EXPLORATION & DEVELOPMENT

Peninsula positioned for Lance uranium development

A DECADE after it took a decision to mine, and after four years of trials and tribulations, Peninsula Energy says an updated definitive feasibility study shows its Lance project in the US can be “a globally competitive” uranium operation.

 Drilling at Lance

Drilling at Lance

The DFS examined the potential to operate a smaller scale in-situ recovery mine over the already permitted Ross and Kendrick areas, where 14.4 million pounds of yellowcake can be recovered over 14 years.
 
Total resources at Lance, which also hosts the less advanced Barber area, total 53.7Mlb, suggesting Peninsula has the capacity to grow with the market.
 
The junior, which has invested in low-pH field trials over the past few years to help de-risk its operations, expects Lance could generate US$894 million over the initial life, assuming average sales at $62.38/lb, compared to all-in life of mine costs of $45.74/lb.
 
Net present value is put at $125 million and internal rate of return is 43%. 
 
Pre-tax net cash is expected to be $239 million.
 
Production would take three years to ramp up, reaching a steady state of 2Mlbpa from year four, with average production of 1.3Mlbpa over the life of mine.
 
It needs around $60 million to get to positive cashflow in year three. Life of mine capex is $291 million over two stages, with the largest costs being the stage two wellfield replacement project and sustaining capex at $196 million.
 
Stage one envisages average production of 820,000lbpa, lower than originally scoped, while the second stage is targeting 2Mlba of yellowcake.
 
Peninsula says the 31Mlb Barber resource, which is mostly inferred, remains an option to grow production towards 3Mlba.
 
The company can fund the works out of its existing cash, and from its existing sales of uranium under contracts that has it delivering 4.8Mlb to the market priced at $56-58 million. That should generate a $9 million profit this year. It started the quarter with around $8 million cash.
 
The junior has been selling product from Lance, and has purchased uranium for sales in recent years. 
 
Production at Lance was suspended in mid-2019 to allow for trials of a low-pH in-situ recovery process, in addition to the originally authorised alkaline ISR process.
 
Peninsula claims it is the only US-based uranium company authorised to use the low-pH ISR method, with Lance being in position to get into the market before any of its rivals.
 
A final investment decision to restart operations is targeted before the end of the year. 
 
Peninsula's shares, which have traded at A11-35c over the past year, were last traded at 20c, valuing it at $199 million.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining News Intelligence team.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining News Intelligence team.

editions

Mining Journal Intelligence Investor Sentiment Report 2024

Survey revealing the plans, priorities, and preferences of 120+ mining investors and their expectations for the sector in 2024.

editions

Mining Journal Intelligence Mining Equities Report 2023

Access an exclusive, inside look on the quarterly mining IPOs and secondary raisings data and mining equities performance tables with an annual Stock Exchange Comparisons supplement.

editions

Mining Journal Intelligence World Risk Report 2023 (feat. MineHutte ratings)

A detailed analysis of mining investment risks across 121 jurisdictions globally, built on 11 ‘hard risk’ metrics and an industrywide survey.

editions

Mining Journal Intelligence Global Leadership Report 2023: Social licence

Gain insights into social licence trends and best practices from interviews with 20+ top mining company executives and an industrywide survey.