🕐26.08.09 - 01:54 Uhr

RCR broker report on uranium developer, Toro Energy



Resource Capital Research
September Quarter, 2009 Disclaimer and disclosure attached.

Copyright© 2009 by Resource Capital Research Pty Ltd.

All rights reserved.

1
0.32
Debt (A$m) - Sep 09F
Enterprise value (A$m)
Avg monthly volume (m)
Cash (A$m) - Sep 09F
Price/Cash (x) Cash (A$m)
Price/Book (x)
Listed company options: Net asset backing (Ac/share)
*Uranium prospective tenements only, both held and under application.
Reserves
Resources
Wiluna: L.

Way & C"pede Meas Ind & Inf.
Napperby Inferred
Mineralised Material (est., non compliant with JORC, inclusive of the Napperby Inferred Resource)
Napperby Historic
Total Mineralised (non JORC)
Contacts Directors
Mr Greg Hall
Managing Director
Tel: 61 (0) 8 8132 5600
Norwood, SA, Australia D.

Carter (Non Exec Dir)
J.

Sells (Non Exec Dir)
2.40
76
605.8
10,000
Mlb
Eqty
0.0
24.4
Aus (NT)
Location
3.35 7.4 7.4
31.8 31.8
Early Expl.

Namibia
Mount Woods 100% U rights U IOCG
Radium Hill
U3O8
0.0
Early Expl.

Aus (SA)
Early Expl.

Aus (WA)
Aus (SA)
0.0
24.4
0.0
Target
200
200
11.1
14.42
0.036
0.055
% ppm
0.0
U3O8
Kt
Cut Off
Process
na
Status
Project
na
na
Alk h/leach
Equity
9.34
100% 20.2
0/100%
100% U
3,799
Total Resources
0.0
12,500
3,799 3,799 3,274
-
0.0
2.50 2.50
4.4
72
1.5
0.64 0.60
1.42 6.32 6.59 7.50
2009F
Toro Energy Limited
All eyes are on the imminent release of Toro"s Wiluna uranium project
(24mlb resource) optimisation study.

If it meets targets then a market refocusing
on the long term strategic value of calcrete deposits (as per
Mega"s Lake Maitland transaction) should produce a stock re-rating.
A$ 0.19
Production and Financial Forecasts
2008a 2010F
69
2.00
Jun-09a
Exploration and evaluation (A$m)
Sep-09F
555.8
2.5
77
20 August 2009
Share price (A$)
Shares on issue (pr end) (m shares)
Funding from JV partners (A$m)
YEAR END: June
571
Allarrow Pty Ltd (1.8%)
TOE.AU
15
Uranium
Australia (WA,NT,SA), Namibia
Advanced Exploration/Resource Definition/PFS
Exchanges: ASX:TOE
Capital Profile
to
Tenement costs ($k per year)
Land holding ("000 ha)*
102.8 Drilling - Other/Diamond (m)
Number of shares (m) 556
Options and warrants (m)
0.19
52 week range (A$/share) 0.09
0.0
Market capitalisation (undiluted) (A$m)
Major shareholders: OZ Minerals Ltd (49.9%), ANZ Nominees (5.0%)
Corporate (A$m)
Convertible notes (m)
Drilling - RAB (m)
0 Exploration/(Expl.+ Corporate) (%)
Funding duration at current burn (years)
102.8
21,500
-
555.8
2,500
494.7
4,000
2,500
3,500
72
-
1.0 0.6
3,799
-
12,500
555.8
19,500 15,500
-
U DYL
U
OZL/MNT
31
Fully diluted (m)
U
6.0
0
Mlb
0 0
(JORC)
Project Ore
Mt
Company Comment
24.6
0.9
26.0
Cash backing (Ac/share)
** Nominal A$6m capital raising assumed FY10
26.0
1.6 1.6
Capital raisings (A$m)**
0
13.4 9.0
0
0.0
9.0 6.5
12.2
Uranium
Code for reporting mineral resources - Australian:
Classification U3O8
PFS Aus (WA)
Scoping
Reserves and Resources/Mineralised Material
Key Projects
Ownership/
26.9
2.7
26.0
6.5
U3O8
15.8
Investment Points
0.7
No
5.5
1.2
100% uranium focus.

Expl.

+ eval.

budget A$7m pa,
current cash A$8m (plus A$20m placement facility).
Potential Production 2012.

PFS completed on Wiluna
project (WA) - 24mlb JORC resource, (target 28mlb).
Critical Wiluna optimisation study due Sep "09 for
enhanced economics, BFS to start 4Q09.
Recent Wiluna resource upgrades very positive.

Lake Way
grade +34% to 543ppm, C"pede +26% to 553ppm.
Nearby Mega Uranium Lake Maitland transaction shows
long term strategic value of calcrete resources -
transaction value ~US$6/lb - equiv.

equals A$0.40/share
for TOE.
Napperby, NT.

JORC resource 7.4mlb, on track for 13mlb.
Scoping study complete mid 3Q09.
Oz Minerals recent selldown a one-off.
Positive (3Q09) Wiluna optimisation study results likely to
result in re-rating.
Project
0.0
E Smyth (Non Ex.

