Peninsula Energy Faces Contract and Commissioning Risks Amid Lance Project Reset

Lance Project Advances Amid Operational Challenges

Peninsula Energy Limited (ASX, PEN) has provided a detailed update on its June 2025 quarter activities, highlighting significant progress at its flagship Lance uranium project in Wyoming, USA. The company is advancing the commissioning of its Central Processing Plant (CPP), with water commissioning underway and hot commissioning scheduled for August. This is a critical step ahead of the planned first production of dry yellowcake in the September quarter.

However, operational challenges persist, including corrosion issues in the initial CPP phase and sub-optimal wellfield development patterns that have led to the halting of some construction activities. The company is actively addressing these issues, redeploying resources, and revising its Life of Mine model to reflect a more risk-considered ramp-up and enhanced wellfield design.

Strategic Reset of Uranium Sales Contracts

In a decisive move to de-risk its business, Peninsula Energy has mutually terminated five out of six uranium sales contracts, representing over 5 million pounds of uranium oxide. This reset eliminates future delivery obligations and related liabilities under take-or-pay clauses, but also exposes the company to uranium spot price fluctuations for volumes sold beyond contracted amounts. One contract remains with a take-or-pay obligation for 600,000 pounds of uranium oxide, with flexible termination provisions.

The termination agreements include payments totaling US$6.6 million, with US$1.6 million already paid and the remainder contingent on a forthcoming capital raising or a deadline in late October 2025. Failure to meet payment obligations could reinstate previous contractual liabilities, underscoring the importance of the company’s financing plans.

Regulatory Milestones and Environmental Safety

Peninsula secured key regulatory approvals during the quarter, including the Permit to Mine and Source Materials License for the Kendrick Project Area from the Wyoming Department of Environmental Quality, as well as an aquifer exemption from the U.S. Environmental Protection Agency. These approvals clear the way for uranium recovery operations at Kendrick, which holds a substantial resource estimated at nearly 20 million pounds of uranium oxide.

Safety performance remains strong with no lost time injuries reported during the quarter despite the complex and congested work environment at the CPP Phase II construction site. Environmental compliance was maintained with no reportable spills.

Financial Position and Leadership Changes

Following its suspension from ASX trading since April 2025, Peninsula Energy has secured a US$15 million debt facility from Davidson Kempner, drawing US$10 million in early July to fund critical development and commissioning activities. The lender has also committed to participate in the company’s upcoming equity capital raising, which is expected to further strengthen the balance sheet.

Leadership transitions continue with David Coyne appointed as permanent Non-Executive Chairman, bringing extensive mining and corporate experience. Additionally, uranium industry veteran Keith Bowes has been appointed as a Non-Executive Director, pending completion of the capital raising. Meanwhile, two long-serving directors are retiring as part of the company’s planned board renewal.

Looking Ahead

Peninsula Energy is preparing to release revised production forecasts for 2025 through 2027 in the coming weeks, reflecting the updated commissioning timeline and operational adjustments. The company’s focus remains on safely ramping up production at Lance while managing financial and contractual risks to position itself as a fully independent uranium producer in the US market.