Fission Uranium
Transcription
Fission Uranium
CANADA FCU CN Price (at 20:59, 09 Jan 2015 GMT) Valuation Outperform C$1.01 C$ 2.73 - DCF (WACC 8.0%) Fission Uranium Maiden resource surprises on the upside 12-month target C$ 2.25 12-month TSR % +122.8 Volatility Index Very High GICS sector Energy Market cap C$m 367 Market cap US$m 309 30-day avg turnover C$m 0.8 Number shares on issue m 363.1 Event Investment fundamentals Impact Year end 30 Jun Revenue EBITDA Recurring profit Reported profit Gross cashflow CFPS CFPS growth EPS rec EPS rec growth Total DPS Total div yield ROA ROE EV/EBITDA Net debt/equity P/BV 2014A 2015E 2016E 2017E m m m m m C$ % C$ % C$ % % % x % x 0.0 -8.3 -5.5 -4.8 -7.4 -0.03 nmf -0.02 nmf 0.00 0.0 -3.3 -2.3 -36.9 -12.2 1.4 0.0 -7.4 -5.2 -12.2 -3.9 -0.01 65.1 -0.01 36.9 0.00 0.0 -2.9 -2.0 -49.8 -16.6 1.4 0.0 -8.0 -5.6 -11.7 -3.4 -0.01 17.4 -0.01 -1.7 0.00 0.0 -2.8 -2.0 -48.0 -22.3 1.4 0.0 -8.0 -5.6 -11.6 -3.4 -0.01 2.0 -0.01 1.8 0.00 0.0 -2.6 -1.9 -48.0 -18.1 1.4 FCU CN vs TSX, & rec history Fission released a maiden resource on the newly named Triple R deposit, on its Patterson Lake South project, on the SW margin of the Athabasca Basin. There is no question in our mind this is an impressive result and should move the stock materially higher due to its 1) high-quality resource that demonstrates compelling economics, 2) growth potential, which remains impressive; and 3) ultimate take-out potential. The total mineral inventory is 105.4 m lbs @ 1.50%, comprised of 79.6m lbs @ 1.58% in the indicated category and 25.9m lbs @ 1.30% in the inferred category. The resource has a high-grade core with an estimated TMI of 58m lbs @ 19.66%. We have updated our model with an enhanced grade profile in the early years of mining, and tweaked our capital and operating costs – which together cancelled each other out, resulting in no change to our estimated C$2.73/sh NAV@8%. We continue to believe the exploration potential of the PLS property remains attractive and the likelihood that additional resources will be found is, in our opinion, a near certainty. In addition we believe producers will take an interest in the PLS project. At US$8.00/lb in-situ, based on the current resource we can see Fission being taken out for as much as C$900m. Our Commodities team forecasts uranium to remain in oversupply until the end of the decade, but still maintain a long-term U3O8 price of $60/lb. We recognize certain project risks including the length of time to permit development and the fact that there is no processing facility in the neighbourhood. We don’t consider any of these issues to be show-stoppers. Earnings and target price revision Note: Recommendation timeline - if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period. Source: FactSet, Macquarie Research, January 2015 (all figures in CAD unless noted) We revised our model and forecasts for corporate spend. As a result, 2015 CFPS changed to $(0.01) from $0.00. We reiterate our C$2.25 target price and Outperform rating. Price catalyst 12-month price target: C$2.25 based on a NAV methodology. Analyst(s) Catalyst: Ongoing winter drill program results followed PEA (2Q15). Ron Stewart +1 416 848 3512 ron.stewart@macquarie.com Mohamed Abo Daff +1 416 848 3537 mohamed.abodaff@macquarie.com Action and recommendation 12 January 2015 Macquarie Capital Markets Canada Ltd. Our target is based on a 0.8x multiple to our discounted Net Asset Value of C$2.73 derived from our mine model for PLS. We recommend buying FCU to investors looking for best-in-class uranium development stories. Please refer to page 8 for important disclosures and analyst certification, or on our website www.macquarie.com/research/disclosures. Macquarie Research Fission Uranium The resource The maiden resource is comprised of three separate zones the R00E, R780E and R780E (other) and hence has been newly named the Triple R deposit. Resources, presented in Figure 1, were estimated based on a 0.1% U3O8 cut-off grade. The total mineral inventory is 105.4 m lbs @ 1.50% comprised of 79.6m lbs @ 1.58% in the indicated category and 25.9m lbs @ 1.30% in the inferred category. The resource has a high-grade core with an estimated TMI of 58m lbs @ 19.66%. Fig 1 The Triple R deposit, maiden resource estimate Zone Indicated (@ 0.1% U3 O8) ROOE R780E (Main) Tonnes (000's) High Grade Low Grade R780E (Other) Total Indicated 126.0 110.0 1,898.0 157.0 2,291.0 Pounds U3 O8 (000's) Gold Ounces U3O8 (%) Gold (g/t) 1.15% 18.21% 0.69% 0.97% 1.58% 0.15 2.77 0.39 0.67 0.53 3,194 44,148 28,864 3,356 79,562 1,000 10,000 24,000 3,000 38,000 3.57% 26.35% 1.26% 0.68% 0.33% 1.30% 1.50% 0.59 3.77 0.89 0.56 0.22 0.61 0.55 669 13,860 648 8,797 1,910 25,884 105,446 3,000 1,000 11,000 2,000 17,000 55,000 Inferred (@ 0.1% U3O8) ROOE R780E (Main) 8.5 23.9 23.3 R780E (Other Zones) 585.0 Low Grade Halo 260.0 Total Inferred 900.7 Total Mineral Invntory (TMI)* 3,191.7 * Total Mineral Inventory (TMI) is a non-compliant term High Grade Low Grade Source: Company documents, Macquarie Research, January 2015 