Uranium company Peninsula Energy Ltd (ASX:PEN, OTCQB:PENMF) expects to be fully funded to sustainable positive free cash flow from its Lance Project in the US on completing a A$106 million fully underwritten equity raise.
This major raise includes an institutional placement for approximately A$52.9 million and a A$53 million 1 for 4 accelerated non-renounceable entitlement offer of 530.2 million shares.
The raising at an offer price of A$0.10 per share represents a 13% discount to the last closing price of $0.115 per share on May 15, 2024, a 13.6% discount to the 10-day VWAP of $0.116 as at and including May 15, 2024, and a 10.7% discount to the theoretical ex-rights price (TERP) of A$0.112 per share.
In strong financial position
This will place Peninsula in a strong financial position to complete key development and construction activities at Lance in the US uranium stronghold of Wyoming at full pace.
It is expected to fully fund the company to sustainable free cash flow in the third quarter of 2025.
Peninsula’s managing director and CEO Wayne Heili said: “We continue to be buoyed by the support of existing and new shareholders to back the Lance Project.
"Lance is one of the largest uranium projects in the US and with production at Lance scheduled to re-commence in late 2024, we are well-positioned to become a near-term, long-life, independent uranium producer.
“The work at Lance is continuing at full pace and we remain on track for commissioning later this year.
"This funding provides us with balance sheet strength to take us through until anticipated sustainable free cashflow generation in Q3 2025.
"We are still progressing debt discussions but felt this opportunity delivers a high level of financial certainty to shareholders in respect to our funding requirements.”
Lance Project remains on target for commissioning in late 2024, positioning Peninsula to capitalise on the increasingly tight uranium market, forecast growth in demand and rising uranium prices.
About the raising
The equity raising will result in the issuing of approximately 1,058.8 million new shares, representing approximately 49.9% of existing Peninsula shares on issue.
Up to around 528.5 million new shares are expected to be issued to new institutional investors and existing institutional shareholders under the placement.
It will be conducted concurrently with the institutional entitlement offer in line with the company’s ASX Listing Rule 7.1 and 7.1A placement capacity.
Eligible institutional shareholders will be invited to participate in the institutional component of the entitlement offer, which is being conducted today, May 16, 2024, and tomorrow, May 17, 2024. Eligible institutional shareholders can choose to take up all, part or none of their entitlement.
Entitlements that eligible institutional shareholders do not take up by the close of the offer, and institutional entitlements that would otherwise have been offered to ineligible institutional shareholders, will be offered to new institutional investors and existing institutional shareholders concurrently with the institutional entitlement offer.
Retail component
Eligible retail shareholders with registered addresses in Australia or New Zealand or other jurisdictions into which the company determines to extend the entitlement offer, and who are not located in the United States, will be invited to participate in the retail component of the entitlement offer at the same price and offer ratio as the institutional entitlement offer.
The retail component opens on Thursday, May 23, 2024, and will close at 5:00pm (Sydney time) on Monday, June 3, 2024.
Eligible retail shareholders who take up their entitlement in full can also apply for additional new shares in excess of their entitlement up to a maximum of 50% of their entitlement under an oversubscription facility.
Additional new shares will only be available for the oversubscription facility if there is a shortfall between applications received from eligible retail shareholders and the number of new shares proposed to be issued under the retail offer.
Director participation
Displaying their confidence in the company and its uranium production strategy, MD & CEO Wayne Heili, chairman John Harrison and non-executive director Mark Wheatley have committed to taking up their entitlements in the entitlement offer.
Harrison and non-executive director David Coyne have agreed to sub-underwrite A$25,000 each of the retail entitlement offer.
The equity raising is fully underwritten by the joint lead managers.
Allocation of funds
The proceeds from the equity raising, when combined with the company’s cash balance of US$49.6 million at March 31, 2024 (unaudited), are intended to be allocated towards:
- Pre-production capex – US$52.2 million;
- Ramp-up capex – US$11.5 million;
- Ramp-up opex – US$30 million;
- Working capital – US$12.5 million;
- Corporate costs – US$7.6 million; and
- Cost of the equity raising – US$4.6 million.
Debt discussions
Peninsula is also continuing to pursue debt discussions, which in addition to the remaining unexercised March 2025 in-the-money options, may be established to provide additional working capital, funding for growth initiatives and balance sheet flexibility.
A financial adviser has been appointed to assist with the arrangement of debt facilities to support working capital to achieve steady-state production and balance sheet flexibility.
The company is in ongoing discussions with government funding agencies and has received interest from international financiers in relation to funding the Lance Project.