Peninsula Energy (ASX: PEN) has targeted 2012 to begin producing uranium from the Lance projects, with a first sales agreement to supply 1.15 million pounds of uranium oxide over seven years to a Tier 1 power utility in the U.S. a significant milestone.
The deal will render Peninsula as one of the largest producers of uranium in the U.S. when production is ramped up at the Lance projects.
The terms of the sale agreement will see Peninsula supply U3O8 over a period of 7 years. The agreement has been struck at an escalated fixed price, fixed quantity and term.
The weighted average contract pricing over the term of the contract is consistent with the average term price used in the PFS.
This is a major positive for the company as the uranium price continues to increase, and is currently around US$73 a pound, up over 80% for the recent lows in mid-2010.
Production is targeted to commence at Lance in 2012 and build to 1.5 million pounds of U3O8 per year, with a plant capacity of 3 million pounds annually.
The agreement is a result of the company's proactive approach in 2010 which aimed at securing sales agreements, with negotiations continuing with other groups involved in the nuclear power industry.
Peninsula is likely to sign additional sales agreements with large utilities in the U.S.
Peninsula’s executive chairman Gus Simpson said “The agreement is an important milestone for Peninsula and the company."