Honeymoon Uncertainty Clouds Boss’ Outlook

Commodities | Jul 30 2025

Boss Energy's FY26 guidance raised doubts over Honeymoon's ability to reach nameplate capacity, clouding the outlook and raising valuation concerns.

-Boss Energy’s operational update triggers share price sell-off
-Feasibility study assumptions questioned, given FY26 guidance
-Nameplate capacity concerns for Honeymoon translate into much lower valuations/price targets
-Expert study will commence shortly, but with no end date yet confirmed
 

By Mark Woodruff

Shares of uranium miner Boss Energy ((BOE)) plunged by -44% on the day of issuing its June quarter update and operational outlook for the 100%-owned Honeymoon mine in South Australia.

Striking a discordant tone given the subsequent market reaction, management was “pleased to provide” FY26 guidance for Honeymoon. Unfortunately, this missed the consensus forecast by -6% and cast doubt over production and sustaining capex due to poor continuity of mineralisation at the east end of the orebody.

The company also walked back enhanced feasibility study (EFS) production assumptions that the market had relied on since 2021.

Leachability issues and higher reagent consumption have now cast doubt over the reliability of management’s 2021 EFS assumptions. In short, management flagged uncertainty around achieving nameplate capacity in FY27 and beyond, based on performance assessments of wellfields B1–B5.

Ord Minnett comments this implies a need for additional wells, driving up sustaining capex and casting doubt over Honeymoon’s ability to achieve its nameplate capacity.

With 2.45mlb/year capacity now in doubt, Macquarie suggests the market is questioning whether new FY26 guidance for 1.6mlbs may represent peak output before declines from the initial high-grade wellfields. It’s also thought mine life assumptions may come under pressure.

As the analysts at Ord Minnett bemoan, an expert study will commence shortly, but with no end date yet confirmed the broker is forced to make guesses for costs and production volumes from FY27.

Even then, all experts may have difficulty assessing how much of the resource has poor continuity until development drilling is complete.

Certainly, the analysts at Morgan Stanley remain cautious. Achieving nameplate capacity and preserving mine life are likely to be negatively correlated, according to this broker, necessitating a revised mine plan and updated project economics.

Boss Energy has two in-situ recovery (ISR) projects in production, Honeymoon in South Australia and a 30% stake in Alta Mesa in Texas, which is operated by US-based enCore Energy.

This week’s update follows last week’s announcement Managing Director and CEO Duncan Craib will transition to Non-Executive Director role effective September 1, with current COO Matt Dusci set to take the helm.

While Craib successfully oversaw the Honeymoon mine’s ramp-up broadly in line with expectations, his departure came as a surprise to Canaccord Genuity.

Positively, the broker noted Dusci has a strong track record, having previously served as acting CEO at IGO Ltd ((IGO)) prior to joining Boss Energy.

June quarter in more detail

The company reported output of 349klb in the June quarter, in line with UBS' expectation for 330klb, implying FY25 production guidance of 850klb was met.

At just 100klb, sales declined -33% quarter-on-quarter and were significantly below UBS’s circa 250klb forecast.

The reported sales volume of 100klb at a realised price of US$71/lb equally fell short of Euroz Hartleys’ estimate of 300klb at US$75/lb (consensus: 265klb at US$72/lb).

The 'miss' was not unexpected given the extension of the enCore Energy loan repayment to December 2025, announced earlier this month, which involved 100klb priced at US$100/lb. Also, Euroz Hartleys noted spot price softness earlier in the June quarter ahead of the US$200m SPUT bought deal financing on June 20.

At the time, Bell Potter noted the repayment extension and additional US$3.6m cash facility were designed to provide enCore with working capital for the Alta Mesa joint venture. In the event of a default, Boss Energy would have the right to assume control of a 51% interest in the joint venture.

FY26 cost guidance disappointed the analysts at Citi, with cash costs of $41–45/lb and AISC of $64–70/lb materially above the broker’s forecasts, driven by an expected decline in average tenor (average uranium grade or concentration). This broker also noted capex is trending higher.

Indeed, forecast capital expenditure of -$56–62m significantly exceeded UBS’s estimate of -$25m, raising concerns given the ion-exchange (IX) plant is already well advanced. The IX plant remains a critical asset for processing uranium-bearing solutions extracted from underground operations.

Cash on hand of $36.5m was around -$18m below forecasts by Morgan Stanley and consensus, due to lower sales during the quarter.