We looked at the in-situ value of the rock using a spot uranium price of $35.00/lb and based on an assumed a contract price of $60/lb. What we find is that the TMI has an in-situ value of around $1,200/tonne on spot prices and around $2,000/tonne on our assumed contract price. Applying the same math to the high-grade zone, we find the rock has an in-situ value of over $15,000/tonne using spot prices and a staggering $26,000/tonne using contact prices. Our model We maintained our model estimate of 2.55m tonnes mined over a 15-year mine life, but modified our assumed grade profile to reflect a 3.0% grade for the first ~6 years of production followed by ~8 years at an average grade of 0.72%. Based on our mine plan a little less than 10m lbs of the total resource have not been modelled but could, in theory allow the mine to continue for another 3 years. We have not added any value for the by-product gold that might be recovered. The resource we used in our model is presented in Figure 2, below. Fig 2 Macquarie model mine resource and residual inventory Zone High Grade Mine Resouce (Initial 6 yrs) Lower Grade Mine Resouce (8 yrs) Total Mined Residual Resouces Tonnes (000's) 1,090 1,460 2,550 642 U3O8 (%) Gold (g/t) 3.03% 0.72% 1.70% 0.68% 0.75 0.46 0.59 0.43 Pounds U3O8 (000's) 72,800 23,100 95,800 9,646 Gold Ounces 25,500 20,900 46,400 8,600 Source: Macquarie Research, January 2015 12 January 2015 2 Macquarie Research Fission Uranium Our revised model parameters are presented in Figure 3, below along with our previous model assumptions. We increased our assumed mining cost to US$2.75/tonne from $1.25/tonne previously and increased our sustaining capital from around $40m to $70m over the mine life. Our model assumes both an equity and debt financing totalling around $500m in 2018. We have assumed a $200m equity financing and $300m in debt at a 7.5% interest rate. A comparison of our old and new model parameters along with the financial outcome is presented in Figure 3. Fig 3 Macquarie model parameters and outcome Parameter Assumed Price Reserves & Production Tonnes Grade Contained U3O8 Recovery Construction Start Productin Start Mill Throughput Life of Mine Uranium Production Mine Life Average Uranium Production Operating Cost Mining Cost Strip Ratio Total Mining Cost/ton of Ore Processing Cost G&A Total Cost per Ton Processed Capital Cost Pre-Production Capital Sustaining Capital Financials NPV @ 5% NPV @ 8% IRR Units US$/lb Macquarie Estimates (Previous) 60 Macquarie Estimates (Current) 60 000's % U3O8 2,550 1.8% 2,550 1.7% 000 lbs % Date Date tpd 000 lbs U3O8 years lbs/a 101,164 95.0% 2019 2021 500 96,133 15.00 6,409 93,670 95.0% 2019 2021 500 91,891 15.00 6,126 US$/tonne Waste:Ore US$/tonne US$/tonne US$/tonne US$/tonne 1.25 7.0 10.00 300.00 10.00 320.00 2.75 7.0 22.00 300.00 45.00 367.00 US$m US$m 430.0 42.0 450.0 70.0 US$m US$m % 1,315 882 48.00% 1,335 976 58.00% Source: Macquarie Research, January 2015 Exploration upside To date mineralization has been defined over a 2.25km east-west strike length in four separate zones; the R600W, R00E, R780E and R1620E. Resources were estimated from the R00E and R780E zones only. The deposit is described as a shallow, basement-hosted and structurally controlled deposit. The high-grade core is centred on a NNE striking, near-vertical fault surrounded by a lower-grade halo. Inclined drilling completed last year helped define the geometry of the mineralized system. 12 January 2015 3 Macquarie Research Fission Uranium We believe the exploration potential of the PLS property remains attractive and the likelihood that additional resources will be found is, in our opinion, a near certainty. Due to the nature of their deposition, uranium deposits are rarely found as single discrete deposits; rather the mineralizing systems form districts that are usually comprised of a cluster or collection of deposits. Such is the case on the Eastern margin of the Athabasca Basin. Fig 4 Plan view of the Triple R deposit mineralized zones Source: Company documents, January 2015 Take-out potential, PLS trumps a weak market Despite the fact that investors have had little appetite for the uranium sector, we believe producers will take an interest in Fission and its PLS project. We looked back as far as 2010 and found 14 transactions in the uranium sector, which were completed at an average price of around $4.35/lb. We consider the Denison acquisition of Fission Energy in early 2013 and Rio Tinto’s acquisition of Hathor in late 2011 to be better proxies for an acquisition of Fission Uranium. These two transactions had an average value of just over US$8.00/lb. If we apply that to Fission Uranium, based on the current resource we can imagine a take-out price of north of US$800m. In Canadian dollars, with an exchange rate of 0.85 that would imply a price on Fission of around over C$900m. 12 January 2015 4 Macquarie Research Fission Uranium Fig 5 Uranium transactions since 2010 Date Target 5-Jan-15 Uranerx 17-Sep-13 Rockgate Capital 26-Aug-13 Alpha Minerals 