Accumulation Time - Huge Upside Potential, page-36

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ura_bull

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22/05/18

17:32

Post #: 33256601
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Originally posted by JID ↑

Hi Tutes,

Counter intuitively, a higher spot price for U is actually BAD for PEN as it currently stands.

By sourcing U to meet contractual obligations on the spot market, higher spot prices effectively increase the cost of sales until they can ramp up Lance using a "low pH" process which looks like late 2019 or early 2020.

If I was management, I would use as much of the US$19m as possible (without running into liquidity issues) to buy U on the spot market as soon as possible to meet the contractual obligations prior to the planned transition at Lance, before prices rise.

Everybody knows that the spot price for U is unsustainable and analysts have been forecasting a deficit to emerge c. 2020-2021.

However some analysts (e.g. Leigh Goering) have been bringing their forecast deficit timeline forward.

Now that producers such as Cameco are sourcing large volumes of U on the spot market and there is a risk that PDN ceases supply of spot U to the market within 4 months (likely IMO) I think we are already starting to see the market respond in anticipation of less available spot U.

Thus for PEN, there is a risk that their currently fat margins will shrink very quickly. A totally ironic situation to be in.

Cheers
John

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I'm trying to find confirmation in a release but I was nearly sure PEN had short term contracts for U they purchased at a rate just slightly higher than spot but locked in for like maybe a year?

I'll post if I can find it in a release...

PEN Price at posting: 25.5¢ Sentiment: None Disclosure: Held
1 Upvote

0 Great analysis

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(20min delay)
Last 8.3¢		Change -0.002(2.35%)		Mkt cap ! $264.5M

Open	High	Low	Value	Volume
8.5¢	8.6¢	8.2¢	$453.2K	5.435M

Buyers (Bids)

No.	Vol.	Price($)
2	249998	8.3¢

Sellers (Offers)

Price($)	Vol.	No.
8.5¢	88201	3

View Market Depth

No.	Vol.	Price($)
2	249998	0.083
14	1944401	0.082
14	2381409	0.081
28	3295825	0.080
6	1183885	0.079

Price($)	Vol.	No.
0.085	88201	3
0.086	500000	1
0.087	82721	3
0.088	194960	3
0.089	200001	3

Last trade - 16.10pm 22/08/2024 (20 minute delay)

PEN (ASX) Chart

Accumulation Time - Huge Upside Potential, page-36

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