The Honeymoon uranium project is making strong progress with committed expenditure reaching the halfway mark, putting the project on time and budget, ASX-listed Boss Energy reported on Monday.

Committed expenditure under the redevelopment programme has reached the halfway mark, totalling A55.1-million of the budgeted A$104.5-million capital expenditure, excluding a A$7.6-million contingency.

Boss has cash on hand of A$115.6-million and a strategic uranium stockpile valued at A$88.3-million, based on current spot prices, ensuring that it is fully-funded through to production.

“To reach the halfway mark on time and on budget at any project is an outstanding achievement, particularly given the current high-inflation environment and shortages of skills and equipment,” said MD Duncan Craib.

“This result positions Boss to capitalise on the growing demand for uranium, especially from western countries, as leading utilities around the world look to lock in new long-term contracts and diversify from Russia as a supplier.

“The strong outlook is reflected in the growing level of inquiry we are receiving from utilities, which is coinciding perfectly with the development progress at Honeymoon, setting us up for a pivotal second half of the year.”

Craib said the incentive price needed to establish new uranium mines had risen to around $80/lb compared with the current spot price of $48.75/lb. “Costs for new mines, with some notable exceptions, have risen as inflationary effects are included in feasibility studies, meaning the incentive price is now widely seen as being around $80/lb,” he said.

“This will severely restrict the availability of new supply, further helping to ensure the market remains tight.

“There is also a growing push among buyers to reduce their dependence on any individual company or geographic area. The recent contracts signed with developers, despite the availably of lower-cost supply from existing producers, is evidence of this.

“If utilities continue to work towards reducing dependence on Russian supplies, fixed-term uranium demand could increase significantly during 2023, leading to higher term prices,” said Craib.

The Honeymoon project will produce its first uranium in the December quarter, ramping up to a steady-state run of 2.45-million pounds of uranium oxide over a mine life of 11 years.