The Peninsula Energy Ltd (ASX: PEN) share price is having a day to forget on Wednesday.
At one stage today, the ASX All Ordinaries share was down as much as 30% to 12.5 cents.
It has since bounced back a touch but remains down 22% at 14 cents currently.
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Why is this ASX All Ordinaries share crashing?
Investors have been selling the uranium developer's shares this morning after it made a very disappointing announcement.
According to the release, resin processing provider Uranium Energy Corp (UEC) has notified the company that it is terminating the agreement to treat loaded resins and produce dry yellowcake from the Lance ISR Projects.
And while the agreement contains a mutual 270-day notice of termination provision, Peninsula isn't planning to use UEC's resin processing capacity during the remaining term of the agreement.
Instead, Peninsula has adopted a plan to accelerate the in-house development of an expanded and fully optimised production plant to produce a high-quality yellowcake product free of impurities, aligning with the restart of production at Lance.
However, the decision to accelerate the in-house development of resin processing and yellowcake production is likely to result in a "significant delay" to the previously announced imminent restart of production at Lance.
Though, conversely, its initial analysis indicates that the revised plan will ultimately deliver a faster ramp-up to full capacity under a more efficient and capital-effective operation.
Nevertheless, this is a bitter blow to the company and its shareholders given that production was due to commence in the middle of the year (i.e. now) at Lance.
The ASX All Ordinaries uranium company's managing director and CEO, Wayne Heili, said:
Faced with the unexpected challenge of not being able to rely on the processing services of our long-term service provider, we are now recalibrating our business plan to operate independently from our industry peers and to bring forward the in-house capability to produce finished yellowcake.
While a delay to our planned restart is disappointing, we anticipate emerging with an expanded production capacity and a lower operating cost profile because of this endeavour. We are also evaluating an accelerated schedule towards full capacity. Analysis of the impact of this action on operational plans and funding requirements are underway and we will keep the market posted on key developments as they occur.
