Monsters of Rock: Uranium miner tanks after managing director sells 70pc of his shares for $21m

Boss Energy (ASX:BOE) managing director/ CEO, chairman and director sell a massive portion of their respective shareholdings on market
MD Duncan Craib makes over $21m (pre-tax, etc) selling over 70pc of his shares
BOE’s Honeymoon project is currently ramping up production to ~2.45 million pounds (Mlbs) of U3O8 per annum

A small 0.08% recovery for Materials (ASX:XMJ) today, which is still down +2% in the past week.

Iron ore monsters BHP (ASX:BHP), Rio Tinto (ASX:RIO) and FMG (ASX:FMG) were down marginally “as traders liquidated long positions to cash-in profits on bets of faltering demand entering seasonally slack steel demand season in China”, according to CommSec.

Some of the biggest winners were in gold after the futures price climbed to $US2,352.50/oz “as investors assessed diminishing bets of US interest rate cuts ahead of a key US inflation report due later in the week”.

Today’s Best Miners 🏆

Nickel Industries (ASX:NIC) (nickel) +3.2%

Yancoal Australia (ASX:YAL) (coal) +1.5%

Resolute Mining (ASX:RSG) (gold) +1.9%

Today’s Worst Miners 💩

Boss Energy (ASX:BOE) (uranium) -11%

Energy Resources of Australia (ASX:ERA) (uranium) -6.12%

Silver Lake Resources (ASX:SLR) (gold) -3.8%

Boss management sell down shareholdings, market follows

Since late 2021 Australia’s newest uranium producer Boss Energy (ASX:BOE) has gained almost 1500%.

At 5:13pm yesterday arvo the company announced that managing director & CEO Duncan Craib, chairman Wyatt Buck and director Bryn Jones had sold a massive portion of their respective shareholdings on market.

Nothing inherently wrong with that, as this was the team which created that value in the first place. It doesn’t necessarily look good to other shareholders, though.

“Mr Craib joined Boss in January 2017 and was tasked, personally invested, and incentivised with taking the Honeymoon mine toward production,” Buck says.

“Having achieved that milestone event Mr Craib has sold 3.75 million securities and retains 1.43 million securities after the change.”

At $5.63 per share Craib just made over $21m selling over 70% of his shares and options.

Buck sold 291,777 shares worth ~$1.6m, and Jones sold 600,000 shares worth ~$3.4m.

Buck says Craib remains a significant long-term shareholder of the company “and has no intention to sell any further shares in the medium term” but the market didn’t like it, sending the stock down over 11%.

Holy hell. Any Boss Energy shareholders out there still bullish after the MD just rinsed 75% of his shares on market? $BOE.ax $BOE pic.twitter.com/7BNf5oSPK9

— TRAVIS RICCIARDO (@TRAVmoneyofmine) May 27, 2024

BOE’s Honeymoon project is currently ramping up production to ~2.45 million pounds (Mlbs) of U3O8 per annum. It also has a 30% stake in enCore’s Alta Mesa In-Situ Recovery project in South Texas which was expected to begin production H1 2024.

Fenix locks in high iron ore prices

Small iron ore miners are few and far between on the ASX.

The ones that do exist are high cost, meaning they make very little profit during booms and habitually stop production when prices go sub US$100/t.

Except Fenix (ASX:FEX), which continues to succeed where so many others have failed.

Much of that comes down to timing. The early 2021 opening of its high-grade Iron Ridge project near Geraldton in WA coincided with an epic price boom as China reopened from its initial run of Covid lockdowns.

That gave the fledgling producer the sugar hit most new miners only dream of.

And while the iron ore price would experience its biggest bear drop in history just 6 months later, Fenix has endured thanks to its growing high-grade asset base, ownership of its own port, rail and haulage infrastructure, and savvy hedging.

Hedging protects against falls in commodity prices by guaranteeing a certain price for future output. (It has downsides, especially if spot commodity prices are higher than hedged prices for an extended period.)

FEX is now taking advantage of the recent resurgence in iron ore prices to extend and improve its hedge book.

It has secured new iron ore hedging contracts for 210,000 tonnes of iron ore between July 2024 and December 2024 at an average price of A$170 per tonne.

That’s a nice margin at cash costs of A$77.6/t in the March quarter.

The total hedge book is now 310,000 tonnes at an average price of A$170.23 per tonne which gives the company “strong positive cashflow margin on a base level of production whilst maintaining positive exposure to spot iron ore prices”.

The $220m capped growth focused stock had a super healthy $88m in the bank at the end of the March quarter.