Peninsula Energy (PEN.AX) has signed an additional sales agreement which requires the company to deliver 1.2 million pounds of uranium to Synatom, a Belgium-based outfit. The 1.2 million pounds will be delivered over a six year period, starting in 2028, and the pricing will include a base price with some market-price related components. According to the company, the gross revenue of this sales contract will be US$88-117M which represents a price of $73-97.5 per pound which should result in a substantial operating margin for Peninsula as the anticipated production cost on the Lance uranium project in Wyoming is US$42.50 per pound on an AISC-basis.
This new sales agreement brings the total amount of committed pounds to 6 million pounds of uranium, to be delivered over the next 10 years. According to the current mine plan and business plan, the mine is slated to produce almost 15 million pounds of uranium during that period, which means that just under 40% of the anticipated production now has found contractual buyers.
Disclosure: The author has no position in Peninsula Energy. Please read the disclaimer.
