It’s been a long period of dormancy for the uranium market following the 2011 Fukushima disaster which has seen an industry slowdown, with many smaller uranium companies shutting down. However, one which has not, Boss Resources (ASX: BOE) – is preparing to re-start operation.
There’s just one problem – they need the price of uranium to reach $50/lb to achieve their “conservative” base case scenario in order to realise the AUD $248 million free cash flow (post tax) from the 3.3 million pounds of U3O8 which Boss is licensed to export annually.
These lofty expectations of the uranium market, however, have not stopped Boss Resources from advancing the most recent Feasibility Study of their Honeymoon Uranium Project in South Australia, where shareholders have already invested more than AUD $170 million of infrastructure expenditure on the production facility.
Identified within the study, a further capital investment of AUD $92.9m would enable the re-start of production, a 12-month process, and enable Boss to produce 20.74 Mlbs expected to generate $1.48b in gross revenue – assuming the uranium market reaches prices of USD $50/lb.
“Reflecting a conservative base case uranium price of $50/lb U308 over LOM, the FS demonstrates Honeymoon’s advanced development can rapidly respond to a market rally, given the low capital barrier,” said Boss Resources CEO Duncan Craib.
“It’s average all-in-cost of US$32.3/lb U308 over LOM positions Honeymoon as one of the lowest operating uranium production costs world-wide.
“Completion of the FS milestones offers investors a real and near-term uranium supply prospect and allows us to progress off-take contracts with utilities world-wide.”
According to uranium giant Cameco, the U3O8 spot price in January 2020 has been around USD $24.85/lb but has seen significant improvement since reaching lows of $18 in November 2016 following highs of $72 prior to the Fukushima disaster.
The updated Feasibility Study results come on the same day Boss Resources appointed Peter O’Connell as Non-Executive Chairman, replacing the outgoing Mark Hohnen.
O’Connell, an industry leader in fund management, has held executive positions at various investment firms with up to $35 billion of assets under management and is a Non-Executive Director or Northern Star Resources (ASX: NST) which has a market cap of more than $9 billion.
As per their last quarterly report in October 2019, Boss Resources had $10m cash in the bank.