Peninsula Energy Ltd (ASX:PEN, OTCQB:PENMF) is adopting an accelerated plan for in-house resin processing and dry yellowcake uranium production, aiming to become a fully independent end-to-end producer of the partially refined ore.
This strategic shift is in response to the termination of its resin processing agreement with Uranium Energy Corp (UEC)
The decision to bring resin processing and yellowcake production in-house is expected to result in a more efficient and capital-effective operation.
By implementing these capabilities from the start of production, Peninsula will have greater independence and can execute its business plan of expanded uranium production without relying on external services.
Recalibrating business plan
Peninsula managing director and CEO Wayne Heili said: “Faced with the unexpected challenge of not being able to rely on the processing services of our long-term service provider, we are now recalibrating our business plan to operate independently from our industry peers and to bring forward the in-house capability to produce finished yellowcake.
“While a delay to our planned restart is disappointing, we anticipate emerging with an expanded production capacity and a lower operating cost profile because of this endeavour.
“We are also evaluating an accelerated schedule towards full capacity. Analysis of the impact of this action on operational plans and funding requirements is underway and we will keep the market posted on key developments as they occur.”
Remains confident
Although the revised plan will require a full evaluation of capital and timing requirements, Peninsula remains in a strong pre-production position with a cash balance of US$21.5 million and a strategic inventory balance of 210,000 pounds of uranium
The company believes that its experienced team is well-suited to execute the revised plan efficiently.
Despite the delay, Peninsula Energy remains confident in the opportunities presented by its Lance Projects in Wyoming, USA.
Forward plan
Lance is one of the largest uranium development projects in the United States, and once in production, Peninsula will be well-positioned to supply the growing market as nuclear power gains momentum as a critical part of the green energy mix.
The company acknowledges the importance and demand for uranium in the global push for decarbonisation and emphasises the significance of Lance in meeting those targets.
Peninsula plans to continue investing in the project's preparation for production, with construction work progressing at the plant site.
In conclusion, while the termination of the resin processing agreement may cause a delay, Peninsula is seizing the opportunity to build a more robust project and strengthen its capabilities.