Peninsula Energy Limited announced that its wholly-owned subsidiary Strata Energy Inc. began in-situ uranium recovery operations from the Ross Permit Area at the Lance Projects in Wyoming, USA in December 2015. Due to the 2016 uranium price pull back the company reviewed its operating plan during the third quarter calendar year 2016 and implemented an interim operating strategy in fourth quarter until uranium prices normalise. Peninsula's production is now aligned to complement delivery commitments under its existing term contracts, thereby maximising the value attained for the extracted resource. Following the delivery of 200,000lbs U3O8 over December 2016 and January 2017 (which are detailed further in this report), Peninsula has a further 300,000 pounds U3O8 remaining to be delivered in 2017. The Company has implemented cost reduction measures including reducing the number of drilling rigs and contractors on site to reflect a lower level of ongoing wellfield development activity in 2017. While the Company will operate in line with the modified - low cost production plan on an interim basis, optionality has been preserved to enable Peninsula to expand quickly when the market improves. Production for the 6 months ended 31 December 2016 was 84,000 pounds U3O8. with 35,000 pounds U3O8 extracted in the December quarter, in-line with the interim operating strategy. Production for the quarter was primarily from header houses 1, 2 and 3. Approximately 40,000lbs of uranium product was drummed during the quarter. One delivery of drummed product was made to a North American conversion facility in December 2016 and a further two deliveries were made during the first week of January 2017. Extreme weather conditions during November and December (temperatures as low as minus 30ºC) periodically hampered ongoing wellfield maintenance activities with staff unable to access the wellfield. Header house 4 has been slow to ramp up and is also considerably smaller than the other Stage 1 header houses due to its positioning near Mine Unit 1 regulatory boundaries, with a large portion of the ore body in that area only able to be accessed when Mine Unit 3 is developed in the future. Inclement weather also affected the completion of construction and commissioning of header houses 5, 6 and 7. Header house 5 is now online and commenced sending uranium to the CPP in January 2017. As at the end of January header house 5 is performing well and in line with forecasts. Average flowrates from extraction wells remain consistent with the planned rate of 20 GPM, substantially confirming the porosity and permeability of the Lance orebody. Header house 6 is now commissioned and is forecast to be sending uranium to the CPP in February 2017. Header house 7 is expected in to be commissioned in February 2017 and to commence sending uranium to the CPP during March 2017. The implementation of the interim operating strategy means that the planned Stage 2 expansion at the Lance Projects, including the construction of seven additional header houses, has been placed on hold until a sustainable improvement in the uranium market occurs and additional term contracts are secured. The Company will however continue with the roll out of additional header houses, as construction of header houses 8 thru 10 will allow flowrates across all production wells to be optimised, reducing operating costs and increasing average uranium head-grade. Lower operating costs combined with existing high value term contracts should see Peninsula move to sustainable cash generation in the first half of 2017, a significant achievement in the current market. When implemented, Stage 2 is planned to reduce all-in costs by bringing the elution, drying and packaging functions in house combined with greater economies of scale. Associated funding for Stage 2 (including the revenue streaming facility) is also on hold at this time. 200,000 pounds of U3O8 sales were completed by the Company In December 2016 and January 2017 pursuant to long-term contracts at an average realised cash price of $55 per pound U3O8. The January 2017 delivery of 100,000 pounds U3O8 was from material sourced entirely from the Lance Projects while the Company contracted for the purchase of 100,000 pounds U3O8 for the December 2016 delivery. With 100,000 pounds U3O8 delivered in the first half of January 2017, the Company has a further 300,000 pounds U3O8 to be delivered in calendar 2017 which will generate significant cash from operations. South Africa ­ Karoo Projects: Peninsula continued to implement the restructuring strategy embarked on during second quarter 2016 aimed at reducing the Company's tenement landholdings which, at the time, comprised of a 74% interest in 40 prospecting rights (PRs) covering 7,774 km² of the main uranium-molybdenum bearing sandstone channels in the Karoo Basin (Karoo Projects). During the quarter, after consultation with BEE partner, it was agreed to relinquish the Fraserburg and Loxton project areas in the Northern Cape province, neither of which contained any mineral resource. Subject to completion of the various regulatory processes, Peninsula's total tenement holding will amount to 3,818 km2, of which 322 km² Peninsula has freehold ownership BEE partners hold the residual 26% interest in these tenements, as required by South African law. During the quarter Peninsula continued to conduct the major activities in support of a Pre-Feasibility Study (PFS) for the Quaggasfontein, Ryst Kuil and Kareepoort mining right application areas at the Karoo Projects. The PFS follows a preliminary technical and economic assessment concluded by DRA in late 2013 and subsequent metallurgical test work conducted. During the quarter all the metallurgical tests required to support the full design of the processing plant was completed, which enabled finalisation of the process plant flow street, layout and in-plant infrastructure. Mine designs and layouts for both open pit and underground and all engineering works associated with the proposed mine and plant tailings storage facility continued. Preliminary designs and layouts were completed in early January 2017. Life of mine capital and operating cost estimates will now be prepared using this information.