PERTH (miningweekly.com) – Uranium junior 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, in the US.
The company said on Tuesday that the $15-million funding was the first component of a broader funding package which would also include a revenue streaming facility, for which a term sheet had been signed and due diligence was currently under way.
The convertible loan would comprise a $9.63-million loan from RCF VI and a $5.37-million loan by Pala, with the lenders having the ability to convert all or part of the loan into fully paid ordinary shares at a conversion price of 80c a share.
The convertible loans would bear an interest of 8% a year, payable in quarterly arrears in either cash or shares. The maturity date of the convertible loan was April 2017.
Meanwhile, the revenue streaming facility would be a nondilutive mechanism that would see a proportion of the future uranium sales revenue, over a finite period of time and finite quantity of production, being exchanged for a one-off upfront cash payment that would also be used for development or expansion capital.
Peninsula said it had received several proposals and had 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, which is aimed at generating an increased operating margin and subsequent financial sustainability,” said MD and CEO Gus Simpson.
The Lance project delivered its first uranium in January this year.
Under the first stage of development, Lance would produce between 500 000 lb and 700 000 lb of uranium oxide (U3O8) a year. Production would increase to 1.2-million pounds a year of U3O8 in the second stage of development.
Stage 3 development would further increase production to 2.3-million pounds a year of U3O8.
Peninsula pointed out that the Stage 2 expansion would see the termination of a toll milling agreement currently in place at Lance, bringing these functions in-house.
When combined with the cost benefits of increased production and economies of scale, all-in sustaining costs at Lance were expected to reduce by between $9/lb and $10/lb of U3O8, to between $31/lb and $32/lb.