Peninsula Energy On The Road To Uranium Production

Published on Thursday December 29 2011
 

Peninsula Energy (ASX:PEN) has completed feasibility and economic studies of its Ross and Lance uranium projects in Wyoming and the results should enable Peninsular to gain project funding and become a uranium producer in 2013.

While some investors may be gun shy of uranium, a number of analysts are predicting that uranium prices could climb in 2012/13 due to delays in new supplies coming online and Russia's plans to stop exporting enriched uranium next year from its secondary supplies.

In addition, uranium industry company UxC compiled a report on the uranium market for the period 2013-2030. In part it said:

“Following the Fukushima accident, there still remains a deficit of supply from the perspective that current production levels are insufficient to meet required future demand given the expected continued growth of nuclear power and the decline in inventory supplies such as HEU that have recently been supplying the market.

"Given the need for increased production, the midpoint of our composite spot price forecast in-creases from $60 in 2013 to $83 in 2025."

Study Results

The Ross Definitive Feasibility Study (DFS) and the Lance Expanded Economic Study (EES) have confirmed the technical and economic viability of the Lance in-situ recovery (ISR) uranium projects in the Powder River Basin Wyoming, USA.

- Ross Definitive Feasibility Study (DFS) NPV US$46 million

- Lance Expanded Economic Study (EES) NPV US$207 million with an initial capital requirement of US$79 million including the capital cost of the Central Processing Plant (CPP)

The Lance projects (EES) included three production units planned at Ross, Kendrick and Barber deposits.

The DFS has been completed by Lyntek Inc. (Denver based engineers) on the June 2011 measured and indicated resources of 8.8 million pounds of uranium at the Ross production unit only and has established the operating costs, well-field parameters and development costs which in the EES are applied to all three production units.

Rockbury Capital FZ LLC and the Company have then applied these parameters to the EES which includes a total 23.3 million pounds of U3O8. This number assumes the conversion of a 12.1 million pounds of the 30.1 million pounds of inferred U3O8 resources that are currently delineated at the Lance projects to indicated category or better.

The EES anticipates the expanded project including Ross, Kendrick and Barber production units feeding a Central Processing Plant (CPP) with an expandable capacity of up to 3.0 million pounds per annum. The CPP evaluation was included in the Lyntek Scope of Work and as such is to a DFS level of accuracy.

In the EES the first production unit will be at Ross with a capacity of 750,000 pounds per annum and production ramping up over 3 years to 2.19 million pounds per annum steady-state production with the inclusion of the Kendrick and Barber production units.

Costs

All important steady state total production cost was estimated at US$31.55 per pound U3O8 including indirect taxes, royalties and ongoing well-field development (C1 cash costs of US$11.93 per pound).

Mining

In situ mining (ISR) is a form of solution mining where uranium is removed from sandstone formations by the same chemical process that deposited it there in the first place. Currently the in-situ process is the single largest producer of U3O8 globally accounting for approximately 41% of all primary production.

ISR mining and processing of uranium consists of two steps: recovering uranium from the mineralised sandstone host via the cycling of recovery solutions through it and the processing of this uranium-rich solution into yellowcake.

Infrastructure

The Lance projects are located in north-eastern Wyoming, about 32 kilometres north of Moorcroft and adjacent to the ranching community of Oshoto. Moorcroft lies adjacent to the I-90 Interstate highway. From the Interstate turn off there is approximately eight kilometres of paved road followed by approximately 48 kilometres of graded roads.

Within the project areas, existing land uses include: livestock grazing, oil production, fodder crop production, communication, power lines and a road transportation network.

Infrastructure within the project area includes roads, utilities, oil wells and activities associated with agriculture (including livestock and hay production). There are several maintained roads and three power lines that pass through the project area.

Revenues

Sales of U3O8 are predominantly contracted on a long term basis with prices determined by a pre-set formulae linked to the reported term and/or spot prices. In the DFS, Lyntek has used a price forecast of US$63.31-79.50 per pound for the 2013-2022 period of operations.

For EES modelling purposes the Company has adopted a price forecast based on a UX Consulting Inc. (UxC) independent report on the long term uranium market for the period 2013-2030. The EES assumes U3O8 production is sold at a contract price of US$62.58 per pound, 2011 base escalated at an average 2.6% per annum.

Permitting

Following a recent review of the permitting strategy the company "is confident in finalising permitting." In addition all new project areas are being designed so they are contiguous with the Ross permit area and as such will be deemed to be amendments to the Ross Permit (once issued) rather than standalone applications. This strategy will significantly reduce the permitting process and timing going forward.

Project funding

The Company is well advanced in structuring and implementing the funding plan for the development of the operation.

It is anticipated that funding will be sourced from a combination of debt and equity.

Rockbury Capital FZ LLC and Boswell Capital Corporation have signed Non Disclosure Agreements with several international banking and uranium industry groups. These groups are currently reviewing the Company’s electronic data room with a view to proposing a financing arrangement, or part thereof. In several cases this will be combined with U3O8 sale and purchase arrangements.

