PEN - Peninsula Energy

[gnealson]

Definition of Platitude: A platitude is a trite, meaningless, biased, or prosaic statement, often presented as if it were significant and original.

I take umbrage at your post.

I find it offensive. It is in itself a platitude and offers nothing constructive to the determination of dealing with PEN as a short term or long term investor/trader.

I note that you only joined the ASF in April 2011 and have contributed little, other than deride the position/perspective of other longer term members of the ASF. IMO you would do well to observe and learn until you have have something constructive to contribute.

Still nothing of substance on the fundamentals of PEN, and now quickly shifting to personal attacks.

Grant

 

[skc]

Lots of platitudes tonight. Still no debate on the current value of PEN.

I take it we all agree that the 5.5 - 10.7 cent range is fair value then, and that we should only expect the upper end of that range if both the AUD/USD rate falls to 0.80 and the spot/term price rises to $70 USD/lb.

Grant

Yes all the talk about the nuclear industry is important but you can't make a call unless you do a valuation.

There are three main variables to PEN's price.

1. uranium price
2. aud/usd exchange rate
3. amount of resources in the ground

Speculating on 1 in view of recent events is probably fair enough, although hard to quantify. Speculating on 2 using PEN as an vehicle is plain silly. The only other reason for bullish stance on PEN would be if one sees substantial upside in the resource estimates. If the investor holds that view then I suppose they will wait for announcements to bring such assumption into actual fact, hopefully soon.

 

[TabJockey]

I TAKE UMBRAGE hahahahah this thread is horrible.

Technically looks like there will be plenty of trades left in the old girl yet, maybe even buy at 7 sell at 10... again! Pretty nasty stock for a medium term hold though, I agree with the bloke that says its going nowhere. Long term its still a good investment but, how long do you want to wait?

 

[J&M]

I brought in at 10c I sold out of this at .093 cents to cut my losses
I brought in the TXN cap raising so good profit from TXN
I read most of the posts from Tech A which i find very informative
and HangSeng he seems to be in for the long term also good posts

The earthquake in Japan also had a bearing in my selling
I did keep a few for future cap raising

I still may buy back in at 6c or 7c

So i guess you have to make up your own mind re this stock

 

[barney]

I TAKE UMBRAGE hahahahah this thread is horrible.

Interestingly enough TJ ..... that comment just made it a little worse (No disrespect intended)

Nulla Nulla's comments were far more useful than most of the subtle down ramping being disguised as fundamental analysis, being bandied around on the thread of late.

To paraphrase part of his observations ...... If anyone has a negative opinion on the stock ..... and you perceive the fundamentals have deteriorated .... and the technicals look like crap ......

What is the point of initiating a debate about it ......

Yes all the talk about the nuclear industry is important but you can't make a call unless you do a valuation.

There are three main variables to PEN's price.

1. uranium price
2. aud/usd exchange rate
3. amount of resources in the ground

Speculating on 1 in view of recent events is probably fair enough, although hard to quantify. Speculating on 2 using PEN as an vehicle is plain silly. The only other reason for bullish stance on PEN would be if one sees substantial upside in the resource estimates. If the investor holds that view then I suppose they will wait for announcements to bring such assumption into actual fact, hopefully soon.

As always SKC ...... common sense from a real investor ....... appreciate your comments.

 

[nulla nulla]

Still nothing of substance on the fundamentals of PEN, and now quickly shifting to personal attacks.

Grant

hmm..personal attacks. I take it your post is..tongue in cheek.

 

[So_Cynical]

Fact 1: Fukishima is not the only Nuclear Power Station in the world;
Fact 2: There are hundreds more Nuclear Power stations in the planning stages for China, India and the rest of the world;
Fact 3: The demand for Yellow Cake is not going to evaporate any time soon.

If PEN can produce yellowcake, they will have a market. If they can sell it for a profit then PEN will be arround for a long time to come regardless of where they started out and what they did in the past. If they found uranium on their leases instead of gold and had the kudos' to mine it in the face of a lot of political opposition in the past, good on them.

Get over it, move on, cut the bulldust. If you like uranium stocks buy PEN, trade PEN and post your comments on the PEN thread. If you don't like uranium stocks, don't waste your time posting on the PEN thread.

