Boss Energy (ASX: BOE) recorded a strong performance at the Honeymoon uranium project in South Australia in the three months to end December driven by higher production and lower costs.
The company reported record drummed production of 456,000 pounds uranium concentrate (up 18% on the September quarter), and ion exchange (IX) production of 406,000lbs (up 8%) on the back of higher flow from new wellfields.
The increase was reflective of a full quarter of production from four wellfields compared to the September quarter, which included only partial production from wellfield B4.
Honeymoon’s pregnant leach solution (PLS)-to-IX uranium concentrate tenor during the quarter was 77 milligrams per litre (down from 81mg/l in the previous quarter)—an expected decline, with average tenors elevated due to positive results from a lixiviant optimisation program.
Boss expects lower drummed production in the current quarter to be partially offset by increased flow capacity as commissioning of Column 4 commences in March, with production anticipated to increase again in the final quarter on higher input from wellfield B5 and first input from wellfield B6, which will come online before end June.
Cost Reductions Recorded
Boss recorded a decline in C1 (direct cash operating) and all-in sustaining costs during the period to $30/lb and $49/lb respectively, down 12% and 3% on the September quarter.
The C1 cost reduction was driven by positive results from a series of reagent optimisation programs in the wellfields, the precipitation circuit and the conversion liquor process and higher production which fractionalised fixed costs.
Sustaining capital expenditure was consistent with the previous quarter and mainly represented costs incurred from wellfields B5-B7.
Project spend increased by $2 million to $11m, mainly driven by wellfield supporting infrastructure costs including the East Kalkaroo trunkline and a delineation drilling program.
Costs also continued to be incurred for the ongoing completion of NIMCIX columns 4-6.
New Wellfield Design
Boss concluded its review of the Honeymoon project with an expected material and significant deviation from the assumptions underpinning the company’s 2021 enhanced feasibility study (EFS), potentially impacting life-of-mine production and costs.
As a result, Boss formally withdrew the EFS, saying it should no longer be relied upon as a guide to future operational performance.
It has since identified an alternative pathway forward using a wide-space wellfield design that could potentially deliver lower costs and improved lixiviant tenors by increasing leaching time, lowering reagent use, utilising wellfield infrastructure over a larger surface area, and putting more uranium under leach.
The pathway remains at the concept stage and Boss intends to incorporate it into a new feasibility study.
Production Guidance Static
Boss’ production guidance for the current financial year remains at 1.6Mlb of drummed uranium concentrate, with the C1 cost guidance lowered by $5/lb and total capital expenditure adjusted higher by $4m.
Sustaining capital guidance increased from approximately $29m to around $33m as a result of the new feasibility study and wide-spaced wellfield design trials across Honeymoon and East Kalkaroo.
While some wellfields are still being built to the current specifications, the company is slowing activity to minimise spend on infrastructure that may not be relevant to the new design.
Boss is continuing exploration of the existing tenement area surrounding Honeymoon, reprocessing existing passive seismic data and collecting new data during the quarter to define prospective palaeovalleys at mineable depth, with the company also drilling two sonic core holes to obtain samples for metallurgical testwork.
Plans are underway for low-cost aircore drilling along mapped palaeovalleys and two diamond drill holes to obtain samples for nuclear magnetic resonance / porosity / permeability characterisation.
Satellite Deposits and Alta Mesa
The early development of the Gould’s Dam and Jason’s satellite discoveries remains a key near-term opportunity for Boss, and the company expects to finalise an updated mineral resource statement and schedule of work this quarter to bring these into production.
The proposed wide-spaced wellfield design could potentially improve the recoverable uranium metal and reduce capital intensity and C1 costs at both deposits.
Drummed production during the quarter from the Alta Mesa uranium joint venture in South Texas totalled 142,699lb of uranium concentrate, representing a decrease of 63,532lb on the previous quarter.
Boss received 68,420lb, reflecting its 30% pro rata share of shipped production and representing a 23,318lb increase from 45,102lb in the previous quarter.
Balance Sheet Strength
Boss finished the quarter in a strong financial position with no debt and $208 million of liquid assets, representing a decrease of $4.4m from the September quarter.
Cash increased by $5.1m following the $39.3m sale of 350,000lb uranium concentrate and receipt of a 50,000lb trade receivable valued at $5.1m.
This was partially offset by Honeymoon’s operating and capital costs of $27.9m and other cash outflows totalling $11.4m.
Listed investments decreased by $8.8m due to the decline in fair value of Boss’ listed equity investments in enCore Energy and Laramide Resources (ASX: LAM).
Uranium inventory on hand increased by $4.4m (or 175,000lb), as production exceeded sales and was partially offset by a reduction in the accounting weighted average cost of inventory from $74/lb to $68/lb.
