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  • Peninsula Energy Makes Construction Tracks At Lance Uranium Projects 0 comments
    Nov 28, 2013 7:50 PM

    Peninsula Energy (ASX: PEN) is progressing site works at Ross Permit Area of its Lance Uranium Projects in Wyoming as it awaits the issue of the final Source Material Licence from the U.S. Nuclear Regulatory Commission.

    Interestingly, a number of mine planning drill holes have intersected significant mineralisation outside of the existing resource boundaries, raising the possibility of a future resource update.

    The works allow the company to quickly construct the central processing plant on receipt of the approval, which is expected in late March 2014, allowing production to start in the second half of 2014.

    "Peninsula is making significant progress on all allowable construction prior to the issuance of the SML. Its grant will allow construction of the Central Processing Plant and the installation of the production well-fields in 2014," executive chairman Gus Simpson said.

    Earthworks and Construction

    The company has stripped the required volumes of top soil from the central processing plant and administration areas in order to provide material for access roads, laydown areas and future site reclamation needs.

    It added that fabrication has commenced offsite on long lead items such as the Ion Exchange vessels and other pressure columns that it had previously sent purchase orders for.

    Drilling

    Peninsula has completed a total of 271 mine planning drill holes during the period from 1 January to 26 November 2013 for a total of 137,165 feet at the Lance Projects.

    These include 31 ore zone baseline water quality wells and monitoring wells, 234 delineation holes and six core holes all of which are located within and around Mine Units 1 and 2 (MU1and MU2) at the Ross Permit Area.

    Several of the delineation drillholes have intersected significant mineralisation, some of which is outside of the existing resource boundaries.

    Highlights include:

    - RMR2716: 8 feet at 1,030ppm U3O8 Grade Thickness (NASDAQ:GT) .82;
    - RMR2646: 6.5 feet at 520ppm U3O8 (GT .34); and
    - RMR2645: 4.5 feet at 740ppm U3O8 (GT .33).

    The monitoring well program, which began in January 2013 is being conducted to provide correlations and base line studies of the MU1 water quality and will further refine site-specific geological and hydrological parameters.

    These parameters are enhancing Peninsula's overall understanding of the ore body and extraction rates.

    Delineation drilling is also being conducted to optimise the well field patterns and perimeter monitor well locations within MU1 and MU2.

    Core drilling is continuing in order to provide additional representative samples for ongoing leach testing and metallurgical studies that will assist in the selection of the most appropriate ion exchange resin.

    In conjunction with the above program, its wholly-owned subsidiary Strata Energy is fulfilling regulatory commitments to re-plug historic exploration holes in the vicinity of the first mine units.

    During the period 1 January to 26 November 2013 a total of 163 holes representing 90,805ft of drilling, were re-plugged.

    Lance Projects

    The Lance Uranium Projects are envisaged as producing 2.2 million pounds of U3O8 per annum with an NPV of US$323 million and a capital expenditure of US$114 million to reach steady state production.

    A recent Wellfield Optimisation Study has also highlighted a 6% increase in NPV to US$323 million, a 12.5% reduction in capital expenditure to steady state production to US$114 million and a 12% drop in steady state operating cost to US$30.65 per lb U3O8. IRR has been estimated at 38%.

    This supports its commercial viability at the current long term contract price of US$56/lb and ranks Lance amongst the lowest cost producers.

    The first production unit will be at Ross with a capacity of up to 1.25 million pounds per annum followed by Kendrick, ramping up over several years to a steady state 2.3 million pounds per annum.

    It is expected to be cashflow positive from Year 3 with payback within 4.6 years.

    Analysis

    Peninsula Energy continues to step closer towards starting uranium production from the Ross Permit Area in the second half of 2014, a key milestone for the company.

    The progress on the site works positions the company well to fast track construction of the central processing plant and other infrastructure once the final Source Material Licence is received.

    Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.

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