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EPIC: PEN
Market: ASX:PEN
52-week High/Low: A$0.49 / A$0.22
Sector: Mining
Market Cap: A$59.06M
Website: www.pel.net.au
Peninsula Energy Ltd

Peninsula Energy Ltd

Peninsula Energy Ltd (ASX:PEN) is listed on the Australian Securities Exchange.

Peninsula Energy Ltd

www.pel.net.au

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Big picture - Why invest in Peninsula Energy Ltd


Peninsula Energy Ltd Snapshot

Peninsula Energy Limited (PEN) is an ASX listed uranium mining company which commenced in-situ recovery uranium operations in December 2015 at its Lance Projects in Wyoming, USA.


Peninsula is embarking on a project transformation initiative to change from an alkaline ISR operation to a low pH ISR operation with the aim of aligning the operating performance and cost profile of the Lance Projects with industry leading global uranium production projects.

WYOMING, USA – LANCE ISR URANIUM PROJECTS
(Peninsula Energy 100%)

 

BACKGROUND

The Lance Projects are located on the North-East flank of the Powder River Basin in Wyoming, USA (Lance Projects). The original NuBeth Joint Venture between Nuclear Dynamics Inc, Bethlehem Steel Corporation and later Pacific Power and Hydro (NuBeth JV), discovered thirteen substantial zones of uranium mineralisation associated with an extensive system of roll fronts confirmed by drilling between 1970 and 1979. As part of this exploration program, the NuBeth JV drilled more than 5,000 exploration and development holes, totalling in excess of 912,000 metres. A proprietary database of the historic drilling and pilot plant data was acquired by Peninsula in 2007, defining a then relatively unknown uranium district of which Peninsula is now the dominant mineral rights holder.

The Company has explored only part of this area since 2007 and delineated over 53.7mlbs of U3O8 JORC Code (2012) compliant resource by 2013..

The Lance Projects have 305 line kilometres of identified roll fronts stretching over 50 kilometres north-south and are open to the north, south and west. Unlike most in-situ recovery (ISR) projects, Peninsula’s mineral resources are located on contiguous landholdings where it controls the mineral interest..

In December 2015 Peninsula received the United States Nuclear Regulatory Commission’s (NRC) authorisation to begin in-situ uranium recovery operations from the Ross Permit Area at the Lance Projects utilising alkaline lixiviant.

 

PROJECT TRANSFORMATION INITIATIVE - A "GAME CHANGER"

In October 2017 the Company announced the outcomes of recent research initiatives aimed at improving the operating performance at the Lance Projects. These outcomes included  encouraging laboratory test results using lower pH solutions (mild acids), which returned  increased peak uranium solution grades averaging nearly 1.0 g/L with uranium recoveries typically over 90%. These initial results indicate that utilising a low pH system could be a transformational development for the Lance Projects and could align the operating performance and cost profile with current industry leading global uranium production projects. All 1st quartile uranium operations globally are ISR facilities that utilise a low pH lixiviant.

Research and Technical Assessment

Research efforts undertaken during 2017 confirmed that the uranium resource at the Lance Projects is robust but it also identified several key variations between the Lance trend mineral deposit and other Wyoming roll-front type deposits. Similar to the majority of uranium deposits mined in Kazakhstan, the Lance mineralisation is set in Cretaceous aged sediments rather than the younger Tertiary aged sediments typical in the Powder River Basin. With the passage of more time, it appears that the Lance deposit was subjected to a secondary alteration event that effectively bound much of the contained uranium in a less accessible host rock environment.

The Company has now employed state-of-the-art petrographic investigation techniques to reveal important mineralogical differences and to investigate the possibility of using alternative solution chemistries to boost the uranium recovery potential of the project.

“Game-Changing” Results

Laboratory scale tests were conducted to screen representative Lance Project core samples for amenability to alternative lixiviant solutions, notably both mild sulphuric and citric acid. The results of these tests were very encouraging and indicate that the uranium bound within the host rock during the secondary alteration event can be released into solution. The initial laboratory tests returned enriched solution grades averaging 295 mg/L with uranium recovery averages at 95% through 25 pore volumes treated. By way of comparison the uranium recoveries of recent comparable tests using an alkaline solution on Lance core averaged 35% recovery through 25 pore volumes (40% recovery achieved after 25 pore volumes during project to date operations). To obtain further confidence in the indicative results, the initial laboratory tests were duplicated and refined. Further test work also simulated post-leach groundwater restoration efforts.

