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Date : 09/05/2022

Uranium stock Boss Energy Ltd (ASX: BOE) is rising after Quarterly Update

Boss Energy is an Australian uranium exploration, mining, and development company keen on becoming a significant player in the Australian and global uranium market.

Boss Energy is among few mature companies to enter the novel uranium bull market. When the world is moving toward green energy and discarding the methods of conventional electricity production, the use of Uranium can be a key asset in this process. Uranium has the great potential to unlock the way for an unlimited energy source.

Boss Energy has a signature project called the Honeymoon Project, located in South Australia. The company is focused on developing Honeymoon Project for a 3.3M lbs. annual uranium supply. The company has recently announced to raise $125 million in equity for the project’s development.

BOE stock is currently rising after the company recently provided quarterly updates. If we look at the one-year performance, BOE stock is trading at $2.47 after hitting its all-time high of $3.08. It previously closed at $2.60 and has given a return of more than 1200% to its investors in the previous 12 months.

BOE: 1H22 Performance

boss energy limited asx

Boss Energy Ltd (ASX: BOE) stock has gained significantly in the trailing twelve months. The company has recently announced a solid financial statement with a heavy investment in Uranium.

  1. Boss Energy reported a net profit of $15.90 million for the six months ending 31 December 2021. Previously, it had a $1.67 million loss in the first half of 2020.
  2. The Group’s net assets grew by $16.18 million in the first half of the year to $101.64 million. At the end of the fiscal year 2021, the firm had $85.46 million in net assets.
  3. At the end of December 2021, the Group’s working capital (current assets minus current liabilities) was $17.47 million. It was $20.41 million after the fiscal year 2021.
  4. BOE’s basic and diluted EPS in the first half of 2022 was $5.58 and $5.33, respectively.
  5. The group announced no dividends, nor did they show any intention of announcing dividends in the near future.

Reasons for the BOE stock surging

On 16 March 2022, Boss undertook a $125 million equity offering to finance the development of its Honeymoon Uranium Project in South Australia to the point of the first production. With the help of the money, they will develop the project and increase its productivity. Honeymoon Uranium Project is its top-notch project, and this investment will bring a massive change in its development.

Boss announced on 10 February 2022 that it has inked a deal with First Quantum Minerals Ltd (TSE: FM) (FQM) about the rights to five tenements inside the Honeymoon Uranium Project in South Australia for the mining of basic and precious metals. The deal will help both the companies to utilise their capabilities for the economic benefit of both companies.

Uranium Prices and demand is pushing up the BOE share price

According to the recent updates, the price of Uranium has increased. The current price of Uranium is $53.10 per pound. The current uranium price reflects a spike of 82.16% in the previous year. It recently achieved a price of around $65 per pound, which is the highest price uranium has achieved since the Fukushima disaster of 2011.

The government of the United Kingdom is keen on developing eight nuclear reactors by the end of 2030. They intend to increase their nuclear energy output to cater to the 25% energy demand of the UK by 2050. It will surely increase the Uranium market size in the UK.

The US had also intended to impose a ban on the Russian nuclear fuel import. The decision was taken after the Russian invasion of Ukraine. The ban has increased nuclear fuel demand from other companies in the US and Europe. Boss energy can benefit from the opportunity as they have a strong presence in the US.

Investment in Uranium ahead of the Crisis

The company had recently made a brilliant decision when they invested in Uranium ahead of the geopolitical situation. During the year ended 30 June 2021, the company signed two binding contracts to acquire 1.25 million pounds of U3O8 at an average price of $30.15/lb. On 30 April 2021, the company received 0.25 million pounds of U3O8, representing a $7,537,500 (A$9,938,687) gain in its uranium investment. On 30 June 2021, the company received the remaining 1 million pounds of U3O8, representing a US$30,150,000 (A$39,754,747) increase in a uranium investment. The uranium investment cost the company A$177,176.

The uranium spot price was US$42.13 per pound on 31 December 2021. The six-month return on uranium investment was $18,705,017, based on a USD/AUD exchange rate of 0.7256. The ConverDyn Facility in Metropolis, Illinois, houses all of the company’s uranium reserves.

Conclusion

The Russian invasion of Ukraine and the global demand for Uranium have immensely resulted in the surge in the global uranium market size. The company had been proactive in signing the uranium deal before this uncertain situation and has uranium reserves at a very low rate than the current ones. This will positively increase the revenues in FY22.

 

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