Peninsula Energy Limited

PEN Details

Peninsula Energy Limited (ASX: PEN) happens to be the uranium producer. The company is having a market capitalisation of ~$268.92 million as on 23^rd September 2021.

Q4FY21 Update:

• During the three months’ period, the company completed A$13.4 million Placement at 15c, well-supported by new and existing international and domestic institutions. It also executed sale of 200,000 pounds of U₃O₈ at a realised cash price of US$49.57 per pound U₃O₈ generating a net cash margin of US$3.5 million realised in July 2021.
• The company was having available cash of US$6.7 Mn at 30^th June 2021 plus 309,507 pounds of uranium in the converter accounts valued at US$9.9 Mn.

Key Data (Source: Company Reports)

Result Performance (Half-Year Ended 31 December 2020)

• Revenue from the continuing operations for the interim period stood at $2.77 million, as compared to $2.25 million in the previous corresponding period (pcp).
• The company reported loss for the half-year at US$1.78 million, as compared to US$7.67 million in the pcp, which can be attributed to the turnaround in 2020 to a gross profit realised on sale of uranium concentrate, significant reduction in corporate and administrative expenses, realisation of a derivative gain relating to financial assets associated with the portfolio of uranium concentrate sale and purchase agreements, and elimination of finance costs.

Outlook:

The company continued to focus towards the progression of the MU1A low-pH field demonstration at the Company’s flagship, 100%-owned Lance Project located in Wyoming, USA.

The field demonstration of low-pH In-Situ Recovery (ISR), which started in August 2020, is designed to provide key data on pattern configurations, pH adjustment, acid consumption, solids handling and oxidants ahead of a decision to restart production at the Project.

Risks:

PEN holds undiversified exposure to commodity markets with a sole focus on Uranium extraction and is hence extensively sensitive to potential high price volatilities.  

Technical Overview:

Chart:

Source: REFINITIV

Note: Purple Color Line Reflects RSI (14-Period)

Stock Recommendation:

The stock has witnessed a rise of ~82.14% in the time span of 1 month. It has made a 52-week low and high of $0.060 and $0.350, respectively. During the June 2021 quarter, PEN took actions throughout the key focus areas in order to enhance the performance, including further changes to the configuration of the injection as well as recovery well patterns.

Investors with high risk appetite should consider this stock amid associated risks such as volatility in the uranium prices as well as risks related to the broader commodity markets. Also, the company is having negative cash flows from the operating activities in the quarter ended 30^th June 2021.

Considering the aforesaid facts, we give the “Speculative Buy” recommendation on the stock at the current market price of A$0.250 per share (Time: 2:15 PM (GMT +10), Sydney, Australia) as on 23^rd September 2021.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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