Boss Resources reported on September 1 that it has agreed to acquire the Honeymoon in situ uranium project in South Australia from Uranium One Inc. The project is located near the South Australia/New South Wales border, approximately 80 km northwest of the town of Broken Hill. It produced a total of about 335 mt of U3O8 in 2011 and 2012 but was never fully commissioned and was placed on care and maintenance in 2013 due to low uranium prices.
Facilities at the Honeymoon project include an 880,000-lb/y solvent extraction plant; well fields currently on care and maintenance; a 200-person accommodations camp; administration buildings; a 75-km power line connecting to mains power; a fleet of vehicles, spares, and other equipment associated with the commissioning of the project; a runway capable of landing light planes; an extensive geological database of 17,000 drill holes and associated logging information; and cash-backed environmental bonds in the amount of A$8.7 million.
Mineral resources total 5.3 million mt at an average grade of 0.14% U3O8, containing approximately 16.6 million lb of U3O8 above a 0.05% U3O8 lower cutoff. The property includes a 2,595-km2 tenement package that has excellent exploration potential.
Boss will form a joint venture with Wattle Mining, whereby Boss will own 80% and Wattle will own 20% of the Honeymoon project. Native title agreements with respect to the exploration and mining activities have been signed with the local indigenous communities. Mining and uranium export permits are in place.
Considerations for the acquisition included an immediately payable $200,000 site access fee that gave Boss the exclusive right to access the Honeymoon project and conduct due diligence. Other considerations include an initial cash payment of approximately A$2,442,000; A$3 million under a promissory note repayable within 24 months of completion of the acquisition; and A$4 million under a promissory note issued and repayable within 48 months of completion of the acquisition.
Boss will also make the following contingent payments to Uranium One upon successful recommissioning of the Honeymoon project: $2 million payable in cash and/or shares upon the later of restart of the operations with commercial production or five years after completion of the acquisition, and 10% of the net operating cash flow of the project payable annually up to a maximum of A$3 million.