Russia sells Australian mining arm to Boss Resources

01 September 2015

Rosatom, the Russian state nuclear corporation, has agreed to sell its Honeymoon uranium project in northern South Australia to Boss Resources.

Boss is a Subiaco, Australia-registered minerals exploration company that has nickel and copper projects in Sweden and Finland and gold projects in Burkina Faso, West Africa.

In an Australian Stock Exchange announcement today Boss said it had entered into an agreement with Rosatom subsidiaries Uranium One Inc and Uranium One Australia Pty Ltd to acquire 100% of the issued share capital in Uranium One Australia, which owns the Honeymoon project.

Boss said the deal is a "company-transforming acquisition that places it at the forefront of aspiring Australian uranium producers."

Boss will form a 'special purpose vehicle' with privately-owned Wattle Mining Pty Ltd, whereby Boss will own 80% and Wattle will own 20% of Uranium One Australia. Boss has an option to acquire Wattle's 20% after completion of a bankable feasibility study.

Rosatom acquired the Honeymoon mine when its uranium mining subsidiary ARMZ bought out Toronto, Canada-based Uranium One in June 2010.

The Honeymoon project - located 80km north-west of the town of Broken Hill - has resources up to 2100 ppm that are amenable to in-situ leach processing. Full mine infrastructure in place with 880,000 pounds per annum of solvent extraction plant already built, Boss said.

The project - one of only four fully permitted uranium projects in Australia - was placed in care and maintenance in November 2013 and has never been fully commissioned amid low uranium prices. At that time, Uranium One said it had "impaired" the Honeymoon project due to continuing difficulties in the production process and issues in attaining design capacity, combined with high mine operation costs.

Honeymoon, which has a capacity of up to 400 tonnes U3O8 (340 tU) per year, was expected to produce 275 tonnes U3O8 (233 tU) in 2012, at a cost of $47 per pound U3O8. This is around three times the average cost of Uranium One's production from Kazakhstan and compared badly to then current uranium market spot market prices of $34.75 per pound, as reported by consultants UxC.

Boss noted that it is a large 2595-km-squared tenement package, however, with "excellent exploration potential to identify further resources". There are two main exploration regions - the Eastern Region which hosts the Honeymoon, Brooks Dam and East Kalkaroo resources; and the Western Region which hosts the Goulds Dam and Billeroo deposits which have historical mineral resource estimates.

"The Board considers that the project contains significant potential for additional mineral resources to be defined," Boss said. "Specifically, the Goulds Dam and Billeroo regions contain historical mineral resource estimates that have not yet been validated by the Boss technical team. Regionally, in the Gould's Dam region airborne magnetic data indicates the potential for untested paleochannel regions, with historical drilling data indicating the presence of uranium mineralisation."

Boss has chosen not to announce publicly the potential endowment of these regions until further technical validation endeavours have been completed.

Payment for the acquisition includes a $200,000 site access fee that gave Boss the exclusive right to access the Honeymoon uranium project and conduct all its due diligence; an initial cash payment of about $2,442,000; $3 million under a promissory note and repayable within 24 months of completion of the transaction; and $4 million under a promissory note issued and repayable within 48 months. Boss will also make the following contingent payments to Uranium One upon successful recommissioning of the project - $2 million payable in cash and/or shares upon the later of restart of the operations with commercial production or five years of completion of the acquisition. It is anticipated that completion shall occur in about three months, Boss said.

Researched and written
by World Nuclear News