PENINSULA MINERALS LTD 4/8/10Underrated After Significant...

PENINSULA MINERALS LTD 4/8/10

Underrated After Significant Milestones Achieved

Peninsula Minerals Limited (Peninsula, PEN, Company) has recently achieved significant milestones for which it has been given little to no re-rating by the market. The Company released its maiden JORC compliant resource in April, ahead of schedule and larger than had originally been targeted. The 15mlb U3O8 resource underpins the recently completed Pre Feasibilty Study (PFS), which has indicated robust economics for the first two project areas at its 100% owned In Situ Recovery (ISR) uranium projects, located in Wyoming, USA. We value these two (of 13 in total)projects at 6cps, including a 10% discount to our Net Present Value calculation.
Substantial exploration and appraisal potential exists in the USA asset portfolio as well as at the Companys 76% owned Karoo Project in South Africa where drilling is scheduled to commence this month.
PFS Indicates Low Capex, Operating Cost Project
The PFS has estimated C1 cash costs of US$13.5 per lb (including Vanadium credits), C2 costs (after royalties and taxes) of US$21.4 per lb and C3 total cash costs (after all spend including capex) of US$30 per lb.
This compares favourably to conventional mining operations, which can require significant start-up capital. This also indicates that economics are
likely to be robust considering the expected contract price starting at US$62 per lb in 2012 and escalating each year. On Track for Mid 2012 Production PEN has completed significant work related to permitting, including recent submission of applications for deep-water disposal wells. The Company is also close to completing baseline data collection to enable submission of key environmental applications (~70% complete) by the end of the year. We gained an in depth perspective on the proactive approach undertaken by the US team during a recent site visit, which increased our confidence in PENs ability to achieve its scheduled milestones.
The level of detail undertaken in the PFS should enable completion of the Bankable Feasibility Study in early 2011. The relatively low complexity of construction of the ISR plant also facilitates timely completion required to meet the mid 2012 first production schedule. Resource Recalculation, Karoo Drilling, Bankable Feasibility The Company has been extremely busy and will continue to be so for the next 18 months, with significant milestones over the next 6 months likely to re-rate. PEN is currently recalculating its resource in the USA, which may result in improvements in both size and category. Drilling at the Karoo Project, in South Africa, is scheduled to commence within weeks. Significant permitting applications should be submitted in December 2010, followed by expected completion of Bankable Feasibility in early 2011. The Company has also been in discussions with potential offtake partners, which could result in an injection of equity in the next 6-month period. Sentiment towards
the Uranium Sector is also improving, in our view, along with the spot price.
We rate Peninsula Minerals as a Buy with a 6-month price target of 9cps.