Personally If there is a trade opportunity with PEN and I see it, I will take it. It owes me nothing, I owe it nothing and all the other crap is just background noise. Also all the crap about protecting newbies is just that...crap. There is a well worn expression on the ASF site, it is DYOR. Do Your Own Research.

I'm with Nulla...the Fundamentals for PEN are all still in place, fear is driving the SP and 9 times outa 10 that translates to opportunity.

 

[barney]

Grant,

Even though I am a little confused regarding your motives with PEN .....

Just for some balance

For instance, do you think what I wrote about the RCR valuation of PEN being 5.5-10.5 cents was incorrect?

Seemed reasonable

Do you agree that the market got ahead of itself when PEN rose above 11 cents?

It appears so in hindsight

How much do you expect the DFS announcement to impact the NPV (your best case/worst case estimates)?

Would be pure speculation either way. Currently possibly a slight increase in the SP.
Personally I am more interested in the possible increase in the resource base over the near term post DFS, and the possible acquisition of suitable projects ........... which may well be purchased at a discount due to the perceived deteriorating fundamentals for Uranium. Opportunism in the short term by the Company may well lead to more significant gains in the longer term ............ A traders needs to balance his/her risk tolerance when investing of course.

 

[nulla nulla]

I'm with Nulla...the Fundamentals for PEN are all still in place, fear is driving the SP and 9 times outa 10 that translates to opportunity.

Right on the ball SC. That is what it is all about...opportunity. It doesn't matter a fig whether it is short term or long term, it is all about making a return on your capital.

 

[gnealson]

Even though I am a little confused regarding your motives with PEN .....

My main motive is to stamp out the bullying of anyone with a neutral or negative view in here. I've been reading for a long time and finally got sick of it. In the absence of the authorities taking action, this seems to be the best response to bullies: http://www.youtube.com/watch?v=wjvXoK9JKEg&feature=related

Just for some balance

...

Would be pure speculation either way. Currently possibly a slight increase in the SP.
Personally I am more interested in the possible increase in the resource base over the near term post DFS, and the possible acquisition of suitable projects ........... which may well be purchased at a discount due to the perceived deteriorating fundamentals for Uranium. Opportunism in the short term by the Company may well lead to more significant gains in the longer term ............ A traders needs to balance his/her risk tolerance when investing of course.

True, but careful you don't fall for the pounds in the ground mistake. Value is produced by increasing the rate we can sell pounds of Uranium and reducing the cost of producing them. It's no good to double our resource base if we can't also increase our production rate or reduce our production costs. Pounds we can only extract 20 years from now don't add much value in NPV calculations today.

I also think it's too soon to be contemplating acquisitions when we haven't got any cashflow yet. Nothing wrong with speculation, but where's the limit? I mean I could hypothesise that PEN will buy a 10 billion resource for nothing in the future, and that might be fun to contemplate, but I'd be pretty foolish to include it in my valuation right now.

Even though I disagree with some of your views, thanks for a level headed response. Really appreciate it. I thought SKC's response was pretty level headed too.

Grant

 

[barney]

My main motive is to stamp out the bullying of anyone with a neutral or negative view in here. I've been reading for a long time and finally got sick of it.

On HotCopper I agree that does happen, but to be honest I hadn't noticed it much on ASF.

Bullying is really just holders trying to verbally "protect" their position, which is fairly normal human behaviour.

True, but careful you don't fall for the pounds in the ground mistake. Value is produced by increasing the rate we can sell pounds of Uranium and reducing the cost of producing them. It's no good to double our resource base if we can't also increase our production rate or reduce our production costs. Pounds we can only extract 20 years from now don't add much value in NPV calculations today.

Agree, but we have to respect the abilities of the management to bring the production plan together, and so far the management of Peninsular have done an excellent job on a tight time line.

PEN's proposed production costs are extremely competitive compared to its peers. It is more likely to succeed where other Juniors might get squeezed out due to reduced margins.

If this happens, PEN may end up in a better position in the medium/longer term based purely on supply and demand ...... None of these things can be measured at this stage of course, so its a personal investor decision on whether to take the punt.

I also think it's too soon to be contemplating acquisitions when we haven't got any cashflow yet. Nothing wrong with speculation, but where's the limit?

If we are to believe the management, near term acquisition/s is/are very much on the agenda

Purchase of an additional existing resource (perhaps now at a discounted price??), would allow for immediate higher production rates and provide the capital required to speed up the delineation of our existing resources.

