Interview with Wayne Heili, MD of Peninsula Energy Ltd.

Our previous interview: https://www.cruxinvestor.com/posts/pe...

Recording date: 11th January 2024

Peninsula Positions for Uranium Resurgence With 2024 Production Plans

Australian uranium developer Peninsula Energy (OTCQB:PENMF) believes it has addressed the challenges that hindered its production plans in 2023 and can now fasttrack efforts to join the ranks of uranium suppliers by late 2024. The company is completing construction of a processing facility at its Lance project in the U.S. to produce yellowcake from an insitu recovery (ISR) operation in Wyoming. Peninsula aims to ramp up to an initial production rate of 2 million pounds U3O8 per year.

According to CEO Wayne Heili, securing their own backend capability after originally planning for toll processing will enable Peninsula to reduce costs and more than double targeted output relative to the prior satellite approach. The decision did push back first production, but the extended timeline may prove fortuitous if uranium markets continue recent strength.

Following an institutional placement and share purchase plan raising A$60 million, Heili confirmed Peninsula now has adequate funding to finish plant modifications and infrastructure at Lance to achieve production in 2024. The company also structured additional financing options potentially worth around A$40 million to provide further support for the rampup phase if required.

Importantly, Peninsula Energy has substantial existing contract coverage inherited from the project’s prior owners that will help derisk early operations. However, with only about onethird of the expanded production capacity spoken for so far, the company retains significant exposure to rising spot and term prices expected due to uranium’s structural supply deficit.

Heili points to U.S. policies around Russian uranium imports, renewed buying from the Sprott Physical Uranium Trust, and widening supply/demand imbalances as providing multiyear tailwinds. With mines unable to keep pace with reactor requirements globally, he suggests the market could retest alltime highs above $130 per pound in 2024. That would be a major boon for Peninsula coming online.

The Lance ISR technique itself is proven technology, having operated previously, and Heili expressed confidence in bringing production back given his team’s expertise. While timing may trail some other projects, Peninsula anticipates having lower costs than most at around $50 per pound. Thus, profit margins look attractive even on existing contract rates assumed to average $60 to $70.

With Peninsula clearing obstacles that distorted its outlook a year ago, investors now have improved visibility on the company’s capability to deliver yellowcake into a strengthening market. The strategic move to control its own backend processing derisks operations and allows increased scale. Heili contends that with all key pieces in place, “2024 is about execution and getting the construction done and ready for production.” The coming 18 months will demonstrate whether Peninsula can fulfill its production promises to shareholders.
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