(Peninsula Energy 100%)
Figure 1: Lance Projects Location, Wyoming, USA
Figure 2: Lance Projects Process Plant and Admin Building, Wyoming, USA
In October 2017 the Company announced the outcomes of recent research initiatives aimed at improving the operating performance at the Lance Projects. These outcomes included encouraging laboratory test results using lower pH solutions (mild acids), which returned increased peak uranium solution grades averaging nearly 1.0 g/L with uranium recoveries typically over 90%. The initial laboratory test uranium recovery results have been confirmed with additional targeted laboratory tests and via geochemical modelling.
All uranium operations that are in the 1st quartile of the global cost curve are In-Situ Recovery (ISR) facilities that utilise a low pH lixiviant.
Laboratory Research Programme
Peninsula has conducted an extensive laboratory research programme. Five column leach tests have now been completed using core samples collected from various locations within the Lance Projects area. These tests have confirmed the effectiveness of the proposed low pH chemistry at the Lance Projects and also indicated that the quality of the affected groundwater can be returned to existing approved target restoration values following the use of lower pH in-situ recovery (ISR) solutions.
To change from an alkaline based mining solution to a low pH solution requires the approval of amendment requests for the existing permits and licenses, which currently authorise the use of alkaline and oxidant solutions only in the ISR process.
Permit to Mine
In April 2018 the Company’s wholly owned subsidiary, Strata Energy Inc (Strata), formally submitted a request to the Wyoming Department of Environmental Quality (WDEQ) Land Quality Division to amend its existing Permit to Mine (PTM) to allow for the use of a low-pH recovery solution in the Ross Permit Area of the Lance Projects. The Company received final approval of the PTM amendment during the March 2019 quarter. This approval follows the completion of an extensive technical review of the amendment application by the WDEQ, completion of the public comment period and completion of a review by the WDEQ of the comments received.
The approved PTM amendment allows the implementation of low pH operations within the Ross Permit Area at the Lance Projects in four progressive phases, Phase 1 of which is the low pH field demonstration that commenced in December 2018.
Each of the four phases of implementation are outlined below:
Phase 1 – Mining and Initial Restoration Stage of Low pH Field Demonstration
A low pH field demonstration commenced in December 2018 following the approval of a non-significant revision to the PTM and the determination by a Safety and Environmental Review Panel that a low pH field demonstration could be conducted under the existing SML. The low pH field demonstration consists of a mining stage and an initial restoration stage.
A key objective of the mining stage of Phase 1 is the successful lowering of the local mining zone pH level to the targeted level (approximately 2.0 standard units (S.U.)) without compromising the ability to move lixiviant through the mining zone. Results of the mining stage of the low pH field demonstration were released to the market on 1 April 2019.
During the restoration stage within Phase 1, which commenced in mid-April 2019, the objective is to return the pH level in the mining zone to equal or above 5.0 S.U. in order to bring the formation pH into a range where industry standard restoration techniques can be utilised. Upon elevating the pH to a level equal to or above 5.0 S.U., Strata will submit an Interim Operation Report to the WDEQ that summarises the results of the field demonstration for this phase. Test results will be compared by the WDEQ with predetermined criteria and performance metrics.
Those elements of the low pH field demonstration necessary to obtain approval for the commencement of commercial scale operations are expected to be completed in mid-2019. Approval of the SML amendment request will also be required to proceed with Phase 2.
Phase 2 – Commencement of Commercial Scale Operations (MU1 and MU2)
Phase 2 is the commencement of commercial-scale low pH operations throughout the entirety of existing previously operated areas of Mine Units 1 and 2. Phase 2 can commence upon acceptance by the WDEQ that the Phase 1 Interim Operation Report has demonstrated that pre-defined acceptance criteria have been achieved, or through approval by the WDEQ following evaluation of variations to acceptance criteria (if any).
The restoration stage of the low pH field demonstration runs in parallel with Phase 2 and continues into Phase 3.
Phase 3 – Field Scale Groundwater Restoration in Low pH Field Demonstration Area
Phase 3 of the implementation plan consists of a field scale groundwater restoration demonstration within the low pH field trial area, building upon the initial Phase 1 restoration activities. Field scale restoration is intended to restore the water quality in the mining zone to specified criteria. Following this field scale groundwater restoration, Strata will submit an Interim Restoration Report to the WDEQ for review and approval. It is estimated that the Interim Restoration Report will be submitted toward the end of 2019.
Phase 4 –Commencement of Commercial Scale Operations (New Mine Units in Ross Permit Area)
Upon WDEQ approval of the Interim Restoration Report, the Company can advance to Phase 4 of the implementation plan and commence the use of low pH lixiviants in all future new wellfield units within the Ross Permit Area. Commencement of operations in any new mine unit is subject to the normal WDEQ review and approval of the wellfield data packages, which is the same process for new mine units that is required under the existing alkaline permits and licenses.
