Commodities, Finance, News, Uranium

Inside Boss Energy’s uranium offtake strategy

Boss uranium

Boss Energy is poised to make a final investment decision (FID) regarding a restart of its Honeymoon uranium project any day now, after which it will need to advance offtake agreements to support the operation.

Boss has been calculated about its debt strategy up until now, ensuring it doesn’t accumulate debt too early in the process. As a result, the company hasn’t rushed to enter into any offtake partnerships that restrict it financially.

“We have not attained any debt as it requires fixing the uranium price through long-term contracts,” Boss managing director Duncan Craib said when the company launched its recent $125 million equity raise.

“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 uranium price has cooled from its April highs, where the commodity neared $US65 per pound (lb); however, its price on May 24 ($US46.7/lb) was still up 50 per cent on the past year.

When the time comes to engage in offtake negotiations, Boss has an open policy, which means it could sell all around the world. But there are some key jurisdictions on which the company is focused.

“Our target market would likely be Europe and the US, but not to, say, South Korea and Japan,” Craib told Australian Resources & Investment. “We can trade with whomever; we’ve got experience on entering into offtakes with a multitude of countries, but it would appear most of our discussions are currently with North America and Europe.

“The type of contracting that we would look to enter into would be market-related offtake agreements where we have a floor and a ceiling, the floor would protect you against the downside. The contracts will be of different pricing mechanisms and different durations.

“As the market begins to pick up as it’s doing, we would be looking to layer in those market-related contracts. It’s very difficult to cherry pick the top of the market but these market-related contracts give you the ability to grow with the market.

“That’s the way the industry is heading – away from fixed-price contracts towards market-related contracts.”

Boss was trading at $2.12 at the time of writing (May 26) with a market capitalisation of $720 million.

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