PERTH (miningweekly.com) – Uranium hopeful Boss Energy has launched a A$125-million capital raising to fund the development of its Honeymoon uranium project, in South Australia.

The capital raising comprises a two-tranche share placement to raise up to A$120-million and a share purchase plan (SPP) to raise an additional A$5-million.

The first tranche of the share placement will consist of 42.8-million shares, priced at A$2.15 each to raise an initial A$92.1-million under the company’s existing placement capacity.

The second tranche of the placement, which will be subject to shareholder approval at a general meeting scheduled for April, will consist of a further 13-million shares, and will raise A$27.9-million.

Under the SPP, eligible shareholders will be able to subscribe for up to A$20 000 worth of new shares in the company, also at a price of A$2.15 each. The SPP is expected to open on March 25 and will close on April 7.

Boss said on Wednesday that the offer price represented an 11.2% discount to the company’s last closing price, and a 17% discount to its five-day volume weighted average share price.

“The capital raising will ensure Boss is funded through to the start of production at Honeymoon. We have deliberately structured our funding to maintain a highly conservative and robust balance sheet with no debt, A$135-million of net cash and an additional A$100-million contingency from our existing strategic uranium inventory. We have not attained any debt as it requires fixing the uranium price through long-term contracts,” said Boss MD Duncan Craib.

“Boss anticipates that committing to long-term contracts in the current rising uranium price environment would adversely impact the long term upside potential of Boss and we intend to wait for further increases in contract prices before making any offtake commitments.

“We are cognisant of the working capital issues that single asset developers before us have come across, and hence we have worked relentlessly towards de-risking Honeymoon. This includes the current advanced front-end engineering design study, compiling our best-in-class development and operational team, the purchase of our 1.25-million pound strategic inventory and now through our conservative funding structure with no debt and significant balance sheet flexibility.”

A 2020 feasibility study into the Honeymoon project estimated that it would require a capital investment of $63.2-million to restart operations, and that the project would generate more than A$492-million in pre-tax free cash flow over the 12-year mine life, while the net present value had been estimated at $163-million and the internal rate of return at 42.9%.

Stage 1 of the operation was based on the refurbishment of the existing solvent extraction plant, with significant process improvements, while Stage 2 consisted of the addition of an ion exchange circuit, to achieve yearly production of two-million pounds of uranium oxide equivalent.

“With the uranium markets continuing recovery, Boss to be funded and Honeymoon having a unique short timeframe to production with all permits in place, Boss will be perfectly positioned to become the uranium producer of choice for investors and customers alike,” Craib said.