PEN peninsula energy limited

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Ann: Presentation - DFS Completed for Lance, page-45

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SSA

721 Posts.

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16/08/22

00:23

Post #: 63130117
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Originally posted by SSA: ↑

I remember when GOR (gold miner) released its DFS for its mine Gruyere in November 2016. Price dropped 30% to 0.50 in the months afterwards, and steadily buyers consolidated all the way up to 0.80, before price broke out and went to 1.65.

The DFS in that case had GOR at NPV (8% discount) pre tax of $486m. 13 year mine life - 260-300k ounces of production a year. By that stage, they hadn't sold half the mine to Gold Fields as part of the JV. Gold price assumption was $1500 an ounce (at the time of DFS it was trading at $1150), AISC for life of mine was $945-1000. Feasibility also stated NPV was heavily leveraged to gold price. A 16% increase in gold price to $1750 would see the NPV increase by 87% to $910m. At the time GOR traded at a market cap of ~$450m, and post DFS release dropped 30% to $320m.

Note, they ended up giving away 50% of the asset (130-150k ounces per year of production) to gold fields for them to build the mine and wear the risk around construction costs. So can't simply halve the NPV... got to take out upfront cost associated with mine, but they also gave up 50% of the operating cash flows over life of the mine.... for arguments sake lets say the NPV at half ownership was $250m. Compared to pre-tax 8% NPV in AUD of $178m for PEN. So, ~70% of Gruyere NPV, when adjusted (roughly) for the half stake.

In Aug 2019, GOR was trading in the 1.60s, around $1.3bn market cap and gold was trading at $1500 an ounce. It went into production 2 months later. When gold traded at 2000 an ounce about a year later, GOR traded at $2, around $1.7-1.8bn market cap. Shares on issue increased by over 100m between 2016 and 2020.

Chart looked similar too (first one GOR) second one PEN. Different metal/commodity, different time. Some have noted that the valuation and performance of PEN will be contingent on uranium price, I don't disagree. The spot price chart looks bullish when taking a longer-term view anyway. If the action post GOR DFS is anything to go by, a drop of 30% would see PEN testing 14.5c or thereabouts, which could coincide with a continuation of general bear market. A hold of that area, which is the most recent low, would bode well. We will find out in time...

Anyway, all in all, an interesting observation - which I'm sure will get $hit thrown at it, because, hey, it's hotcopper.

Uranium spot price (monthly chart) - breakout of base.

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I should clarify - they gave up about $2.5bn (AUD) of operating cash flow over life of mine (based on DFS assumptions of gold at 1500USD (2380AUD) an ounce and AISC of 690USD (945AUD @ AUD/USD of 0.63). Spared themselves between $500-600m upfront in mine construction as part of the 50:50 JV. NPV at 8%

PEN Price at posting: 18.0¢ Sentiment: Buy Disclosure: Held
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