Peninsula Energy announced that it has signed two uranium concentrate sale and purchase agreements with major U.S. power utility companies. The agreements will see the company deliver up to 1,935,000 pounds of uranium from its Lance projects starting in 2016. They were made at prices significantly above current uranium spot price. The current contracts are for quantities of nearly 2 million pounds with the deliveries starting next year. The contracts are all combined. The ones from 2011, from last year and this year, all with a significant margin above our all-in costs at Stage I and Stage II of production, which is a significant achievement and accounts for a significant portion of our production over the next few years to the point where we are very comfortable, said Peninsula CEO and managing director, Gus Simpson.
In a note released Wednesday, Dundee Capital Markets analyst David Talbot said that those contracts are for a total of 3,997,500 pounds of U3O8. Average contract duration is estimated at about 7.5 years, suggesting that 533,000 pounds per year may be sold into contracts. They estimate the weighted average price may come in close to US$53.54 per pound ignoring escalation. With Lance production of 2.3 million pounds per annum, it appears that 13.3 percent of annual production is covered by contracts.
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