Boss Energy Ltd (ASX: BOE) could be producing uranium from three deposits by early in the 2030s, Macquarie says, and remains very leveraged to rising uranium prices.
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ASX uranium producer looking cheap
Macquarie has released a new research note on Boss Energy, forecasting healthy share price upside for the company.
The broker said the company had recently provided more clarity around unlocking two satellite deposits – Jason's and Gould's Dam – with one to be connected to the processing facility via a trunkline, and the other to truck-load resin in from the second.
Macquarie said the indication was that Jason's could be in production by early CY30 while Gould's Dam was looking like early CY31.
Boss Energy released a new feasibility study for the central Honeymoon uranium mine in August, which envisaged production until at least 2034 based around a new in-situ well design.
The company is expecting to produce about 13.8 million pounds of uranium over a nine-year period.
Boss Energy said regarding the new study:
New feasibility study is underpinned by an updated mineral resource estimate incorporating substantially increased drilling density, revised geological interpretations, estimation methodology, incorporated operating permeability data, and experience gained since production recommenced. This enables a materially enhanced understanding of the mineralisation grade and distribution, geology and permeability.
The study also identified opportunities to further optimise wellfield spacing, "which could reduce infrastructure requirements and improve capital efficiency, recovery and unit costs''.
Share price target increased
Macquarie increased its 12-month price target on Boss Energy shares by 11% to $2 per share following the inclusion of the Jason's and Gould's Dam projects.
The broker said that only a small fraction of Honeymoon's production was contracted, giving the company good leverage to rising uranium prices.
They said:
Boss Energy intends to remain materially under-contracted, noting 73% of inventory and forecast Honeymoon new feasibility study production is currently uncommitted. Additionally, existing inventory largely covers the contract book, largely eliminating its exposure to "deliver or pay" risk (e.g. that others in the sector have suffered from). BOE explained it intends to continue selling production on a slightly forward basis (providing flexibility over timing and preserving leverage to rising prices)
On the valuation of the company, Macquarie said:
BOE can develop 3 mineralised systems into Honeymoon, expand scale & lower unit costs (by) early 2030s – despite lower grade & more challenging resource than promised by past management. At current uranium prices this is attractive and not yet priced in.
Macquarie's $2 price target compares to $1.72 currently.
Boss Energy is valued at $668.4 million.
