Peninsula Energy advances Lance Project reset with funding and contract updates

Peninsula Energy Ltd (ASX:PEN, OTCQB:PENMF) has reported notable progress with its reset plan at the Lance Project in Wyoming, addressing key operational challenges and advancing critical milestones as it eyes a restart of operations.

Phase II construction of the Central Processing Plant (CPP) is nearing completion, with hot commissioning set to begin later this month. The company is also in advanced discussions with multiple parties for short-term debt funding to support the final workstreams necessary for the project’s restart.

“The team continues to work incredibly hard on progressing several key workstreams to ensure Peninsula and the Lance Project are positioned on solid footing for long-term success as operations prepare to restart,” managing director and CEO George Bauk said.

Sales contracts revised as part of reset plan

As part of the reset, Peninsula has mutually agreed to terminate three sales contracts with global power utility companies for the delivery of uranium yellowcake. These terminations represent a combined total of 1.95 million pounds of uranium over eight years. The decision follows delays in completing the Central Processing Plant and a comprehensive review of operations.

“This has been a critical step towards ensuring the viability and delivery of our revised production plan,” Bauk said.

“Today, we have announced the termination of three contracts through mutual consent, and are continuing to advance discussions around remaining agreements,” he added. “This is a key building block of the reset plan. With our updated production timeline, it has been essential to bring our customers along on this journey.”

The contract terminations eliminate Peninsula's future obligations to deliver uranium and related liabilities under take-or-pay clauses, though the company will now face exposure to fluctuating uranium prices. Importantly, no liabilities related to the terminated agreements will carry forward, and any associated accounting derivatives will be reversed.

Peninsula remains in negotiations with the remaining customers, with plans to re-engage once the Lance Project achieves consistent production levels.

EPC settlement paves way for construction completion

Peninsula also provided an update on the settlement of a dispute with its engineering, procurement and construction contractor, Samuel EPC, over the completion of the CPP. Peninsula has made an initial US$1.25 million payment as part of the June 12 settlement agreement, paving the way for continued construction.

“We are taking a deliberate and methodical approach to ensure the restart at Lance is based on a robust, sustainable and achievable plan,” Bauk said. “Samuel EPC continues to advance Phase II construction of the Central Processing Plant, with commissioning and handover scheduled to start this month.”

Strong interest in funding and production restart

Peninsula is continuing to engage in discussions with potential funding partners to support the completion of its revised production plan. With due diligence visits completed by several parties, the company expects to finalise funding arrangements in the coming weeks.

As the company moves forward with the reset plan, Peninsula remains focused on achieving a sustainable and reliable production track record, with a view to re-establishing relationships with its customers once the Lance Project is fully operational.