Boss Energy expands global uranium footprint with Alta Mesa project

Boss Energy (ASX: BOE) has taken a key step in its global expansion plans with the successful completion of its $92 million acquisition of a 30% stake in the Alta Mesa in situ recovery (ISR) uranium project in South Texas from enCore Energy.

Boss managing director Duncan Craib said this is another major milestone in Boss’ strategy to continue growing its uranium inventory, production and cash flow.

“The Alta Mesa project has many key similarities to our Honeymoon uranium project in South Australia, where the commissioning process is well on track and we are set to produce our first drum of uranium in the coming weeks,” he said.

“Alta Mesa will also enable us to diversify our production on both a project and geographical basis.”

“Our strong production and growth outlook is underpinned by a robust balance sheet with no debt and a strategic uranium stockpile now worth $1,951m based on current spot prices.”

Completion of the Mesa interest acquisition comes at the same time as Boss is undertaking significant commissioning progress and ramp-up at its Honeymoon uranium mine in South Australia.

“The exploration success which will underpin growth there, the Alta Mesa acquisition, our very strong balance sheet and impending cash flow mean we are ideally positioned to capitalise on the strong demand for uranium from tier-one locations,” Mr Craib added.

Transaction approval steps

Boss and the Mesa project interest seller were required to undertake a range of actions to complete the master transaction agreement between the two parties as announced on 6 December 2023.

Having satisfied the various conditions precedent to the transaction, including approval from the Committee on Foreign Investment in the United States, the two parties entered into a joint venture (JV) agreement in regard to Boss Energy acquiring its 30% interest in the JV company and the Alta Mesa project.

Pursuant to the agreement, enCore will act as manager of the JV company.

Pro rata distribution

The JV company will distribute uranium from production at Alta Mesa on a pro rata basis to enCore and Boss Energy’s ownership interest.

The parties have also entered into a uranium loan agreement providing for up to 200,000 pounds of uranium to be loaned by Boss Energy to enCore, which is expected to be transferred to enCore next week.

The principal of the loan, valued at the prevailing spot price plus interest of 9%, will be repayable in 12 months in uranium or cash at the election of Boss Energy.

Under the subscription agreement, Boss has now acquired 2,564,102 common shares of enCore issued from treasury at a discounted price of around $6 per share for total proceeds to enCore of approximately $15.2m.

Additional technology access

The parties have also entered into a strategic collaboration agreement providing for Boss to receive an exclusive Australian licence for and collaborating on the development of enCore’s Prompt Fission Neutron exploration and production tool technology.

The Alta Mesa project includes a central processing plant (CPP) and a fully licenced and constructed ISR uranium plant located on 200,000 plus acres of private land in Texas.

Total operating capacity at the Alta Mesa CPP is 1.5 million pounds of uranium per year.

The Alta Mesa CPP historically produced nearly 5Mlb of uranium between 2005 and 2013, when full production was curtailed as a result of low uranium prices.

KPMG reported that uranium spot prices continued their declining trend in 2013, falling 21.3% to average at about $58 a pound.

The current uranium spot price is around $123, up from $108 last month and $61 one year ago.