new hartleys report - 6month target of 9 cents, page-10

Wednesday, April 14, 2010

Perth broker Hartleys places 9cps target on Peninsula Minerals
by Proactive Investors

Share Price: $0.044
6mth Price Target: $0.09

Hartleys has updated a research report on Peninsula Minerals (ASX: PEN) as it reported its maiden JORC compliant uranium resource from its 100% owned Lance Projects, located in Wyoming, USA.

The total resource estimate is 15.1mlb U3O8 with average grade of 507ppm of which 4mlb is in the indicated category and 11.1mlb is in the inferred category. Significantly, over 90% of the resource is from the first two targeted production areas at the most advanced of the 13 projects sites: Ross and Barber.

The size and grade of the resource is in line with Company guidance; however, it is 8.5 months earlier than originally scheduled. It has also added 4mlb of indicated resource when the original schedule called for an inferred resource only. Cut off grades used for the calculation were 325ppm and 275ppm for Ross and Barber, respectively.

Hartleys considers this conservative as many in-situ recovery (ISR) projects use a cut-off grade of 200ppm.

First Production on Track for 2012

The maiden JORC resource is a major milestone on the road to production, planned for 2012. The first production area is planned at Ross where 10.1mlb U3O8 has been assigned. Permitting and engineering work at Ross has also commenced. The Company is targeting production of 1.5mlb per annum, which we value at 8cps, fully diluted, based only on the current JORC resource.

Hartleys anticipates further resource upgrades that will be able to be commercialised.

Recent changes to permitting procedures at the Nuclear Regulatory Commission and the Wyoming Department of Environmental Quality are considered likely to reduce the time required to gain approvals, further supporting PENs planned timeline to production. We had previously considered this on the critical path.

Additional Mineralised Potential of 50-80mlb U3O8 Identified

The work done to calculate the maiden JORC has also allowed for an estimation of the potential resource over all of the 13 Lance Projects based on the conversion rate of identified roll fronts (areas of mineralisation) to resources.

This estimate is 50-80mlb U3O8 over and above the maiden JORC resource.

Commercialisation of this potential resource could add 32cps to Hartley's valuation.

Continuous Drilling in the USA for 2010

Peninsula currently has 5 rigs operating at its Lance Projects and we expect strong newsflow, with increased grades likely from targeting drilling on the nose of the roll fronts. These may be interspersed; however, with results from exploration drilling designed to identify new roll front zones.

Drilling in South Africa to Commence Mid Year

PEN also has a 74% interest in a large acreage position in the Karoo Sandstone region located in South Africa. Recent studies by the Company indicated that it might be possible to expedite conversion of some of the historically identified
mineralisation to a JORC resource of 30mlb.

Drilling is scheduled to commence in mid 2010 and we expect results soon after.

PEN now looks cheap on a likely production scenario from a de-risked maiden JORC resource, with significant upside potential in both the USA and South Africa.

Hartleys have subsequently upgraded Peninsula Minerals from a Speculative Buy to a Buy with a 6-month price target of 9cps.

http://www.proactiveinvestors.com.au/companies/news/6435/perth-broker-hartleys-places-9cps-target-on-peninsula-minerals-6435.html