12-Aug-13 Mega Uranium (Lake Maitland) 6-Jun-12 Rockgate Capital 24-May-13 Strathmore Minerals 16-Jan-13 Fission Energy 11-Dec-13 ARSA (Karoo Basin, South Africa) 26-Aug-12 Yeelirrie (BHP) 14-Feb-12 Extract Resources 25-Oct-11 Titan Uranium 19-Oct-11 Hathor Exploration 17-Dec-10 Aurora Energy (Fronteer Gold) 15-Dec-10 Mantra Resources Average Average of Denision and Rio Tinto Acquisitions Acquirer Energy Fuels Denison Mines Fission Uranium Toro Uranium Mega Uranium Evergy Fuels Denison Mines Penninsula Energy Cameco Tarus Minerals Energy Fuels Rio Tinto Paladin Energy ARMZ Value Resources (US$m) (m lbs) 161.0 19.1 9.0 45.3 181.0 n/a 33.0 26.0 8.0 45.3 21.0 71.5 51.0 8.9 50.0 50.1 430.0 144.5 2,264.0 512.9 268.0 30.4 609.0 57.9 257.0 136.3 1,080.0 101.4 387.3 96.1 330.0 33.4 Grade EV/ Resource (US $/lb) (U3O8) 0.091% 8.46 0.069% 0.19 n.a n/a 0.037% 1.26 0.069% 0.18 0.113% 0.30 1.270% 5.78 n/a 1.00 0.131% 2.98 0.044% 4.41 0.021% 8.80 8.627% 10.51 n/a 1.89 0.042% 10.65 0.956% 4.34 4.95% 8.15 U Spot Price at Annoucement (US $/lb) 36.0 35.0 34.0 36.0 40.0 40.0 42.0 44.0 49.0 52.0 53.0 53.0 51.0 61.0 44.7 47.5 Source: Company reports, Macquarie Research, January 2015 Risks, opportunities and a look ahead Despite the high-quality nature of the resource, there remain some project-specific risks that should be noted. The first risk we would like to highlight is that permitting of uranium development projects can take time. Hathor (taken out by Rio Tinto – RIO AU, A$58.50, Outperform, TP: A$72.00, Adrian Wood), in their 2011 PEA on the Roughrider project in the Athabasca estimated that the environmental assessment would take an estimated 36 to 48 months to complete. Given that the Triple R deposit sits under a shallow lake, we would assume that the environmental review would take at least that length of time. A second noteworthy risk is that there is no uranium processing facility in the vicinity of the PLS project. As a result we have incorporated $450m in preproduction capital spending into our model. A third risk is associated with Macquarie’s view of the uranium market in general. We believe Uranium will remain in oversupply until at least 2020 driven primarily by Chinese stockpiles. Our Commodities team forecasts a gradual price increase from $35/lb to $53/lb through 2019 and assumes a long-term price of $60/lb [LINK]. Notwithstanding these risks, we believe Fission will continue to add value by advancing the project. They are currently conducting a winter resource delineation drill program and are expected to follow that with a preliminary economic assessment in 2Q15. The company had just under C$30m in cash at the end of 3Q14 so we assume they remain fully funded through these work programs. Valuation and Sensitivity to Uranium Prices Our model derives a fully-funded NAV8% of C$2.73/sh based on a long-term uranium price of $60/lb, which means that FCU is currently trading at ~0.4x NAV. We note that using current spot prices for uranium, our NAV drops to ~C$1.00-1.35/sh (for uranium prices between $35-40/lb), which is generally in line with FCU’s current market value. We maintain that there is significant value embedded in this story even at drastically lower Uranium prices. A +/-10% swing in Uranium prices impacts our NAV8% by +/-15%. 12 January 2015 5 Macquarie Research Fission Uranium Fig 6 Macquarie valuation sensitivity to uranium prices $2.73 $25.00 $30.00 $35.00 $40.00 $45.00 $50.00 $55.00 $60.00 $65.00 $70.00 $75.00 $80.00 $85.00 $90.00 $95.00 0.0% $0.45 $1.27 $2.10 $2.92 $3.74 $4.56 $5.38 $6.21 $7.03 $7.85 $8.68 $9.50 $10.32 $11.15 $11.97 2.0% $0.39 $1.05 $1.70 $2.36 $3.02 $3.68 $4.33 $5.00 $5.66 $6.32 $6.98 $7.64 $8.30 $8.96 $9.62 4.0% $0.33 $0.86 $1.39 $1.92 $2.46 $2.99 $3.52 $4.05 $4.59 $5.12 $5.66 $6.19 $6.73 $7.26 $7.80 6.0% $0.28 $0.72 $1.15 $1.58 $2.01 $2.44 $2.88 $3.32 $3.75 $4.19 $4.63 $5.06 $5.50 $5.94 $6.37 8.0% $0.24 $0.60 $0.95 $1.31 $1.66 $2.02 $2.37 $2.73 $3.09 $3.45 $3.81 $4.17 $4.53 $4.89 $5.25 10.0% $0.21 $0.50 $0.80 $1.09 $1.38 $1.68 $1.97 $2.27 $2.57 $2.87 $3.17 $3.46 $3.76 $4.06 $4.36 12.0% $0.19 $0.43 $0.67 $0.92 $1.16 $1.40 $1.65 $1.90 $2.15 $2.40 $2.65 $2.90 $3.15 $3.40 $3.64 14.0% $0.17 $0.37 $0.57 $0.78 $0.98 $1.19 $1.39 $1.60 $1.81 $2.02 $2.23 $2.44 $2.65 $2.86 $3.07 16.0% $0.15 $0.32 $0.50 $0.67 $0.84 $1.01 $1.19 $1.36 $1.54 $1.72 $1.89 $2.07 $2.25 $2.42 $2.60 Source: Macquarie Research, January 2015 12 January 2015 6 Macquarie Research Fission Uranium Fission Uranium (FCU CN; C$1.01, Outperform, TP: C$2.25) Incom e Statem ent Total revenue Cost of Sales Operating margin Depreciation EBT Total tax Net Incom e Unit US$m US$m US$m US$m US$m US$m US$m 2014 0 0 0 0 (4) (1) (5) 2015E 0 0 0 0 (15) (3) (12) 2016E 0 0 0 0 (16) (4) (12) 2017E 0 0 0 0 (16) (4) (12) 2018E 0 0 0 0 (24) (6) (17) Adjusted EBITDA Adjusted Net Incom e Adj. EPS FD US$m US$m US$ (8) (5) (0.02) (7) (5) (0.01) (8) (6) (0.01) (8) (6) (0.01) (8) (11) (0.03) Cash Flow Statem ent Operating cash flow Cash flow from investing Cash flow from financing Net change in cash CFPS FD Unit