Boss Resources: Valuation Update as Production Could Reach 4Mlbs pa
The Honeymoon project is located in South Australia and is one of only 4 uranium projects in Australia that is fully permitted for uranium mining. $170m has already been spent on infrastructure at the project, which includes a 0.88lb pa solvent extraction processing facility, 75km powerline to the power mains, camp and administration office, vehicles, spares and other significant infrastructure.
The information provided here should not be the only trigger for your investment decision. We strongly recommend you seek professional financial advice whenever making financial investment decisions.
Analyst Comment: Boss has continued to move forward with the development of their Honeymoon project as they announced positive preliminary results from their Option Study as well grown the resource to 57.8Mlbs (654 ppm U3O8). Both announcements confirm our belief that when production recommences, it will be at a significantly higher rate than the current plants 0.88Mlbs pa capacity.
Based on the current resource as well as the exploration potential (100Mlbs exploration target), we have estimated that production will be ramped up to 4Mlbs pa over the five years of production. A staged ramp up allows for cash flow generated from the project to pay for the capital expansion when mining commences at Goulds Dam as well as increase the plants throughput from 2Mlbs pa to 4Mlbs pa.
We also estimated that when production reaches the 4Mlb pa mark, C1 operating costs will fall to around US$15 / lb (TSI estimate), which would put the Honeymoon project in the lowest cost quartile for uranium operations globally.
Valuation: We have increased our valuation for Boss to $0.27 / share (share price $0.06 / share).The key driver for the change to our valuation was increasing our production rate to 4Mlbs pa (previous 2Mlbs pa). Further information regarding the key assumptions and our scenario analysis can be found in our valuation analysis video.
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