Uranium

Boss is closer to becoming Australia’s third uranium producer following regulatory green light

By Market Index
Thu 06 Oct 22, 11:06am (AEST)
Green light
Source: Unsplash

Key Points

  • Boss Energy can now resume production at its previously shelved Honeymoon Uranium Project near Kalkaroo, SA
  • PFS released last June, forecasts production of 21.81m pounds of uranium over Honeymoon’s 11-year life
  • New approvals mean Boss can now mine up to 3.3m pounds of uranium oxide per annum

Given the strong demand for energy, the refocus on carbon emissions, and a surge in uranium prices in the wake of the war in Ukraine, regulatory approval for Boss Energy (ASX: BOE) to restart production at its previously shelved Honeymoon Uranium Project near Kalkaroo, SA, couldn't have come at a better time.

However, the uranium miner’s share price was down -0.75% at the open after revealing that the SA Department for Energy and Mining has granted regulatory approval for the company’s updated Program for Environment Protection and Rehabilitation (PEPR).

Today’s regulatory green light follows a year of discussions with the state’s regulators after the initial mothballing of the mine 10 years ago.

3.3m pounds annually

New approvals mean Boss, one of only four companies to hold an export licence from the Australian government in the highly regulated sector, can now mine up to 3.3m pounds of uranium oxide per annum from the site, northwest of Broken Hill.

The expanded mining footprint allows for an extension to the 11-year mine life.

The feasibility study, released last June, forecasted production of 21.81m pounds of uranium over Honeymoon’s 11-year life.

Australia’s third operator

Commenting on today’s announcement, Boss managing director Duncan Craib notes Boss is well on the path to becoming Australia's next uranium producer.

"We are making rapid progress on site, we are fully-funded through to production, and the outlook for uranium demand is extremely strong as the world prepares to meet its energy needs and carbon emission targets at the same time."

Craib previously noted that Honeymoon was "perfectly placed" to become the country's third operating uranium mine.

The other two operating uranium mines in Australia are BHP's (ASX: BHP) Olympic Dam in SA’s Far North, and US nuclear company General Atomics-owned Heathgate's Beverley operations north-west of Honeymoon.

Capital raise

Back in March the uranium miner raised $125m in equity to complete its FEED Study, and fund $113m in development costs.

Management noted at the time that the capital raising was deliberately structured to maintain a highly conservative and robust balance sheet with no debt, $135m of net cash and an additional $100m contingency from the company's existing strategic uranium inventory.

What brokers think

The Boss Energy share price is up 42% over 12 months.

Consensus on Boss is Strong buy.

Based on Morningstar’s fair value of $3.94 the stock appears to be undervalued.

Macquarie has lifted its uranium price forecasts 17% and 21% for FY24 and FY25 respectively, and the update drives forecast earnings increases for Boss of 7%, 36% and 12% through to FY26.

The broker’s Outperform rating is retained and the target price increases to $3.30 from $2.60.

Watch out for further broker updates later this week.

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Boss Energy share price snapshot.

 

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