Peninsula Energy, based in Australia, owns the Lance Projects located in Wyoming and is focused on developing an In-Situ Recovery (ISR) uranium powerhouse. Their low-cost ISR processing technique, coupled with high priced long-term contracts positions, Peninsula is a viable uranium producer despite spot uranium prices hovering around $35 per pound (earlier).
Management began signing long-term contracts for production at Lance in 2011 when uranium prices were significantly higher than today. The firm currently has contracts in place totaling 7.8 million pounds at an average price of $59 per pound through 2020. Therefore, the average price Peninsula is expected to receive throughout the remainder the decade is significantly higher than the current long-term price of approximately $45 per pound, which they feel locks in margin and de-risks operations as a whole.
In their view, Peninsula long-term contracts and low cost ISR operations position the firm to thrive despite lower spot uranium prices. First production was reached in 2015. In December 2015, the firm brought its Ross Permit Area (located within the Lance Projects) online with ISR production commencing. Their currently estimate average cash costs of just $22 per pound during Stage 1, generating an impressive gross margin of approximately 63%.
Further, Lance hosts a significant resource base totaling 53.6 million pounds, including 4.5 million pounds in Measured, 12.6 million pounds in Indicated and 36.5
million pounds in Inferred resources. They note that while the majority of resources are Inferred, the firm currently has six drill rigs operating, which they feel could ultimately increase resources while upgrading the existing resource base.
The Lance Projects are scalable. The Lance Projects are being developed in a three-stage approach with Stage 1 recently completed. Moreover, Stage 1 provides Lance with production capabilities totaling 600-800,000 pounds per year.
Other projects in South Africa.
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