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Peninsula Energy gains $5M investment from JP Morgan Asset Management

Last updated: 00:47 10 Mar 2014 EDT, First published: 01:47 10 Mar 2014 EDT

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Peninsula Energy (ASX: PEN) has raised $5 million to fund ongoing construction activities at its Lance Uranium Projects in Wyoming through a placement of shares to JP Morgan Asset Management.

Proceeds will also be used to progress feasibility studies at the Karoo Projects in South Africa and for general working capital purposes.

The company had placed 161.29 million shares priced at $0.031 each to JPMAM, a leading global asset manager with $1.5 trillion in assets under management.

“The Board is delighted to welcome JPMAM to the register of Peninsula and looks forward to a long standing mutually beneficial relationship,” executive chairman Gus Simpson said.

Lance Uranium Projects

Peninsula has made further progress this month towards bringing its Lance Uranium Projects into construction with the receipt of the key final Supplemental Environmental Impact Statement for its Lance Central Processing Plant and Ross Permit Area.

It now expects to receive on 31 March the Source and Byproduct Material Licence that will allow it to complete full construction and commence uranium production.

Early construction on the project and the start of fabrication on long lead items is expected to allow the company to start production in second half of 2014.

Ross will be the first production unit with capacity of up to 1.2 million pounds of U3O8 per annum followed by Kendrick, ramping up over several years to a steady state 2.3 million pounds per annum.

NPV has been estimated at US$328 million while a capital expenditure of US$146 million is required to reach steady state production. Initial capital expenditure is US$68 million.

It is expected to be cashflow positive from the fourth quarter of 2015 with payback within 3.4 years.

The Lance Projects in Wyoming host at least five roll front deposits with about 53.7 million pounds of U3O8. There is also further exploration potential of 158 million to 217 million pounds.

Karoo Projects


Peninsula had in December acquired a 74% interest in 36 prospecting rights covering 5,600 square kilometres, bringing its assets in South Africa’s Karoo Basin up to 42 prospecting rights covering 7,800 square kilometres.

Its original Karoo resources are located on two well-defined sedimentary channels that each extends for up 100 kilometres along strike.

These channels have been tested both recently and historically with approximately 10,000 exploration drillholes.

The Indicated and Inferred Resource of 50.1 million pounds of U3O8 has been estimated in localised areas in which reliable drilling data is available.

In addition, an Exploration Target of 126 million to 133 million pounds of U3O8 has been estimated based on a combination of exploration results and on proposed exploration programs

Pre-Feasibility Studies are underway which are focused on an alkaline processing route for the project.

Analysis

Attracting JP Morgan Asset Management as an institutional investor with a $5 million placement highlights the attractiveness of Peninsula Energy’s Lance Uranium Projects in Wyoming and its Karoo Projects in South Africa.

It delivers the funding to progress ongoing construction at Lance where the company has recently received the final Supplemental Environmental Impact Statement and will shortly receive the crucial Source and Byproduct Material Licence.

In addition, Peninsula remains funded to continue feasibility studies for the second string in its bow, the Karoo Projects in South Africa.

Proactive Investors continues to believe that the investment case for Peninsula is strong – a point underscored by JP Morgan’s investment.

With the upcoming award of the SML, which will pave the way for full construction to start with production following soon after, the company’s current valuation of $97 million is light on a medium term outlook - given share price triggers ahead.

 

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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Peninsula Energy Ltd (ASX:PEN, OTCQB:PENMF) CEO Wayne Heili speaks with Proactive soon after announcing the company has secured binding commitments to raise A$50 million via a placement to global institutional and sophisticated investors to fund continuing construction works and wellfield...

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