Boss Energy share price slides 5% despite project milestone

The broader sector containing Boss and its peers is treading lower in Wednesday’s trade.

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Key points

  • Boss Energy shares are down 5.35% to $2.30
  • The board approved the final investment decision for the company's flagship Honeymoon Uranium Project
  • With works commencing immediately, first production of uranium is expected in the quarter ending December 2023

The Boss Energy Ltd (ASX: BOE) share price is having a woeful day on the ASX despite the company’s latest positive announcement.

At the time of writing, the uranium producer’s shares are swapping hands at $2.30, down 5.35%.

Boss Energy share price falls on Honeymoon decision

The Boss Energy share price is falling today despite the board’s final investment decision (FID) regarding the Honeymoon Uranium Project.

This comes as the broader sector containing Boss and its peers is treading lower in Wednesday’s trade.

Shares in fellow miners Paladin Energy Ltd (ASX: PDN) and Deep Yellow Limited (ASX: DYL) are down 9.12% and 4.64%, respectively.

According to the Boss Energy release, its board of directors approved the FID to develop Honeymoon this year.

The company will now accelerate construction, ensuring Honeymoon remains on track for first production in the quarter ending December 2023.

This will ramp up to a steady-state rate of 2.45Mlb of triuranium octoxide (U3O8), a compound of uranium, per year.

Boss Energy completed the pivotal front-end engineering design (FEED) study during the previous quarter.

It showed that Honeymoon will be an economically robust project with an internal rate of return (IRR) of 47% at a US$60/lb of U308.

The all-in sustaining cost (AISC) is forecast to be around US$25.60/lb over the life of the mine.

In March, Boss Energy secured $125 million through a capital raise to fund the development of its Honeymoon project. This includes $113 million of estimated capital development costs for re-starting Honeymoon.

What did management say?

Boss Energy managing director Duncan Craib commented on the company’s progress:

This 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. 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.

In parallel with the above achievements, the uranium price has continued to hold steady. As a result, the value of Boss Energy’s 1.25 million pound stockpile of U308 is $59.38 million.

The combination of the company’s successful raising and uranium stockpile means it’s fully funded through to production and cash flow at Honeymoon.

The Boss Energy share price is up around 2% for the first six months of this year.

Motley Fool contributor Aaron Teboneras has positions in Paladin Energy Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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