Peninsula Energy (ASX:PEN) now has a new approach for its Lance uranium project, as the company’s board of directors has approved a three stage development program for the project which is located in Wyoming, USA. In a first production stage the expected output will be relatively low at just 0.5-0.7 million pounds per year, increasing to 1.2 million pounds in stage 2 and 2.3 million pounds per year in the third stage of the planned operations.
By opting for the scalable plant, Peninsula reduced the initial capital expenditures at Lance where production is anticipated to start in H1 2015. The remaining capex for the first stage is just $33M and the company will need an additional $35M and $78M for the second and the third stage of the project. Lance should be viable even at the lower production rate as Peninsula Energy has already contracted 34-50% of the production until 2020. At an expected AISC of less than $30 per pound of uranium, Peninsula’s margins should remain robust and the company could be able to finance its expansion plans without any additional external financing. Peninsula expects to enter into additional contracts to sell 1.5-2.5 million pounds of uranium over the next 5 years, and we’ll be looking forward to see the price Peninsula will receive for its uranium.
> Click here to go to the Peninsula Energy website
Disclosure: The author holds no position in Peninsula Energy. Please see our disclaimer for current positions.
