Boss Energy set for final investment decision on South Australian uranium mine re-open
Boss Resources has sold its interest in the Golden Hill and Gourma Projects to joint venture partner Teranga for $10 million cash.
Boss Energy (ASX: BOE) says its latest engineering study has confirmed there will be strong financial returns when it re-opens the Honeymoon uranium mine in South Australia.
The final investment decision (FID) is expected once the recently announced $120 million placement is completed, and that decision will trigger immediate work on engineering, procurement and construction.
Long lead items have already been evaluated and are ready for procurement.
The front-end engineering design (FEED) report confirms last year’s cost estimates, with Honeymoon being economically robust project with an internal rate of return of 47% with a uranium price of US$60 per pound.
‘Outstanding’ outlook for Honeymoon mine
Boss says the mine redevelopment is also technically robust with nameplate output of 2.45 million pounds at an all-in sustaining cost of US$25.60/lb over the 11-year mine life.
The study also confirmed the potential to extend mine life through mining satellite deposits.
Managing director Duncan Craib said the FEED provided more strong evidence of the “outstanding” outlook for Honeymoon.
“The planets are aligning perfectly for Boss and Honeymoon in every respect. The study also shows that production is projected to meet Boss’ targeted levels”, he added.
“These key findings come against a backdrop of significant increases in the uranium price and an exceptionally strong supply-demand outlook.”
Capital cost of $113 million
Based on the FEED study, the total capital cost estimate is $113 million, including a contingency allowance of 8%.
First uranium is scheduled to be produced with 12 to 18 months of the final investment decision.
In its most recent quarterly report Boss Energy noted that its original inventory of uranium oxide had a current spot market value of $79.22 million.
The company paid US$30.15/lb for the inventory, which converted to Australian dollars in January represents an outlay of $49.69 million, leaving a book profit of $29.53 million.
Boss Energy has also previously noted that it has one of the few uranium projects ready to participate in the early stages of the new uranium bull market.
The company began exploration drilling during the December quarter as part of its strategy to continue increasing the inventory and forecast production rate.