Highlights of the study include:
- Low capital outlay with optionality for quick restart;
o Stage 1 - US$10M re-start for SX Plant - 0.88Mlbs pa;
o Stage 2 - US$58M - Ion Exchange plant - 2Mlbs pa;
o Stage 3 - US$78M - Gould's Dam expansion - 3.2Mlbs pa;
- All-In Sustaining Costs (AISC) - US$23.90 / lb (LOM);
- Direct Operating Costs (C1) - US$15.60 / lb; and
- Work to commence on a DFS.
Analyst Comment: The results of the PFS were positive as it confirmed our belief that the Honeymoon project is on track to become the next uranium producing asset in Australia.
Capital - First, the existing infrastructure reduced the initial capital costs to recommence production to just US$10m. The low capital cost, as well as the fact Honeymoon is one of only four fully permitted uranium projects in Australia, should allow for production to recommence in a shorter time-frame compare to other uranium development assets.
Stage two development costs remained largely unchanged, however stage three capital cost fell significantly compared to our previous estimation (in part due to the reduced long-term production output). We believe, stage three expansion is likely to be funded from accumulated cash reserves as well as project financing. Therefore, reducing the likelihood of future capital raising requirements once the stage two expansion is completed.
Operating Costs - Operating costs (US$23.90 / lb - LOM), were in line with previous guidance. This will see the Honeymoon project become one of the lowest cost uranium producers when production commences in the future.
Production - Stage one and two expansion production guidance remained unchanged, however the long term guidance slightly fell (current 3.2Mlbs pa vs. previous - 3.6Mlbs pa). We understand this was to re-align guidance with the current export licence agreement.
Valuation: We currently value Boss at $0.23 / share (share price $0.05). Full details of our Valuation & Investment Analysis can be accessed by clicking on the button below.
To view the video, please visit:
About The Sophisticated Investor
The Sophisticated Investor is a new equity investment tool which seeks to assist investors in becoming more informed in their investment decision making. We show and tell investors about a company in a series of short, informative videos. We possess specialist equity analyst skills and are complemented by video professionals. We conduct site visits and interview management, in a way most investors simply aren’t able to access. We promote long term value creation for investors by employing detailed financial analysis and intrinsic value calculations.
Adam Kiley trading as The Sophisticated Investor ('TSI'), (AR No. 458224), is an authorised representative of Intelligent Financial Markets Pty Ltd (AFSL No. 426359). The information contained in this communication is intended as general advice only. Your personal objectives, financial situation and needs have not been taken into consideration. Accordingly, you should consider how appropriate the advice is (or is not) to your objectives, financial situation and needs before acting on the advice. The information in this communication should not be the only trigger for your investment decision. We strongly recommend you seek professional financial advice whenever making financial investment decisions.
Conflict of interest
TSI does and seeks to do business with companies featured in its articles and videos. As a result, investors should be aware that TSI may have a conflict of interest that could affect the objectivity of some articles or videos. Investors should consider TSI articles and videos as only a single factor in making any investment decision. The publishers also wish to disclose that they may hold stock in some companies featured in their articles and videos, and that any decision you make to purchase the stock of a company TSI profiles should be made only after you have initiated your own enquiries as to the validity of any information contained in those articles and videos.
TSI will only initiate coverage of a company that passes our internal investment checklist. Once a company has passed this checklist, we will initiate coverage of that company and follow up with ongoing updates and commentary on its activities. Articles and videos produced and published by TSI are NOT Research Reports in terms of ASIC Regulatory Guide 79.
The Sophisticated Investor
Boss Resources Ltd