Moving ahead

The Lance ISR uranium projects are ready to be progressed to development stage following relevant permitting and project funding factors which are all well advanced.

Total construction time is estimated at six months and first commercial U3O8 production remains on track for late 2012 (subject to permitting), ramping up over 2013.

This timeline to first commercial U3O8 production is subject to final Board approval which is expected before March 2012.

The company is now working towards detailed design and engineering and to awarding an EPCM contract for the projects ahead and the commencement of site preparation works. In addition, the Company is assembling a highly experienced team to successfully transition from explorer to producer and have the financial capacity to fast track the project implementation where possible.

Analysis

The outcomes of the feasibility study and economic studies of Peninsula's Wyoming uranium projects indicate viable uranium projects with a sufficient margin and buffer over costs of production. Capital costs are also reasonable given the significant scale and production levels envisaged in the studies. This should combine to ensure that project funding is available given the high quality of the projects.

Given the production timeline of the projects should coincide nicely with lower market supplies of uranium in 2013 and beyond.

Long term contract prices offer a higher revenue potential for Peninsula. While it has been a tough road for uranium companies post Fukushima, there are very few listed companies with advanced stage uranium projects that can propel a company from explorer to producer within 12-18 months.

Peninsula Energy provides a compelling uranium counter for longer term investors, with $23 million in cash, trading a significant discount to intrinsic value and longer term valuation with a number of catalysts for re-rating ahead.

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Black Range Minerals Ltd. : Appointment of New Managing Director

Published on Thursday December 22 2011

APPOINTMENT OF NEW MANAGING DIRECTOR

Black Range Minerals Limited ("the Company") is very pleased to announce the appointment of Mr. Tony Simpson to the Company's Board of Directors. Mr. Simpson will immediately assume the position of Managing Director.

Mr. Simpson is a mining engineer with over 40 years industry experience. During his career he has held numerous senior management, technical and operational positions.

For the past two years Mr. Simpson was employed by ASX-listed Peninsula Energy Limited as its Chief Operating Officer. In this position he was directly responsible for the successful exploration and permitting activities at Peninsula's Lance Uranium Project in Wyoming, USA.

The Company believes that the experience and knowledge Mr. Simpson gleaned while working on the Lance Uranium Project will be of considerable benefit to the Company as it takes its Hansen/Taylor Ranch Uranium Project in Colorado, USA, through feasibility studies and mine permitting.

The Company's previous Managing Director, Mike Haynes, will continue to serve on the Company's Board as a Non-executive Director. The Company is very pleased to welcome Mr. Simpson to the Board.

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North Korea Agrees To Suspend Uranium Enrichment

Published on Sunday December 18 2011

SEOUL — North Korea has agreed to suspend its enriched-uranium nuclear weapons program, a key United States demand for the resumption of disarmament talks, according to news reports.

Yonhap news agency and the Chosun Ilbo daily quoted an unidentified diplomatic source saying the Washington had also agreed to provide the North with up to 240,000 tonnes of food aid.

Pyongyang pledged "to implement initial measures of denuclearisation that include a suspension of its uranium enrichment program," Yonhap said.

The North apparently agreed to put stricter and clearer monitoring systems in place to ensure that the food aid reached those most in need, according to the source, Yonhap said.

The agreements came when Robert King, US special envoy for North Korean human rights, met with Ri Gun, head of North American affairs at North Korea's foreign ministry, on Thursday and Friday in Beijing, the source said.

The reports could not be independently confirmed.

Suspending the uranium enrichment programme -- first disclosed by the North one year ago -- is a key demand of Washington's before six-party negotiations can resume.

The North quit the six-party forum -- which also includes China, Russia, Japan and South Korea -- in April 2009, one month before its second nuclear test.

Pyongyang has long said it wanted the six-nation talks to re-start, but without preconditions.

But the United States says the North must first show "seriousness of purpose" by shutting down the enrichment programme.

According to both Yonhap and Chosun Ilbo, the two countries were likely to hold a third round of talks this coming week in Beijing to discuss resuming the six-party talks.

Glyn Davies, the US special representative on North Korea, will likely meet with North Korean First Vice Foreign Minister Kim Kye-Gwan in Beijing around Thursday, the source said.

North Korea was promised 500,000 tonnes of food aid from the United States when it dismantled part of its nuclear facilities in Yongbyon in 2008.

It had received 170,000 tonnes by the time the aid was suspended in 2009 as tensions worsened over the North's nuclear programs.

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Bannerman Resources Pushes On With Capital Raising

Published on Wednesday December 14 2011

URANIUM aspirant Bannerman Resources is not waiting for its troubled Chinese suitors to get their house in order, and will push ahead with a capital raising to help fund work on its flagship project in Namibia.

Bannerman went into a trading halt yesterday and is expected to emerge in the next 48 hours with plans to raise up to $15 million.

Bannerman was forced to walk away from takeover talks with Chinese investor Sichuan Hanlong Group after Hanlong could not guarantee funding arrangements from Chinese banks.

Hanlong's push into Australia's resources sector has been hampered by an insider trading investigation involving key executives, including managing director Steven Hui Xiao.

