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Peninsula Energy's 2021 contracted uranium sales will deliver cash margin of US$6-8 million

The latest purchase agreement underpins Peninsula’s forecast net cash margin of US$6 million to US$8 million on uranium sales for next year.

Peninsula Energy Ltd - Peninsula Energy enters into binding purchase agreement with UG USA for uranium sale
Peninsula owns the Lance Projects in Wyoming, USA

Peninsula Energy Ltd (ASX:PEN) has entered into a binding purchase agreement with UG USA, a subsidiary of ORANO, for 400,000 pounds of uranium oxide for delivery in 2021.

This will add to the 450,000 pounds of U3O8 in committed sales that the company has to its customers in 2021.

The latest purchase agreement underpins Peninsula’s forecast net cash margin of US$6 million to US$8 million on uranium sales for next year, based on the difference between the purchase pricing and the sales price computations of the company’s agreements with customers.

“De-risks” cash flow projections

Managing director and CEO Wayne Heili said: “Entry into the agreement to secure the uranium that we need for most of our 2021 deliveries significantly de-risks our cash flow projections through to the end of next year.

“The recently completed equity raise along with the net cash margin from these sales will provide funding certainty through the second half of 2021, allowing us to complete the planned technical activities in support of an optimised restart plan for the Lance Projects, while uranium markets continuing to strengthen.”

While the price to be paid under the purchase agreement is confidential, it is in line with current market reported prices.

The agreed pricing is fixed and is not subject to any form of escalation or adjustment.

Purchased uranium will be delivered to Peninsula in allotments during the year in order to align with the timing of deliveries to customers.

Payment for the purchased uranium is also aligned with the receipt of proceeds from the sales.

Quick facts: Peninsula Energy Ltd

Price: 0.064 AUD

ASX:PEN
Market: ASX
Market Cap: $56.46 m
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