In the immediate short term we have a nasty looking market retrace to contend with as well unfortunately.

 

[Joe Blow]

I would just like to point out that it is possible to disagree with other thread participants in a respectful way without attacking, denigrating, mocking or otherwise insulting them.

It is also possible to refer to other thread participants or their opinions/analysis politely without being snide, patronising, sarcastic or rude in any way.

All it takes is a little effort.

It takes many views to make a market and forums like ASF exist to help facilitate discussion and debate about various ASX listed companies. Disagreement and different opinions are to be expected.

If you disagree with someone's post, or aspects of it, then please feel free to offer a different perspective; but please do it respectfully.

If you are convinced someone is mistaken or has posted information you believe to be incorrect, then feel free to correct them; but please do it in a courteous and constructive way.

This post is not an invitation to debate the finer points of forum etiquette in this thread, it is simply a reminder about how we should treat other ASF members. Please take note of it and keep it in mind when you are composing your posts. If anyone would like anything clarified please PM me.

Now, lets get back to discussing PEN and see if we can keep this thread on topic and constructive. I look forward to, and appreciate, everyone's co-operation!

 

[Garpal Gumnut]

From a charting view, PEN has displayed two nice triangles recently.

The latest, a descending indicates a probable down move to 0.055.

gg

 

[gnealson]

On HotCopper I agree that does happen, but to be honest I hadn't noticed it much on ASF.

Recently it happened on HC, the users got suspended and then moved here and started the exact same practice.

Bullying is really just holders trying to verbally "protect" their position, which is fairly normal human behaviour.

Bullying is an attack, not a justifiable defense of anything.

PEN's proposed production costs are extremely competitive compared to its peers. It is more likely to succeed where other Juniors might get squeezed out due to reduced margins.

I see this repeated often, and it's surely a strength for PEN, but without quantifying profit it makes no sense to me. If we're only making $1 a pound then we have a pretty unexciting business. Just because the next company is losing $5/lb, it doesn't make us more profitable or our shares more valuable. So I agree it's a strength, but it's only half the story.

If this happens, PEN may end up in a better position in the medium/longer term based purely on supply and demand ...... None of these things can be measured at this stage of course, so its a personal investor decision on whether to take the punt.

To my mind, what this scenario requires is for PEN to be making a lot of cash for a considerable time, and then for the Uranium Industry to sink into the doldrums (perhaps around 2020?) and for PEN to then use its cash and its cost advantage over other players to borrow money and buy them out. Right now however, I don't understand the emphasis on all these far dated future possibilities. It has little bearing on the company now.

If we are to believe the management, near term acquisition/s is/are very much on the agenda

How much has management actually alluded to and how much has been baked in by internet pundits though? If there is an acquisition, then I expect the main benefit from it to be sooner or cheaper production. I try not to get too excited about these kinds of possibilities though because in the past I've seen all kinds of theories bandied about. For instance, by my memory, over 2 years ago there was a lot of internet gossip about deals with nearby producers to use their processing facilities. It still might turn out to be true, and it might even be done via acquisition, but it's been 2 years. At the time, the implication was that we'd possibly be in production by 2011, but nothing ever came of it. I'm naturally suspicious of such speculation because those with vested interests have so much to gain by misrepresenting the timeframe and the likelihood of these happenings.

Purchase of an additional existing resource (perhaps now at a discounted price??), would allow for immediate higher production rates and provide the capital required to speed up the delineation of our existing resources.

Immediately (?) higher production rates? It seems you agree that the best acquisition would be processing facilities and preferably an ISR operation that is already producing, but again I question the timeframe. People always talk about these possibilities as if the deal will be done inside a week and we'll be generating cash inside two. Without timeframes and sober estimates of how it will affect the bottom line, I can't get too excited even though I agree the concept is plausible, sometime in the future.

Grant

 

[hangseng]

"How much has management actually alluded to and how much has been baked in by internet pundits though?"


A few facts surounding "aquisition(s)" and toll milling:

Fact 1.

1. Hartleys report 16 Feb 2011 "potential growth driven by acquisitions".
   
2. In the company presentation PEN stated "Look at near production acquisition opportunities in areas of existing operation"

Fact 2.

PEN has applied for a Permit to "Toll for others" and this is publicly available information on ADAMS.
Mostly missed by all commentators and public forums, except for those that read all available information and didn't skim. This aspect would make a significant difference to both cashflow and the NPV if successful, as it would also utilise unused initial process plant capability.


