(Peninsula Energy 100%)
Figure 1: Lance Projects Location, Wyoming, USA
Figure 2: Lance Projects Process Plant and Admin Building, Wyoming, USA
In October 2017 the Company announced the outcomes of recent research initiatives aimed at improving the operating performance at the Lance Projects. These outcomes included encouraging laboratory test results using lower pH solutions (mild acids), which returned increased peak uranium solution grades averaging nearly 1.0 g/L with uranium recoveries typically over 90%. The initial laboratory test uranium recovery results have been confirmed with additional targeted laboratory tests and via geochemical modelling.
All uranium operations that are in the 1st quartile of the global cost curve are In-Situ Recovery (ISR) facilities that utilise a low pH lixiviant.
Research and Technical Assessment
Research efforts undertaken during 2017 confirmed that the uranium resource at the Lance Projects is robust but it also identified several key variations between the Lance trend mineral deposit and other Wyoming roll-front type deposits. Similar to the majority of uranium deposits mined in Kazakhstan, the Lance mineralisation is set in Cretaceous aged sediments rather than the younger Tertiary aged sediments typical in the Powder River Basin. With the passage of more time, it appears that the Lance deposit was subjected to a secondary alteration event that effectively bound much of the contained uranium in a less accessible host rock environment.
The Company has now employed state-of-the-art petrographic investigation techniques to reveal important mineralogical differences and to investigate the possibility of using alternative solution chemistries to boost the uranium recovery potential of the project.
Laboratory scale tests were conducted to screen representative Lance Project core samples for amenability to alternative lixiviant solutions, notably both mild sulphuric and citric acid. The results of these tests were very encouraging and indicate that the uranium bound within the host rock during the secondary alteration event can be released into solution. The initial laboratory tests returned enriched solution grades averaging 295 mg/L with uranium recovery averages at 95% through 25 pore volumes treated. By way of comparison the uranium recoveries of recent comparable tests using an alkaline solution on Lance core averaged 35% recovery through 25 pore volumes (40% recovery achieved after 25 pore volumes during project to date operations). To obtain further confidence in the indicative results, the initial laboratory tests were duplicated and refined. Column leach tests including simulated post-leach groundwater restoration were conducted in the June 2018 quarter with results indicating that the quality of the affected groundwater can be returned to existing target restoration values following the use of lower pH in-situ recovery solutions.
The laboratory test results indicate that the operating performance of the Lance Projects could be dramatically improved through the use of the alternate lower pH solutions similar to those employed at ISR projects in Australia, Kazakhstan and elsewhere.
To change from an alkaline based mining solution to a low pH solution requires the approval of amendment requests for the existing permits and licenses, which currently authorise the use of alkaline and oxidant solutions only in the ISR process.
Discussions with the relevant regulatory authority have been positive and have not identified any legal impediments to the use of low pH ISR solutions at the Lance Projects.
Preparation of the permit and license amendment submissions commenced during the December 2017 quarter and on 6 April 2018 the Company’s wholly owned subsidiary, Strata Energy Inc (Strata), formally submitted a request to the Wyoming Department of Environmental Quality (WDEQ) to amend its existing Permit to Mine (PTM) to allow for the use of a low-pH recovery solution in the Ross Permit Area of the Lance Projects. All leach testing and geochemical modelling required to support the amendment applications were completed prior to the applications being submitted.
Following the submission of the amendment request, the first review and clarification meeting was held with representatives of the WDEQ in June 2018, with the meeting being the first of a number of such meetings expected to be conducted over the remainder of the 2018 calendar year in accordance with prescribed guidelines for the review of such permit amendment requests. Based on its assessment and understanding of the amendment approval processes, the Company holds a reasonable expectation that amendments to existing operating permits and licenses could be granted in mid-2019. During the amendment process, Peninsula will continue operating the Lance Projects in accordance with the currently approved licenses and permits.
