Boss Energy (ASX: BOE) has successfully raised $120m to fund the development of its Honeymoon Uranium Project in South Australia.
The company's shares are down -5.8% in early-trade, weighed by the discount on new shares and director selldown.
Raising price at $2.15 per share (11.2% discount to last closing price of $2.42 prior to placement)
Placement will take place in two tranches:
Tranche 1 will issue circa $92m
Tranche 2 will issue circa $28m in late-April
Boss Energy directors will sell down approximately $5m of shares at the offer price
“The capital raising will ensure Boss is funded through to the start of production at Honeymoon,” said Managing Director Duncan Craib.
Boss Energy said that Front-End Engineering Design (FEED) studies due at the end of March are “practically complete”, with only minor works outstanding.
Post FEED, the company plans to commence construction with production expected within 18 months from commencement.
Project developments costs are forecast to be around $82.1m.
“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,” said Craib.
The capital raising was therefore used to ensure Boss Energy is not reliant on an offtake agreement to fund the development of Honeymoon.
Boss Energy believes there’s “substantial scope to add significant value and mine life” beyond its initial feasibility mine plans. This includes:
Mine life expansion from ongoing exploration efforts
Expand production capacity
Improved technologies to optimise output/costs
Uranium price upside
At US$60/lb, the Honeymoon Project has a pre-tax net present value (NPV) of $412m. At US$80/lb, NPV pushes up to $729m.
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