Ch"man)
0/100%
JV /
G.

Hall (MD) Option Metal
0/100%
Analyst: Dr Tony Parry
M.Myers (Non Exec Dir)

www.toroenergy.com.au
Lake Mackay
Napperby
Namibia
Wiluna
DYL
13.2
Calcrete
13.2
Route
Early Expl.
na
Alk.

Leach
6.0 13.2
100%
0.037
100%/25% Calc/Alask
100% U Calcrete
Partner Type
none
none Unc+S"stone
none Palaeochannel
P.

Lester (Non Exec Dir)
TOE - Toro Energy Limited
0.00
0.05
0.10
0.15
0.20
0.25
0.30
Aug-08
Sep-08
Oct-08
Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Aug-09
Share Price ($/Share)
Source: Bloomberg
Overview: TOE listed on the ASX in March 2006 and is a pacesetter in advancing calcrete style
uranium projects in Australia, with Wiluna (WA) at PFS stage and Napperby (NT) at scoping study.
Wiluna Optimisation Study: The GRD Minproc PFS was released in Sep ‘08.

and reviewed in our
4Q08 Report.

The PFS Option D assumed 1.5mtpa, 16.3mt LOM, 12 year mine life.

Capex A$247m,
opex US$39/lb, TOE"s base case project NPV @ 12.3% (nom) an uninspiring A$78m, using U3O8 price
of US$80/lb (A$/US$ of 0.75).

NPV is highly sensitive to grade and long term U3O8 price.

The current
Optimisation Study (OS) is critical to enhance project economics.

The OS is targeting capex -10%, head
grades +20% (actual +31% - see below), improved recoveries, mine life +5 years (resource drilling
underway), overall opex -13% (minimum) to US$34/lb, to give major NPV increase to A$165m (TOE
data).

This means OS release in 3Q09 will be a huge milestone for TOE and its share price.

Resource
Upgrades: The Jun ‘09 resource upgrade produced a 31% increase in overall average grade (from
419ppm to 548 ppm @ 200ppm cut off, and total contained U3O8 up 2% to 24.4mlb.
Lake Maitland ("LM") Transaction: Previously reported (1Q09 RCR TOE report).

Analogous regional
surficial calcrete resource to Wiluna (LM is 21.5mlb @ ~500ppm, 200ppm cut off) at scoping study
stage, possible production 2011.

Japanese utilities purchase of 35% values LM resource at ~US$6/lb
(subject to c/off grade).

This underpins strategic value of calcrete resources.

A similar value applied to
TOE"s Wiluna resource would imply ~A$0.40/share value for TOE shares.
Napperby Project (NT): 150km NW Alice Springs, resource drilling on-going.

Current JORC inferred
resource to 7.4mlb U3O8 (359ppm grade) over ~50% of a total 14km strike.

On track to confirm 13.2mlb
non JORC historic resource (Uranerz).

Calcrete hosted deposit is near surface (<8m depth), easily
mined, low strip ratio.

We expect release of the milestone Napperby scoping study mid 3Q09.
Other Exploration: Extensive greenfields/brownfields U exploration portfolio in SA, NT, WA and
Namibia (~38,000km2, budget A$2mpa).

Priorities are Lake MacKay (WA) unexplored, palaeochannel
and IOCG potential (initial reconnaissance soil and gravity program), Iwupataka (NT) sandstone and
unconformity, Namibia - JV with Deep Yellow (ASX:DYL earning 75%) will increase activity on Toe"s 3
Namibian tenements around DYL"s Tumas-Tubas project (DYL: >100mlb resource likely).

Mount
Woods (SA), TOE has 100% U rights for tenements surrounding OZL"s Prominent Hill ("PH")
operations.

OZL likely to increase their IOCG exploration with 15 PH style targets to be drilled.
Corporate: TOE has recently put in place an A$20m five year equity placement facility with a US
investment fund, which will ensure it can maintain momentum on fast-tracking Wiluna.
Investment Comment: TOE shares have not significantly reacted to analogous Lake Maitland sale
(implies AS$0.40 value for TOE) and recent very positive Wiluna grade increases.

Recent sell down of
Oz Minerals stake (ASX:OZL) to 49.9% was expected, may have created concerns about overhang,
which are unfounded.

If 3Q09 Wiluna optimisation study meets targets, we expect a near term share
price re-rating to ~A$0.25-A$0.30.
Resource Capital Research
September Quarter, 2009 Disclaimer and disclosure attached.

Copyright© 2009 by Resource Capital Research Pty Ltd.

All rights reserved.

2
The table below summarises key project improvements targeted in Toro"s current optimisation study on
the flagship Wiluna calcrete project (completion Sep ‘09) Above-target resource grade increases already
achieved are the primary value drivers which will underpin the BFS and a planned startup in 2012/2013.
Subject to the imminent optimisation study results, TOE expects to commence a definitive feasibility study
on Wiluna in 4Q09.

This could lead to a decision to proceed in mid 2011, potential first production in 2H12
Resource Capital Research
September Quarter, 2009 Disclaimer and disclosure attached.

Copyright© 2009 by Resource Capital Research Pty Ltd.

All rights reserved.

3
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