US$m US$m US$m US$m US$ 2014 (7) (21) 41 29 (0.03) 2015E (4) (16) 44 50 (0.01) 2016E (3) (5) 30 71 (0.01) 2017E (3) (10) 0 58 (0.01) FCF (Macquarie) FCF (Forw ard curve) FCF Yield US$m US$m % (7) (1020) (309%) (8) (402) (122%) (8) 37 11% (13) 118 36% Balance Sheet Cash and equivalents Working Capital Debt Total S/H equity Enterprise Value Unit US$m US$m US$m US$m US$m 2014 29 26 0 237 - 2015E 50 45 4 273 285 2016E 71 67 4 300 263 2017E 58 54 4 296 276 Price assum ptions USD/CAD Production Patterson Lake South (100%) Total Uranium production Uranium cash costs per ounce Valuation P/E P/CF Copper EV/EBITDA (consolidated) 2018E P/NAV (9) (30) 500 NAV Breakdow n (8% discount) 519 (0.02) Uranium Operations Patterson Lake project NPV (39) Regional project 153 46% Developm ent NAV 2018E 519 514 304 487 115 Cash Total debt Corp/G&A Total NAV (undiluted) Operating Multiple Unit 2014 1.00 2015E 1.03 2016E 1.10 2017E 1.10 2018E 1.10 Unit 000mlbs 000m lbs US$ 2012 0 0 0 2013 0 0 0 2014 0 0 0 2015E 0 0 0 2016E 0 0 0 Unit x x x x 2012 NMF NMF NMF 0.37 2013 NMF NMF NMF 2014 NMF NMF NMF 2015E NMF NMF NMF 2016E NMF NMF NMF US$m US$ / Sh C$ / Sh % Total 981 90 2.43 0.22 2.70 0.25 99% 9% 1,071 2.65 2.95 108% 29 (4) (102) 0.07 (0.01) (0.25) 0.08 (0.01) (0.28) 993 0.80 2.46 2.73 3% (0%) (10%) 100% Source: Company reports, Macquarie Research, January 2015 12 January 2015 7 Macquarie Research Fission Uranium Important disclosures: Recommendation definitions Volatility index definition* Financial definitions Macquarie - Australia/New Zealand Outperform – return >3% in excess of benchmark return Neutral – return within 3% of benchmark return Underperform – return >3% below benchmark return This is calculated from the volatility of historical price movements. All "Adjusted" data items have had the following adjustments made: Added back: goodwill amortisation, provision for catastrophe reserves, IFRS derivatives & hedging, IFRS impairments & IFRS interest expense Excluded: non recurring items, asset revals, property revals, appraisal value uplift, preference dividends & minority interests Very high–highest risk – Stock should be expected to move up or down 60–100% in a year – investors should be aware this stock is highly speculative. Benchmark return is determined by long term nominal GDP growth plus 12 month forward market dividend yield High – stock should be expected to move up or down at least 40–60% in a year – investors should be aware this stock could be speculative. Macquarie – Asia/Europe Outperform – expected return >+10% Neutral – expected return from -10% to +10% Underperform – expected return <-10% Medium – stock should be expected to move up or down at least 30–40% in a year. Macquarie First South - South Africa Outperform – expected return >+10% Neutral – expected return from -10% to +10% Underperform – expected return <-10% Low–medium – stock should be expected to move up or down at least 25–30% in a year. Macquarie - Canada Outperform – return >5% in excess of benchmark return Neutral – return within 5% of benchmark return Underperform – return >5% below benchmark return Low – stock should be expected to move up or down at least 15–25% in a year. * Applicable to Asia/Australian/NZ/Canada stocks only Macquarie - USA Outperform (Buy) – return >5% in excess of Russell 3000 index return Neutral (Hold) – return within 5% of Russell 3000 index return Underperform (Sell)– return >5% below Russell 3000 index return EPS = adjusted net profit / efpowa* ROA = adjusted ebit / average total assets ROA Banks/Insurance = adjusted net profit /average total assets ROE = adjusted net profit / average shareholders funds Gross cashflow = adjusted net profit + depreciation *equivalent fully paid ordinary weighted average number of shares All Reported numbers for Australian/NZ listed stocks are modelled under IFRS (International Financial Reporting Standards). Recommendations – 12 months Note: Quant recommendations may differ from Fundamental Analyst recommendations Recommendation proportions – For quarter ending 31 December 2014 Outperform Neutral Underperform AU/NZ 51.80% 31.80% 16.39% Asia 58.06% 27.37% 14.57% RSA 45.07% 30.99% 23.94% USA 44.42% 50.10% 5.48% CA 60.54% 35.37% 4.08% EUR 46.81% (for US coverage by MCUSA, 5.29% of stocks followed are investment banking clients) 33.51% (for US coverage by MCUSA, 3.08% of stocks followed are investment banking clients) 19.68% (for US coverage by MCUSA, 0.44% of stocks followed are investment banking clients) FCU CN vs TSX, & rec history RIO AU vs ASX 100, & rec history (all figures in CAD currency unless noted) (all figures in AUD currency unless noted) Note: Recommendation timeline – if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period. Source: FactSet, Macquarie Research, January 2015 12-month target price methodology FCU CN: C$2.25 based on a NAV methodology RIO AU: A$72.00 based on a DCF methodology Company-specific disclosures: FCU CN: The primary analyst for Fission Uranium has visited its material operations and development assets within