Boss Re­sources

Boss Re­sources is the proud owner of the Honey­moon project, one of the few Aus­tralian ura­nium projects ready to par­tic­i­pate in the early stages of a new bull mar­ket. We spoke with Boss Re­sources man­ag­ing di­rec­tor and chief ex­ec­u­tive Dun­can Craib about the

The Australian Mining Review - - CONTENTS - ELIZ­A­BETH FABRI

Q. Take us through the re-start strat­egy for Honey­moon.

In July 2018 the com­pany launched the re-start strat­egy for the Honey­moon ura­nium project in South Aus­tralia, as cat­e­gorised into three key phases;

Phase 1: The gen­er­a­tion of the fi­nal in­put data re­quired for the DFS in­clud­ing the drilling pro­gram to de­liver the mea­sured and in­di­cated re­source, an op­ti­mi­sa­tion pro­gram to de­liver fur­ther cost sav­ings and/or process im­prove­ments and a pre­lim­i­nary ex­e­cu­tion plan, up­dated cost es­ti­mate and sched­ule for the re-start of the ex­ist­ing sol­vent ex­trac­tion (“SX”) plant.

Phase 2: The sec­ond phase com­prises the DFS and per­mit­ting up­dates.

Phase 3: The third phase cov­ers the de­tailed ex­e­cu­tion plan­ning, op­er­a­tional readi­ness in­clu­sive of the SX plant recom­mis­sion­ing plan, in con­junc­tion with the ion ex­change plant de­tailed de­sign.

Phase 1 is ahead of sched­ule with the in­fill drilling cam­paign our cur­rent pri­mary fo­cus, tar­get­ing an area of re­source lo­cated on the ex­ist­ing Min­ing Li­cence within close prox­im­ity and within well-field pump­ing dis­tance to the ex­ist­ing pro­cess­ing plant in­fra­struc­ture.

No fur­ther per­mit­ting is re­quired to ex­tract re­sources within this area and ac­cord­ingly, the ini­tial well­field op­er­a­tions will be con­ducted in this area to sup­ply pro­duc­tion dur­ing the early years of op­er­a­tion.

More than 100 holes have been drilled to date with the ini­tial re­ported drill re­sults of 50 mud ro­tary drill holes re­turn­ing ex­cep­tional re­sults (as an­nounced to ASX on 2 Au­gust 2018) sur­pass­ing our ex­pec­ta­tions in both grade and thick­ness of the min­er­al­i­sa­tion. Hole BIF0044’s qual­ity drill re­sult was quite ex­cep­tional at 9.5m width at 7,407ppm pU3O8 (70,367 GT), rank­ing it as one of the best in­ter­sec­tions drilled at Honey­moon.

To put it into per­spec­tive, our cut-off grade is 250ppm and whilst we could mine at lower grades, there are nu­mer­ous cost and op­er­a­tional ben­e­fits to leach­ing higher grade ma­te­rial from con­tin­u­ous thick­nesses.

Pri­mar­ily, less ore has to be leached to ex­tract the same amount of con­tained ura­nium, which typ­i­cally re­sults in lower op­er­at­ing costs and in­creased op­er­at­ing mar­gins.

Q. When do you hope to hit the start but­ton on pro­duc­tion?

The Honey­moon mine can re­spond very quickly to chang­ing mar­ket con­di­tions and catch the up­side of the mar­ket cy­cle.

The ex­ist­ing SX plant is cur­rently on care and main­te­nance and can reach a pro­duc­tion level of around 880,000lbs per year within a nine month pe­riod and, with the ad­di­tion of the IX plant, ramp up to 2mlbs per year within 24 months.

In gen­eral, de­liv­er­ies un­der long term con­tracts com­mence around 18 months to two years after the con­tracts are signed, this would al­low Boss the ad­van­tage of sign­ing term agree­ments for sup­ply in par­al­lel with tak­ing the de­ci­sion to move for­ward with pro­duc­tion.

This is a rare ad­van­tage for a new pro­ducer as in many in­stances pro­duc­tion may start sev­eral years after the de­ci­sion to pro­duce is taken and mar­ket con­di­tions may have changed sig­nif­i­cantly.

Sus­tain­able long-term prices above US$40 - $45/lb would be a trig­ger to draw the Board’s at­ten­tion to a de­ci­sion to start pro­duc­tion.

Q. Take us through your de­ci­sion to in­cor­po­rate a $US58m ion ex­change cir­cuit into the pro­cess­ing plant?

Like Honey­moon, more than 50 per cent of the world’s ura­nium is mined by in situ leach meth­ods, also known as in situ re­cov­ery (ISR), which is seen as the most cost-ef­fec­tive and en­vi­ron­men­tally ac­cept­able method of min­ing, and other ex­pe­ri­ence sup­ports this.

Once the preg­nant leached so­lu­tion is pumped from the ISR pro­duc­tion wells to the treat­ment plant the ura­nium can with be re­cov­ered by a resin/poly­mer ion ex­change (IX) or by an liq­uid ion ex­change (sol­vent ex­trac­tion – SX) sys­tem.

The IX sys­tem how­ever is the pre­ferred pro­cess­ing op­tion, ac­count­ing for the vast ma­jor­ity of ISR op­er­a­tions due to its com­pa­ra­bly low op­er­at­ing and cap­i­tal costs.

Boss Re­sources’ com­pany-mak­ing iden­ti­fi­ca­tion of an op­ti­mal resin to sup­port IX pro­duc­tion for Honey­moon fol­lowed ex­ten­sive lab­o­ra­tory test work in 2017 with ANSTO.

