Peninsula unveils revised strategy for Lance

Friday, 1 September 2023

Production at the in-situ leach (ISL) project, which Peninsula has transitioned to low-pH operations since it last operated commercially in 2019, had been expected to start this year, but in June, the Australia-based company announced that Uranium Energy Corp (UEC) had decided to terminate an existing toll-milling agreement to process loaded resins from Lance at its existing Irigaray Central Processing Plant. This prompted Peninsula to revise its plans.

The termination of the toll-milling agreement had come as a shock, prompting the company to accelerate existing plans to bring forward the development of its own in-house resin processing and yellowcake production, Managing Director and CEO Wayne Heili told investors. This had always been the company's intention for a later stage of the project, but this pivot in strategy has required a full evaluation of the extra capital and time requirements.

The new recovery plant will be capable of producing up to 2 million pounds U3O8 (769 tU) per year. Production is anticipated to begin in December 2024 and is projected to reach around 1.1 million pounds in calendar year 2025, ramping up to between 1.6 and 1.8 million pounds per year by 2029. The project is forecast to achieve positive cash flow during first full year of production, in 2025.

Net additional funding of USD95 million will be needed above that anticipated in the company's 2022 Definitive Feasibility for the project. The additional funding "is not required as one lump sum amount and may be obtained progressively" over the two year time period, the company said. It expects to source the additional finance through a combination of the sale of strategic uranium inventory, equity and debt instruments, although additional funding arrangements have not yet been put in place. The company has had "preliminary discussions" on possible debt options, including US government sources. Heili told investors that the company expects to be able to "more clearly define that" in October.

All customers have "indicated willingness to cooperatively revise near-term delivery schedules".

The revised LOM model is based on the total resource base of 21.8 million pounds U3O8 estimated to be contained within the Ross and Kendrick production areas alone. It excludes the contiguous Barber Resource Area, which has a 31.9 million pound resource base offering the opportunity for future growth. Production in the first two years is planned to be solely from the Ross production area, with production from Kendrick to commence in 2027. In total, 14.8 million pounds are expected to be produced from Ross and Kendrick over an effective production life of 10 years.