His wife, Xike Hu, yesterday agreed to a travel ban (until March) demanded by the Australian Securities and Investments Commission.

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U.S. Nuclear Plants Will Favor Domestic U.S, Mine Supplies

Published on Saturday December 03 2011

Regulatory approvals in the U.S. regarding new and expanding uranium mines have come under the microscope at London financial analysts Libertas Partners. This follows the recent comment from Cameco (TSX:CCJ) that its subsidiary, Power Resources, has faced frustrations from the regulatory processes in Wyoming. They have been trying to bring into production new wellfields into production at the Smith Ranch-Highland mine.

Libertas has gone on to look at other companies operating within the U.S. and how they are affected by the American regulators. Even though the prospects for uranium post-Fukushima are poor, the report says, the demand outlook within the U.S. remains good due to the highly enriched uranium agreement is set to expire in 2013. This was the deal that allows recycling of Russian military stockpiles of uranium which now account for 13 per cent of world supply and, more importantly, 45 per cent of annual U.S. requirements.

Libertas notes that the Russians are looking to extend these contracts - hence the acquisitions of Uranium One and, through that former Canadian-owned company, the Australian uranium company Mantra Resources (whose project is in Tanzania). But because of security-of-supply concerns, the report says U.S. nuclear utilities are keen to secure greater domestic supplies.

In general, the new U.S. projects are modest in size. Production is generally below 1 million pounds a year, in-situ leaching costs are about $20/lb (against this week’s $US52.25/lb spot uranium price) while for underground mines it comes out at about $30/lb. The companies are:

Vane Minerals (AIM:VML) - operating in Utah and Arizona, began their mining lease application process in mid-2010.

Bayswater Uranium (TSX.V:BYU) - in application process in Wyoming, hopes to get into production in 2015.

Black Range Minerals (ASX:BLR) - this Australian company is aggressively advancing feasibility studies and mine permitting activities at its Colorado Taylor Ranch/Hansen Uranium Project. Combined, the Taylor Ranch and Hansen uranium projects are one of the largest  within the United States, with 90 million pounds of U3O8.

Titan Uranium (TSX.V:TUE) - has several advanced projects, especially Sheep Mountain in Wyoming. Has just agreed to merge with Energy Fuels (TSX:EFR) which plans to build a uranium-vanadium mill in Colorado. Approvals could be finalised in March.

Peninsula Energy (ASX:PEN) - this Australian company is going through permitting process for the Ross/Lance in-situ leaching project in Wyoming. Air quality permit received. Production target unclear.

Strathmore Minerals (TSX:STM) - partner with Sumitomo in Roco Honda underground project in New Mexico. Environmental Impact Statement scheduled for completion in December 2012, with a decision on mine permit shortly thereafter.

Uranerz Energy (TSX:URZ) - first production planned for late 2012 with all Federal and Wyoming permits in place.

Uranium Energy (NYSE:UEC) - has just begun production at the Palangana in-situ leach mine in Texas

Uranium Resources (Nasdaq:URRE) - two fully licensed facilities in Texas while New Mexico ISL mine due to produce in June quarter, 2013.

Ur Energy (TSX:URE) - five years into the regulatory process in Wyoming, this company now awaits only one final approval. State mining permit in place. First production expected in June quarter, 2013.

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Toro Energy Seeks Partners For $280m WA Uranium Mine

Published on Thursday December 01 2011

TORO Energy will consider all project funding options as it moves towards developing Western Australia's first uranium mine.

"In Australia there are four operating uranium mines," Toro Energy managing director Greg Hall said.

"Going forward, we are the lead company. We're on a path, subject to WA and federal approvals, that means we will be the next uranium mine."

Mr Hall told the company's annual general meeting in Adelaide yesterday Toro estimated it will cost about $280 million to build the mine at Wiluna in south-central WA.

The Norwood company intends to lodge its final Environmental Review and Management Program for Wiluna with the WA Government this month and anticipates government approvals by mid-2012, leading to commissioning in 2013.

Toro was looking for options to fund Wiluna, which would produce about 820 tonnes a year of uranium.

"We have been searching, and discussing, with potential cornerstone investors and joint venture partners," he said. " ... we're looking at potential methods of financing the project.

"In the current climate, the most likely method will be a joint venture partner who takes part-ownership in return for both funding and offtake of uranium. While we're marketing uranium directly to nuclear utilities to put in place contracts that'll give us good returns, we're also keeping aside a portion of offtake for those tentative joint venture discussions."

Chairman Erica Smyth said the company was proceeding very cautiously.

"We will need the stars to align, but we believe they will," she said.

"We're looking at all the options to finance this." Both Dr Smyth and Mr Hall said the industry had been dealt a severe blow by the Fukushima disaster.

Nonetheless, sentiment had bounced back far more quickly than the post-Chernobyl era.

"Due to the immediate precautionary 20km evacuation zone, the International Atomic Energy Agency preliminary summary is that `to date no health effects have been reported in any person as a result of radiation exposure from the nuclear accident'," Dr Smyth said. "(And) it is now believed that no member of the pub- lic was exposed to any harmful levels of radiation."

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