At 31 December 2020, the Company holds a portfolio of uranium concentrate sale agreements with major utilities for up to 5.45 million pounds U3O8, with 4.1 million pounds of U3O8 committed and up to 1.35 million pounds of U3O8 optional at the election of customers. Of the U3O8 committed sales, 1.1 million pounds can be satisfied with open origin uranium in the next 3 years, with the balance to be supplied from Lance Project origin uranium.
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 on new long-term uranium concentrate sale agreements, targeting pricing mechanisms that would support increased production scenarios under the planned transition to low pH ISR mining at Lance.
Peninsula enters into binding purchase agreements intermittently to procure pounds of U3O8 to satisfy its open origin sales delivery obligations.
As of 31 December 2020, the Company holds a 400,000-pound U3O8 uranium concentrate purchase commitment.
Purchased uranium will be delivered 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. The price to be paid under the purchase agreements is confidential, but in line with market reported prices at the time they are entered into, are fixed and not subject to any form of escalation or adjustment.
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 of the Company’s agreements with customers.