Peninsula Energy Ltd (ASX:PEN) is progressing in its current process to dual list on the New York Stock Exchange (NYSE).
Listing on the NYSE exposes Peninsula’s U.S. based producing uranium projects to the world’s largest capital market and institutional fund managers.
The company believes it has cleared the key outstanding items received to date and is awaiting its Form 20-F to be declared effective by the SEC.
Subject to Form 20-F being declared effective and final clearances from the NYSE, Peninsula aims to complete the listing process in 2H 2016.
Background
Peninsula’s plan is to be a uranium producer with multiple sources of supply in established mining economies with low cost, long life mines.
Peninsula’s primary focus is ramping up production at its uranium Lance Projects located in the U.S. state of Wyoming.
The company also has a 74% interest in the 7,800 square kilometres located in South Africa, the Karoo Projects.
Peninsula also intends to acquire one of several projects it has identified in Australia or Canada.
Lance Projects
Effective production at the Lance Projects commenced in March 2016 with construction completed on-schedule and on-budget.
The Lance Projects have a 3 stage production profile building to 2.3 million pounds of uranium per annum by 2020, which is when Stage 3 plans to begin.
Stage 1 is on track and aims to produce 700,000 pounds of uranium by H1 2017 through 7 header houses.
The current JORC-2012 compliant resource is 53.7 million pounds of uranium with expansion potential to create over 70 years of mine life.
The project has strong economics with an internal rate of return (IRR) of 36% and average cash cost of US$29.16 per pound.
The Lance Projects’ all-in sustaining cash cost (AISC) will reduce from $41 to $31-32 per pound as the project enters Stage 2 during the second half of 2017.
Stage 2 financing
Peninsula continues to work on a funding package for the company’s Stage 2 expansion and has been progressing negotiations on a revenue streaming facility as the primary component of this package.
Revenue streaming is a non-dilutive mechanism that sees a proportion of future sales revenue being exchanged for a one-off upfront cash payment that is to be used for development or expansion capital expenditure.
The proportion of future sales revenue only applies for a finite time period and finite quantity of annual production.
Technical and commercial due diligence has now been completed by the funding party, and Peninsula and this party are working together to finalise a binding agreement in the near term.
Karoo Projects financing
Peninsula see the Karoo Projects as their second production centre as per their long term strategy to create multiple sources of supply.
Karoo has a JORC compliant resource of 23.3 million tonnes grading 1,108ppm for 56.9 million pounds of uranium.
Peninsula has been negotiating with a number of parties to secure a strategic investment partner to accelerate the project through the completion of feasibility studies.
At this stage legal and technical due diligence has been completed by two groups, one of whom has put forward a proposal with the other expected to lodge a proposal shortly.
The company is also continuing negotiations with a third party who previously submitted a term sheet, which is subject to ongoing finalisation of investment structure and due diligence.
Broker spotlight
Peninsula has drawn research coverage from five investment banks and research houses, with recently published reports including:
Rodman & Renshaw Research: Buy rating – A$2.25 price target
BMO Capital Markets: Outperform rating – A$1.00 price target
Dundee Capital Markets: Buy rating - A$1.80 price target
These price targets represent significant upside from the current share price of A$0.69.
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