Company managing director and chief executive Gus Simpson said the company had revised its strategy as it ramps up to stage one of its development plan, a production rate of between 500,000-700,000 pounds of uranium oxide per annum.

“By implementing a managed production ramp-up the company is well positioned to sustain itself through the current uranium market and then to expand quickly when the market improves,” Simpson said.

Peninsula had planned to start work on the stage 2 expansion in 2017 – bringing the elution, drying and packaging functions in house and increasing production to 1.2 million pounds per annum.

The company said it would be able to reach the 1.2Mlbpa production level within 12 months and ramp up to its ultimate target of 2.3Mlbpa in the following year when the decision was made to move forward.

Peninsula plans to raise $A13.5 million through a placement and share purchase plan, with about $5.6 million of this used to build three new header houses – a key component of the ISR process – on the Lance project area, with additional funds used for debt repayments and working capital. 

A header house is a monitoring station where engineers measure the pressure and flow of water and oxygen pumped via injection wells through the permeable, uranium-rich ore body of the project area.

Uranium leaches into the water during this process, with the solution being later pumped from the header house to a processing plant where the metal is separated from the water.

Peninsula said the new header houses, complementing the seven that will be operational by the end of 2016, would allow it to vary flowrates across all its production wells, optimising operating costs and increasing the average uranium head grade.

The company has 8.1Mlb uranium under contract for delivery to major utilities in the US and Europe, which it says will generate about $US440 million in revenue at sales prices of $54/lb.

“Lower operating costs combined with high value term contracts will see Peninsula move to sustainable cash generation in the first half of 2017,” Peninsula said.

The company will place 17 million shares at 50c each with institutional investors to raise $8.5 million, with $5.1 million of this to come from major shareholders Resource Capital Fund VI and Pala Investments.

Peninsula will also carry out a share purchase plan to raise an additional $5 million, with shares sold at the same price, subject to regulatory approval. 

Shares in the company were down 0.9% or A0.5c to 54c in morning trade, giving the group a market capitalisation of $96.1 million.