Interview with Wayne Heili, MD/CEO of Peninsula Energy (ASX:PEN)
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Recording date: 18th December 2024
After over a year of preparation, U.S.-based uranium company Peninsula Energy (PEN) has resumed production at its Lance in-situ recovery (ISR) projects in Wyoming. The company is now on track to become a significant supplier of uranium as nuclear energy sees a resurgence amid the push for carbon-free baseload power.
Peninsula announced it began capturing uranium on ion exchange resins in December 2024 after preconditioning its well fields. This marks the first step to producing uranium concentrate (U3O8), with initial production of yellowcake expected in Q1 2025 and first deliveries to utilities slated for Q2 2025.
2025 production is forecast at 600,000 lbs of U3O8, generating the company's first revenues. More importantly, Peninsula provided a steep multi-year growth trajectory, targeting 1.1-1.3M lbs in 2026 and 1.5-1.7M lbs in 2027 as it ramps up the Lance projects towards its licensed capacity of 2-3M lbs per annum.
At the same time, Peninsula has secured a solid financial foundation to complete construction and fund working capital needs. As of October 2024, the company had $68 million of cash, with only $15 million remaining to finish its processing plant. This leaves an estimated $50 million for operating needs as it moves to first production.
Peninsula's Lance projects represent a large, scalable production base with decades of mine life. With over 58 million lbs of measured and indicated resources, and additional regional exploration potential, the company offers investors long-term exposure to the uranium market recovery now underway.
The uranium market has turned a corner over the past 18 months, driven by COVID-19 related mine disruptions, dwindling secondary supplies, and strong demand growth as countries turn to nuclear energy to meet rising electricity needs while phasing out fossil fuels. This has seen the spot uranium price increase by over 50% since early 2020, with further upside likely as the structural supply deficit widens.
As a U.S. ISR uranium producer, Peninsula is particularly well positioned to benefit from the market upturn. Domestic nuclear utilities are looking to secure supply from stable jurisdictions due to geopolitical risks and potential trade restrictions on imports from nations like Russia. Additionally, Peninsula's industry-leading cost profile means it can generate robust margins and cash flows even at current prices.
With production now underway, a major growth runway ahead, and an improving uranium market, Peninsula offers a unique value proposition for investors. As countries reaffirm nuclear power's role in a clean energy future and utilities return to long-term contracting, Peninsula is set to emerge as a major winner. The company's proven management team, strengthened by the recent addition of a Chief Operating Officer with deep ISR experience, further enhances its outlook.
In the context of a looming uranium supply crunch, Peninsula stands out as a near-term U.S. production growth story with a long-life, low-cost asset base. As the uranium price continues to rise, Peninsula is positioning itself to capitalize on this once-in-a-cycle opportunity and reward shareholders. The coming months should see the company re-rated as it transitions to producer status and executes on its ambitious growth plans.
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