Boss Energy (BOE) is poised to release its 2QFY25 results on January 29th, and Bell Potter has provided an optimistic preview, with a “Buy” recommendation and a target price of A$4.70 per share. The company’s Honeymoon project is showing strong potential, with significant production growth expected for the quarter, alongside a promising outlook for uranium prices.
Production Growth at Honeymoon
Bell Potter estimates that Boss Energy will produce 150,000 lbs of U3O8 in 2QFY25, marking a 67% quarter-on-quarter increase. This production boost is driven by increased capacity utilization at the Ion Exchange (IX) columns, with Column 1 expected to operate at full capacity (90%) for the quarter, while Column 2 averages 29% capacity. While the leach tenor (U3O8 concentration) is forecasted to drop slightly from 71mg/l to 60mg/l, and recoveries are expected to decrease from 97% to 95%, Bell Potter anticipates that production through the IX plants will still reach 166,000 lbs.
The company is also expected to continue ramping up its drumming and packaging process, with an estimated 90% of production being drummed this quarter, up from 81% in 1QFY25 and 49% in 4QFY24. This steady increase in drumming is a positive sign for efficiency improvements.
Cost Management
In terms of costs, Bell Potter forecasts a C1 cost of A$69.71/lb (US$45/lb) for the quarter, which is in line with previous expectations. The company’s cost base is expected to trend lower over the second half of FY25 as columns 2 and 3 are further ramped up, with a target average C1 cost of A$62/lb (US$42/lb). This improvement in cost efficiency will help boost profitability as production increases.
Uranium Market Outlook
Despite some volatility in the uranium spot market—currently sitting at US$72/lb—Bell Potter remains optimistic about the long-term fundamentals. The uranium market is expected to see higher prices across the entire nuclear fuel chain in the coming years. However, the short-term volatility could impact projects that are expected to reach Final Investment Decision (FID) over the next 12 months, with some companies, such as Deep Yellow, delaying their decisions. This delay in new project approvals could exacerbate the ongoing supply shortage and increase the likelihood of price spikes.
Investment Thesis and Target Price
Bell Potter has marked to market its uranium price and foreign exchange assumptions for 2QFY25, and the firm continues to view Boss Energy as attractively priced, with a forward FY25 EV/EBITDA multiple of 6.6x—lower than its peers. If BOE’s production and costs align with expectations, there could be significant upside potential, and Bell Potter anticipates a re-rating of the stock post-2QFY25 results. The firm maintains its “Buy” recommendation and a target price of A$4.70 per share.
Conclusion
Boss Energy is in a strong position to capitalize on the growing demand for uranium, with solid production growth and cost management at its Honeymoon project. Despite some short-term volatility in the uranium spot price, the long-term outlook for the nuclear fuel market remains positive. With a compelling valuation and a 12-month target price offering attractive upside, Boss Energy is a stock worth watching as it gears up for its 2QFY25 results.
