Boss Energy poised to capitalise on decarbonisation trend and global energy crisis with Honeymoon uranium project
Boss Resources has sold its interest in the Golden Hill and Gourma Projects to joint venture partner Teranga for $10 million cash.
Emerging uranium producer Boss Energy (ASX: BOE) has reported a strong June quarter of activity during which it ramped up construction and generated new exploration success at its Honeymoon project in South Australia.
Managing director Duncan Craib said the company’s progress was underpinned by a strategy which will see it become the country’s newest uranium producer by the end of next year.
“This was a pivotal quarter for us which demonstrated that we are executing our strategy on every level,” he said.
“We made a final investment decision to develop Honeymoon and we are now ramping up construction, ordering key equipment and refurbishing the campsite.”
The period was driven by global energy utilities keen to secure uranium supplies amid the energy crisis and ongoing push towards decarbonisation.
“There has been a notable increase in the level of enquiries we received from utilities over the past quarter,” Mr Craib said.
“There is strong demand for new supplies, particularly from an Australian project such as Honeymoon, and we are very encouraged by utility interest in visiting our mine site.”
Final investment decision
In June, Boss announced a final investment decision which will keep Honeymoon on track for first production in December 2023, increasing to a steady-state rate of 2.45 million pounds of uranium oxide a year.
The forecast $113 million capital cost of the development (including contingencies) is fully-funded, backed by zero debt and maximum flexibility and pricing leverage in offtake negotiations.
Mr Craib said strong results this month from infill and resource extension drilling had further strengthened Boss’ strategy to increase Honeymoon’s forecast production rate and mine life.
“Ramping up production does not form part of our current restart feasibility studies, but provision has been made in the plant design to incorporate this increase,” he said.
“With improving market conditions, we believe it is prudent to now progress with the exploitation of known satellite deposits.”
Global market
While the June quarter was reported to be less dramatic for the global uranium market than earlier this year, the continuing war in the Ukraine has seen a hardening of attitudes towards trading with Russia.
It has also highlighted the stranglehold Russia has on gas supply to Europe and the reliance on Russia as a global supplier of nuclear fuel.
“The nuclear fuel market over the past two decades has become a global market and the goal has been to bring supply and demand into balance,” Mr Craib said.
“Russian supply is a critical component and non-Russian supply of enrichment and conversion services are currently not adequate to fill the gap that would be created by terminating existing contracts with Russia.”
Uranium prices
Price volatility continued during the quarter, with the uranium spot price falling from US$53 per pound at end April to US$48.50/lb by end May, before rising to US$50.50/lb by end June.
In contrast, term prices steadily increased, rising from US$50/lb to US$52/lb at end April and to US$53/lb by end June.
Mr Craib said recent contracting with restart projects demonstrates genuine interest by utilities to diversify supply by bringing back production from restart projects in stable environments.