The laboratory test results indicate that the operating performance of the Lance Projects could be dramatically improved through the use of the alternate lower pH solutions similar to those employed at ISR projects in Australia, Kazakhstan and elsewhere. The test results also indicate that groundwater restoration efforts following low pH solution mining is efficient and effective.

Permitting Amendments

To change from an alkaline based mining solution to a low pH solution will require the approval of amendment requests for the existing permits and licenses. Initial discussions with the relevant regulatory authority have been positive and have not identified any legal impediments to the use of low pH ISR solutions at the Lance Projects. Based on these preliminary discussions with the regulator, the Company holds a reasonable expectation that amendments to existing operating permits and licenses could be granted within 18 to 24 months of the October 2017 ASX announcement. During the amendment process, Peninsula will continue operating the Lance Projects in accordance with the currently approved licenses and permits.

Peninsula’s laboratory research indicates that the quality of the affected groundwater can be returned to pre-operational conditions following the use of lower pH ISR solutions. These results demonstrate consistency with the Lance Project’s current regulatory requirements. Currently established target restoration values would not need to be modified when considering the potential use of low pH ISR solutions. The initial research indicated that low pH solution environments may potentially be restored more efficiently than typical alkaline solution environments.

Lance Projects Operational Performance

Current production rate targets are established so that production levels would meet the Lance Projects sourced delivery commitments under existing term contracts and will continue on this basis while the permit amendment process proceeds in parallel. The Company continues to take advantage of the current low uranium price environment by purchasing uranium to meet commitments under certain term contracts.

In parallel to the low pH solution permit amendment process, operations at the Lance Projects will continue as they are with production from the currently active operating areas and the Company expects production to average between 30,000 and 40,000 lbs U3O8 per quarter (120,000 to 160,000 lbs U3O8 per annum) through to the end of CY 2018. Production from the Company’s nine (9) commissioned header houses using alkaline lixiviant will form the basis of on-going operations over the near-term.  The Company is also bringing header house 10 into readiness in mid-2018 to increase operating flexibility

No further wellfield development capital expenditures are currently scheduled under the existing alkaline ISR permit beyond those for Header House 10.

 

SALES AND MARKETING

In the current low uranium price environment, the Company has contracted to purchase 900,000 lbs U3O8 over the next 3 years at an average cost of US$25/lb to meet non-Lance sourced delivery commitments under term contracts.

Peninsula currently has up to 7.6 million lbs of U3O8 remaining under contract for delivery to major utilities located in the United States and Europe through to 2030 at a weighted average delivery price of approximately US$54.50/lb U3O8. Projected revenue remaining under these existing long term contracts is up to US$415 million. These contracts provide a substantial earnings stream to the Company whilst allowing it to retain significant quantities of planned U3O8 production for contracting during future periods.

 

JORC CODE - COMPLIANT RESOURCE

The remaining JORC-compliant Resource Estimate for the Lance Projects  is 53.5Mlbs, calculated by applying a combined constraint of a GT of 0.2 contour and 200ppm eU3O8. These cut offs are considered to be appropriate for both calculating and reporting of ISR resources at the Lance Projects.

The measured, indicated and inferred resources are located in host sandstones. Geological modelling of the extensive down-hole geophysical data has accurately defined the impermeable shale and mudstone horizons that form the confining horizons to the mineralised sandstones.

MR JOHN HARRISON
(Non Executive Chairman)

Mr Harrison brings to Peninsula a wealth of experience and resource sector knowledge acquired over a 45 year career including 20 years of investment banking in London. During this time Mr Harrison has developed an extensive international contact base advising companies across a range of commodities, (including uranium) and raising more than £500m in equity capital in the process.

Prior to joining RFC Ambrian Ltd and following a successful career in the Lloyd’s reinsurance market, Mr Harrison was Managing Director at Numis Securities Ltd (Numis) where he worked on the development and listing of the then, new Lloyd’s corporate underwriting vehicles, an activity upon which the Numis corporate finance franchise was built.

Mr Harrison is the former Non-Executive Chairman (UK) of international advisory and broking firm RFC Ambrian Ltd and is currently the Non-Executive Chairman of unlisted UK coking coal development company West Cumbria Mining Limited.

 

MR WAYNE HEILI
(Managing Director / Chief Executive Officer)

Mr Heili has spent the bulk of his 30-year professional career in the uranium mining industry. He most recently served as President and Chief Executive Officer of Ur-Energy, Inc. where he successfully oversaw the design, construction, commissioning and ramp-up of the Lost Creek in-situ uranium project in Wyoming USA. Prior to joining Ur-Energy, Inc., Mr Heili served as Operations Manager of the Christensen/Irigaray in-situ uranium mines in Wyoming and also has experience on conventional uranium mines in Texas. He holds a Bachelor of Science in Metallurgical Engineering from Michigan Technological University and is a past President of the Uranium Producers of America.

