Ends
