Boss Energy (ASX:BOE) Investor Overview

Overview

Boss Energy (ASX:BOE) is a listed Australian producer of uranium. The company has two projects – the 100 percent owned Honeymoon uranium project in South Australia and the 30 percent owned Alta Mesa project in the US.

The macro-environment and steps taken by the US government remain favorable for uranium producers such as Boss Energy. The United States Congress recently enacted legislation prohibiting the importation of Russian uranium products. Known as the Prohibiting Russian Uranium Imports Act (HR 1042), this legislation was passed by the House of Representatives on December 11, 2023, and later approved by the Senate on April 30, 2024. The prohibition is valid until 2040.

The legislation’s sunset provision, set for 2040, aims to encourage the sustained deployment of uranium conversion and enrichment facilities and services in the United States and its allied nations over the long term. This should benefit domestic suppliers such as Boss Energy.

According to UxC estimates, annual uranium demand could surge by nearly 65 percent, exceeding 300 million pounds (Mlbs) U308 by 2030, up from the current demand level of 197 Mlbs U308. Meanwhile, the projected mine supply for 2024 is approximately 155 Mlbs U308, suggesting a deficit of nearly 40 Mlbs.

Moreover, there is an expected surge in demand for uranium due to the projected 18 percent increase in nuclear reactor capacity from 2023 to 2030. Nuclear energy will be critical in meeting the global ambition of net zero emission. Thus, ensuring a secure supply is crucial, and the Honeymoon mine is strategically positioned to provide uranium from South Australia to a market facing escalating geopolitical instability.

Spot uranium prices have jumped dramatically. They are the highest since 2008, at over US$80/lb. Due to the tightness of the uranium supply/demand balance, prices are expected to remain strong.

The company’s first drum production in April 2024 at the Honeymoon mine is timed with strong market fundamentals. Boss has entered into two binding sales agreements to sell ~1.8 Mlbs U308 to two major Western utilities in 2032. These agreements ensure a stable revenue flow for Boss, offer strong profit margins, and reinforce the trust utilities placed in the supply from the Honeymoon Uranium Mine in South Australia.

Honeymoon utilizes in-situ recovery (ISR) coupled with ion exchange for uranium extraction and processing. The process is environmentally friendly and more cost efficient compared to traditional mining.

Boss is expanding its senior management team to align with its expanding presence as a global uranium producer. Justin Laird, a highly experienced financial executive, has been appointed CFO, while Robert Gordon, a respected mine production executive, has taken on the role of general manager at Honeymoon.

As of 31 March 2024, the company had AU$100 million in cash and no debt. It also holds a strategic inventory of 1.25 Mlb of U308, which has a current spot market value of AU$169 million. Boss Energy possesses multiple producing uranium mines and is strategically positioned to capitalize on the improving fundamentals of the uranium market.

Company Highlights

• Boss Energy is an Australia-based uranium producer focused on its two key projects – the 100 percent owned Honeymoon Uranium Project in South Australia and the 30 percent owned Alta Mesa Project in the US.
• In June 2024 Boss became a multi-mine uranium producer through the Honeymoon and Alta Mesa Projects.
• The Honeymoon uranium mine commenced production in April 2024, with the first sale of uranium expected in July 2024.
• Annual production at Honeymoon is forecast to reach 2.45 Mlbs of U3O8.
• The Alta Mesa uranium mine commenced production in June 2024, with first sale of uranium expected in October 2024.
• Annual production at Alta Mesa is forecast to reach 1.50 Mlbs of U3O8. Once steady-state operations are established, Boss’s 30 percent share of the production amounts to 500,000 lbs per year.
• Uranium prices have been the highest since 2008 at over US$80/lb. Prices are expected to remain strong due to the tightness of the uranium supply/demand balance. The company’s first production is timed with strong market fundamentals.
• The company has signed two sales agreements to supply 1.8 million pounds of U3O8 to leading power utilities in Europe and the US, spanning eight years from 2024 to 2032. The company plans to pursue additional agreements as the price of uranium increases.

The 100 percent owned Honeymoon uranium project is situated in South Australia, approximately 80 kms northwest of the town of Broken Hill. The project is home to the historical Honeymoon uranium mine, Australia’s second operating in-situ recovery uranium mine. It began production in 2011 under the previous ownership of Uranium One. Operations at Honeymoon were halted in November 2013 due to declining uranium prices. Subsequently, Boss Energy acquired the project in 2015. The company has since restarted the mine, with the first drum of uranium produced in April 2024.

Boss Energy’s enhanced feasibility study (EFS), released in June 2021, demonstrates the financial robustness of the Honeymoon mine. It indicates an 11-year mine life, a production rate of 2.45 Mlb/annum, and a pre-tax NPV of 8 percent of US$309 million at the U3O8 price of US$60/lb. The existing EFS is based on just 50 percent of the existing JORC resource, i.e. only 36 Mlbs of the total JORC Resource of 71.6 Mlbs.