Lance Projects Operational Performance
Operational performance for the 12 months to June 2018 is shown in Table 1 below.
|Units||Sep 2017||Dec 2017||Mar 2018||Jun 2018|
|U3O8 Dried and Drummed||lbs||42,665||23,270||73,864||43,553|
|Cash Sale Price||US$/lb||50.00||N/A||43.34||N/A|
Table 1: Lance Projects Operating Performance Summary
1 Expenditure on production activities is determined in accordance with Item 1.2(c) of Appendix 5B and excludes development and capital expenditure costs.
To preserve in-situ U3O8 pounds for future low pH extraction, and to reduce cash expenditure over the low pH permitting and transition period, during May 2018 the Company suspended the majority of alkaline based production activity within the first mining unit at the Lance Projects (MU1). Alkaline ISR based production continues in the second mining unit (MU2), where head grades are higher and in a small number of MU1 production wells to assist with maintaining wellfield fluid control in MU1.
Reducing current production rates will not affect the Company’s ability to deliver into its near-term or mid-term sales obligations as the Company has the flexibility of making on-market purchases to complement Lance production within its product sales agreements.
No further wellfield development capital expenditures are currently scheduled under the existing alkaline ISR permit following the completion of construction of Header House 10 during the June 2018 quarter.
Figure 3: Wellfields and Header Houses, Mine Unit 1, Lance Projects Wyoming USA
Peninsula currently has up to 7.6 million lbs of U3O8 remaining under contract for delivery to major utilities located in the United States and Europe through to 2030 at a weighted average delivery price of approximately US$51-53/lb U3O8.
Within the quantity of 6.5 million lbs U3O8, 4.6 million lbs U3O8 are committed quantities for delivery through to 2030. Up to 1.9 million lbs U3O8 are deliveries that are optional, at the election of the respective customers, to be delivered between 2021 and 2026. These contracts provide a substantial earnings stream to the Company whilst allowing it to preserve significant quantities of planned U3O8 production for contracting during future periods.
Figure 4: Header House Interior, Lance Projects, Wyoming USA (2018)
On 14 November 2017, the Governor of the State of Wyoming requested that the U.S. Nuclear Regulatory Commission (NRC) enter into an agreement with the State of Wyoming as authorised by Section 274b. of the Atomic Energy Act of 1954, as amended (AEA). Under the proposed agreement, the NRC would discontinue, and the State of Wyoming would assume, regulatory authority over the management and disposal of byproduct materials as defined in Section 11e.(2) of the AEA and a subcategory of source material associated with uranium mining and milling within the State of Wyoming.
The transition of regulatory oversight of uranium mining and milling achieved a significant milestone on 26 June 2018 when the proposed agreement between the NRC and the State of Wyoming was published on the U.S. Federal Register for a 30-day public comment period. Subject to the extent of public comments, the transition is on track to be completed by 1 October 2018. Completion of this transition will simplify the regulatory oversight of the Lance Projects in Wyoming as the Company will be dealing with only one primary regulator compared to the current situation of dealing with both the State of Wyoming and the NRC as primary regulators. This is expected to decrease future regulatory costs incurred by the Company and also means that all regulation and approvals of future low pH operations at the Lance Projects will be overseen, managed and controlled by the State of Wyoming.
The remaining JORC-compliant Resource Estimate for the Lance Projects is 53.5Mlbs, calculated by applying a combined constraint of a GT of 0.2 contour and 200ppm eU3O8. These cut offs are considered to be appropriate for both calculating and reporting of ISR resources at the Lance Projects.
The measured, indicated and inferred resources are located in host sandstones. Geological modelling of the extensive down-hole geophysical data has accurately defined the impermeable shale and mudstone horizons that form the confining horizons to the mineralised sandstones.
Table 2: Lance Projects Resource Estimate
|U3O8 kg (M)||U3O8 lbs (M)||Grade (ppm U3O8)|