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Highlights:
- Peninsula Energy (ASX:PEN) announced a delay in its Lance Uranium Project (LUP) and downgraded production guidance.
- Production expected in June quarter due to challenging weather and supply chain issues in Wyoming.
- Share price dropped by 13% amid investor concerns over the uncertainty and lack of specific production downgrade details.
Peninsula Energy (ASX:PEN) experienced a significant share price drop of 13% in the first hour of trading following the announcement of delays and a production downgrade at its Lance Uranium Project (LUP) in Wyoming. The company had previously aimed to commence production in the March quarter but is now targeting the June quarter due to challenging weather conditions and supply chain issues.
Peninsula Energy is on track to start producing yellow cake uranium, which is consumed by nuclear fuel makers before enrichment. However, the market reacted negatively to the delay in momentum. Despite the company's assurances that production is still expected in the June quarter, the recent challenges have cast a shadow over its progress.
The Peninsula board expressed frustration over the delays and emphasized the company's commitment to working closely with contractors to expedite the project's completion. Peninsula Energy stated that it would continue to sequentially commission the elution, precipitation, and filtration circuits as they are handed over from the construction contractor. Ramp-up to higher production rates is anticipated once the full plant is commissioned.
Notably, Lance had only resumed production late last year after being mothballed for five years. The incoming Managing Director, George Bauk, will be on-site at LUP from February 3, overseeing the project's progress. The company also reported having just shy of $45 million in cash reserves.
The share price decline highlights the market's concern over the uncertainty created by the delay. The company did not provide specific details regarding the extent of the production downgrade, adding to investor apprehensions. The Peninsula board indicated that it would continue to monitor progress and provide updated production guidance for the calendar year 2025 at the end of the March quarter. However, it is likely that the guidance will be revised downward from the previously forecast 600,000 lbs U3O8.