the past year; the company has furnished local transportation and accommodations as part of these site visits. Macquarie Capital Markets Canada Ltd. or one of its affiliates managed or comanaged a public offering of securities of Fission Uranium Corp in the past 12 months, for which it received compensation. Macquarie Capital Markets Canada Ltd. or one of its affiliates managed or co-managed a public offering of securities of Fission Uranium Corp in the past 12 months, for which it received compensation. MACQUARIE CAPITAL MARKETS CANADA LTD./MARCHÉS FINANCIERS MACQUARIE CANADA LTÉE. or one of its affiliates managed or co-managed a public offering of securities of Fission Uranium Corp in the past 12 months, for which it received compensation. RIO AU: The analyst and/or associated parties own or have other interests in securities issued by Rio Tinto Limited. MACQUARIE CAPITAL (AUSTRALIA) LIMITED or one of its affiliates has provided Rio Tinto Limited with investment advisory services in the past 24 months, for which it received compensation. Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/disclosures. Date 01-May-2014 Stock Code (BBG code) FCU CN Recommendation Outperform Target Price C$2.25 Target price risk disclosures: FCU CN: Any inability to compete successfully in their markets may harm the business. This could be a result of many factors which may include geographic mix and introduction of improved products or service offerings by competitors. The results of operations may be materially affected by global economic conditions generally, including conditions in financial markets. The company is exposed to market risks, such as changes in interest rates, foreign exchange rates and input prices. From time to time, the company will enter into transactions, including transactions in derivative instruments, to manage certain of these exposures. RIO AU: Any inability to compete successfully in their markets may harm the business. This could be a result of many factors which may include geographic mix and introduction of improved products or service offerings by competitors. The results of operations may be materially affected by global economic conditions generally, including conditions in financial markets. The company is exposed to market risks, such as changes in interest rates, foreign exchange rates and input prices. From time to time, the company will enter into transactions, including transactions in derivative instruments, to manage certain of these exposures. 12 January 2015 8 Macquarie Research Fission Uranium Analyst certification: The views expressed in this research accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst principally responsible for the preparation of this research receives compensation based on overall revenues of Macquarie Group Ltd ABN 94 122 169 279 (AFSL No. 318062) (MGL) and its related entities (the Macquarie Group) and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations. General disclaimers: Macquarie Securities (Australia) Ltd; Macquarie Capital (Europe) Ltd; Macquarie Capital Markets Canada Ltd; Macquarie Capital Markets North America Ltd; Macquarie Capital (USA) Inc; Macquarie Capital Securities Ltd and its Taiwan branch; Macquarie Capital Securities (Singapore) Pte Ltd; Macquarie Securities (NZ) Ltd; Macquarie First South Securities (Pty) Limited; Macquarie Capital Securities (India) Pvt Ltd; Macquarie Capital Securities (Malaysia) Sdn Bhd; Macquarie Securities Korea Limited and Macquarie Securities (Thailand) Ltd are not authorized deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia), and their obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL) or MGL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of any of the above mentioned entities. MGL provides a guarantee to the Monetary Authority of Singapore in respect of the obligations and liabilities of Macquarie Capital Securities (Singapore) Pte Ltd for up to SGD 35 million. This research has been prepared for the general use of the wholesale clients of the Macquarie Group and must not be copied, either in whole or in part, or distributed to any other person. If you are not the intended recipient you must not use or disclose the information in this research in any way. If you received it in error, please tell us immediately by return e-mail and delete the document. We do not guarantee the integrity of any e-mails or attached files and are not responsible for any changes made to them by any other person. MGL has established and implemented a conflicts policy at group level (which may be revised and updated from time to time) (the "Conflicts Policy") pursuant to regulatory requirements (including the FCA Rules) which sets out how we must seek to identify and manage all material conflicts of interest. Nothing in this research shall be construed as a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction. In preparing this research, we did not take into account your investment objectives, financial situation or particular needs. Macquarie salespeople, traders