To pro­vide fur­ther tech­ni­cal val­i­da­tion the com­pany con­ducted a highly suc­cess­ful Field Leach Trial in July to Novem­ber, dur­ing which the mod­i­fied leach­ing regime pro­duced sig­nif­i­cantly higher ura­nium tenors than had pre­vi­ously been achieved at Honey­moon. The IX pi­lot plant also per­formed ex­cep­tion­ally well, de­liv­er­ing the key tech­ni­cal val­i­da­tion step on re­cov­er­ing ura­nium ef­fi­ciently from real leach liquor.

The out­stand­ing Field Leach Trial re­sults jus­ti­fies the de­ci­sion to pur­sue Ion Ex­change and its sig­nif­i­cant po­ten­tial for eco­nomic up­side be­ing the most ef­fi­cient, low­est risk and low­est cost method of pro­cess­ing ura­nium.

An­other key ad­van­tage of the IX process is that it can be utilised on iso­lated ore­bod­ies where a satel­lite plant can be set up if the cen­tral process plant is too dis­tant.

Es­sen­tially a fa­cil­ity is es­tab­lished to load the ion ex­change resin/poly­mer so that it can be trucked to the cen­tral Honey­moon plant for fur­ther pro­cess­ing. Hence iso­lated ore­bod­ies can be­come vi­able, since apart from the well­field, lit­tle cap­i­tal ex­pen­di­ture is re­quired at the mine site.

Q. How close are you to se­cur­ing off­take agree­ments, have you fielded many sales en­quiries to date?

The mar­ket is still a buyer’s mar­ket though there are pos­i­tive signs of up­ward price move­ment in the spot and term mar­kets. Boss has been re­spon­sive to buy­ers’ re­quests for pro­pos­als for sup­ply and had been in in­for­mal dis­cus­sions with po­ten­tial off-tak­ers.

We have a clear price ob­jec­tive in mind and while it is higher than cur­rent mar­ket ex­pec­ta­tions we are well within the range of ex­pected near term price move­ments. We are un­able to dis­close any de­tails as any dis­cus­sion are con­fi­den­tial.

Q. If the US de­cides to in­tro­duce tar­iffs on ura­nium im­ports, how (or will) will this im­pact Honey­moon?

At this stage it is too early to know what form, if any, re­stric­tion on im­ports to the US will take. Aus­tralia has been a long-stand­ing, re­li­able and re­spon­si­ble ura­nium sup­plier to the US and in 2017, US nu­clear util­i­ties pur­chased al­most one-fifth of their re­quire­ments from Aus­tralia. The fo­cus of con­cern for the US pe­ti­tion­ers ap­pears to be on sup­ply from state-owned com­pa­nies which is not an is­sue for sup­ply from Aus­tralia. We will con­tinue to mon­i­tor th­ese de­vel­op­ments closely. The US is a very im­por­tant mar­ket for us but one shouldn’t for­get that just un­der two thirds of world de­mand is out­side the US.

Q. What is your out­look for the ura­nium mar­ket Are you con­fi­dent prices will im­prove?

Yes, we are con­fi­dent that price will im­prove and it is in­creas­ing hav­ing reached $US27/lb.

De­mand is grow­ing es­pe­cially in China, In­dia and Rus­sia, we are see­ing emerg­ing nu­clear na­tions such as Saudi Ara­bia and more re­ac­tors restart­ing in Ja­pan. Even prior to the re­cent cut­back in ura­nium pro­duc­tion in Canada, Kaza­khstan and Africa due to un­sus­tain­ably low prices, in­dus­try fore­casts showed a need for new ura­nium pro­duc­tion in the early to mid-2020s; cut­back to pro­duc­tion has brought that dead­line for­ward.

To bring ex­ist­ing pro­duc­tion back on line and en­cour­age de­vel­op­ment of new pro­duc­tion in time to meet de­mand prices will have to rise sig­nif­i­cantly sev­eral years prior to when pro­duc­tion is needed.

We are al­ready see­ing signs that the mar­ket is tight­en­ing. For many of the new mines a sus­tain­able price would be in the $US50 to 70/ lb range.

Q. Fi­nal thoughts?

Since Boss Re­sources’ ac­qui­si­tion of Honey­moon in De­cem­ber 2015, we have pro­gres­sively de-risked the project both tech­ni­cally and com­mer­cially to the point where on com­ple­tion of the re-start strat­egy, we will be ready to ex­e­cute the pro­grams of work re­quired to restart Honey­moon as­sum­ing a spec­i­fied ura­nium price has been achieved to sat­isfy the tar­geted IRR and NPV re­turn to max­imise share­holder value.

The project is fully per­mit­ted with a 3.3mlbs pa ex­port li­cence and ex­ist­ing plant an in­fra­struc­ture in­vested at over A$170m.

Honey­moon can be brought back into pro­duc­tion in a mere 12 months, and be­ing an ISR mine in com­bi­na­tion with IX pro­duc­tion, would rank as one of the low­est cost pro­duc­ers world-wide.

Fur­ther­more, there is sig­nif­i­cant ex­plo­ration up­side with a tar­get of be­tween 32Mt to 78Mt at a grade of be­tween 450ppm and 1400ppm U3O8 with a po­ten­tial tar­get en­dow­ment of be­tween 42Mlb and 100Mlb of con­tained U3O8.

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