Why the Peninsula (ASX:PEN) share price is jumping 10% today

The United States approved the Omnibus budget bill which has excited domestic uranium producers. Here's why the Peninsula Energy Ltd (ASX: PEN) share price is advancing today.

| More on:
CSR share price rising asx share price represented my man in hard hat giving thumbs up

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Peninsula Energy Ltd (ASX: PEN) share price is advancing today following the overnight United States Omnibus budget approval. During late morning trade, the Peninsula share price rose as high as 11.5 cents. However, the uranium mining company's shares have since partially retreated to 11 cents, up 10% for the day.

Let's take a look at what is moving the Peninsula share price today.

What's driving the Peninsula share price?

The Peninsula share price is on the rise today after the company advised the United States President Donald Trump signed off on the Omnibus budget bill. The approved spending package will see the US Department of Energy allocate US$75 million towards the establishment of a national strategic uranium reserve.

Under the American Nuclear Infrastructure Act (ANIA), the US Department of Energy will be restricted to only buy uranium recovered from facilities licenced by the Nuclear Regulatory Commission. This, in turn, not only strengthens the domestic uranium market, but also preserves the US' nuclear fuel supply chain.

Nuclear fuel can be harnessed in power stations to produce electricity without emitting carbon dioxide, a greenhouse gas that causes climate change. While the main ingredient for nuclear fuel is uranium, most utility companies are sourcing the product from other countries. The reason for this is that overseas uranium companies often deflate prices, making it difficult for US companies to compete.

According to the US Energy Information Administration, 90% of uranium purchased by US nuclear power reactors comes from outside the country. This affects demand with US nuclear power producers having suffered over the past decade, lagging behind overseas competitors.

The new act gives the Nuclear Regulatory Commission the ability to block imports of uranium from Russia and China. This is seen as a way to not only protect national security interests, but also the domestic uranium mining sector.

How does this affect Peninsula Energy?

While only a handful of companies will be able to supply material into the uranium reserve, Peninsula's wholly owned US subsidiary, Strata Energy, is one of them.

With uranium operations in Wyoming, the company believes the recent bill approval will provide significant opportunities for it moving forward. According to Peninsula, its Lance projects have the production facilities to accommodate the US Department of Energy's needs.

This would supplement the company's existing portfolio of uranium sale contracts, which total up to 5.5 million pounds of uranium to be delivered until 2030. It is estimated that the weighted average future sales price of uranium is US$51 to US$53 per pound.

What did management say?

Peninsula managing director and CEO Mr Wayne Heli commented:

Creation of a uranium reserve is truly a ground- breaking initiative for our industry and our nation. The reserve program will go a long way toward supporting and expanding the domestic production of nuclear fuel in 2021 and beyond.

We look forward to working with the U.S. DOE to ensure this funding strategically supports established production companies with permitted facilities and infrastructure. The budget approval, and other recent bipartisan legislative actions recognize the importance of nuclear energy in the generation of baseload, carbon-free electricity.

Peninsula share price snapshot

The Peninsula share price is down over 25% since this time last year. Having reached a 52-week high of 19 cents in April, its shares have failed to reach anywhere near that mark over the period since then.

Based on the current Peninsula share price, the company commands a market capitalisation of around $94 million.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »