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Peninsula Energy notes production successes ahead of start to uranium extraction trials

The company hopes to reduce its production costs with a shift in chemistry.
The central processing plant for Lance uranium projects
INVESTMENT OVERVIEW: PEN The Big Picture
The central processing plant for Lance Uranium Projects

Peninsula Energy Ltd (ASX:PEN) has shared its quarterly successes with the market in a Stocktube investor presentation, highlighting key successes at the Lance Uranium Projects in Wyoming.

The 30-minute presentation, posted to Proactive Investors’ YouTube channel, profiles the company’s expansion plans for its key production asset.

Managing director and CEO Wayne Heili, who directly addressed the market in the results video for the September 2018 financial quarter, said the Lance projects “had a solid quarter with respect to our production objectives.

“We recorded over 40,000 pounds of produced uranium from the Lance projects during the quarter which topped the high end of our production guidance.

“Our toll-milling service provider dried and drummed over 30,000 pounds of yellowcake during the quarter.”

 

The product is dried and drummed intermittently on a campaign basis.

During the September 2018 quarter, the company reduced its inventory and spent less on production expenditures as it underwent a period of transition.

Peninsula is transitioning from an alkaline-based chemistry to a low-pH-based chemistry for the lixiviant, or liquid medium, it uses to leach uranium from ore at its recovery operations.

READ: Peninsula Energy secures approval to begin low-pH uranium recovery process trial

Wyoming-based Heili, who has an undergraduate degree in metallurgical engineering, acknowledged the proposed lixiviant change in a Proactive Investors Stocktube video published on Wednesday.

Heili said: “Last year at about this time, Peninsula announced our intentions to shift from an alkaline-based chemistry to a low-pH-based chemistry with our in situ recovery operations.

“We’ve been looking at the outcomes of low-pH lixiviant operations, and we believe that we can significantly enhance our production rates and improve our production costs through the shift in chemistry.”

 

Peninsula’s proposal to use a new low-pH lixiviant was welcomed by the Wyoming Department of Environmental Quality (WDEQ) which amended the company’s permit to mine (PTM) to allow testing of the lixiviant’s suitability for uranium recovery.

WDEQ’s 'non-significant revision' (NSR) gives the company the all-clear for a small-scale field demonstration in the US state.

Heili told Proactive Investors: “The company is very excited about getting this permission to test the new lixiviant, and on a field scale at our project.

“The field-scale testing will allow us to understand the technical parameters, the costs, and really the entire outcome of the proposed new lixiviant far better than we can understand through laboratory-scale testing.

“We’re bringing in some equipment, but we hope to be testing the new chemistry before the end of the year on a field-scale basis, which would be about three or four patterns in one of our existing mine units.”

READ: Peninsula Energy achieves quarterly increase in uranium production at Lance Projects

Heili acknowledged shareholder queries about the value in changing the company’s uranium extraction process.

He said: “I think one of the larger concerns for the shareholders and the stakeholders is our ability to restore the groundwater after our mining process.

“Through this field-scale test, we'll be able to go in and demonstrate the restoration technologies, and how they’ll be successful in bringing the groundwater quality back where we expect we can post-mining.”

The company leader acknowledged the company was hoping to start the testing in December 2018 and was awaiting further correspondence from WDEQ.

Neighbouring tenements to Pensinsula's Lance projects

Neighbouring tenements to Pensinsula's Lance projects

Peninsula is hoping to finish the trial within six to eight months of starting, after undergoing both mining and restoration phases.

Wyoming’s environment department is conducting a review of Peninsula’s requests to amend its existing mine permit and a source material and by-product licence (SML).

“When the Department of Environmental Quality completes their review, they’ll be putting out to the public for review and comment, their findings.

“So, we’re looking forward to seeing the DEQ findings and conclusions on our requests sometime in the near future, and later on, probably by the middle of next year, we hope to conclude the regulatory process and start wholesome, full-scale production activities at the Lance project.”

Drummed uranium from Lance

Drummed uranium from Lance

Financial aspects

Peninsula’s May 2018 guidance for the financial year ending June 30, 2019, remained unchanged in its latest quarterly report at 90,000 to 110,000 pounds.

During the September 2018 quarter, the company increased triuranium octoxide (U3O8) production by 10,000 pounds or 8% when compared to its results for 2018’s June quarter.

The company held US$13.6 million cash on September 30, 2018, going on to make a major transaction the next day.

On October 1, 2018, the company sold 100,000 pounds of U3O8 to a customer, its final delivery obligation for 2018.

WATCH: Peninsula Energy to become globally competitive uranium producer with low-pH ISR operation

Peninsula supplied 85,000 pounds itself and sourced 15,000 pounds from the market, with the transactions to appear in the company’s next quarterly report, for the December 2018 quarter.

Production results for the December quarter will be affected by the downtime of equipment failure at the company’s processing plant.

During Australia’s 2017-18 financial year, in January 2018, the company sold off a portion of its interest in a concentrate project for US$19 million cash, netting US$22.8 million after a tax remittance.

Revenue for the fiscal year came in at US$13.16 million after 257,934 pounds of uranium concentrate was sold.

READ: Peninsula Energy feasibility study results confirm new low-cost uranium operation

Lance project concentrate made up 177,934 pounds of the sales figure, with 80,000 sourced elsewhere.

The income-earning company reduced its consolidated losses by US$74 million or 98.4% to US$1.17 million.

Peninsula reported $8.71 million of its losses came from its decision to exit the Karoo projects in South Africa, a once-off cost that won’t be repeated this financial year.

The company had US$22.7 million of financial liabilities on June 30, 2018.

US dollar note

Capital matters

Merrill Lynch (Australia) Nominees Pty Limited was the company’s largest shareholder on September 27, 2018, with a notable 23.16% interest.

Citicorp Nominees Pty Limited was the second largest shareholder, holding 12.55%, followed by JP Morgan Nominees Australia Limited (3.41%), BNP Paribas Noms Pty Ltd (2.71%) and HSBC Custody Nominees (Australia) Limited (2.41%).

Additional HSBC and BNP Paribas companies are among Peninsula’s top 15 companies.

Peninsula had loan agreements with RCF VI and Pala that were on-sold to entities with Melbourne-based investment fund Collins Street Asset Management and the Collins Street Value Fund in July 2018, a top shareholder in Peninsula.

CS Fourth Nominees Pty Limited was the company’s 19th largest shareholder on September 27, holding 0.37%.

Peninsula’s shares closed up 1 cent, or 4.88%, to 22 cents yesterday.

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