We will see “rapid price movement” in the uranium market in 2022, says the head of the Australian uranium company best placed to enter production in the coming years.

Boss Energy (ASX:BOE) managing director Duncan Craib, whose company is aiming to redevelop the mothballed $107 million Honeymoon uranium mine in South Australia, said despite modest price activity so far this year catalysts were emerging for a price run in 2022.

The long depressed commodity is fetching US$43.75/lb on the spot market according to Numerco, down on the US$51/lb it hit last year driven by investment purchases off the spot market by the Sprott Physical Uranium Trust.

But with prices up around 40% since the start of 2021, spot and term prices are on track to rise to the US$60/lb level widely regarded as the level to incentivise new production.

“I think this year you’re going to see some rapid price movements that’ll take the market by surprise and there’s several catalysts for that,” Craib told Stockhead.

“On the positive side you’ve got Sprott listing on the New York Stock Exchange, Russia might not back down over the Ukraine if the US imposes sanctions, more unrest in Kazakhstan (the world’s biggest uranium miner), supply chain impacts on production because of Covid.

“On the negative side global stock movements may effect it or very negative would be a major accident.

“But I think we’re in for a fascinating year; I really do.”


Boss planning to expand Honeymoon life

It will take Boss’ Honeymoon just 12 months from FID to production on account of its status as a restart project.

Closed by previous owner UraniumOne in 2013, the mine is already permitted to export uranium, which means it could join BHP’s Olympic Dam and Heathgate’s Beverley mine, also in SA, as one of just three in production.

Honeymoon contains 71.6Mlb of uranium oxide (U3O8) JORC resources, 35.9Mlb of which is included in the restart plan, giving it an 11 year mine life.

New results for the Jason’s and Brooks Dam deposits out today have demonstrated the potential to extend that resource not only beyond the limited portion included in the restart study, but beyond previously reported JORC resources as well.

Hits containing uranium grades of up to 1,727ppm at Brooks Dam and 1,715ppm at Jason’s South from its “Accelerated Discovery Initiative” exploration drilling have unearthed grades that compare favourably to other deposits in Australia.

Craib says it gives confidence the broader Honeymoon area will contain resources to see Boss through “a number of uranium cycles”.

“We have further exploration upside, so the nice thing is it’s going to see Honeymoon being able to produce through a number of uranium cycles going forward so it’s very pleasing,” he said.


Boss share price today:



Utilities starting to come to the table

Low prices for more than a decade since the Fukushima reactor incident in 2011 in Japan have led to a flight of supply from the market.

Reactors will soon be on the search for new product, with the time gap between offtake deals and the start of delivery generally taking around 18 months.

Craib said more contracting activity should be seen this year, with utilities having one eye to a pending supply shortfall in 2024.

“It’s been such a buyer’s market for so long … the noticeable change is that utilities are becoming a bit more involved and I wouldn’t say concerned but they are taking a far greater interest in the uranium market,” Craib said.

“Most of the low hanging fruit has been taken now, most of the cheaper material that’s been around.”

Craib said it is “not definite but quite certainly plausible” that Boss could have Honeymoon ready to go by 2024.

“Utilities will need to contract in advance of that period, often the date of signing until delivery is about 18 months on average, so utilities never want to be caught short,” he said.

“I know enCORE Energy (in America) have announced in the last three or four months two offtake agreements and they’re a development company.

“So it’s a good signal that utilities are now not just contracting with existing producers.

“They know new mines are needed and they want to diversify that supply risk and not have all their eggs in one basket.

“So they are looking further afield and that’s where Australia can really benefit from this.”


What happened on the market today?

Good question.

Top tier iron ore and lithium stocks were in favour, driving the Materials Index containing the large resources players 1.96% higher.

BHP (ASX:BHP), FMG (ASX:FMG) and MinRes (ASX:MIN) were all big movers after WA Government plans to expand their port allocations at Port Hedland were revealed yesterday.

Rio Tinto (ASX:RIO) was also well in the green despite investors digesting a report released by the company yesterday afternoon showing sexual harassment, racism and bullying was rife within its mining and corporate workforces.

It also pledged its support to rehabilitate the Ranger uranium mine in the Northern Territory with its subsidiary Energy Resources of Australia (ASX:ERA) after ERA revealed a cost blowout from $973 million to $1.6-2.2 billion.

ERA will miss the January 2026 deadline previously outlined, saying it will complete works to restore Ranger to the same environmental standard as the adjacent Kakadu national park between December 2027 and December 2028.