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Honeymoon Mine restarts

Wednesday, 22nd January, 2020

The Honeymoon Mine across the border in South Australia. PICTURE: Supplied The Honeymoon Mine across the border in South Australia. PICTURE: Supplied

By Callum Marshall

A positive feasibility study for Boss Resources’ Honeymoon mine has boosted confidence that uranium production could restart at the site within 12 months.

The mine is in South Australia, 80 kilometres northwest of Broken Hill, and the company said it would look to recruit locals.

The feasibility study results and a conservative uranium price has excited Boss Resources which is fully permitted to export 3.3 million pounds of triuranium octoxide (uranium) equivalent per year over a 12-year mine life.

In an ASX announcement yesterday, Managing Director Duncan Craib said that the feasibility study base case results confirmed Boss Resources would be Australia’s next uranium producer. 

“Reflecting a conservative base case uranium price of $50 per pound of triuranium oxtoxide over life of mine, the study demonstrates Honeymoon’s advanced development can rapidly respond to a market rally, given the low capital barrier,” said Mr Craib.

“It’s average all-in-cost of US$32.3 per pound of triuranium oxtoxide over life of mine positions Honeymoon as one of the lowest operating uranium production costs world-wide.”

Speaking to the BDT yesterday, Mr Craib said they had spent the last three years “de-risking” the asset and getting to this point.

“What this represents is about circa $20m worth of expenditure, technically advancing the asset,” he said.

“The feasibility study is really a representation of us saying to the industry that we are now ready to produce. 

“We’ve technically de-risked the asset and we’re in a position that we can be one of the lowest cost producers worldwide.

“It’s been sort of three years of work in the process.”

With the current US spot price for uranium at $25 per pound, Mr Craib said that the company was waiting for prices to rise to over $30, at which point they’ll start locking in contracts and continuing with further production.

“When the spot price goes over $30 you’d expect a premium of 25 per cent,” he said.

“When that happens you’re locking into offtake agreements in the 40s and that’s enough for us to start.

“But bear in mind we don’t want to destroy the resource at these low prices. 

“While you could be the first bull out of the gate where you take that lower contract, the industry itself is saying that prices of around US $60 per pound are needed to incentivise new production.

“I thought the price would be in the 30s by now. I got that wrong but what we have proved is that we’ve got a viable company that’s ready to go.

“Our focus will be on recruiting local people, particularly South Australia, Broken Hill etc.”

He said there was “absolutely” the potential for Broken Hill workers to be hired once the company started signing contracts and getting income coming in to get the project started.

“What we’re focused on now is getting drill-ready targets so when the price does pick up we can immediately hit those and move forward,” said Mr Craib.

“The way we’re doing that is through geo-physical passive seismic and high reflective surveying. And that’s all done by local people and technical help.

“When the price picks up you then get the rigs out there and start drilling.”

Yesterday’s news marks a positive development in the 30-year history of the Honeymoon mine, with Boss Resources benefitting from the work put into the site by previous owners Uranium One.

“It goes back 30 years from Rio Tinto to Southern Cross and then Uranium One,” said Mr Craib. 

“It’s a deposit that’s been known. Exploration’s continued over the years.

“Uranium One, in the height of the boom recently in 2011, made the decision to build an actual processing mine or production plant but from then they ran into economic hardship as well as rising costs and low prices.

“So they put into shutdown mode in 2013.

“Then we acquired the asset. In December 2015 it was finalised. Since then we’ve added technical know-how and industry experience and lowered the average price now to make it a viable project in the current times.”

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