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Peninsula Energy streamlines operations as it progresses uranium project in the US

Published: 00:06 10 Mar 2020 EDT

Peninsula Energy Ltd - Peninsula Energy streamlines operations as it progresses uranium project in the US
Over the past 2 to 3 years, Peninsula has been focused on minimising its costs

Peninsula Energy Ltd (ASX:PEN) is focused on minimising its expenditures as it progresses the low pH transition at the Lance Uranium Project in the US and awaits improvements in the market for US produced uranium.

Last month, the company welcomed President Trump’s proactive steps to revitalise the US uranium production industry by including a US$1.5 billion uranium buying program over the next 10 years in a budget proposal to the U.S. Congress.

Peninsula is also awaiting the pending publication of outcomes and recommendations from the U.S. Nuclear Fuel Working Group (NFWG).

The NFWG was established through executive action by President Trump to examine the entire US nuclear fuel supply chain in order to protect national security interests, to plan for defence infrastructure needs and to support domestic uranium supply.

Low pH de-risking and optimisation

As Peninsula intends to fulfil its sales obligations in 2020 with uranium purchased from the market, the primary focus of activities at the Lance Project this year is on the low pH de-risking and optimisation program.

Central to this program is an additional low pH field demonstration in an area that has not previously been subjected to mining operations.

Peninsula personnel have been actively engaged in the planning and development of the new field demonstration area.

The company engaged consultants with substantial global experience in low pH uranium ISR operations to advise on technical optimisation opportunities.

Laboratory tests have been and continue to be conducted to screen viable optimisation concepts.

With the progress of this advanced technical planning, the start of operations in the new field demonstration area is anticipated in early April.

Streamlined business operations

Over the past 2 to 3 years, Peninsula has focused on minimising its expenditures as it progresses the low pH transition at the Lance Project and awaits improvements in the market for U.S. produced uranium.

Additional measures are now being implemented in order to reduce the expenditure rate without directly impacting the progression of core activities including the low pH de-risking and optimisation activities:

Employment agreements for several members of the leadership team at the Lance Project have been modified to reduce the effective working week for these employees. This has the effect of decreasing the ongoing site payroll costs, yet, importantly, retaining the technical and leadership expertise and experience required for a future restart of operations.

Corporate administrative costs are to be reduced. Some functions currently undertaken by the Perth based team will be transferred either to existing personnel located at the project site in Wyoming or to contract service providers. As a result, three members of the Perth corporate team will be leaving the business in the coming weeks and the Perth office will be closed. Peninsula will retain a Perth presence, with the Finance Director / CFO continuing to be based there.

The chairmen of the board’s two sub-committees will forego their fees in respect of the subcommittee activities.

Reducing costs while maintaining production capabilities

Peninsula managing director/CEO Wayne Heili said: “As we have no need to produce uranium for scheduled deliveries in 2020 and production has been idled, we will do what we can to minimise our expenditures and to reduce our future funding needs.

“We have made the hard decision to further reduce our cost base.

“Still, we have maintained our production capabilities and the capacity to make the necessary investment decision to rapidly restart and ramp-up production activities at Lance using the industry leading low pH in-situ recovery method even before completion of current site activities if our markets improve.

“We look forward to providing shareholders and key stakeholders with further information on governmental initiatives regarding incentivisation of the U.S. domestic uranium industry and on outcomes of the de-risking and optimisation activities at the Lance Project over the coming months as each workstream progresses.”

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