Sign up Australia
Proactive Investors - Run By Investors For Investors

Peninsula Energy lifts cash position with US$19 million uranium sales deal

The company has sold part of its interests in long-term sales and purchase agreements.
Uranium drums
Proceeds will help fund the transition to low pH mining at the Lance projects in U.S.

Peninsula Energy Ltd (ASX:PEN) has strengthened its cash position by selling part of its interests in long-term uranium sale and purchase agreements for US$19 million.

Binding contract sale agreements have been signed with a third-party for a portion of its delivery commitments under two existing concentrate agreements.

The quantity of delivery obligations sold represents 935,000 pounds of uranium.

These commitments were scheduled to be fulfilled between 2018 and 2021.

Financial position “greatly enhanced”

Wayne Heili, managing director said: “One of Peninsula’s defining strengths is our sales contract portfolio.

“We have greatly enhanced our current financial position by accelerating some of the income potential contained in that portfolio.

“This non-dilutive cash infusion should allow the company to comfortably advance our production improvement initiatives at the Lance projects.

“Peninsula greatly appreciates the full cooperation of our counterparties in this transaction.

“The professionalism and creativity exhibited by these industry leaders was on full display throughout the process of arranging this transaction.”

READ: Peninsula Energy lifts uranium production for third straight quarter

As part of the contract sale, Peninsula has also sold its entire interest in an agreement to purchase 900,000 pounds or uranium between 2018 and 2020.

This commitment is no longer required as uranium purchases under this agreement were intended to provide the bulk of material for commitments that have been satisfied through the contract sale.

Strong contract book retained

Peninsula has retained a strong contract book of up to 6.6 million pounds remaining under contract for delivery between 2018 and 2030 with customers in North America and Europe.

The weighted average delivery price of these contracts is US$51-53 per pound of uranium.

Deliveries under the agreements will be a combination of uranium from Peninsula’s Lance projects in Wyoming, U.S.A., and open origin uranium that the company may purchase on the open market.

Possible new agreements

Peninsula continues to engage with existing and potential new customers regarding possible new long-term concentrate sale and purchase agreements.

These are targeting pricing mechanisms that would support increased production scenarios under the company’s planned transition to low pH mining at the Lance projects.

Part of the contract sale proceeds will be used to progress the low pH permit amendments, finalise additional technical testing and complete a low pH feasibility study.

READ: Peninsula Energy’s substantial shareholder lifts position

With a strong cash position and additional financial flexibility, Peninsula does not anticipate the need for a working capital facility over the next 1 to 2 years.

Therefore, the Investec working capital facility has not been extended.

This reduces corporate overhead expenses by eliminating associated line fees, undrawn commitment fees and interest on drawn working capital amounts.

View full PEN profile View Profile

Peninsula Energy Ltd Timeline

Related Articles

Photo from Finniss project
May 09 2018
Importantly, the doubling in the Grants resource was at the same high grade of 1.5% lithium.
February 21 2018
Galileo's Star zinc project in Zambia is showing plenty of promise
Horse Hill drilling site under construction
March 14 2018
Sue Corrigan is a geologist and geoscientist with 40 years' industry experience in both exploration and development geology

No investment advice

The information on this Site is of a general nature only. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions. You acknowledge and understand that neither the Company, its related bodies corporate, the information providers or their affiliates will advise you personally about the nature, potential value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter. You should read our FSG and any other relevant disclosure documents and if necessary seek persona advice prior to making any investment decision.

You understand and agree that no Content (as defined below) published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person.

You understand that in certain circumstances the Company, its related bodies corporate, the information providers or their affiliates may have received, or be entitled to receive, financial or other consideration in connection with promoting, and providing information about, certain entities on the Site and in communications otherwise provided to you.

You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate. From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Before you act on any general advice we provide, please consider whether it is appropriate for your personal circumstances.

© Proactive Investors 2018

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use