Why the Peninsula Energy (ASX:PEN) share price tumbled 25% from multi-year highs

The uranium explorer share price has been tumbling ever since it hit multi-year highs.

| More on:

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 might have hit a near-term top after rallying to a 3-year high of 35 cents on 17 September.

Shares in the uranium explorer have since tumbled 25% to 25 cents.

share price dropping

Image source: Getty Images

Why the Peninsula Energy share price is sliding

Uranium prices ease from 9-year highs

Uranium prices skyrocketed in a short period of time, rallying from around US$30/lb in mid-August to above US$50/lb by late September.

During this time, the Peninsula Energy share price surged 180% from 12 cents to 35 cents.

Back in late May, the company initiated a $15 million capital raising to settle its purchase of 300,000 pounds of uranium at a price of US$31.35/lb.

The company believed that acquiring uranium inventory "during a period when there is a focused and continued drive by the United States Government to support and revitalise the domestic uranium industry, is a low-risk strategy that has the potential to deliver considerable upside value for shareholders."

The recent jump in uranium prices to US$50/lb meant that Peninsula Energy would've been sitting on a hefty US$5.5 million profit from its physical uranium acquisition.

The jump in uranium prices has been driven by a Canadian investment fund, Sprott Asset Management and its Physical Uranium Trust.

The uranium fund has an aggressive strategy to purchase physical uranium off the spot market and store it in secured locations.

The fund was regularly purchasing physical uranium up until 17 September, broadly in-line with when uranium prices plateaued.

Uranium prices have since struggled to hold above US$50/lb, sliding to US$44.3/lb according to Trading Economics.

Broader selloff among ASX-listed uranium players

The Peninsula Energy share price isn't alone in its recent selloff.

The pullback for uranium prices has triggered broad-based selling across all ASX-listed uranium players.

The largest of them all, Paladin Energy Ltd (ASX: PDN) has tumbled 11% in the past week and down 26% from its recent high of $1.12.

Prospective explorers such as Deep Yellow Limited (ASX: DYL) and Boss Energy Ltd (ASX: BOE) have also experienced similar falls.

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Fallers

A businesswoman pulls her glasses down in shock to look at the bad news on her computer.
Share Fallers

Why Bank of Queensland, Brainchip, Pilbara Minerals, and Yancoal shares are sinking today

These ASX shares are being hammered on Tuesday.

Read more »

a middle-aged woman holds up two fingers with a wide mouthed smile on her face and wide open eyes.
Share Fallers

'Top quality': Expert picks 2 ASX 200 shares to buy at a nice discount

These stocks are down but not out. One portfolio manager is convinced they'll make you richer in the long run.

Read more »

a group of business people sit dejectedly around a table, each expressing desolation, sadness and disappointment by holding their head in their hands, casting their gazes down and looking very glum.
Share Fallers

Why Atlantic Lithium, Arafura, Brainchip, and Core Lithium shares are falling

These ASX shares are starting the week in the red.

Read more »

A woman with a sad face looks to be receiving bad news on her phone as she holds it in her hands and looks down at it.
Share Fallers

Why Atlantic Lithium, CBA, Piedmont Lithium, and Pilbara Minerals shares are dropping

These ASX shares are ending the week deep in the red.

Read more »

Woman looking at her smartphone and analysing share price.
Share Fallers

Golden buying opportunity for 2 ASX shares slashed last month: Celeste

Here's a pair of businesses that are going pretty strong but whose stock prices are in a dip, ready now…

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why 29Metals, BHP, Helia, and Rio Tinto shares are dropping today

Here's why these ASX shares are weighing on the market's performance on Thursday.

Read more »

a woman holds her hands to her temples as she sits in front of a computer screen with a concerned look on her face.
Share Fallers

Why Nuix, Smartgroup, Ventia, and Woodside shares are dropping today

These ASX shares are having a tough time on the ASX boards on Wednesday.

Read more »

A woman looks distressed as she stares dramatically at her phone
Share Fallers

Why Brainchip, Lynas, Megaport, and Universal Store shares are dropping today

These ASX shares are having a tough time on Tuesday.

Read more »