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Peninsula Energy buying uranium low, selling high

The company has existing contracts securing US$420 million revenue.
Peninsula Energy buying uranium low, selling high
Peninsula is currently covered by five research houses

Peninsula Energy (ASX:PEN) is forecasting a cash positive current June quarter, largely thanks to its contract sales book that that has locked in an averages sales price of US$54 per pound.

To illustrate, year to date, Peninsula has sold 250,000 pounds of uranium at an average price of US$54 per pound.

Of this 250,000 pounds sold, 100,000 pounds was produced from Peninsula’s flagship Lance Projects located in Wyoming, U.S. and the remaining 150,000 pounds was purchased.

Peninsula is buying its uranium much lower than it is selling it, with contracts secured to purchase a further 300,000 pounds over the next 3 years at an average price of US$25 per pound.

Existing contracts over the next decade have a projected revenue of US$420 million meaning Peninsula is ideally positioned for a future rebound in uranium prices.


Background

Peninsula is producing uranium from the Lance Projects in the U.S. state of Wyoming.

The Lance Projects have a mine life of at least 20 years, underpinned by 53.7 million pounds of uranium, the largest uranium ISR JORC-Code compliant resource in North America.

Production for the previous March quarter was 25,2938 pounds uranium.

Multiple headers houses are used to extract uranium and currently seven header houses are in simultaneous operation.

Header house #8 is under construction and is due online in the current June quarter.

Peninsula also owns 74% of the undeveloped Karoo Projects in South Africa, which have a JORC resource of 56.9 million pounds uranium grading 1,108 ppm.

Karoo has the potential to be a second long-life asset for Peninsula.


Uranium market commentary

A common theme in the uranium market is production restraint with a number of the large uranium miners cutting production by 10-12% in the March quarter.

However, the demand for carbon-free nuclear power continues to grow with utilities now having over 800 million pounds of uranium uncovered over the next 10 years.

The consensus is that the secondary supplies can’t and won’t cover this supply gap over the long term.


All eyes on Peninsula

Peninsula has been recognised as a compelling place to be to play a uranium rebound and this is recognised by both its major shareholders and research coverage.

It boasts major shareholders that include Resource Capital Funds, Pala Investments, Global X Funds, BlackRock Funds and Areva.

Peninsula is currently covered by five research houses.

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Peninsula Energy Ltd Timeline

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