Boss Energy poised to benefit from early stages of the emerging uranium bull market

About Boss Energy Limited

Boss Energy Limited (Boss Energy, the company, ASX: BOE) is Australia’s next uranium company as it focuses on the re-start of its one hundred percent owned Honeymoon Uranium Project in South Australia, 80 kilometres northwest of Broken Hill. The company has been listed on the ASX since July 2007 and has its head office in Subiaco, Western Australia.

Honeymoon Uranium Project

This historical mine was Australia’s second in-situ recovery uranium mine, commencing production in 2011 under previous owner, Uranium One. Operations at Honeymoon were suspended in November 2013 in response to falling uranium prices, with the Project subsequently acquired by Boss Energy in 2015. Boss is now in the final stages of re-starting mining operations, by leveraging the $170 million of established high-quality infrastructure already on-site. The first drum of uranium production from the Honeymoon Uranium Project is targeted for February 2024.

Alta Mesa Joint Venture with enCore Energy

Boss Energy has formed an asset Joint Venture and strategic relationship with enCore Energy, which holds a portfolio of uranium assets across the US with expertise in all aspects of In situ Recovery (ISR) operations used to obtain uranium from underground.  Under the JV arrangements, Boss Energy has purchased a 30 percent interest in Alta Mesa for US$60 million cash. Alta Mesa is a high-grade uranium mine with significant Mineral Resource.

Uranium Price

The price of uranium is moving higher as nuclear energy becomes an increasingly popular option in the context of ‘net zero’ and as a considerable amount of supply sits in geopolitically sensitive areas like Russia. The average price of uranium in 2022 was US$40.77 per pound, rising to an average price per pound in November 2023 of US$62.29 with a high of US$85 per pound in December 2023. This follows a peak in June 2007 at US$136.22 per pound. The price reached above US$92 per pound in January 2024.

Nuclear as a clean-energy source

Nuclear energy is a zero-emission clean energy source that is  generated through fission which is the process of splitting uranium atoms to produce clean energy  The heat released from fission is used to create steam that spins a turbine to generate electricity without the harmful by-products emitted by fossil fuels.

Nuclear energy is also less harmful to the environment than wind turbine and solar power energy sources. According to the US Nuclear Energy Institute (NEI), a typical 1000-megawatt nuclear facility in the US needs less than 2 square kilometres to operate. The NEI says that wind farms require 360 more times land area to produce the same amount of electricity and solar photovoltaic plants require 75 times more space.

Nuclear fuel is extremely dense which means that just a tiny volume of nuclear fuel can provide the same amount of energy as a chemical fuel. Nuclear fuel density is about one millionth the density of a chemical fuel. For example, a cylindrical fuel pellet about 1 centimetre round by 1 centimetre in length can produce as much energy as a tonne of coal. The difference lies in the fact that much greater energy levels are created in nuclear reactions than are created in chemical reactions.

For example, a coal plant burns 30,000 tonnes of coal per day to produce one gigawatt of electricity, while a nuclear reactor may burn one tonne of 3 – 5 percent enriched uranium in a year of operation, to produce the same amount of energy on a daily basis. This means that the ‘waste’ from nuclear power plants has an absolutely tiny volume and mass, compared to the waste volume from coal plants. In 60 years of running 100 one gigawatt nuclear power plants in the US, they have in total generated about 70,000 – 80,000 tones of waste. This amount of waste would easily fit in a football field and would not be piled more than a few metres high. Coal plants on the other hand put their waste directly into the atmosphere.

US National Energy Security strategy

The US Energy Department has announced a US$500 million funding package to assist US uranium  companies to boost production of nuclear fuel as a key element of the country’s National Energy Security strategy.  This investment comes at the same time that the Biden Administration is intensifying efforts to ramp up the country’s capacity to produce nuclear fuels after the US Congress voted to approve legislation that would prevent enriched-uranium imports from Russia, the country’s largest foreign supplier. Although it has been held up in the Senate – and would only take effect later this decade if legislated into law – the bill has given fresh impetus to a rebound in prices for raw nuclear fuel.

The Future

Uranium is certain to play a key role in the global energy mix and Boss Energy is perfectly placed to capitalise on a strengthening uranium market as it completes the final steps necessary to commence production from its 100 percent owned Honeymoon Uranium Project from February 2024.

The Honeymoon Project in South Australia is in a Tier-1 uranium mining jurisdiction with established export pathways to international energy markets. South Australia is home to the BHP-owned Olympic Dam mine located 560 kilometres north of Adelaide. Olympic Dam is the largest known single deposit of uranium in the world. The Four Mile uranium mine is also located in South Australia, 550 kilometres north of Adelaide. The Honeymoon Project is South Australia’s third producing uranium mine.

Boss Energy is debt-free with $154 million of strategic uranium inventory, based on a uranium price of US$80 per pound.

Globally there are 412 operable nuclear power reactors with 60 nuclear reactors under construction, 110 nuclear reactors are on order or planned and more than 300 are at the proposal stage. If the world is to meet its ambitious decarbonisation goals, Boss Energy is certain to be a major beneficiary of the demand for nuclear energy with its export licence of 3.3 million pounds of uranium per annum.