Boss Energy Limited (Boss, ASX: BOE) is an Australian-based uranium producer that owns 100 percent of a producing mine in South Australia and 30 percent of a producing mine in South Texas, USA. As an ASX200 company that has been listed on the ASX since July 2007, Boss has strong institutional support for its future uranium production strategy. Boss has its head office in Subiaco, Western Australia.

Exposure to a rising uranium market

As the world shifts towards a low-carbon future, Boss Energy is poised to benefit from the early stages of the emerging uranium bull market. This is because nuclear power appears destined to become a key contributor to the reduction of global carbon emissions.

Boss is well placed to benefit from this strengthening uranium market with its existing low capital-intensive Honeymoon Project in a tier-one jurisdiction in South Australia, 80 kilometres northwest of the town of Broken Hill. The Honeymoon Project and its associated high-quality infrastructure were acquired by Boss Energy from the previous owner in 2015. This followed the suspension of operations by the previous owner in 2013 in response to falling uranium prices.

The world needs more uranium to meet its net-zero goals, and new mines do not come on stream quickly. For example, it took Boss Energy nine years to bring Honeymoon back into production at commercial scale, after the deposit was discovered over half a century ago in 1972. This tightening of supply is creating an opportunity for Australia’s only global multi-mine uranium producer with mining operations in Australia and the USA.

Strategic physical inventory of 1.25M pounds of Uranium

Boss currently maintains 1.25 million pounds in strategic uranium inventory which is stored at a conversion facility in North America. The inventory was purchased in March 2021 on the spot market at an average price of US$30.15 per pound. This compares to today’s spot price of US$63 per pound. The uranium purchase was funded by a A$60 million share placement.

The strategic uranium inventory reduces contract delivery risk and provides flexibility in offtake negotiations with customers, as well as providing leverage to any future appreciation of uranium prices on the back of tight supply fundamentals. The inventory can also be used as collateral to support future funding requirements.

Exploration and production upside potential

The exploration potential of the Honeymoon mine is significant as Boss undertakes technical and economic studies on developing satellite deposits as an additional production source. Boss also owns exploration tenements 130 kilometres south of Honeymoon and has recently been awarded three highly prospective exploration tenements on the Eyre Peninsula in South Australia. Boss has a total uranium exploration tenement package of 6000 square kilometres in South Australia.

The Honeymoon project is on track to produce 850,000 pounds of yellowcake in FY25 to be packaged in steel drums before refining and processing to prepare it for use as fuel in nuclear reactors. Longer-term Boss plans to ramp up this production volume to 2.45 million pounds per annum and this target is currently proceeding to plan.

Boss Energy owns a 30 percent stake in the high-grade Alta Mesa mine in South Texas, USA, for which it paid US$60 million cash. The mine commenced production in June 2024 and has exploration potential covering about 800 square kilometres in a uranium-friendly jurisdiction. The Alta Mesa mine has a 1.5-million-pound plant operating capacity, with a simple path to expand this capacity using existing licences to 2 million pounds of production per annum.

Both the Honeymoon and Alta Mesa mines use the highly economical in-situ uranium extraction process in the mine operations. This extraction process is about 65 percent of the cost of conventional mining and requires average capital expenditure of less than 15 percent of conventional mines. This is because unlike conventional mining, there is no temporary ground disturbance, no ground excavations, no tailings, minimal dust and less water consumption. Instead, uranium extraction columns are used to pump the ore to the surface after injecting the ore body with barren leach liquor. The high-grade liquor solution is then pumped to the surface and the uranium extracted using ion exchange, before it is dried to produce yellow cake.

Looking ahead

At 30 June 2024 Boss Energy had no debt and cash on hand of $67 million. The Group also owns listed investments valued at $35 million and the uranium inventory of $171 million. This ensures that the ramp-up of the Group’s Honeymoon uranium project in South Australia and the Alta Mesa project in Texas can be readily funded.

The demand for reliable clean energy is creating new markets for nuclear generation as a source of supply for energy-intensive AI data centres, while the revival of shut down nuclear reactors and life extensions for existing reactors is also boosting long-term uranium demand. This demand does not include the new builds occurring throughout the world. Furthermore, the Trump administration has in recent days promised deregulation and streamlined approval processes for the development of nuclear plants in the US.

Supply to 2030 is tight across the cycle, and if Russia cuts supply to the US in response to US sanctions and import tariffs, immediate upward pressure on the uranium price will occur.

Boss Energy considers the market is at an early stage of the uranium contracting cycle and has strategically remained under-contracted in anticipation of higher uranium prices. Boss has the balance sheet flexibility to enter contracts when it wants to and remains in constant discussions with major global utilities. Boss Energy is seen as a strong counterparty given its strategic inventory with no jurisdiction risk. This implies that any uranium price upside will be captured by Boss Energy through future contracts layered into a rising market.

Boss Energy appears to have significant economic value upside if term prices for uranium rise in the period ahead.