RCR Report...I don't disagree with it at all. Except for PEN to have an NPV of 5c it requires a uranium price of $40/lb, the bottom of the uranium market that has now passed. Now history and irrelevant IMO.


"Investment Comment:

PEN remains on-track for completing the Lance DFS and timely permitting of its WY based ISR project, with production visibility 4Q12. The “nuclear renaissance” is expected to regain momentum, notwithstanding recent events in Japan.

Lance base case NPV A$165m (A$0.08/share; US$50/lb realised uranium price, vanadium US$7.50/lb).

With full de-risking of Lance, post commissioning, PEN NPV is A$0.10/share fully diluted (discounting a realised uranium price of US$50/lb, AUD/USD 0.80 and 10% discount rate).

Assuming a US$60/lb uranium price, post commissioning, NPV rises to A$0.13/share fully diluted.

WY is a uranium friendly state, and combined with PEN’s experienced permitting consultants, and new streamlined US permitting procedures, the company is well positioned to fast track regulatory approvals."


I feel sure we will see further RCR, BGF and Hartleys reports in the near future as the DFS figures are released and inevitable upgrades of resource are announced. I expect the DFS very soon, if not imminently now. As I do news on permitting, financing, further agreements for product and Karoo.

I still hold firm that the current irrational sentiment has provided an unprecedented opportunity. However I am a contrarian investor prepare to take calculate risk (based on knowledge and known facts) and don't follow herd mentality, nor take notice of media hype.

A tragic event has just occurred that resulted in to date "9,199 people having been confirmed killed and 14,000 are being listed as missing"*. This as a result of the massive earthquake and Tsunami, not a nuclear plant accident.

Perspective will eventually return, as will sanity and logic. All of which have for now gone out the window, as usually does when irrational fear takes hold.

Did PEN run ahead of itself? IMO no it didn't and albiet not for Japan would be still there or even higher leading into the DFS and other postive news.


* source: http://earthquake-report.com/2011/03/22/japan-tsunami-the-death-toll-does-not-stop-climbing-part-6/


I will add the latest update I have found:

"The March earthquake and tsunami killed up to 28,000 people and the estimated financial cost stands at $300bn (€207bn), making it the world's most expensive disaster.

Japan's economics minister warned that the damage was likely to be worse than first thought as power shortages would cut factory output and disrupt supply chains."

Note: earthquake and tsunami ...NOT a Nuclear Plant accident.

source: http://www.independent.ie/world-new...ak-could-be-worse-than-chernobyl-2617692.html

Sanity will prevail eventually.

 

[hangseng]

Perspective:

As stated in an ABC report this morning and posted elsewhere:

"The reactor is getting all the media attention and the loss of 25000 lives in the quake and the consequent affect of the Japanese people, has been ignored>"


Now have a good close look at this excellent comparison.

How does Fukushima differ from Chernobyl?

Japanese authorities have raised the severity rating of the nuclear crisis at the damaged Fukushima Daiichi power plant to the highest level, seven.

The decision reflects the ongoing release of radiation, rather than a sudden deterioration. Level seven previously only applied to the 1986 Chernobyl disaster, where 10 times as much radiation was emitted.

But most experts agree the two nuclear incidents are very different.

Explore the table below to find out how they compare.
http://www.bbc.co.uk/news/world-asia-pacific-13050228.

 

[Garpal Gumnut]

From a charting view, PEN has displayed two nice triangles recently.

The latest, a descending indicates a probable down move to 0.055.

gg

It opened at 0.077, today, crept back up to 0.082, and is now in retreat at 0.079.

This, thus far, is a confirmation of the breakout to the downside of the descending triangle, and it will probably fall further no matter how many tea leaves one inspects.

And its a full 16 mins to pulling up stumps.

Exciting.

gg

 

[gnealson]

"How much has management actually alluded to and how much has been baked in by internet pundits though?"


A few facts surounding "aquisition(s)" and toll milling:

Fact 1.

1. Hartleys report 16 Feb 2011 "potential growth driven by acquisitions".
   
2. In the company presentation PEN stated "Look at near production acquisition opportunities in areas of existing operation"

Thanks for the clarification. I'll await the time when 'potential' becomes 'actual' and 'looking' becomes 'found'. Based on previous experience, it often takes years for these transitions to occur.