Using the remaining identified JORC resource, there is considerable potential to prolong the mine’s lifespan and enhance the production nameplate capacity of 2.45 Mlb per annum. Boss Energy is currently implementing strategies to boost both the production rate and the lifespan of operations at Honeymoon. This includes targeting satellite deposits such as Gould’s Dam (25 Mlb of U3O8) and Jason (11 Mlb of U3O8).

These target deposits are expected to increase the forecasted production at Honeymoon from 2.45 Mlbs per annum of U308 to over 3 Mlbs per annum.

The 30 percent owned Alta Mesa project is a high-grade uranium ISR project in South Texas, a prolific US district for sandstone-hosted ISR production, having historically produced ~80 Mlbs. South Texas is the most progressive permitting production jurisdiction in the United States, and the typical AISC for similar ISR projects in the region is US$30-35/lb.

Boss Energy purchased its 30 percent stake in the Alta Mesa project from enCore Energy for US$60 million in cash. enCore Energy is a reputable US uranium developer and operator with a strong track record. They successfully initiated operations at the Rosita ISR re-start project in the United States in just 20 months. Prior to this, the enCore Energy team managed the Alta Mesa project before undergoing care and maintenance.

The Alta Mesa project boasts an NI 43-101 compliant resource with 3.41 Mlbs at 0.109 percent U3O8 in the measured and indicated category, and 16.97 Mlbs at 0.120 percent U3O8 classified as inferred. The project has an annual production capacity of 1.5 Mlbs U3O8, with Boss Energy’s share at 500,000 lbs per annum. The project commissioning is on track, with the first production expected in May 2024.

Management Team

Duncan Craib – Executive Director and CEO

Duncan Craib has been the chief executive officer of Boss Energy since January 2017. He has significant experience in mining, especially in the uranium industry. He has worked in senior leadership roles across geographies, including Australia, the United Kingdom, Namibia and China. Before joining Boss Energy, Craib was the finance director at Swakop Uranium. He played a significant role in developing and constructing the Husab uranium mine in Namibia, a project valued at US$2.5 billion. Husab, considered world-class, was commissioned in 2016.

Justin Laird – Chief Financial Officer

Before joining Boss, Justin Laird was the manager of business projects at Wesfarmers (ASX:WES). During his nine-year tenure, he held various senior roles in business development, led transaction and finance teams, expanded new ventures, and fulfilled other commercial and strategic responsibilities. He is a chartered accountant.

Wyatt Buck – Non-executive Chairman

Wyatt Buck has significant uranium mining experience, having worked with Cameco Corporation for nearly 15 years. He was the general manager of the McArthur River uranium mine and Key Lake Mill, the largest uranium mining operation in the world. He has held key operational positions at Paladin Energy (ASX:PDN), serving as both general manager and managing director of the Langer Heinrich uranium project in Namibia. He held these roles from the initiation of construction in February 2006 until achieving design-level production. From 2011 onward, Buck has served as operations director at First Quantum Minerals (TSE:FM), where he has supervised mining operations across various locations, including Finland, Spain, Turkey, Australia and Mauritania.

Jan Honeyman – Non-executive Director

Jan Honeyman is an experienced human resources professional, most recently with global miner First Quantum Minerals, where she was the director of HR for 16 years. Prior to this, she worked in HR and talent management with various companies, including Halliburton.

Bryn James – Non-executive Director

Bryn James is a member of the Australian Institute of Mining and Metallurgy, with over two decades of involvement in the Australian uranium sector. He possesses extensive experience across all stages of the mining process, with a specific focus on uranium in-situ recovery (ISR), as well as mine development and production. Previously, he worked with ISR uranium producer Heathgate Resources. He also served as the chief operating officer of Canada-based uranium developer Laramide Resources (ASX/TSX:LAM,OTC:LMRXF).

Robert Gordon – General Manager

Robert Gordon brings vast experience in operating processing plants and managing projects within the global resources sector. Previously, he served as the process plant operations manager at Newcrest Mining. His expertise spans various aspects of metallurgy, including hydrometallurgy, which aligns with the processes utilized by Boss at Honeymoon.

Jonathan Owen – Project Manager

Jonathan Owen brings over 25 years of experience in all aspects of the mining cycle, from feasibility to handover. With a background in project management and development, he boasts considerable experience, including a decade spent at First Quantum Minerals as a project manager overseeing the African Sentinel copper/nickel development. More recently, he played a pivotal role in the handover of the Cobre Panama copper/gold processing plant.

Jason Cherry – Geology Manager

Jason Cherry is a seasoned uranium exploration geologist with 17 years of experience and has expertise in diverse mining styles of uranium mineralization. He spent several years at Honeymoon, where he played a significant role in the discovery of new uranium resources, including the satellite deposits of Jasons and Goulds Dam.