Boss Energy has taken another step towards restarting the mothballed Honeymoon uranium project in South Australia after launching a $125-million equity raise.
A $120-million placement will comprise two tranches, with the first involving the issue of approximately 42.8 million ordinary shares at an issue price of $2.15 per share. Boss will aim to raise $92.1 million through this first tranche.
If approved by shareholders at a general meeting in April, the second tranche will involve a further 13 million shares issued at the same price as the first tranche, with Boss aiming to raise $27.9 million.
The $2.15 issue price represents a 11.2 per cent discount to Boss’ last closing share price of $2.42 on March 15.
Boss will aim to raise the remaining $5 million through a share purchase plan (SPP), enabling all Boss shareholders with registered addresses in Australia and New Zealand the opportunity to apply for new shares at the same $2.15 placement price.
As part of the SPP, eligible shareholders will be able to apply for up to $20,000 worth of new shares.
Boss managing director Duncan Craib explained the reasoning behind the raise, highlighting the company’s sturdy financial position.
“The capital raising will ensure Boss is funded through to the start of production at Honeymoon,” he said.
“We have deliberately structured our funding to maintain a highly conservative and robust balance sheet with no debt, $135 million of net cash and an additional $100 million contingency from our existing strategic uranium inventory.”
Craib said it wouldn’t be wise for Boss to accumulate debt at this stage.
“We have not attained any debt as it requires fixing the uranium price through long-term contracts,” he said.
“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.”
The equity raise will enable Boss to achieve various milestones such as complete its front-end engineering design (FEED) study (expected in March 2022), fund $113 million of Honeymoon development costs, restart development of Honeymoon post-FEED, and continue negotiations with potential offtake partners.