Proactive Investors Australia report that Boss Resources Limited has been transformed into an advanced uranium developer through the astute acquisition of the Honeymoon Uranium mine in South Australia (BOE 80%). The mine, which is currently on care and maintenance, has existing infrastructure and a uranium processing facility which is in excellent condition. As a result of the purchase, BOE has all the necessary Australian permits to mine, process and export uranium, which is something that only three other mining companies currently hold. Furthermore, the project uses the In-Situ Leach (ISL) extraction technique which is renowned worldwide for its low operating cost base. Overall, PIA sees the potential to restart uranium production in the medium term, which will likely be done at an increased scale in order to be sustainable in the current uranium price environment, although this is expected to rise over this year. We have applied the ASX-listed uranium producer peer average of $1.25/lb to the Honeymoon projects current Mineral Resource of 27.5 million pounds U3O8 (80% owned) and taken half of the exploration target of 42 to 100 million pounds U3O8 (80%), to determine their valuation range of $0.10 to $0.13 per share. However, the PIA valuations are calculated by using expected pounds in the ground basis, which is an inappropriate basis to establish the real value. BOE is planning to commence an aggressive exploration program in the June 2016 which should significantly expand the current resource. A significantly expanded resource base should be suitably rewarded by the market and allow for a feasibility study on the mine restart. PIA concludes that if BOE can double the existing resource, this would allow an increased scale for the mine from the current 880,000 pounds per year to 2 to 5 million pounds per year, which would allow for a sustainable mining operation at current uranium prices, and an even better at increasing uranium prices in the future.
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