Boss Energy Limited

Thank you for standing by and welcome to the Boss Energy Investor Conference Call December quarter 2024. All participants are in listen-only mode. There will be a presentation followed by a 30-minute question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. In the interest of time, participants are requested to limit the number of questions to two per term. If you have additional questions, you are welcome to rejoin the queue and we'll be able to ask further questions if time permits. If we run out of time and you do not have time for your question, we ask that you please call our office on 0862634494 or email boss at bossenergy.com and speak to our team. I would now like to hand the conference over to Mr. Duncan Krebs, Managing Director. Please go ahead.

Good morning, everyone. Thank you for taking the time to dial into our first quarterly call, which we expect to become a regular occurrence now that we are in production. And today really is a milestone event for the company, declaring commercial production and publishing our first cost guidance. On the call joining me today is Justin Laird, our CFO, and Matt Doocy, our COO. And on today's call, we will walk you through the key achievements of the December quarter and as well as providing cost guidance for the second half of this financial year 2025. At the end of the call, we will take questions and to our analysts, Justin and I will be in touch in coming days to invite you on a honeymoon site tour in March. Given construction activities are largely complete and the site is safe, we'll be hosting regular site visits going forward. So turning to the presentation, the highlights, looking at the three key categories, Our key ramp-up milestones delivered during the quarter, well, we remain on track to deliver our 850,000 pounds of uranium per our production guidance for 2025. It's another strong quarter of growth as we continue to ramp up production, our honeymoon operation in South Australia, as well as at the Alta Mesa operation in South Texas. Some of the key highlights, which we'll expand upon during the call, include 137,000 pounds of uranium being drummed during the quarter, and that's up 53% since the September quarter, and 215,000 pounds of iron exchange production, which is up 96% from the previous quarter. Our NIM6 column three was commissioned and currently ramping up. Columns one and two, I'm pleased to report, are continuing to operate at nameplate capacity. The final installation and commissioning of Kiln 2 was also completed and is now operating. Commercial production effectively was then declared effective from 1 January 2025. Financially, we're also in a strong position. We retain and remain with sort of $252 million in cash and liquid assets on our balance sheet. Funnily enough, it's a growth of $7 million from the previous quarter and we still have zero debt. During the quarter, we sold 200,000 pounds of uranium at a realized price of US 77.5 per pound, which is roughly around 125 Australian dollars per pound. So in light of the quarter's strong performance, we're pleased to publish our maiden C1 cost guidance for Honeymoon of between Australian dollars 37 to 41 per pound, which equivalent in US dollars, an exchange rate of 0.62, equates to about 23 to 25 US per pound. And that's for the six months forecast to 30 June 2025. We believe this is a very strong outcome by any measure and is in line with the forecast in the feasibility study released in June 2021, which simply adjusted for inflation. And finally, for the further ramp up and growth initiatives that are underway, while we continue to de-risk honeymoons processing and operations, We're also progressing growth initiatives such as infill drilling on our satellite deposits of Jason's and Gould's Dam and also ramping up and supporting our joint venture with Encore's Ultimisa. Looking at our production results, as stated, during the quarter we produced 137,000 pounds of uranium drummed, which was up 53%. from the previous quarter and 215,000 pounds of product from the iron exchange columns, which is nearly double to the previous quarter. The difference between IX production and drummed yellow cake is really due to slight time delays in commissioning and tuning of our second kiln, kiln two. That issue has now been resolved. We also achieved a number of other key milestones, which will help provide step changes in our production profile. These include installation and commissioning of column three, final installation and commissioning of kiln two, and completion of the pump installation on wellfield three. In terms of production ramp up, we remain confident that we'll achieve our 2025 guidance. Iron Exchange production is already achieving a run rate consistent to delivering 850,000 pounds of uranium by June 25. Kiln 2, as mentioned, has been commissioned and became operational in mid-January. So if we look at the past two weeks or 14 days, we've recorded an average of 3,900 pounds per day production of uranium. This is a great achievement and not only highlights the production run rate, but also validates our adoption of ion exchange technology, which has increased production throughput and reduced the cost of production. And that's what we set out to achieve all those years ago, five, six years ago. In fact, in the past 24 hours, according to our daily production sheet I just received, we're killing 7,000 pounds, which implies both the front end and the back end of the processing plant have achieved nameplate capacity for six columns. However, only just two columns were actually operating. Having said that, we are still in a commissioning phase and the focus is now on consistency and reliability of production as we ramp up. In terms of timing of our next milestones, we expect columns four to six to be completed by June 2025. We'll continue to implement optimisation initiatives to improve the availability of the drying and packing area. As mentioned, Wellfield 3 is also available for use, and we will turn that on when required. In terms of growth, when we look at our exploration, We've got the satellite deposits as mentioned, Jason's and Gould's Dam prospects. They really have the potential to drive growth as well as enable us to leverage our existing infrastructure at the Honeymoon Processing Plant and further capitalise on opportunity presenting by growing global demand for uranium from tier one locations such as South Australia and South Texas. Our key activities for the quarter included completing the infill drill program, for Goulds Dam and Jason's deposits, which did include a number of significant intercepts, including 3.25 metres at a grade of around 3,873, which was measured by a PROM fission neutron tool. We also have engaged AMC consultants to produce a mineral resource update for the Goulds Dam and Jason's deposit, and we're advised that we will receive that in the quarter three of 2025. And with our new chief geologist, Andy Wild, we've now been looking at other growth prospects around the uranium mine, including the Cummins Dam prospect, which is next to East Kalkaroo. And that's to find a zone of mineralisation of approximately one kilometre by one kilometre, which remains open. In terms of further upcoming exploration activities, we'll continue drilling on that Cummins Dam prospect. And we'll also continue to generate new exploration targets around the honeymoon operation identified for high priority targets that could represent additional undiscovered resources. For Alta Mesa, we're really content with our business relationship with Encore Energy and the Alta Mesa operation. We've had many touch points with the Encore team during the course of my career, our chairman Wyatt Buck and Sashi Davies, our marketing and strategic representative. Our chairman, Wyatt, and I had the fortune of attending Altamesa's grand opening ceremony or celebration in early October with George W. Bush, the 43rd president of the United States leading proceedings. A few weeks afterwards, Encore announced Altamesa's production ramp up had passed another important milestone with the first of three ion exchange circuits nearing flow capacity. Altamisa's first iron exchange circuit was commissioned in June 2024, and the second iron exchange circuit is planned to commence operation this current quarter, with the third iron exchange circuit planned to be online by the end of 2025. They're making good progress. And during the quarter, Encore also announced more strong-grade results, which we announced to the market. The operation also observed increased wellfield recoveries as ramp-up continues. The solution head grades at Altamisa peaked at about 140 milligram per litre and averaged approximately 65 milligram per litre. Altamisa is ramping up to an annualised production rate of 1.5 million pounds per annum. And our share of that production is 30 percent. Just quickly looking at the market, just a sort of quick overview. I'm sure most are up to speed. But really, when we cast our eyes back in the past year, 2024, fundamentals improved significantly. On the demand side, international energy agencies' 2023 World Energy Outlook projected more than a doubling of global nuclear capacity from 417 gigawatts, increasing by 916 gigawatts by 2050. The industry also saw unprecedented interest in developing nuclear capacity to support data centre growth. In 2024, several prominent companies, including Amazon, Microsoft, Meta and Google, announced MOUs with nuclear utilities to develop nuclear capacity aimed at supporting these data centres. And this phenomenon wasn't really even contemplated some year or two ago. It highlights a strategic shift towards sustainable and reliable energy sources to power the growing demands of data infrastructure. This was further complemented by last week's Stargate project announced by President Trump, a 500 billion AI infrastructure venture. Growing demand for electricity generation has also driven nuclear capacity upgrades, life extensions and recommissioning of shutdown reactors such as Daipei Canyon, Palisades, Three Mile Island and Duane Arnold. Nuclear capacity demand and associated uranium demand is expected to more than double by 2050. And while demand expectations are increasing, the risks on the supply side cannot be ignored. Geopolitical concerns continue to dominate worldwide. These include potential import bans, sanctions, transport issues, potential tariffs and counter tariffs. It's making headlines daily, all of which will continue to create uncertainty in the market regarding the availability of supply now and in the future. When we now move to financials, as mentioned at the opening, Boss Energy remains in a very strong financial position with a robust balance sheet that is supported by $252 million in cash and liquid assets on hand as at 31st of December 2024, which was a $7 million increase on the September quarter. This is a strong financial position which will support Boss Energy during ramp-up with no requirement for external capital or debt. During the quarter, we also sold, as mentioned, 200,000 pounds at a realized price of 77.5 US per pound. We've been very disciplined with our marketing strategy, and the price was consistent with the prevailing market price at the time of sale, which represents our strong exposure to potential further increases in the uranium price. Now, importantly, on to cost guidance, but before Justin goes into details on the numbers, it is worth reiterating that the background for the second half of 2025 guidance provided. Overall, BUS is in the early stages of ramp up. And so what we are providing is a forecast based on actuals that we have seen to date combined with planned production. Over to you, Justin.

