Boss Energy reaches halfway mark for Honeymoon uranium project
Emerging uranium producer Boss Energy (ASX: BOE) has announced it has reached the halfway mark in committed expenditure for the redevelopment of its flagship Honeymoon uranium project in South Australia.
The company today confirmed $55.1 million of the budgeted $105.4 million capex, excluding a $7.6 million contingency, has been committed for the project to date, putting the project on time and budget.
Honeymoon is fully funded through to production with Boss declaring it has $115.6 million in cash on hand and a strategic uranium stockpile valued at $88.3 million based on current spot prices.
“To reach the hallway mark on time and on budget at any project is an outstanding achievement, particularly given the current high-inflation environment shortages of skills and equipment,” Boss managing director Duncan Craib said.
He said the company is now positioned to capitalise on the growing demand for uranium, especially from western countries, as leading utilities look to lock in new long-term contracts and diversify from Russia as a supplier.
“The strong outlook is reflected in the growing level of inquiry we are receiving from utilities, which is coinciding perfectly with the development progress at Honeymoon, setting us up for a pivotal second half of the year,” Mr Craib added.
Cost for new uranium mines rise
Mr Craib said the incentive price needed to establish new uranium mines has risen to around US$80 per pound (A$114/lb), compared with the current spot price of US$48.75/lb (A$69.80/lb).
“Costs for new mines, with some notable exceptions, have risen as inflationary effects are included in feasibility studies, meaning the incentive price is now widely seen as being around US$80/lb,” he said.
“This will severely restrict the availability of new supply, further helping to ensure the market remains tight.”
Buyers looking to diversify from Russian supply
Mr Craib also noted a growing push among buyers to reduce their dependence on any individual company or geographic area.
“The recent contracts signed with developers, despite the availability of lower cost supply from existing producers, is evidence of this.”
“If utilities continue to work towards reducing dependence on Russian supplies, fixed-term uranium demand could increase significantly during 2023, leading to higher term prices,” he said.
Wellfield start-up on track for second quarter
Boss confirmed development of the first three start-up wellfields at Honeymoon are progressing rapidly with three rigs working to fast-track well installation.
Initial drilling works are 40% complete and scheduled to be finished in the coming months.
A total of 55 out of the planned 86 production wells have been drilled and cased and 15 out of 31 recompletions of existing wells have been finished.
Long-lead items have been ordered, including electrical and instrumentation for wellfield refurbishment.
Boss has also taken delivery of 2.5km high-density polyethylene (HDPE) wellhouse trunklines, 4.5km specialty fibreglass downhole pipe and super-duplex stainless steel connections used to support the pumps in 48 extraction wells.
The company has placed a high priority on securing long-lead items to mitigate possible freight and logistic delays, today confirming that all critical path items remain on track for delivery in line with the project schedule.