and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions which are contrary to the opinions expressed in this research. Macquarie Research produces a variety of research products including, but not limited to, fundamental analysis, macro-economic analysis, quantitative analysis, and trade ideas. Recommendations contained in one type of research product may differ from recommendations contained in other types of research, whether as a result of differing time horizons, methodologies, or otherwise. Before making an investment decision on the basis of this research, you need to consider, with or without the assistance of an adviser, whether the advice is appropriate in light of your particular investment needs, objectives and financial circumstances. There are risks involved in securities trading. The price of securities can and does fluctuate, and an individual security may even become valueless. International investors are reminded of the additional risks inherent in international investments, such as currency fluctuations and international stock market or economic conditions, which may adversely affect the value of the investment. This research is based on information obtained from sources believed to be reliable but we do not make any representation or warranty that it is accurate, complete or up to date. We accept no obligation to correct or update the information or opinions in it. Opinions expressed are subject to change without notice. No member of the Macquarie Group accepts any liability whatsoever for any direct, indirect, consequential or other loss arising from any use of this research and/or further communication in relation to this research. Clients should contact analysts at, and execute transactions through, a Macquarie Group entity in their home jurisdiction unless governing law permits otherwise. The date and timestamp for above share price and market cap is the closed price of the price date. #CLOSE is the final price at which the security is traded in the relevant exchange on the date indicated. Country-specific disclaimers: Australia: In Australia, research is issued and distributed by Macquarie Securities (Australia) Ltd (AFSL No. 238947), a participating organisation of the Australian Securities Exchange. New Zealand: In New Zealand, research is issued and distributed by Macquarie Securities (NZ) Ltd, a NZX Firm. Canada: In Canada, research is prepared, approved and distributed by Macquarie Capital Markets Canada Ltd, a participating organisation of the Toronto Stock Exchange, TSX Venture Exchange & Montréal Exchange. Macquarie Capital Markets North America Ltd., which is a registered broker-dealer and member of FINRA, accepts responsibility for the contents of reports issued by Macquarie Capital Markets Canada Ltd in the United States and sent to US persons. Any US person wishing to effect transactions in the securities described in the reports issued by Macquarie Capital Markets Canada Ltd should do so with Macquarie Capital Markets North America Ltd. The Research Distribution Policy of Macquarie Capital Markets Canada Ltd is to allow all clients that are entitled to have equal access to our research. United Kingdom: In the United Kingdom, research is issued and distributed by Macquarie Capital (Europe) Ltd, which is authorised and regulated by the Financial Conduct Authority (No. 193905). Germany: In Germany, this research is issued and/or distributed by Macquarie Capital (Europe) Limited, Niederlassung Deutschland, which is authorised and regulated by the UK Financial Conduct Authority (No. 193905). and in Germany by BaFin. France: In France, research is issued and distributed by Macquarie Capital (Europe) Ltd, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority (No. 193905). Hong Kong & Mainland China: In Hong Kong, research is issued and distributed by Macquarie Capital Securities Ltd, which is licensed and regulated by the Securities and Futures Commission. In Mainland China, Macquarie Securities (Australia) Limited Shanghai Representative Office only engages in non-business operational activities excluding issuing and distributing research. Only nonA share research is distributed into Mainland China by Macquarie Capital Securities Ltd. Japan: In Japan, research is issued and distributed by Macquarie Capital Securities (Japan) Limited, a member of the Tokyo Stock Exchange, Inc. and Osaka Securities Exchange Co. Ltd (Financial Instruments Firm, Kanto Financial Bureau (kin-sho) No. 231, a member of Japan Securities Dealers Association and The Financial Futures Association of Japan and Japan Investment Advisers Association). India: In India, research is issued and distributed by Macquarie Capital Securities (India) Pvt. Ltd. (CIN: U65920MH1995PTC090696), formerly known as Macquarie Capital (India) Pvt. Ltd., 92, Level 9, 2 North Avenue, Maker Maxity, Bandra Kurla Complex, Bandra (East), Mumbai – 400 051, India, which is a SEBI registered stockbroker having membership with National Stock Exchange of India Limited (INB231246738) and