PEN will require more working capital soon to install more injection/production wells to replace those that aren't coughing up their uranium (again). On this issue, I wonder what the Ross life-of-mine resource looks like now? It can't be looking too flash if wells are being abandoned without recovering the contained uranium. That's ignoring the fact that most (75% if memory serves) of the resource is in the Inferred category anyway.
Seven HH's required for Stage 1 production of 600k to 700k lbs per annum. Another 3 HH's installed recently and that to achieve reduced production guidance of 400k lbs per annum. How can that possibly make sense to a normal, rational investor? I hope they don't do the installation of the new well fields in inclement weather.
I would worry less about Karoo announcements and more about production at Ross. If Ross fails on a technical level, no one will touch PEN. Why no news on performance of new header houses? Have they been commissioned according to the revised timeline, are they producing uranium as per design, will they need more wells to achieve revised guidance? I've spent a bit of time researching the Paladin issues which forced me to read through many historic ASX announcements. One thing becomes apparent, Paladin consistently keep (kept?) the market updated on production and technical issues at Langer Heinrich (and Kayelekera before C&M). Why will PEN not do this? Is it deemed unnecessary? Is it negligence or is it a deliberate management decision? As I said many months ago, if a project is a technical success and produces uranium at nameplate, this fact should be broadcast at every opportunity. The silence from PEN is deafening, and in my view, indicative of an obvious technical flaw that is being swept under the carpet.
One final thought/question. With PEN's current weak financial position and without proof of technical success at Ross, how likely is it that utilities will sign further term contracts with PEN? How likely is it that financiers will bash down Karoo's door to get some of the action? On both counts, I don't think very likely at the moment. Doesn't that put Stage 2 (and Stage 3) at risk?
Now I know that my views will be rubbished by well written, elegantly worded spin from the PEN salesmen but surely, as investors, you should at least be putting these questions to PEN management. If I'm wrong, no skin off my nose but at least you will sleep better at night knowing Ross has the ability to produce at nameplate without raping the resource.
PEN Price at posting:
54.5¢ Sentiment: None Disclosure: Not Held
