The Boss Energy Ltd (ASX: BOE) share price has been placed on ice today.
Before market open, the uranium producer requested its shares be halted pending a capital raising announcement.
Yesterday's closing price for Boss Energy shares stood at $2.42 apiece.
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What's the details in Boss Energy's update?
The Boss Energy share price remained frozen today despite the company releasing the details regarding its capital raise.
According to its morning release, Boss Energy launched a $125 million equity raise to fund the development of its Honeymoon Uranium Project in South Australia.
The capital raising comprises a two-tranche share placement to raise up to $120 million (before costs) and a share purchase plan (SPP) to be offered to eligible shareholders to raise up to an additional $5 million.
Both the placement and SPP are priced at $2.15 a share, which represents an 11.2% discount off the last closing price and a 17% discount off the 5-day volume-weighted average price.
The proceeds of the capital raise will be used to progress a number of strategic initiatives that include the following:
- Complete front end engineering design (FEED) study
- Fund $113 million development costs (including contingency)
- Secure long-lead time items to further de-risk development
- Restart development – post FEED and subject to COVID-19 logistic and sourcing issues
- Continue engagement with utilities for long-term contracts
- Use of equity to fund development de-risks project and retains maximum financial flexibility through commissioning and for future growth initiatives
- Continue exploration focus – substantial scope to extend life of mine (LOM) and/or increase production profile
A SPP booklet will be dispatched to eligible Boss Energy shareholders on 25 March, along with the offer opening up.
The issue of the new shares under the SPP will occur on 13 April 2022.
Management commentary
Boss Energy managing director, Duncan Craib commented:
The capital raising will ensure Boss is funded through to the start of production at Honeymoon.
We have deliberately structured our funding to maintain a highly conservative and robust balance sheet with no debt, $135m of net cash and an additional $100m contingency from our existing strategic uranium inventory.
We have not attained any debt as it requires fixing the uranium price through long term contracts. Boss anticipates that committing to long-term contracts in the current rising uranium price environment would adversely impact the long-term upside potential of Boss and we intend to wait for further increases in contract prices before making any offtake commitments.
With the uranium market's continuing recovery, Boss to be funded (post equity raising) and Honeymoon having a unique short timeframe to production with all permits in place, Boss will be perfectly positioned to become the uranium producer of choice for investors and customers alike.
Boss Energy share price snapshot
With the uranium spot price rising to unprecedented levels, the Boss Energy share price has accelerated by 90% in the past year.
The company's shares rocketed to an all-time high of $3.08 in November, before retracing to today's level of $2.42 per share.
Boss Energy presides a market capitalisation of roughly $690.86 million with approximately 285.48 million shares on its registry.