Commencement of the development of new mining units within the Ross Permit Area (ie, Mine Units 3 and 4) can be done under the existing permits and licenses held by the Company and may commence in advance of the low pH regulatory amendments and finalisation of the low pH field demonstration. Timing of an investment decision for the start of development of Mine Unit 3 will continue to be assessed by the Company over the coming months as market conditions for domestic United States uranium production evolve.
Source Material License
In October 2018, Strata formally submitted a request to the WDEQ Uranium Recovery Program (URP) to amend its existing Source Materials License (SML) for the use of low pH solutions.
In April 2019 the URP completed its review of the amendment application and deemed the amendment to be technically complete under relevant legislation. The WDEQ has prepared for public review a pre-decisional State Decision Document pertaining to the low pH amendment request of Strata’s Source Materials License (SML) and requested Strata to commence the public review and comment process in accordance with Wyoming regulations.
The draft State Decision Document supports the issuance of the requested amendment to enable low pH operations and concludes that the low pH amendment complies with the regulatory standards and requirements under the purview of the WDEQ URP. The State Decision Document also presents the detailed safety and environmental analysis conducted by the URP team in completing their review of the amendment request. The WDEQ URP will prepare a final decision on the proposed SML amendment following a 60-day public review and comment period.
Based on its assessment and understanding of the amendment approval processes, and progress to date, the Company’s objective is to have amendments to all existing operating permits and licenses granted during 2019.
Field Leach Demonstration
The low pH field demonstration commenced in December 2018 following the approval of a non-significant revision to the PTM and the determination by a Safety and Environmental Review Panel that a low pH field demonstration could be conducted under the existing SML. The field demonstration area consists of three adjoining recovery patterns which were previously operated utilising alkaline ISR solutions within Mine Unit 1 (see Figure 3 below).
The low pH field demonstration plan consists of mining and restoration phases. At the outset of the mining phase, the field trial area was operated for a period of three weeks without introducing low pH solutions in order to collect important baseline operational data. The injection of low pH solutions in the trial area commenced in late December 2018.
Beyond observing the uranium recovery behaviour while employing the low pH test solutions, a key technical performance objective of the mining phase demonstration was to lower the local mining zone pH to the targeted level of approximately 2.0 S.U. without compromising the ability to move lixiviant through the mining zone. During the March 2019 quarter this performance objective was successfully achieved. Average injection and extraction well flow rates were also maintained in line with the low pH Feasibility Study parameters.
Figure 3: Low pH Field Demonstration Wellfield Patterns, Wyoming USA
As the mining phase of the low pH field demonstration has successfully demonstrated all key technical objectives, it is now being discontinued so that the Company can proceed to the restoration phase activities of the demonstration, which commenced in April 2019. During the initial restoration demonstration phase, the main technical objective is to return the pH in the mining zone to above 5.0 S.U.’s. At this pH level, industry standard groundwater restoration techniques can be employed to complete the groundwater rehabilitation.
Lance Projects Operational Performance
Operational performance for the 12 months to March 2019 is shown in Table 1 below.
|Units||Jun 2018||Sep 2018||Dec 2018||Mar 2019|
|U3O8 Dried and Drummed||lbs||43,553||30,835||14,445||23,325|
|Cash Sale Price||US$/lb||N/A||N/A||45.06||N/A|
Table 1: Lance Projects Operating Performance Summary
1 Expenditure on production activities is determined in accordance with Item 1.2(c) of Appendix 5B and excludes
development and capital expenditure costs.
Reduced production rates will not affect the Company’s ability to deliver into its near-term or mid-term sales obligations as the Company has the flexibility of making on-market purchases to complement Lance production within its product sales agreements.
No further wellfield development capital expenditures are currently scheduled under the existing alkaline ISR operations, but delineation drilling may occur in Mine Unit 3 in anticipation of the remaining low pH approvals being received.
Figure 4: Wellfields and Header Houses, Mine Unit 1, Lance Projects Wyoming USA
Peninsula currently has up to 6.3 million lbs of U3O8 remaining under contract for delivery to major utilities located in the United States and Europe through to 2030 at a weighted average delivery price of approximately US$51-53/lb U3O8.
Within the quantity of 6.3 million lbs U3O8, 4.4 million lbs U3O8 are committed quantities for delivery through to 2030. Up to 1.9 million lbs U3O8 are deliveries that are optional, at the election of the respective customers, to be delivered between 2021 and 2026. These contracts provide a substantial earnings stream to the Company whilst allowing it to preserve significant quantities of planned U3O8 production for contracting during future periods.
Figure 5: Header House Interior, Lance Projects, Wyoming USA (2018)
The JORC-compliant Resource Estimate for the Lance Projects is 53.9Mlbs, calculated by applying a combined constraint of a GT of 0.2 contour and 200ppm eU3O8. These cut offs are considered to be appropriate for both calculating and reporting of ISR resources at the Lance Projects.
The measured, indicated and inferred resources are located in host sandstones. Geological modelling of the extensive down-hole geophysical data has accurately defined the impermeable shale and mudstone horizons that form the confining horizons to the mineralised sandstones.
Table 2: Lance Projects Resource Estimate
|U3O8 kg (M)||U3O8 lbs (M)||Grade (ppm U3O8)|