Boss Energy launches $125m raising to fund mining restart at Honeymoon uranium project

Boss Energy (ASX: BOE) has unveiled a $125 million equity raising to fund development and the restart of its Honeymoon uranium mine in South Australia to capitalise on the rising uranium price.

The company will undertake a $120 million two tranche placement, with the first tranche to comprise the issue of 42.8 million shares at $2.15 each to raise $92.1 million.

In the second tranche, the company will issue 13 million shares at $2.15 each to raise $27.9 million.

According to Boss, the $2.15 share price is a 11.2% discount to the previous closing price of $2.42 on the 15 March.

It also represents a 17% discount to Boss’ five-day volume weighted average share price.

Eligible Boss shareholders will be able to participate in a $5 million share purchase plan under the same $2.15 price.

All up, the share purchase plan and two-tranche placement are expected to bring in $125 million in funding to Boss before costs.

In addition to the placement and share purchase plan, Boss’s four directors will sell down a combined $5 million in shares.

Exposure to uranium price upside

Commenting on the raising, Boss managing director Duncan Craib said it would provide the financing required to develop Honeymoon through to the start of production.

He said the company had avoided obtaining debt because it would require fixing the uranium price through long term contracts.

“Boss anticipates that committing to long-term contracts in the current rising uranium price environment would adversely impact the long-term upside potential of Boss and we intend to wait for further increases in contract prices before making any offtake commitments.”

“We have deliberately structured our funding to maintain a highly conservative and robust balance sheet with no debt – $135 million of net cash and an additional $100 million contingency from our existing strategic uranium inventory,” Mr Craib explained.

De-risking Honeymoon

Mr Craib added the company had “worked relentlessly” to de-risk the restart of mining at Honeymoon.

Combined with existing cash reserves, Boss expects to have $142 million in cash, with funds for the raising to facilitate the completion of the FEED study, which remains in line with enhanced feasibility study results that were published in June last year.

Capital expenditure costs to restart Honeymoon are estimated at $113 million (including contingencies).

Mr Craib noted the purchase of 1.25 million pounds of uranium inventory also de-risks the mine’s restart, with that now worth about $100 million.

“With the uranium market’s continuing recovery, Boss to be funded (post equity raising) and Honeymoon having a unique short timeframe to production with all permits in place, Boss will be perfectly positioned to become the uranium producer of choice for investors and customers alike,” Mr Craib added.

First production from Honeymoon is expected within 18 months from commencement of development, with the mine forecast to produce 2.4Mlb uranium a year over the first three-to-four years.