In an effort to de-risk the restart of its Honeymoon mine, South Australian uranium explorer Boss Energy (ASX: BOE) has raised $60 million through a share placement and will strategically use it to acquire a large inventory of uranium in the United States.
The company emerged from a trading halt on Monday to announce it has received commitments from professional and sophisticated investors for the placement of 428.5 million shares at an issue price of $0.14 each, with net proceeds intended to buy uranium on the spot market.
Significant demand reportedly came from both existing institutional and “new and noteworthy” investors.
Boss also revealed it has entered into binding agreements to purchase 1.25 million pounds of uranium at a weighted average price of US$30.15/lb (currently A$39.48/lb). The inventory is currently warehoused at the ConverDyn facility in Metropolis in the US state of Illinois.
The acquisition is expected to help strengthen the company’s position in offtake and project funding negotiations as it aims to get its advanced Honeymoon uranium project in South Australia up and running.
“The stockpile will be highly valuable to us on several levels as we secure offtake agreements, finalise project funding and move into production,” Boss managing director Duncan Craib said.
Based on the weighted average price of US$30.15lb (A$39.48/lb), Boss will acquire the 1.25 million pounds of uranium for about US$37.69 million (A$49.35 million).
Under the binding agreements, Boss will acquire the first 250,000lbs of uranium by the end of April and the remaining 1Mlbs by the end of June. It will remain stored at the Illinois facility.
Remaining funds from the capital raising will be applied towards storage costs associated with the inventory, costs of the placement and general working capital.
Increasing flexibility for Honeymoon financing and offtake talks
Boss said the acquisition is likely to deliver several significant benefits for the company including enhancing its financial position to support the planned restart of the Honeymoon uranium project and providing greater flexibility in project funding and offtake negotiations with customers.
The inventory is also expected to de-risk Honeymoon’s restart as it will ensure Boss can meet offtake obligations during the commissioning phase, providing initial customers with confidence of supply.
The acquisition also holds “clear strategic value and upside for Boss shareholders given forecasts of tight supply-demand fundamentals in the uranium market,” the company noted.
Earlier this month, Boss revealed an enhanced feasibility study (EFS) for its proposed Honeymoon mine is now 75% complete.
Process design work is currently evaluating a staged expansion to boost the plant’s nameplate capacity to 2.45Mlbs per annum.
The EFS is scheduled for delivery in the June quarter.