 

MR EVGENIJ IORICH
(Non-Executive Director)

Mr Iorich is currently Vice President, Investment Team at Pala Investments Limited (Pala) and has extensive experience in the natural resources sector across a broad range of commodities with a focus on M&A opportunities, operational, financial planning and corporate structuring.

Prior to joining Pala in 2006, Mr Iorich was a financial manager at Mechel, the Russian metals and mining company, where his responsibilities included all aspects of budgeting and financial modelling.

Mr Iorich graduated from the University of Zurich with a Master of Arts degree and is currently a Non-Executive Director of TSX-listed Serinus Energy and TSX-V-listed Asian Mineral Resources.

 

MR HARRISON (HINK) BARKER
(Non-Executive Director)

Harrison (Hink) Barker retired June 1, 2015 from the Generation segment of Dominion Resources with over 40 years of fossil and nuclear fuel commercial and technical responsibilities. Since 1992, Mr Barker had been the manager responsible for Dominion’s procurement of nuclear fuel and the related processing steps of conversion from U3O8 to UF6, enrichment of UF6, and fabrication of nuclear fuel assemblies.

He is a former chair of the Nuclear Energy Institute’s Utility Fuel Committee, and a past member of the World Nuclear Fuel Market Board of Directors (Chairman for two years). He served on an Advisory Board to American Uranium Corporation while they attempted to develop the Wyoming Reno Creek uranium deposit.

From 1975 to 1984 he worked as an engineer and supervisor in the areas of nuclear fuel quality assurance, nuclear core design, nuclear fabrication contract administration, nuclear fuel procurement, spent fuel transportation and disposal planning during a period when Dominion was building its regulated nuclear operating fleet in Virginia.

Mr Barker holds a Bachelor of Science degree in Electrical Engineering, and a Master’s in Nuclear Engineering Science both from the University of Florida.

 

MR MARK WHEATLEY
(Non-Executive Director)

Mr Wheatley is an experienced resources company CEO, Non-Executive Director and Chairman with a career spanning more than 30 years in mining and related industries.  He has worked in the uranium industry since 2003 and been involved in ISR project exploration, feasibility studies, start up, production, rehabilitation and closure. His uranium experience includes the roles of Chairman and CEO of Southern Cross Resources Inc., the operator of the Honeymoon ISR uranium project, Non-Executive Director of Uranium One Inc. and Uranium Resources Inc.  His other board roles have included Non-Executive Chairman of Xanadu Mines Ltd, Gold One International Ltd, Goliath Gold Mining Ltd, Norton Gold Fields Ltd and directorship of St Barbara Ltd.

 

MR DAVID COYNE
(Finance Director / Chief Financial Officer)

Mr Coyne has over 20 years' experience in the mining, and engineering and construction industries, both within Australia and internationally. Prior to joining Peninsula, My Coyne held senior executive positions with Australia listed companies Macmahon Holdings Limited and VDM Group Limited, and with unlisted global manganese miner Consolidated Minerals. Over the past 10 years, Mr Coyne has been directly involved in a number of equity and debt raising transactions and has been the project director on a company-wide systems implementation project. Mr Coyne has previously served on the Board of listed iron ore miner, BC Iron limited, where he also held the role of Chairman of the Audit and Risk Committee.

Business & Registered Office
Units 32/33, Level 3,
22 Railway Road
Subiaco WA 6008
Australia

Postal Address
PO Box 8129
Subiaco East WA 6008
Australia

Contact Numbers
Phone: +61 (0)8 9380 9920
Fax:     +61 (0)8 9381 5064
Email:   [email protected]

Share Registry:
Link Market Services Limited
For all Shareholding queries and Option Conversions

Phone:  +61 1300 554 474
Fax:      +61 (0)2 9287 0303

Business & Registered Office

Units 32/33, Level 3,
22 Railway Road
Subiaco WA 6008
Australia



Postal Address

PO Box 8129
Subiaco East WA 6008
Australia


Contact Numbers

Phone: +61 (0)8 9380 9920
Fax:     +61 (0)8 9381 5064
Email:   [email protected]

Share Registry:
Link Market Services Limited
For all Shareholding queries and Option Conversions

Phone:  +61 1300 554 474
Fax:      +61 (0)2 9287 0303

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