Boss Energy records robust margins and first positive free cashflow at Honeymoon uranium mine
Boss Energy (ASX: BOE) has announced strong operational and financial results for the three months to end-March, fuelled by a ramp-up of activity at its Honeymoon uranium project in South Australia.
Honeymoon produced 246,869 pounds ion exchange (IX) and 295,819lb uranium oxide drummed over the period, representing growth of 15% and 116% respectively on the previous quarter.
The restarted asset delivered record production during February of 123,188lb uranium oxide drummed, providing the company with confidence in the delivery of its ramp-up plan as it continues to test the plant’s capability.
Pivotal moment
Managing director Duncan Craib said the “highly successful” ramp-up had created a pivotal moment for the company.
“Our success in delivering free cash flow within a year of starting production at Honeymoon reflects the skills and commitment of our people who have worked tirelessly to ensure we achieve exactly what we said we would,” he said.
“Importantly, we generated robust margins at current prices, demonstrating the strength of Honeymoon in the current market and the project’s immense upside on the back of future increases in the uranium price as the market tightens.”
Operational status
Boss brought well-field B3 online and commenced operations from NIMCIX Column 3 in March, with Kiln 2 also commissioned and operational during the quarter.
The company experienced some commissioning challenges with the kiln and bag-house (which form part of the drying and packing stage), resulting in unplanned downtime.
However Boss does not expect this to impact its production guidance target of 850,000lb uranium oxide for financial year 2025.
Key activities in the ramp-up plan for the coming quarter include increasing the flow rate with the availability of NIMCIX Column 3 and well-field B3, as well as changing the precipitation circuit operating regime from batch to continuous activity.
Construction activity
Onsite construction increased during the quarter, with a focus on steel erection along with pipe spooling and assembly for NIMCIX Columns 4 to 6.
Boss anticipates commissioning and production from NIMCIX Column 4 will commence in the current quarter.
The company also expects Columns 5 and 6 will become operational before year-end to align with the start of production from new well-fields.
High-priority targets
A team from RSC Consultants completed a prospectivity map during the period that contained 23 high-priority sandstone-hosted uranium targets over an 80-kilometre exploration zone around the Honeymoon operation.
The company’s first target for testing will be Sara Dam, approximately 10km east of the Honeymoon mine and immediately west of Marmota’s (ASX: MEU) Saffron prospect.
Activities completed include wide-spaced drilling comprising 34 holes for a total 4,298 metres along 12km, six of which intersected anomalous radioactivity north-west of Saffron but are not considered to be of economic tenor.
Cummins Dam exploration
Boss completed 32 rotary mud drill holes at the nearby Cummins Dam prospect, where sparse drilling in the 1970s delivered a series of radioactive intersections the company is yet to follow up.
Mr Craib said further work would be needed to test the permeability and determine if it is suitable for in situ leaching.
Boss also plans to use a low-impact aircore rig to explore targets in the Lake Constance area south-west of the company’s Gould’s Dam deposit, where historical work identified anomalous radioactivity in several holes during the 1970s.
Debt-free position
Boss had zero debt and $229.2 million of liquid assets (being cash, investments and physical uranium) at end-March, representing a decrease of $22.4m on the previous quarter.
This was partially offset by the company recording its first quarter of positive free cashflow.
During the period, Boss received the proceeds of the sale of 150,000lb uranium oxide to a utility customer and the repayment of the 100,000lb uranium it had loaned to enCore Energy.