Peninsula Energy Primed to Produce Uranium as Prices at New Highs

• Peninsula Energy is working to bring its Lance uranium project into production in late 2024, targeting 2 million pounds per year initially.
• Challenges in 2023 led Peninsula to build its own in-house processing capacity rather than rely on a third party, enabling lower costs and higher production capacity.
• Recent capital raises of $60M provide full funding for completing construction and restarting production at Lance. Additional funding can come from potential future option exercises.
• Peninsula has a quality existing contract book but also substantial uncontracted production volume allowing for upside exposure to higher uranium prices.
• Management believes uranium prices could reach all-time highs in 2024 on tightening supply/demand and possible import bans, benefitting near-term producers like Peninsula.

Peninsula Targets Uranium Production in Late 2024 After Addressing 2023 Setbacks

Australia-based Peninsula Energy (ASX: PEN, OTCQB:PENMF)has its sights set on resuming uranium production in late 2024 from its Lance In-Situ Recovery (ISR) project in Wyoming after overcoming challenges that hampered its plans in 2023. The company aims to achieve an initial production rate of around 2 million pounds per year of uranium oxide concentrate, also known as yellowcake.

"2024 is going to be a turnkey year for us we set the stage in 2023 to to bring the project to a more independent and and fully capable Uranian production project," stated Peninsula Managing Director and CEO Wayne Heili in a recent interview.

Ramping Up In-House Processing

Peninsula originally intended to produce yellowcake in 2023 via a "satellite" model, whereby it would process loaded ion exchange resins containing uranium at a third-party facility. However, as Heili explained, "In the middle of the year we lost the services of that third-party provider and we had to move to establish that in-house capability."

This involved Peninsula deciding to construct its backend processing infrastructure at Lance to convert resins into dried yellowcake. According to Heili, vertical integration enhances the economics: "When we're doing it in-house we can do it cheaper and we can do it more efficiently." The move also allows higher production volumes, doubling nameplate capacity relative to the prior satellite approach.

Sufficient Funding to Reach Production

To pay for completing the Lance facility, Peninsula raised A$60 million in late 2023 via an institutional placement and share purchase plan. As Heili affirmed, "That Target level of fundraising was a sufficient amount for us to complete the plant construction." The company also has unexercised options potentially worth around A$40 million that could provide additional funding if needed after production resumes.

Quality Contract Book But Upside Exposure

An important consideration for investors is Peninsula's existing contract coverage. Per Heili, Peninsula has legacy contracts totaling around 600,000 pounds per year, but with nameplate capacity of 2 million pounds there is substantial uncommitted volume providing leverage to rising uranium prices. The company is already profitable on contracted volumes at current price levels.

On the market dynamics potentially buoying Peninsula as it approaches production, Heili sees several catalysts "supporting an upward moving market for several years to come." These include high reliance on Russian uranium imports that could face bans, renewed buying from the Sprott Physical Uranium Trust, and widening supply deficits as global reactor construction continues apace.

Heili suggests Peninsula will be "ready to demonstrate" ISR production from Lance to utilities at an opportune time: "If you have a uranium line that's licensed and ready to produce uh then then the question is why aren't you producing at it". With Peninsula's renewed push towards yellowcake output, investors now have enhanced clarity on when they can expect to start seeing realized sales.

The Investment Thesis for Peninsula Energy

• Uranium exposure via near-term US production capability as market faces structural supply deficit
• Q3 2024 targeted for production start at 2M lb/year rate provides leverage to rising prices
• Existing contract book derisks initial ramp-up phase while allowing upside to spot/term prices
• Funded for completion of construction at Lance following recent A$60M capital raise
• Potential for higher production levels beyond nameplate as in-house processing enables economies of scale

After disappointing delays in achieving first production from its Wyoming ISR uranium project, Peninsula Energy has reconfigured its plans to enable in-house processing and vertically integrate operations. With construction activities now fully funded and the backend facility on track for completion in 2024, Peninsula can soon demonstrate the viability of its production technique. The company enters a market period where uranium prices face substantial upside from lagging mine supply growth and policy-driven constraints to Russian exports. While derisked by a quality contract book, Peninsula also retains exposure to higher prices through uncommitted future volumes. Investors seeking leverage from an emerging US-focused uranium producer can now track the company's progress towards output in the coming 18 months.