Rising uranium prices boost Boss Energy’s position as Honeymoon rapidly advances
Boss Energy plans to use the seismic data along with existing geoscientific information to reduce the number of drill holes required to grow uranium resources at Honeymoon.
Climbing uranium prices have generated a windfall for aspiring producer Boss Energy (ASX: BOE), which aims to capitalise on its strengthened position in project funding and offtake negotiations.
The company has been forging ahead with restart plans at its Honeymoon uranium mine in South Australia in a bid to take advantage of the growing uranium market.
In an announcement today, Boss noted the spot price of uranium has risen from US$32.40 per pound in July to more than US$50/lb. The current spot price on Tuesday was US$41.25/lb, which exceeds the all-in cost of US$31.90/lb that the company forecast in June.
The price increase has resulted in Boss’ 1.25-million-pound uranium oxide inventory having a spot market value of US$51.56 million (A$71.52 million). Since Boss paid US$37.68 million (A$49.69 million) for this inventory in March, this represents a book profit of A$21.83 million.
“In addition to this windfall, the inventory is of immense strategic value to Boss on several levels as it increases flexibility in project funding and offtake negotiations with customers in preparation to restart production,” the company stated.
Boss managing director Duncan Craib said there is concern among utilities about the rising spot price and some of the more strategic utilities are in talks with suppliers to be able to act if prices continue to climb.
“Utility buyers have been busy extending and modifying existing contracts to satisfy some near-term demand at advantageous terms in return for granting suppliers higher prices in the longer term.”
“While the continued purchasing of uranium oxide by the Sprott Physical Uranium Trust will have a positive impact on the market by sequestering significant quantities of uranium and strengthening the uranium price, we can expect to see continued volatility until more nuclear power utilities enter the market,” he added.
Project ahead of schedule as requests for tenders come in
Boss is rapidly advancing key workstreams in preparation for a final investment decision on Honeymoon.
The company has received “three requests for tender proposals from three countries with nuclear energy” in recent weeks, which it said signals the project’s status as a credible near-term producer.
A front-end engineering and design (FEED) study is expected to be completed “well ahead of schedule” early in the March quarter of 2022. This will allow detailed design to commence immediately after a final investment decision is made.
It also recently announced it had appointed Perth-based Process E&I as a key engineering, procurement and construction contractor for the project, responsible for the electrical, instrumentation and control system.
“We have a plant in care and maintenance, other significant production and storage infrastructure in place, we have formed an owners’ team to restart Honeymoon and we are moving through the FEED stage rapidly,” Mr Craib said.
“By continuing to advance Honeymoon on several fronts while growing the uranium inventory, we can ensure we can capitalise on the rapidly turning uranium market at the moment of our choosing.”
Exploration continues in parallel
Boss is also accelerating development of its staged exploration strategy, which has expanded the global JORC resource at Honeymoon by more than 400% to 71.67Mlbs.
The company expects to report on the completion of two trial seismic reflection surveys in the coming weeks.
Drilling is then due to start in November to target the most prospective of Honeymoon’s exploration areas, using a combination of the collected seismic and 3D geological modelling data.