Aussie uranium sector moves towards growth
At long last, green shoots can be seen across the Australian uranium industry, but they risk wilting unless the price of the nuclear fuel moves higher (reports MiningNews).
4th June 2021
Resources Rising Stars
High hopes for a uranium revival in a country that ought to be one of the world's leading suppliers of the material given its rich geological endowment have seen a mini boom in the share prices of explorers with uranium interests.
But all of the players need a price above the current spot uranium market which remains bogged at around US$31 a pound despite predictions that uranium will play a key role in energy transition and the decarbonisation of the environment.
Long-term deals offer better terms but the problem for small players in a big-company business is that customers demand proof of future supply, the first of a series of hurdles that a potential miner of Australian uranium must clear.
Boss Energy, one of the potential leaders of the next generation of uranium miners, has taken an important step in demonstrating its capacity to satisfy the terms of long-term contracts through the acquisition of 1.25 million pounds of stockpiled uranium.
Companies in other countries, especially Canada, have made similar moves which have been widely interpreted as speculative position taking ahead of a sustained rise in the uranium price.
But in the case of Boss, which plans to redevelop the historic Honeymoon mine in South Australia, it's a case of demonstrating uranium reserves to support long-term sales deals at a price higher than the spot market while production from the mine is restored.
Unlike most of its Australian rivals, Boss has all required government permits to restart production at Honeymoon, an in-situ leach extraction business that last operated over a two-year campaign, which ended in 2013.
The next step for Boss is to finalise an enhanced feasibility study which should lead to the signing of sales agreements and a clear pathway for the re-start of production at a rate of 2.45Mlb per annum.
The challenge for Boss is that while it has an attractive average life-of-mine all-in cost of $32.30/lb, management assumes a base-case uranium price of $50/lb over the life of the mine which is why it needs long-term sales contracts and a stockpile in hand to satisfy contracted buyers.
Boss has been one of the best supported of the next generation of Australian uranium miners successfully raising A$80 million in fresh capital over the past year to fund both work at Honeymoon and to build its "comfort" stockpile ahead of signing long-term contracts.
Over the past six months, Boss's share price has effectively tripled from 6c to a 12-month high of 21c in early May before easing to 17c, a price which values the company at $380 million.
While Boss is seen as the most likely first mover in the rebirth of Australian uranium, a sector dominated today by BHP at its Olympic Dam copper project (with uranium as a by-product), there is a group of U-hopefuls emerging.
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