Thanks, Duncan. So as Duncan mentioned, the C1 cost guidance for the second half of FY25 is estimated to be between Australian dollars 37 to $41 per pound, equivalent to US dollars 23 to $25 per pound. We expect that the cost per pound will come down as we ramp up production and the fixed cost is fractionalised. The increase in C1 costs since the EFS essentially represents an increase in line with inflation The composition of the key drivers of C1 costs, such as labour, reagents and power that were set out in the EFS have not materially changed since. The definitions of each cost are also consistent with the EFS, but nonetheless, we've included a summary of the definitions in the appendix of this presentation. Capital costs for the second half of FY25 are estimated to be between $38 million and $43 million. which comprises capex for the wellfields, projects and other sustaining capital. Wellfields capex of 17 million to 20 million mainly reflects infrastructural costs of drilling, casing and screening, as well as the new wellhouses. It also includes the spider lines to connect the wellhouses to the wells and the main trunk line costs, which are used to bring a group of wellfields into production. We are seeing that Wellfields CapEx has gone up approximately in line with C1 costs since the EFS. A small cost of circa $2 million, which wasn't included in the EFS, was the first fill cost for Wellfields, which reflects the initial reagent usage required to charge the circuit and establish the chemical conditions needed to leach the uranium. Studies are currently underway to investigate how much of this investment in reagents can be recovered by pumping the reagent out of used wellfields and then into new wellfields. For Project CAPEX, the remaining cost for the second half of FY25 will be between $19 million to $21 million, which almost entirely represents the cost to complete the project. This is a bit over a third higher than what was estimated in the EFS in terms of the total cost to complete the project. Essentially, the main reason for the increase in project capex is an increase in labour cost and inflation since the EFS was published. That concludes the financial guidance section. I'll now hand back over to Duncan.