Investors are scrambling to secure exposure to uranium amid growing evidence that the market is tightening rapidly, setting the scene for significant price rises.

And now a new report from influential North American broker Sprott has named Boss Energy (ASX:BOE) as the “premier next-in-production uranium developer”.

Boss increased its exposure to the uranium market substantially last week when it raised $60 million to buy a large uranium stockpile.

As well as enabling the company to capitalise instantly on rises in the price of uranium, the strategy also delivers Boss a range of options for funding the equity component of its Honeymoon project in South Australia.

Boss has the choice of selling some or all of the stockpile to fund Honeymoon or simply sitting on it as a means of increasing exposure to the uranium price.

But the stockpile acquisition also brings other key strategic benefits. These include strengthening its hand in offtake negotiations because the company can demonstrate a guaranteed ability to meet contractual sales volumes from day one, eliminating any concerns about risks associated with production ramp up.

This will help Boss secure more favourable offtake and project funding terms than may otherwise be the case.

Sprott says the purchase further enhances Boss’ case as “the most advanced and de-risked project to utilities and lenders and defends its position relative to other developers”.

“The 1.25Mlb U3O8 purchase covers 62.5% of annual steady state production, which gives Boss greater flexibility during production ramp up and strengthens the company’s position in negotiations with utilities.

“What has not changed is that we believe Boss’s technical work at Honeymoon, combined with its competitive cost position makes Boss our top pick of potential near term producers.”

Sprott expects the enhanced feasibility study, expected later this quarter, to confirm similar economics to the 2020 feasibility study, with all-in sustaining costs of ~US$27/lb.

The broker says it likes Boss for three key reasons:

  • Cost advantages versus other uranium developers including scale, low-pH leach, temperate climate
  • Superior operational readiness with permits in place and a 2020 feasibility study
  • 2595sqkm land package with significant exploration upside

It also cites four major upcoming share price catalysts:

  • 1H 2021 (fiscal 2H21): Enhanced FS
  • 1H22 (fiscal 2H22): SCPe construction start (price dependent)
  • 2H23 (fiscal 1H23): SCPe first production
  • FY28 (year 5): SCPe expansion to 3.3Mlbs per year run rate

“Boss’ purchase of 1.25Mlbs of uranium enables the operational team to focus on optimizing solute chemistry and uranium tenor for ideal long-term performance with less pressure on the short-term delivery schedule,” Sprott says.

“This should give Boss additional strength in negotiations with utilities and has the secondary benefit of tightening the spot market further.

“We believe the recent physical purchases by uranium developers, leveraging increased investor interest to purchase on the spot market, is a uranium market catalyst in its own right that we expect to significantly bring forward contracting by the utilities.

“In this market we think Boss Energy has set itself up as the premier next-in-production uranium developer.”

 

This article was developed in collaboration with Boss Energy, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

Read MoreUranium

Featured Companies

You might be interested in