The company’s Lance projects are expected to start production before the end of 2015.
Exciting uranium news hit the space on Monday when Peninsula Energy (ASX:PEN) announced that recent development drilling in the Ross permit area at its Lance projects revealed significant high-grade uranium intercepts. The new intercepts could result in higher head grades and potentially higher recoveries at the projects.
The drilling, which was completed in July and early August by Peninsula’s wholly owned subsidiary, Strata Energy, consisted of a series of injection and production wells for the first production header house at Mine Unit 1 on at the Lance projects. Some significant intercepts found include 2.5 feet at 4,680 ppm U3O8 from 447.5 feet, 9 feet at 1,000 ppm U3O8 from 414.5 feet, 9 feet at 750 ppm U3O8 from 402.5 feet and 7 feet at 890 ppm U3O8 from 402.5 feet.
Strata has now completed 37 mining wells at the Lance projects, with 26 out of the 37 encountering significant mineralization. To date, a total of 104 monitor, injection and production wells have been drilled and fully completed at Mine Unit 1. The wells have also undergone mechanical integrity testing; 99 percent of the wells passed the mechanical integrity tests on the first round.
“It is very pleasing to see the continued success at each project stage building layer on layer. It is testimony to the quality of the assets we have, the planning that has gone into their development and the dedicated execution of those plans by the whole team,“ Peninsula CEO Gus Simpson said in a press release.
Higher head grades and potentially higher recoveries
Monday’s results have caught the attention of analysts, with Dundee Capital Markets’ David Talbot noting that they could have a bigger impact on the Lance projects than the high-grade results the company released last month.
“Today’s production drilling results at Peninsula’s first mine unit is more impactful than similar news that the company provided on July 15, when it returned higher uranium grades than resource grades from development drilling,” Talbot states in a research note. “The difference being that today’s results will make a direct impact during the mining of Mine Unit #1 in the early days of production. In contrast, only a small portion of the previous results were from within the Mine Unit itself.”
Talbot said that the results could in turn mean higher head grades and potentially higher recoveries, noting that they will be better for payback because they’ve been realized so early on. The Lance projects’ current resource sits at 53.7 million pounds of U3O8, and Talbot said that Monday’s results, along with previous development drilling results, suggest there is room for this number to grow.
Real test to come later this year
Peninsula’s Lance projects have been coming along nicely, and in its quarterly activities report, the company said the projects are both on budget and on schedule for first production in the second half of 2015. The company will also list on the NYSE in the near future.
But while the company has done everything right on its end, Talbot said that the real test will be the Nuclear Regulatory Commission’s (NRC) final pre-operation sign off. The projects have already received permitting from the NRC, but Talbot warned that this process has been delayed in the past.
“Peninsula anticipates start-up of operations in early Q4 2015. However, we assume start-up to occur in the following quarter, working a delay into our assumptions merely because we have seen multiple NRC pre-operational review delays over the past couple of years,” Talbot said.
Even so, Talbot reminded investors that Peninsula has consistently delivered milestone after milestone at the Lance projects and said that “the market has started to get behind the stock.” At end of day Monday, Peninsula’s share price was unmoved at AU$0.025. Year-to-date the company is up 25 percent.
Securities Disclosure: I, Kristen Moran, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Peninsula Energy is a client of the Investing News Network. This article is not paid-for content.
Peninsula Energy: Ready to Start Production in Q3 2015