Boss Energy further de-risks Honeymoon uranium project with US sales deal
Boss Energy’s (ASX: BOE) rapid growth strategy has achieved another success with the company entering into its first binding sales agreement for the supply of uranium from the Honeymoon project in South Australia.
The re-start of the historic Honeymoon project, Australia’s first new uranium operation for a number of years, will see it come into production in early 2024.
Under the offtake agreement, Boss will sell 1 million pounds of uranium to an unnamed major publicly-listed US power utility over a seven-year period commencing in 2025 and continuing until the end of 2031.
Managing director Duncan Craib said the agreement has been signed on market-related pricing and contains a ceiling and floor price above the company’s forecast production costs at Honeymoon.
Based on its joint ore reserves committee resource at the Honeymoon Restart Area of 36Mlb of the uranium compound triuranium octoxide (U3O8), Honeymoon has a 10-plus year mine life at a forecast production rate of 2.45Mlbpa, leaving plenty of opportunities to add further offtake agreements.
“Signing our first sales contract is a major milestone for Boss and another key de-risking event for the Honeymoon project,” Mr Craib said.
“With production about to start and the project running on time and on budget, we are extremely well-placed to capitalise on the rising uranium price.”
“Now we also have a binding sales contract in place which gives us financial security while allowing us to retain exposure to further increases in the uranium price,” he added.
“In the process, we have established a long-term relationship with this large strategic customer.”
Located 80km northwest of Broken Hill, Honeymoon is about to enter the second chapter in its mining story.
The historic Honeymoon site was Australia’s second operating in situ recovery uranium mine, commencing production in 2011.
Operations at Honeymoon were suspended in November 2013 in response to falling uranium prices, which ended the year at around $50 vs the current spot price of around $93.
Boss, which acquired Honeymoon in 2015, is leveraging the high-quality infrastructure that remains on-site as well as the already significant uranium resource.
US mine acquisition
The Honeymoon offtake agreement comes in a highly active period for Boss.
Earlier this month, the company agreed to pay $60 million in cash to acquire 30% of enCore’s high-grade Alta Mesa In Situ Recovery project in South Texas.
The Alta Mesa project has 3.41Mlb at 0.109% U3O8 measured and indicated and 16.97Mlb at 0.120% U3O8 inferred compliant resources.
It also offers significant exploration upside potential and drying capacity to expand the 1.5 Mlb capacity plant after expected recommencement of production in 1H 2024.
Successful capital raising
A day after announcing the Alta Mesa deal, Boss successfully completed a bookbuild to raise $205 million through a single tranche placement of new fully paid ordinary shares.
The popularity of the new project acquisition was highlighted by the strong demand the raising received from both existing shareholders as well as a number of new domestic and global institutional investors.
Proceeds raised from the offer are being used to fund the Alta Mesa transaction and project restart, exploration activities and working capital, enCore equity investment and spend on prompt fission neutron technology, as well as production and resource growth initiatives for the Honeymoon project.