PEN 3.85% 13.5¢ peninsula energy limited

update on urz

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    I took the liberty of contacting URZ with a view to gauging how much of its acreage they had actually drilled (following up from a previous pledge).

    Very kindly, Derek Iwanaka (Manager, Investor Relations) informed me that URZ had drilled 15% of its reduction oxidation (“redox”) boundaries found on our Power River Basin properties in Wyoming. Ground-wise, URZ have some 404 skm available to them.

    The idea was to glean how far along they were vis-a-vis PEN. From all the feedback gathered to date, we know that for all intents and purposes PEN is pursuing a strategy of converting inferred resource to indicated resource as well as undertaking regional exploration that aims to locate the mineralised portions of over 320 lineal kilometres of mapped redox boundaries. To a layman such as myself, that seems like a heck of a lot. Ground-wise, PEN have some 120 skm available to them (of which they have drilled but a fraction.)

    Clearly, URZ have some way to go before exhausting these redox boundaries. PEN, on the other hand, seem only to have gotten started. Like-for-like, I'd say PEN possess the most prospective (as results show), and it must therefore be said, coveted, ground.

    Mr Iwanaka also confirmed that URZ currently has delineated 19.1 million pounds of U3O8 in the Measured, Indicated, and Inferred Categories, according to 43-101 guidelines. PEN, on the other hand, have JORCed 41.5 million pounds - though fewer measured & indicated hitherto. Over the course of the next few months, logic alone dictates that it will ramp up significantly.

    As I've discussed previously, and confirmed by Mr Iwanaka, URZ did not underake a DFS. Instead, they conducted a Preliminary Economic Assessment:

    According to National Instrument 43-101 guidelines, a PEA is considered preliminary in nature and includes the use of inferred mineral resources which are considered too speculative geologically to apply economic considerations that would enable them to be categorized as mineral reserves. Mineral resources that are not mineral reserves have not demonstrated economic viability. Thus, there is no certainty that the production profile concluded in the PEA will be realized. Actual results may vary.

    Which kind of makes sense when you realize that URZ have decided to use in-house finance. According to Mr Ikanawa:

    We secured the funds to complete the construction of our Nichols Ranch ISR Uranium Project in Wyoming earlier this year [by issuing common share purchase warrants] and construction commenced in August 2011. The estimated capital costs for the project are ~$35 million and we currently have $41 million in the bank, thus it should not be necessary to raise further funds for completion of this project. The long lead items have already been ordered and paid for thus the Company and construction is currently on budget and on schedule. Production is expected to commence in H2 2012.

    Given that PEN have clearly gone a different route (beefing up the DFS to attract the necessary investment, though I'd say they could, if absolutely need be, go it alone), and given the head-start URZ have on us (WDEQ and NRC license applications were sent out in December of 2007, both of which were granted in 2011), the only unbiased conclusion one can draw is that PEN (December 2010/January 2011 submittal) have gone above and beyond the call of duty.

    And with millions of undiscovered pounds in the process of being converted, it's a lesson none of us should ever forget.

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