At 30 September 2020, the Company holds a portfolio of uranium concentrate sale agreements for up to 5.5 million pounds U3O8, with 4.2 million pounds of U3O8 committed and up to 1.3 million pounds of U3O8 optional at the election of customers. Delivery obligations under the contracts continue through to 2030 with a weighted average future sales price at the upper end of the guided US$51-$53 per pound range.
The Company continues to engage with its existing and potential new customer base regarding possible new long-term uranium concentrate sale agreements targeting pricing mechanisms that would support increased production scenarios under the planned transition to low pH ISR operations at the Lance Projects.
On 14 July 2020 Peninsula announced a binding purchase agreement to procure 400,000 lbs U3O8 for receipt in CY2021. The Company currently has 450,000 lbs U3O8 of committed sales to its customers in CY2021.
The purchase agreement underpins Peninsula’s forecast net cash margin of US$6 million to US$8 million on uranium sales in CY2021, based on the difference between the purchase pricing and the sales price computations of the Company’s agreements with customers. The price to be paid under the purchase agreement is confidential but in line with reported market prices in July 2020 for U3O8 to be delivered in CY2021. The agreed pricing is fixed and is not subject to any form of escalation or adjustment. Purchased uranium will be delivered to Peninsula in allotments during the year to align with the timing of deliveries to customers. Payment for the purchased uranium is also aligned with the receipt of proceeds from the sales.