The following is an extract from a Hartleys broker report released today.
Twelve month price target: $0.16.
Current price: $0.085.
Critical Permit Granted – Upgrade to Buy
Peninsula Energy has announced the granting of its Deepwater Disposal Well licence (“DDW”) for its In Situ Recovery uranium mining operation in Wyoming (“Lance Projects”).
The DDW is a key licence that has caused delays for several other developers in the region. The fact that it has been granted without any requests for additional information or public comments is a testament to the rigorous process undertaken by the Company.
This is the first of three key licences required for extraction and processing of uranium, which is targeted for commencement in mid 2012.
Permit to Mine / Source Material Licence Progress
The Permit to Mine was submitted to the Wyoming Land Quality Division on 13th January 2011. The document has been accepted as complete and is now undergoing a technical review before being presented for public comment.
The completeness review was accomplished 70 days ahead of guidelines, confirming the high quality of the document. Timing on completion of the technical review and public comment are dependent upon any areas of concern being identified.
All indications to date reaffirm our confidence that timely grant of applications should occur.
The Source and Byproduct Material Licence was submitted to the Nuclear Regulatory Commission on the 31st December 2010. Once the document progresses in the queue (expected in early May) it will be reviewed for
acceptance. This should take an additional 60 days.
Technical review, environmental impact statements, Bureau of Land Management review and public comment are then required before granting of the licence.
Again, we remain confident the PEN has gone over and above the level of detail required and engaged key stakeholders to facilitate a timely grant of the licence.
Implications from Japan
The incident at Fukushima in Japan has caused delays for planned construction of nuclear plants in some countries (Japan, UK, Germany, France, Switzerland) pending safety reviews.
China and India are unlikely to modify plans for significant construction of nuclear power plants, in our view. The key concept is that alternatives are not currently viable and that the current supply / demand imbalance is being filled by the megatons to megawatts program, which will expire in 2013.
Headwinds related to sentiment remain, but are fading as the reality of the future global energy shortage becomes clearer.
Near Term Catalysts – Busy Period Approaching
Much of the Company’s hard work over the last 18 months is coming to a head in the next 6 months.
We are expecting completion of Definitive Feasibility in early May, which will likely be followed by a decision to mine and then completion of financing arrangements (we have modelled 60% debt, although this may be conservative).
The Company should also complete additional supply contracts for its product within the next few months, although timing of this may be dependent on movements in the spot price (which we are expecting to recover further in the near term).
Continued strong results from the resource drilling programs at Karoo (South Africa) and Lance are also expected over the coming weeks and months. Today’s announcement highlighted outstanding results from drilling and re-logging at Karoo, which included uranium grades in excess of 3,400ppm and molybdenum in excess of 1,000ppm.
We have upgraded Peninsula to a Buy with a 12 month price target of $0.16.