Boss Resources Optimistic About Uranium Market

Australian uranium explorer Boss Resources (ASX:BOE,OTC Pink:BQSSF) released an optimistic yearly report on Thursday (September 26). The energy fuel explorer, which is restarting the Honeymoon mine, believes it is no longer a matter of “if” the market will strengthen, but “when.”

The company pointed to US President Donald Trump’s Section 232 decision and the recent World Nuclear Association (WNA) symposium as evidence the market is in the early stages of an upswing.

“Nuclear utilities are for the first time publicly acknowledging that supply from re-starting mines, such as Honeymoon, are needed to ensure long-term security of supply and that current price levels will not support that investment,” wrote Mark Hohen in the chairman’s statement.

Boss announced plans to commence a three phase restart program for the South Australian Honeymoon mine in early July 2018, following a three year technical and commercial de-risking process initiated by the company in 2015.

The Honeymoon deposit was first identified in 1972, but wasn’t commissioned until 2011 with a capacity of 340 tonnes of U3O8 per year.

Since acquiring the project in 2015, Boss has steadily advanced the site towards production with a much higher output target, 3.2 million pounds of U3O8 equivalent per year.

Company shares experienced an 8 percent uptick in February following an increase to the resource estimate at the South Australian project.

Restarting Honeymoon is an important milestone for the Australian uranium industry, which is heavily regulated. There are only five permitted uranium mines on the continent, two of which are not operational.

“So, it’s fair to say, now more than in the past 8 years, main industry debate for the near term appears a question of “when” will prices rise not “if,” which is why Honeymoon is so well positioned,” Hohen said.

Phase one of the restart process was completed in March and signaled the start of Phase two, which includes completion of the definitive feasibility study.

“This calendar year’s primary goal is completion of Phase 2, successful achievement of an independent feasibility study report in line with expectations to ensure Honeymoon is Australia’s next uranium producer,” Hohen added.

“Once completed, Boss will be in a position to proceed to production when a global uranium price has reached a point to satisfy our targeted IRR and NPV return to shareholders.”

Just when the spot price will hit the target Boss and many other uranium miners have in mind is a pertinent question that is weighing on the sector. U3O8 has remained rangebound to the US$25 per pound area for most of the year.

According to a nuclear fuel report released by the WNA in early September, demand for uranium as an energy fuel is anticipated to grow in relation to countries implementing nuclear energy into their power grids. The association revised its number to account for the rapid deployment of nuclear reactors used to produce electricity.

“Achieving the Harmony goal of supplying 25 percent of the world’s electricity before 2050 will require a rapid ramp-up of new nuclear build, higher than projected in the Upper Scenario, which in turn would lead to the need of greater amounts of uranium, enrichment, fuel fabrication, transport and used fuel services,” WNA Director General Agneta Rising said.

“Nuclear fuel cycle participants should be prepared to meet a potential large increase in demand to meet the Harmony goal.”

Shares of Boss Resources remained unchanged on Thursday (September 26), trading at AU$0.60.

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.