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Elevated Uranium Demand Fuels Development in South Australia

13 November 2023 12:59

 

South Australia, a global leader in uranium resources, is witnessing increased activity as companies such as Boss Energy and New Horizon Metals Limited respond to surging demand, driving both expansion by existing players and attracting new entrants, fostering economic growth and development in the state’s mining sector.

Global Resurgence

Recent developments in the uranium sector indicate a resurgence not witnessed for over a decade.

Industry experts note that the next bull run in uranium has been long overdue, with fundamentals building up since 2010. A substantial 8-10Mlbpa shortfall in uranium production has created a favourable environment, exacerbated by a surplus of 10Mlb of uranium in the market following Fukushima.

Uranium spot prices are currently reaching almost 13-year highs at nearly US$75/lb, and long-term prices are also reflecting the best levels in over a decade.

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Figure 1: Uranium Spot Price History

The market’s increased appetite for new uranium sources is propelled by the growing acceptance of uranium as a green energy source, with countries once hesitant about nuclear energy now recognising the necessity for stable baseload power, particularly amid the global construction of more reactors.

Global interest in uranium remains strong, with 458 operating reactors, 58 under construction, and another 104 in the planning stage.

This surge in demand has positioned uranium as a viable and reliable energy source, particularly when compared to the intermittent nature of renewable energy. The resilience of nuclear power, with over 50 years of solid reliable performance from most reactors, underscores its appeal despite past incidents like Fukushima and Chernobyl.

South Australia’s Dominance

South Australia’s significance in the global uranium market cannot be overstated. Boasting approximately 80% of Australia’s economic demonstrated uranium resources and 23% of the world’s uranium resources, the state is a key player in the industry. The Olympic Dam deposit, the world’s largest uranium deposit, further solidifies South Australia’s position as a major uranium hub.

In 2020, South Australia led the nation in uranium production, contributing 5497 tonnes of uranium oxide. The state hosts four approved uranium mines—Olympic Dam, Beverley, Four Mile, and Honeymoon—highlighting its diverse resource base.

South Australian Advantages

South Australia’s competitive edge in uranium mining is multifaceted.

The state has developed advanced technologies for processing uranium ore, with a proven track record of safe handling and transportation spanning over 30 years. Port Adelaide’s approval as one of only two Australian ports for uranium exports also enhances the state’s export capabilities.

Despite currently producing only around 10 per cent of the world’s uranium, South Australia’s demonstrated geology indicates significant untapped potential. The supportive stance of the South Australian Government, actively encouraging uranium exploration, further facilitates a conducive environment for mining operations.

Boss Energy Limited (ASX:BOE)

Boss Energy Limited, a prominent Australian uranium miner, has recently been granted exploration rights for a potential new uranium province.

The four highly prospective tenements, covering an expansive area of 3184 square kilometres, are strategically positioned around Boss’ Honeymoon Uranium Project, with these mineral rights held in collaboration with copper developer Coda Minerals, emphasising the collaborative nature of mineral exploration in the region.

The Company aims to target palaeochannel sediments known as the Renmark Group within the Kinloch Project, drawing parallels with the Eyre formation in the Lake Eyre Basin that hosts several of Boss’ existing uranium deposits.

Boss Energy has outlined the geological similarities between Kinloch and the Honeymoon Project highlight the Company’s in-depth understanding of the region’s uranium potential.

This development comes on the heels of Boss Energy’s announcement of expansion at its Honeymoon Project, where two new satellite prospects have been identified.

The recent scout drilling at the Billeroo and Sunrise Prospects, located just 80km from Honeymoon, has unveiled a significant potential for additional uranium resources.

New Horizon Metals (NHM)

New Horizon Metals Limited, an Australian uranium and copper exploration company, is focusing on Tier-1 exploration projects, particularly its South Australian asset, the Wilan Project, while concurrently preparing for an anticipated listing on the ASX in the first quarter of the upcoming year.

Located 140 kilometres north of BHP’s Olympic Dam Mine, the world’s largest uranium deposit containing over two million tonnes of uranium oxide within a hematite breccia complex, the Wilan Project is strategically poised to unlock uranium potential in the area.

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Figure 2: New Horizon Metals Wilan Project shows a similar geophysical signature associated with coincident magnetic and gravity anomalies to the Olympic Dam project

In 2019, Olympic Dam played a significant role in the worlds’ total uranium production, producing 3,967 tonnes of U3O8, equivalent to about six percent of global total mine production. The vast Olympic Dam Project spans an impressive area of over six kilometres by 3.5 kilometres, reaching depths of up to two kilometres and remaining open both laterally and at depth.

Holding substantial reserves of ore, totalling 261,000 tonnes of contained uranium oxide, the Project continues to be a focal point of global uranium production.

New Horizon Metals’ Wilan Project exhibits a geophysical signature akin to the Olympic Dam Project, marked by coincident magnetic and gravity anomalies. This similarity, proven successful in South Australia’s exploration history, has led to the discovery of notable IOCG systems, including the Prominent Hill and Carrapateena deposits.

BHP’s acquisition of the Prominent Hill deposit this year further underscores the region’s significance, producing four million tonnes per annum of copper at an average grade of 0.77% Cu.

As the global economy transitions towards decarbonisation, uranium remains a key component in the green energy future, driving a 27% demand increase between 2021 and 2030. NHM’s diversified portfolio places it at the forefront of capitalising on the growing demand for these essential resources in the evolving uranium exploration landscape.

Board & Management

Boasting more than 35 years in corporate advisory, investment banking, and director advisory roles, Peter Marks, the Executive Director of Iris Metals, contributes a wealth of expertise as he serves as the Interim Chairman for New Horizon Metals.

Mr Mark’s extensive involvement in publicly listed companies within the resources, biotechnology, and technology industries showcases his proficiency in capital raising for pre-IPO and listed companies, cross-border M&A transactions, corporate underwriting, and venture capital transactions in both Australia and the US.

New Horizon’s Technical Director Ralf Kriege additionally brings over 20 years of exploration and mining industry experience, demonstrating expertise in green and brownfields exploration, project evaluation, feasibility studies, mining operations, and administration, with a proven track record in developing remote prospects into economic resource assets globally for various minerals.

The Company’s Geologist Joel Logan contributes over six years of exploration and mining industry experience, including roles with leading global mining companies such as BHP at the Olympic Dam mine.

Private Funding Round to s708 Investors

Alpine Capital Pty Ltd, a team of highly credentialed financial services professionals with extensive experience in Corporate Finance, Institutional Broking, and Wealth Management, is at the forefront of the capital raising for New Horizon Metals.

With 18,500,000 current shares on issue, the capital structure for New Horizon Metals includes the issuance of 15,000,000 shares at a price of $0.10 each, resulting in an undiluted shares on issue (post-offer) of 33,500,000 and a valuation of $1,850,000.

Each participant in the offer will also receive an attaching option with a $0.25 strike price and a three-year term on a 1-for-5 basis, contingent upon a successful listing on the ASX.

The use of proceeds is allocated to exploration (33%) and working capital, and costs associated with the offer (67%). The post-transaction share register will be divided with 45% for s708 Investors and 55% for existing shareholders.

RIU Resurgence Conference

For those interested in furthering their understanding of uranium and related sectors, the RIU Resurgence Conference is on 22 and 23 November at The Westin Perth, WA. This conference offers a valuable opportunity, showcasing junior and mid-sized resources companies, including those in the uranium sector.

The event is free to attend for investors, brokers, funds, media and IR attendees, including morning/afternoon tea, lunch and barista coffee.

Registration details can be found online here.

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