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On 29 January 2019, Peninsula Energy Limited (ASX: PEN) announced its quarterly activities report. During the quarter, the company continued its laboratory research programme which has confirmed the effectiveness of the proposed low pH chemistry at the Lance Projects. This research also indicates that the quality of the affected groundwater can be returned to existing approved target restoration values following the use of lower pH in-situ recovery (ISR) solutions.
Based on the positive results of the initial testing, two additional column leach tests were completed on the core from the Kendrick Permit Area, a planned future ISR operating area (Test 3) and from a core taken from the operating Mine Unit 1 (Test 4).
Some of the highlights of Test 3 and Test 4 are:
- Both tests show uranium recoveries above 95%, further indicating the effectiveness of the low pH chemistry;
- Peak uranium concentrations were 474 mg/L U3O8 (Test 3) and 253 mg/L U3O8 (Test 4);
- During the tests, Average uranium concentrations were 105 mg/L U3O8 (Test 3) and 80 mg/L U3O8 (Test 4), validating prior grade assumptions.
Restoration test results indicate consistency with the Lance Project’s existing regulatory requirements. While considering the potential use of low pH ISR solutions the approved target restoration values would not need to be modified. The results indicate that low pH solution environments may potentially be restored to equal or better quality than typical alkaline solution environments.
During the quarter, Peninsula reached a significant milestone with the initiation of field demonstration activities for low pH ISR at the Lance Projects.
Operating Performance: During the quarter, the Company continued its focus on cost efficiencies at the Lance Projects ahead of the transition to low pH operations.
Production for the Q2 stood at 20,364 lbs U3O8, (over the prior quarter which was 40,920 lbs U3O8). It is however noted that the September quarter production included a 10,000 lbs upward adjustment as a result of the completion of a dried pounds reconciliation by the toll milling contractor for the period of April 2018 to September 2018.
The decrease in production is due to several factors. The company mentioned that the process plant was down for 9 days in October to facilitate equipment repairs following a piping failure. It has also been influenced by a combination of the natural decline of head grades and a conscious decision to reduce chemical addition and hence chemical costs. During the quarter, a total of 14,445 lbs U3O8 were dried and drummed.
Cash expenditure on production for the Q2 was approximately US$2.5 million, which is a decrease in the previous quarter of approximately US$0.2 million. Peninsula continues to exercise cost control and restraint at the Lance Project and throughout the Group.
Peninsula Energy anticipates production in the March and June 2019 quarters to be between 15,000 to 20,000 pounds U3O8per quarter. The company’s guidance for the FY19 remains unchanged at 90,000 to 110,000 pounds U3O8.
In Q2, Strata entered into a new uranium toll mining agreement with Uranium One Americas, Inc. The Toll Milling Agreement started on 1 January 2019 and had an initial term of 5 years with the ability for Strata to extend the term at its option for an additional 5-year period thereafter.
Available cash at the end of the quarter was US$7.5 million. As a result of completing a sale during the quarter and continued cost discipline, the Company generated a positive operating cash flow of just over US$0.5 million.
Stock performance: The shares of Peninsula Energy Limited closed the day’s session at A$0.170, down by 5.556 % or 0.010 points as compared to the previous day close of A$0.180. The company’s outstanding shares stand at circa $244.97 million. The stock has delivered the negative return of 35.71% over the past six months. During the last one month, PEN delivered the positive return of 9.09%.
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