Here's shadders post from a while back when the price of PEN was...

Here's shadders post from a while back when the price of PEN was under 4c.
Interesting to see the scenarios playing out now as it's 'almost a given' that PENO will expire in the money.

From Shadders (put him in your favourites)

higher risk with PENO but the reward profile is interesting... a little case study:

Once PEN gets to 10c we will likely have a PENOA price around 8c (the premium will drop back a little bit because the leverage advantage is much smaller). And a PENO price around 2c (perhaps a little higher).

If you bought 1 of each right now this would represent a gain of:
PEN: 270% (purchase 3.6)
PENOA: 320% (purchase 2.5)
PENO: 280% (purchase 0.7)

So the return ratio is in a pretty similar ballpark at this level...

However fastforward a few more cents and PENO is gaining almost a cent for every 1c gain in PEN and the state of play changes radically... If we look at PEN moving to 12c we'll call PENOA 10c and PENO 3.8c
PEN: 330%
PENOA: 400%
PENO: 540%

at 15c for PEN (PENOA 13c, PENO 6.2c):
PEN: 416%
PENOA: 520%
PENO: 885%

dare I say it 20c (PENOA 17.5c, PENO 11c)
PEN: 555%
PENOA: 700%
PENO: 1571%

In a nutshell the risk is much higher while PEN is substantially below the 10c strike price, the reward for that risk will be roughly equivilent to the reward for owning the heads... However once we start approaching strike price the reward ratio becomes supercharged... So why not just hold the lower risk PEN until the price approaches the safety zone? Because by then the reward will start getting factored in as a premium and PENO will become harder and harder to aquire...

I have a substantial collection of them, all bought at rock bottom prices... I'm personally quite confident PEN will trade over 10c in the next 6-8 months so I'm in early before the value is recognised...

A great post from depthtrader too....
Please go back and do more research though - but we can add some of the momentous posts now and again!

From depthtrader - 10th August 2009 - only a month ago!

In the "potential funding arrangements" thread it was suggested by HangSeng that PEN may be able to start producing before building a plant, by using the excess plant capacity of nearby Uranium producers. Such a scenario would mean PEN could start generating some serious cash and solve the small problem of finding funding to build a plant. So I decided to look at the numbers and came up with the following:

PEN'S LATEST SCOPING STUDY (RELEASED TO MARKET ON 6 MAY)

Production commences: 2012
Annual Production: 1.5 million pounds
Uranium Long Term Price: $65 USD
Production costs per pound (including CAPEX amortisation): $28.3 USD
Gross Margin (after depreciation): $55 million USD
Net Profit (after Tax): $42 million USD per annum

MY UPDATE TO THE SCOPING STUDY:

Production commences: June 2010
Annual Production: 750 000 pounds
Uranium Long Term Price: $65 USD
Costs per pound: $22 USD (I subtracted $7 to reflect operating costs halving for half the amount of Uranium)
Gross Margin (after depreciation): $28.25 million USD
Net Profit (after Tax): $19.78 million USD

Earnings per share AUD: $0.017

Share Price Boost (Assuming P/E of 10): $0.17

This is back of the envelope stuff intended to start some discussion and get a few different perspectives. The current long term contract rate is actually $70 USD, and I've also halved the production rate from 1.5 million pounds even though HangSeng found two companies each with 1 million+ pounds of spare capacity located nearby to the Lance project. If PEN could produce 1 million pounds starting next year then the Share Price could be lifted as much as 22 cents per share using all the same assumptions.

So, even though I think I've been pretty conservative with the numbers, the end result is still pretty impressive and actually a bit of a shock for me. If it happens this way it'll definitely be a shock for the market too I'm guessing.

A net profit of $19-25 million USD per annum would go down well with the banks I expect and allow PEN to simultaneously finance building of a plant at Lance, as well as ramp up the drilling program at Karoo, South Africa. It's a total game changer if management can pull it off.

dt

19th August - the story so far from depthtrader - (and since then we've acquired a VERY valuable data base. This also shows why results are overdue or expected.)

The criticism of the drill results has been mostly based on misunderstanding. So we can discuss the facts rather than distortions of them, here is a summary of the drill results so far.

22 May 2008 - Initial stated resource from historical drilling:

4 stacked roll fronts
Ross: avg 13ft @ 0.05-0.06% for a total of 6-8 million lbs
Lance target: 33-53 million lbs

7 Jul 2008 - After independent review, World Industrial Minerals revises to:

22 stacked roll fronts identified
Lance target: 50-76 million lbs
Ross: avg 13ft @ 0.05-0.07% for a total of 8-12 million lbs
Barber: avg ?ft @ 0.07-0.09% for a total of 4-6 million lbs

1 Oct 2008 - First drilling update (2-3 weeks after commencement):

Interval of 7ft @ 1490ppm returned from RMR0006
Best grade of 1ft @ 4800ppm within above interval

14 Oct 2008 - Second drilling update (note this is only another 2 weeks ;-):

Best grade of 4.5ft @ 1210ppm from RMRD0003
Interval of 10.5ft @ 700ppm from RMR0015

3 Nov 2008 - Drilling program successfully concluded:

21 holes exceed a combined grade thickness product of 0.3 ft % Uranium
Mineralisation encountered in all holes

Global Financial Crisis stopped drilling program

21 Jul 2009 - Positive Core Tests and drilling at Ross re-commences:

Excellent permeability and porosity results achieved from tests of drill cores from 2008.
Drilling re-commences at the Lance Projects targetting extensions of mineralisation at Ross and Barber

4 Aug 2009 - High Grade Uranium Intersections Expand Known Mineralisation at Ross Project

Drilling of 11 holes completed
Drilling has expanded area of known mineralisation
Best grade of 8.5ft @ 1000ppm from hole RMR0026
Best interval of 11ft @ 700ppm from hole RMR0024

"In addition, Peninsula is pleased to report that the drilling completed to date has been successful in expanding the area of known mineralisation and is expected to incrementally increase the uranium endowment at Ross. The current program will continue to step out into areas of wider drill spacing and areas where there is potential to expand the area of the high grade zones."

"Drilling at the Barber project ... will begin in September 2009 also targetting extensions of the historic mineralisation."

If you look at the track record, there's been a steady flow of successes and upgrades and the more the company drills the more Uranium they discover. What other Uranium producer hits mineralisation every time they drill? This is PEN's big advantage, the historical data means they already know where to drill so the hit rate should be expected to be extremely high. When Gus says he expects to increase the uranium endowment at Ross on the back of drilling results that show it's already increasing, I think there's good cause to believe him.

Based on the track record with drilling updates, I'm expecting the next one around 19 August.

dt