Uranium miner to raise $125 million for Honeymoon restart

Listed company Boss Energy has kicked off a $125 million equity raise to fund the development of the mothballed Honeymoon uranium mine in South Australia’s north-east.

Mar 17, 2022, updated Mar 17, 2022
Boss Energy is looking to recommence production at the Honeymoon uranium mine in north-east South Australia.

Boss Energy is looking to recommence production at the Honeymoon uranium mine in north-east South Australia.

Once the money is raised, the restarting of operations is expected to take about 18 months and if it proceeds, Honeymoon would again become the state’s third uranium mine and the fourth in Australia.

Perth-based Boss Energy, previously known as Boss Resources, bought the Honeymoon mine and associated deposit from Uranium One in 2015 for $11.5 million.

The mine is located about 80 kilometres north-west of Broken Hill, 30 kilometres inside South Australia. It had operated from 2011 to 2013, exporting just 312 tonnes of uranium before closing due to high production costs and low prices.

Honeymoon is permitted to export about 1500 tonnes – 3.3 million pounds equivalent – of uranium a year.

Boss announced in 2020 it had developed technology to lower operating costs at Honeymoon and in 2021 reported that the project required $110 million (US$80 million) in capital expenditure to resume, making it one of the lowest funding requirements of any pre-production uranium project worldwide.

The price of uranium has been steadily rising in the past two years from US$23.50 per pound in February 2020 to almost $30 per pound in February 2021.

Last month the price was US$43 per pound and has risen further since as a result of the Russia-Ukraine conflict, briefly topping US$60 per pound last week.

Boss predicts its life-of-mine average all-in sustaining costs are about US$25.60/lb.

Managing director Duncan Craib said the capital raise would ensure Boss is funded through to the start of production at Honeymoon.

“With the uranium market’s continuing recovery, Boss to be funded (post equity raising) and Honeymoon having a unique short timeframe to production with all permits in place, Boss will be perfectly positioned to become the uranium producer of choice for investors and customers alike,” he said in a statement to shareholders yesterday.

Boss Energy’s two-tranche Placement to raise up to $120 million at $2.15 a share, an 11.2 per cent discount on Tuesday’s closing price.

It will also offer a Share Purchase Plan (“SPP”) to raise up to an additional $5 million at the same offer price as the placement.

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The capital raise follows a $60 million raise in March last year to fund the acquisition of 1.25 million pounds of uranium to be used as a strategic inventory to strengthen off-take and project funding negotiations.

The company said it would continue negotiations with potential offtake partners on the right terms to lock in robust margins.

However, it said the latest capital raise would ensure it was not reliant on offtake for development funding and it remained well capitalised to maximise the benefit of the rising Uranium market.

“We have deliberately structured our funding to maintain a highly conservative and robust balance sheet with no debt, $135m of net cash and an additional $100m contingency from our existing strategic uranium inventory,” Craib told the ASX yesterday.

“We have not attained any debt as it requires fixing the uranium price through long term contracts.

“Boss anticipates that committing to long-term contracts in the current rising uranium price environment would adversely impact the long term upside potential of Boss and we intend to wait for further increases in contract prices before making any offtake commitments.”

Boss Energy was this month included in the ASX’s All Ordinaries index of Australia’s largest 500 listed companies.

Its shares were trading at $2.42 at yesterday’s close, giving the company a market capitalisation of $690 million.

BHP’s Olympic Dam mine near Roxby Downs in the north of South Australia is the largest uranium facility in Australia.

It produced about 3610 tonnes of uranium in 2020 – about half of the national production – followed by 2130 tonnes at the Beverley-Four Mile mine near Honeymoon and 1570 tonnes at the Ranger mine in the Northern Territory.

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