BSE Limited (INB011246734). Malaysia: In Malaysia, research is issued and distributed by Macquarie Capital Securities (Malaysia) Sdn. Bhd. (Company registration number: 463469-W) which is a Participating Organisation of Bursa Malaysia Berhad and a holder of Capital Markets Services License issued by the Securities Commission. Taiwan: In Taiwan, research is issued and distributed by Macquarie Capital Securities Ltd, Taiwan Branch, which is licensed and regulated by the Financial Supervisory Commission. No portion of the report may be reproduced or quoted by the press or any other person without authorisation from Macquarie. Nothing in this research shall be construed as a solicitation to buy or sell any security or product. Research Associate(s) in this report who are registered as Clerks only assist in the preparation of research and are not engaged in writing the research. Thailand: In Thailand, research is produced with the contribution of Kasikorn Securities Public Company Limited, issued and distributed by Macquarie Securities (Thailand) Ltd. Macquarie Securities (Thailand) Ltd. is a licensed securities company that is authorized by the Ministry of Finance, regulated by the Securities and Exchange Commission of Thailand and is an exchange member of the Stock Exchange of Thailand. Macquarie Securities (Thailand) Limited and Kasikorn Securities Public Company Limited have entered into an exclusive strategic alliance agreement to broaden and deepen the scope of services provided to each parties respective clients. The strategic alliance does not constitute a joint venture. The Thai Institute of Directors Association has disclosed the Corporate Governance Report of Thai Listed Companies made pursuant to the policy of the Securities and Exchange Commission of Thailand. Macquarie Securities (Thailand) Ltd does not endorse the result of the Corporate Governance Report of Thai Listed Companies but this Report can be accessed at: http://www.thai-iod.com/en/publications.asp?type=4. South Korea: In South Korea, unless otherwise stated, research is prepared, issued and distributed by Macquarie Securities Korea Limited, which is regulated by the Financial Supervisory Services. Information on analysts in MSKL is disclosed at http://dis.kofia.or.kr/websquare/index.jsp?w2xPath=/wq/fundMgr/DISFundMgrAnalystStut.xml&divisionId=MDIS03002001000000&serviceId=SDIS03002001 000. South Africa: In South Africa, research is issued and distributed by Macquarie First South Securities (Pty) Limited, a member of the JSE Limited. Singapore: In Singapore, research is issued and distributed by Macquarie Capital Securities (Singapore) Pte Ltd (Company Registration Number: 198702912C), a Capital Markets Services license holder under the Securities and Futures Act to deal in securities and provide custodial services in Singapore. Pursuant to the Financial Advisers (Amendment) Regulations 2005, Macquarie Capital Securities (Singapore) Pte Ltd is exempt from complying with sections 25, 27 and 36 of the Financial Advisers Act. All Singapore-based recipients of research produced by Macquarie Capital (Europe) Limited, Macquarie Capital Markets Canada Ltd, Macquarie First South Securities (Pty) Limited and Macquarie Capital (USA) Inc. represent and warrant that they are 12 January 2015 9 Macquarie Research Fission Uranium institutional investors as defined in the Securities and Futures Act. United States: In the United States, research is issued and distributed by Macquarie Capital (USA) Inc., which is a registered broker-dealer and member of FINRA. Macquarie Capital (USA) Inc, accepts responsibility for the content of each research report prepared by one of its non-US affiliates when the research report is distributed in the United States by Macquarie Capital (USA) Inc. Macquarie Capital (USA) Inc.’s affiliate’s analysts are not registered as research analysts with FINRA, may not be associated persons of Macquarie Capital (USA) Inc., and therefore may not be subject to FINRA rule restrictions on communications with a subject company, public appearances, and trading securities held by a research analyst account. Information regarding futures is provided for reference purposes only and is not a solicitation for purchases or sales of futures. Any persons receiving this report directly from Macquarie Capital (USA) Inc. and wishing to effect a transaction in any security described herein should do so with Macquarie Capital (USA) Inc. Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/research/disclosures, or contact your registered representative at 1-888-MAC-STOCK, or write to the Supervisory Analysts, Research Department, Macquarie Securities, 125 W.55th Street, New York, NY 10019. © Macquarie Group Auckland Tel: (649) 377 6433 Bangkok Tel: (662) 694 7999 Calgary Tel: (1 403) 294 9541 Denver Tel: (303) 952 2800 Frankfurt Tel: (069) 509 578 000 Geneva Tel: (41) 22 818 7777 Hong Kong Tel: (852) 2823 3588 Jakarta Tel: (62 21) 515 1818 Johannesburg Tel: (2711) 583 2000 Kuala Lumpur Tel: (60 3) 2059 8833 London Tel: (44 20) 3037 2000 Manila Tel: (63 2) 857 0888 Melbourne Tel: (613) 9635 8139 Mumbai Tel: (91 22) 6653 3000 Munich Tel: (089) 2444 31800 New York Tel: (1 212) 231 2500 Paris Tel: (33 1) 7842 3823 Perth Tel: (618) 9224 0888 Seoul Tel: (82 2) 3705 8500 Shanghai Tel: (86 21) 6841 3355 Singapore Tel: (65) 6601 1111 Sydney Tel: (612) 8232 9555 Taipei Tel: (886 2) 2734 7500 Tokyo Tel: (81 3) 3512 7900 Toronto Tel: (1 416) 848 3500 Vancouver Tel: (1 604) 605 3944 Available to clients on the world wide web at www.macquarieresearch.com and through Thomson Financial, FactSet, Reuters, Bloomberg, and CapitalIQ. 12 January 2015 10 Research Financials – cont’d Heads of Equity Research John O’Connell (Global - Head) Andrew Root (US) Greg MacDonald (Canada) (612) 8232 7544 (1 212) 231 2336 (1 416) 628 3934 Mortgage & Consumer Finance Sean Dargan (New York) Asim Imran (Toronto) Internet (1 212) 231 0663 (1 416) 848 3521 Property & Casualty Insurance Consumer Discretionary Amit Kumar (New York) Asim Imran (Toronto) Gaming & Leisure Chad Beynon (New York) TMET – cont’d (1 212) 231 2634 (1 212) 231 1814 Deepon Nag (New York) Tim Nollen (New York) Industrials Aaron Schwartz Chemicals Utilities & Alternative Energy Cooley May (New York) US Exploration & Production Paul Grigel (Denver) (1 303) 952 2754 Oilfield Services Walt Chancellor (Houston) Sameer Rathod (San Francisco) Cleo Zagrean (New York) Chris Feltin (Calgary) Waste Services Adam Baumgarten (New York) Canadian Independents Chris Feltin (Calgary) (1 403) 539 8544 Canadian Integrateds Chris Feltin (Calgary) (1 403) 539 8544 International/Canadian Oil & Gas Producers Ray Kwan (Calgary) Brian Bagnell (Calgary) (1 403) 539 4355 (1 403) 539 8540 Energy Infrastructure Robert Hope (Toronto) (1 416) 628 3964 Financials Banks/Trust Banks David Konrad (Head of Banks) Thomas Alonso (New York) John Moran (Denver) Russell Gunther (New York) (1 212) 231 0525 (1 212) 231 8047 (1 212) 231 0662 (1 212) 231 0518 Life Insurance Sean Dargan (New York) (1 212) 231 2493 (1 212) 231 1749 (1 212) 231 0633 Materials (1 416) 848 3541 (1 416) 848 3512 (1 416) 848 3520 (1 604) 639 6372 Telecommunications Kevin McVeigh (New York) Regional Brokerage/Debt Collection Cable, Satellite & Entertainment Hugh Miller Amy Yong (New York) Andrew DeGasperi (New York) (1 212) 231 2323 (44 20) 3037 4061 (44 20) 3037 4271 (1 212) 231 0695 (1 416) 628 3934 (1 212) 231 6191 (1 713) 275 6352 (1 713) 275 6304 Economics and Strategy Gurvinder Brar (Mumbai) Nilesh Kalamkar (New York) Business & Computer Services (1 212) 231 0663 Vikas Dwivedi (Houston) Kevin Little (Houston) (1 212) 231 0693 TMET Kevin Smithen (New York) Greg MacDonald (Toronto) Colin Hamilton (Global) Jim Lennon (London) (1 212) 231 0683 Global Metals & Mining Daniel Greenspan (Toronto) Ron Stewart (Toronto) Michael Siperco (Toronto) Michael Gray (Vancouver) Commodities & Precious Metals Quantitative Analysis Steel & Metals Aldo Mazzaferro (New York) Angie Storozynski (Head of US Utilities & Alternative Energy) (1 212) 231 2569 Andrew Weisel (New York) (1 212) 231 1159 David Doyle (Toronto) Paper & Packaging Al Kabili (New York) (1 212) 231 6113 Oil & Gas Railroads Canadian Oil Sands/Heavy Oil Producers (1 403) 539 8544 (1 212) 231 6590 Transports & Logistics Kelly Dougherty (New York) (44 20) 3037 4465 (1 415) 762 5034 Electrical Equipment & Building Products Mike Wood (New York) (1 713) 275 6230 Europe Integrated David Farrell (London) (1 212) 231 2586 Construction and Engineering/Machinery (1 212) 231 0635 Software Laurent Vasilescu (New York) Energy (1 212) 231 8014 Media & Entertainment Department Stores & Softlines & Sportswear (1 212) 231 8046 (1 212) 231 0644 (1 212) 231 0643 Semiconductors (1 212) 231 8013 (1 416) 848 3521 Specialty Finance Vincent Caintic (New York) Consumer Retail Ben Schachter (Head of TMET) Tom White (New York) (1 416) 848 3663 (9197) 8055 5902 (1 212) 231 0360 Find our research at Macquarie: www.macquarie.com.au/research Thomson: www.thomson.com/financial Reuters: www.knowledge.reuters.com Bloomberg: MAC GO Factset: http://www.factset.com/home.aspx CapitalIQ www.capitaliq.com Contact Gareth Warfield for access (612) 8232 3207 Email addresses FirstName.Surname@macquarie.com eg. john.oconnell@macquarie.com (1 212) 231 2624 (1 212) 231 0649 Data Center Infrastructure Rajesh Ghai (New York) Equities Sales Head of Global Cash Equities Stevan Vrcelj (Sydney) (1 212) 231 1184 Head of Canadian Equities David Washburn (Toronto) Trading US Sales (612) 8232 5999 Head of US Equities Ken Savio (New York) (1 212) 231 2442 Austin Graham (New York) Peter Doerr (Chicago) Ali Mossadeghi (San Francisco) Canada Sales Roy McDowall (Montreal) (1 416) 848 3631 US Sales Trading (1 212) 231 2494 (1 312) 660 9052 (1 415) 762 5025 Robert DeRosa (New York) Nicholas Struk (New York) Michael Cornette (New York) (1 212) 231 2594 (1 212) 231 2487 (1 212) 231 0882 Canada Trading (1 514) 925 2864 Perry Catellier (Toronto) (1 416) 848 3619 International Sales Trading Mike Gray (New York) (1 212) 231 0928