"Exactly how good our management team are?"
OK, this may be a long post, but I will attempt to answer and give my opinion with POSITIVES and NEGATIVES (feel free to disagree or point out if I'm wrong)
PEN management team has 150+ years of uranium experience (Wayne Heili has 35+ years)... I wouldn't think there's too many teams out there with this much uranium experience.. (POSITIVE!)
Also I think some credit should be given to companies who have been able to survive a black swan event like Fukushima and survived the 10+ year bear market when the whole uranium sector was starved of capital.. business was tough but PEN survived.. (POSITIVE!)
There's probably quite a few investors who would question the credibility of management, and I think their main reasons would be:
1. UEC pulling out of the toll milling agreement with no back up plan
2. Capital raise pricing and timing
3. Supply contracts signed at $60
Let's address them one by one, but before I begin, I think there are a lot of "armchair experts" who say PEN "should've done this and that" with regards to the above, but I must say everything is so easy with HINDSIGHT
1. UEC pulling out..
First of all, the agreement was signed by the previous CEO before Wayne Heili arrived. Is this an excuse? No, BUT for years, NOT ONE person (on HC or Twitter or anywhere) brought up or questioned the agreement, until UNEXPECTEDLY, UEC pulled out, then everyone was suddenly an "armchair expect" saying that PEN should've had a backup plan (most people had no idea)
Yes, a CEO who is "on the ball" would've picked up on the agreement flaw (and amended the contract or have backup plan) after he started with the company, but it is my OPINION only, that probably most CEOs would've missed this exact point like Wayne Heili did (only a minority would've picked up this point)
2. Capital raise price and timing
Now I'm going to say it is a NEGATIVE that PEN did their latest raising at such a big discount. I'm not happy with that either, so I'm not going to defend them on that
Now timing of CRs, I'm not so concerned with as again, everything is easy with HINDSIGHT.
I think Wayne Heili tried to delay the CR as long as possible hoping the rising spot price would lift the SP, but it didn't really happen
How many of you would've thought uranium stocks (not just PEN) would be this low with uranium price at $100.. most stocks are lower than their 2021 highs when spot price was $50.
3. Contracts signed at $60
First of all, only one third of PEN's uranium is selling at $60. Theyre still making money on this ans still have two thirds prodxtion to benefit from rising uranium price!
Secondly, when these contracts were signed by the previous CEO.. it was an absolutely good deal at the time!
Remember uranium price was $20-$30, and PEN was able to get $60.. PEN was one of only a few companies receiving revenue during the bear market whereas most companies were doing CR after CR
Also remember up until end of 2022, PEN had an agreement to purchase spot at $30 (when spot price was higher) and sell at $60.. Great business move and margin.
Also PEN is the only one in the US licensed to do acidic ISR (same process as Kazatomprom).. field trial results show this provides better results and returns.
So, Wayne Heili made the decision to change from alkaline to acidic ISR.. BIG decision when everyone in US around you is using alkaline. Takes a bit of "balls" or "guts" to make that decision IMO.. (POSITIVE!).. would've been easy for Wayne Heili to sit around and do nothing like others U companies and wait for higher spot price
Now we still have to see if PEN can deliver.. ie bring PEN into production end of this year (may be early next year if slight delays) and see the acidic ISR in action..
Let's see how 2024 plays out.. my guess is SP will be a lot higher end of the year compared to todays price
So to summarise, I'd say PEN management have done a reasonable job... not perfect, but good enough for me to say that I'm comfortable and happy holding PEN, as im hoping to reap the rewards when PEN goes into production
As a side note, if anyone is interested, you should read how unhappy TOE shareholders are with their management/chairman.
Not having a dig at TOE, but if PEN had their chairman (underperforming, high salary, makes wrong decisions, doesn't answer shareholders, doesn't do interviews or promote the company, etc), I would seriously be worried about being a shareholder, but comfortable with Wayne Heili for now
Happy to hear others thoughts/opinions/corrections
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