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Honeymoon mine to resume uranium production

Business

Uranium production will resume next year at the Honeymoon mine in South Australia following a decision to push ahead with a $113 million reboot of the project.

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Boss Energy announced this morning it had made a final investment decision on the project, which was mothballed in 2013 and is located about 80 kilometres north-west of Broken Hill, 30 kilometres inside the South Australian border.

It says the announcement follows a briefing update on the project with Mining and Energy Minister Tom Koutantonis on Friday.

Boss will now accelerate construction with production expected to begin towards the end of 2023 ramping up to a rate of 2.45 million pounds a year.

The forecast $113 million capital cost of the development is fully-funded following a $125 million capital raise in March.

The company also holds a strategic 1.25 million pound uranium stockpile valued at about $82 million (US$59.38 million).

Boss managing director Duncan Craib will present at the World Nuclear Fuel Market conference next week, which is attended by many of the world’s leading uranium customers and power utilities.

He said the final investment decision puts Boss firmly on track to be Australia’s next uranium producer.

“We are fully funded with no debt, fully-permitted and extensive infrastructure in place,” Craib said.

“Our front-end engineering studies are completed and we are ready to order key equipment and start construction immediately.

“This puts us in an extremely strong negotiating position with utilities and ensures we can capitalise on the looming uranium supply deficit.”

Perth-based Boss Energy, previously known as Boss Resources, bought the Honeymoon mine and associated deposit from Uranium One in 2015 for $11.5 million.

It had operated from 2011 to 2013, exporting just 312 tonnes of uranium before closing due to high production costs and low prices.

Honeymoon is permitted to export about 1500 tonnes – 3.3 million pounds equivalent – of uranium a year.

Boss announced in 2020 it had developed technology to lower operating costs at Honeymoon and in 2021 reported that the project required $110 million (US$80 million) in capital expenditure to resume, making it one of the lowest funding requirements of any pre-production uranium project worldwide.

The price of uranium has been steadily rising in the past two years from US$23.50 per pound in February 2020 to almost US$30 per pound in February 2021 and US$48.45 yesterday.

Boss predicts its life-of-mine average all-in sustaining costs are about US$25.60/lb.

Honeymoon will become Australia’s fourth operational uranium mine and the third in SA when production resumes.

BHP’s Olympic Dam mine near Roxby Downs in the north of South Australia is the largest uranium mine in Australia.

It produced about 3610 tonnes of uranium in 2020 – about half of the national production – followed by 2130 tonnes at the Beverley-Four Mile mine near Honeymoon and 1570 tonnes at the Ranger mine in the Northern Territory.

Boss Energy’s share price was down slightly to $2.31 following this morning’s announcement.

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