Name and Location
Lance uranium project, Wyoming, US.

Client
Strata Energy, a wholly owned subsidiary of Peninsula Energy.

Project Description
Peninsula’s board has approved a lower-cost three-stage scalable production development plan for its Lance project.
The plan comprises a three-stage ramp-up strategy.

Stage 1 entails a production rate of between 500 000 lb/y and 700 000 lb/y of uranium (U3O8) and includes:
• up to seven wellfield units in simultaneous operation at any point;
• the installation and commissioning of six ion-exchange columns in the central processing plant (CPP); and
• the significant reduction in the extent of the initial CPP building structure and footprint – from the original design parameters – to house the reduced plant and equipment.

Stage 2 involves a production rate of 1.2-million pounds of U3O8 a year and entails:
• up to 14 wellfield units in simultaneous operation at any point;
• the expansion of the CPP building structure and footprint to accommodate additional processing equipment;
• the installation and commissioning of an additional six ion-exchange columns in the CPP, increasing the total number of ion-exchange columns to 12; and
• the installation of elution, drying and packaging equipment in the expanded CPP.

Stage 3 involves a production rate of 2.3-million pounds of U3O8 a year and entails:
• the development of 14 wellfield units in Barber;
• the construction of a satellite plant comprising 12 ion-exchange columns and a reverse-osmosis module at Barber; and
• the trucking of loaded resin from the satellite plant to the CPP for treatment and packaging.

The scalable production development plan significantly reduces the initial funding required to initiate sustainable production at the Lance projects, decreases the volume of U3O8 required to be contracted in Stage 1 and enables the company to defer most of the planned uranium sales contracts until the uranium price is more favourable.

Further, commissioning of the processing facility and wellfield operations in Stage 1 significantly derisks Stage 2 and Stage 3 upgrades.

Net Present Value/Internal Rate of Return
The project has an unlevered pretax net present value at 8% of $288-million and a pretax internal rate of return of 36%.

Value
Remaining capital expenditure (capex) for Stage 1, including contingency, is $33-million.
Capex for Stage 2, including contingency, is $35-million.
Capex for Stage 3, including contingency, is $78-million.

Duration
Not stated.

Latest Developments
Peninsula Energy has secured $15-million in funding through convertible loan agreements with shareholders Resources Capital Fund VI (RCF VI) and Pala Investments to fund the expansion of its Lance project.
The funding is the first component of a broader funding package that will also include a revenue streaming facility, for which a term sheet has been signed and due diligence is currently under way.
The convertible loan will comprise a $9.63-million loan from RCF VI and a $5.37-million loan by Pala, with the lenders having the option to convert all or part of the loan into fully paid ordinary shares at a conversion price of 80c a share.
The convertible loans will bear an interest of 8% a year, payable in quarterly arrears in either cash or shares.
The maturity date of the convertible loan is April 2017.
Meanwhile, the revenue streaming facility will be a nondilutive mechanism that will result in a proportion of the future uranium sales revenue, over a finite period, being exchanged for a one-off upfront cash payment that will also be used for development or expansion capital.
Peninsula has received several proposals and has executed one nonbinding term sheet for a revenue streaming facility, with the due diligence on this facility now well advanced.
“Peninsula is pleased to have secured this funding as it enables the company to accelerate development activity at the Lance project and move to the next production phase . . . aimed at generating an increased operating margin and subsequent financial sustainability,” MD and CEO Gus Simpson has said.
The Lance project delivered its first uranium in January.
Peninsula has indicated that the Stage 2 expansion will result in the termination of a toll milling agreement currently in place at Lance, as this will be done in-house.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Peninsula Energy, tel +61 8 9380 9920, fax +61 8 9381 5064.