Top global commodity broker Sprott Equity names its pick of ASX uranium stocks
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With the uranium price tipped to run hard this year, one of the most closely-followed global commodity brokers has turned its attention to the ASX uranium sector.
In its first research note on an ASX uranium company for four years, Sprott Equity Research recommends investors buy Boss Energy (ASX: BOE).
Naming Boss as its pick of the ASX uranium sector, Sprott says the company’s Honeymoon project in South Australia is the most advanced of its peer group and ready to go.
“We believe Boss has done the most to ensure operational readiness and is our pick of the group,” Sprott says in its research report to clients.
“Even better, Boss is trading at a discounted enterprise value-to-pound multiple to the peer group and therefore represents a greater upside in our view.”
“The quality and volume of Boss’s study work sets the company apart in our view. Like other insitu recovery (ISR) companies, typically with US-based projects, we think Boss’s jurisdiction in South Australia is a significant advantage, and compared to US-based ISRs we believe Boss has a competitive advantage with a larger resource base, larger landholding, low-pH leach, and less demanding groundwater restoration requirements.”
Sprott notes that Boss is nearing the restart of production at Honeymoon pending project finance and incentive pricing.
It says Honeymoon produced from 2011-2013 and has $170m of infrastructure in place including wellfields, a processing plant and site civils including a camp and airstrip.
The resource includes 71.6Mlbs at 620ppm with a 2,595sqkm exploration package. The 2020 feasibility study forecasted annual production of 2Mlbs at an all-in sustaining cost of A$40.20/lb with A$93m of initial restart capex.
“Boss has the largest resource of the western-listed ISR restarts at 71.6Mlbs, with high grades at 620ppm,” Sprott says in its report. “This results in the lowest AISC of the ISR development peer group at US$27.10/lb.
“We believe Boss is best placed to become a globally relevant producer through the cycle. It already has a precedent.
“Fully permitted with a 2020 recent feasibility study (though all ISR restarts market themselves based on being permitted and able to respond quickly to a price recovery), Boss has backed its stated intentions of a restart with action, and is one of only three restart projects to complete an FS in the last three years, along with Paladin and Peninsula.”
Sprott says Boss has also increased the resource by 330%, completed field trails and pilot testing over this period.
“Despite trading at significantly higher multiples, none of US-listed ISR names have completed an economic study since 2016. Key operating improvements identified and tested at pilot scale Boss has identified key improvements including wellfield practices, a strong base anion resin, and NIMCIX columns for uranium recovery.
“We expect these changes to improve uranium recovery from the well field, reduce dilution, and improve uranium recovery and plant performance.”
Sprott concludes by describing Boss as a “natural first mover”.
“Boss is currently trading at just 58% of the peer group weighted average EV/in-situ multiple,” its report says.
“Boss has significant upside sensitivity to the uranium price, with the strongest inflection point between US$40-50/lb.
“Boss is our top pick for the more macro-driven, price-leveraged developers. We think in the early phases of the price breakout, projects in Tier-I jurisdictions will attract capital first and Boss’s production readiness, scalable project and attractive valuation make it a natural first mover in our view.”
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.