Fact 2. [/U][/B]

PEN has applied for a Permit to "Toll for others" and this is publicly available information on ADAMS.
Mostly missed by all commentators and public forums, except for those that read all available information and didn't skim. This aspect would make a significant difference to both cashflow and the NPV if successful, as it would also utilise unused initial process plant capability.

True, but the focus of the discussion has been on things that add value to the bottom line. A permit to toll doesn't. An actual tolling agreement probably will. Please remember that this has been bandied about the internet for years. I'm tired of the speculation and will await the actual announcement before I factor it into my valuation.

RCR Report...I don't disagree with it at all. Except for PEN to have an NPV of 5c it requires a uranium price of $40/lb, the bottom of the uranium market that has now passed. Now history and irrelevant IMO.

For the sake of clarity, with an exchange rate of 1.05 USD/AUD and $40/lb uranium, fully diluted, RCR values PEN at:

4.85 cents per share

Furthermore, if PEN raises $40 million at 7 cents, it would reduce the value to:

4.35 cents per share

And if PEN raises $40 million at 5 cents, it would further reduce the value to:

4.10 cents per share

PEN remains on-track for completing the Lance DFS and timely permitting of its WY based ISR project, with production visibility 4Q12. The “nuclear renaissance” is expected to regain momentum, notwithstanding recent events in Japan.

Lance base case NPV A$165m (A$0.08/share; US$50/lb realised uranium price, vanadium US$7.50/lb).

With full de-risking of Lance, post commissioning, PEN NPV is A$0.10/share fully diluted (discounting a realised uranium price of US$50/lb, AUD/USD 0.80 and 10% discount rate).

Assuming a US$60/lb uranium price, post commissioning, NPV rises to A$0.13/share fully diluted.

WY is a uranium friendly state, and combined with PEN’s experienced permitting consultants, and new streamlined US permitting procedures, the company is well positioned to fast track regulatory approvals."[/I]

Let's hope that the AUD falls 25 cents so these statements come to have meaning in the real world.

I still hold firm that the current irrational sentiment has provided an unprecedented opportunity. However I am a contrarian investor prepare to take calculate risk (based on knowledge and known facts) and don't follow herd mentality, nor take notice of media hype.

Is hangseng back on the table for discussion again?

Did PEN run ahead of itself? IMO no it didn't and albiet not for Japan would be still there or even higher leading into the DFS and other postive news.

You've many times called for opinions to be backed by facts. Shouldn't you also be held to the same standard? Anyone can come on here and put 'IMO' in front of a figure, but doing so isn't Fundamental Analysis.

The RCR report nor anything you've posted supports the assertion that 15.5 cents was fair value. To give you an idea of how far your opinion lies from the actual financial figures, RCR does provide one valuation of PEN at 16.4 cents, but to achieve that valuation, RCR:

* Used an exchange rate 25% below the one we actually have
* Set the Uranium price at $80 USD/lb which never happened this year, even in the spot market
* Ignores the dilution caused by all the in-the-money options
* Doesn't factor in the cost of obtaining $40 million of financing

Can you please provide the Fundamental basis for your assertion that PEN was correctly valued by the market at 15.5 cents in February.

Grant

 

[hangseng]

Can you please provide the Fundamental basis for your assertion that PEN was correctly valued by the market at 15.5 cents in February.

Hartleys Research Report
16 Feb 2011
http://www.pel.net.au/images/peninsul-134--wugiwethoh.pdf
Price Target Increased to 16cps

We have tweaked our model based on the sales price achieved and decreased the dilution effect of any future financing due to the increased share price. The result is an increase in our valuation from 17cps to 18cps, and we have increased our price target from 14cps to 16cps.

 

[gnealson]

Hartleys Research Report
16 Feb 2011
http://www.pel.net.au/images/peninsul-134--wugiwethoh.pdf
Price Target Increased to 16cps

We have tweaked our model based on the sales price achieved and decreased the dilution effect of any future financing due to the increased share price. The result is an increase in our valuation from 17cps to 18cps, and we have increased our price target from 14cps to 16cps.

Hartley's also uses an exchange rate of 80 cents instead of the actual exchange rate hangseng, and based on your past quoting of financial figures I assume you're quoting the undiluted valuation.

It seems like you're just skimming broker reports and cherry picking the most pleasing numbers.

Grant