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Boss Energy’s Share Price Plummet: Understanding the Current Situation
Boss Energy Limited (ASX: BOE) has been in the spotlight after its share price experienced a dramatic decline, plunging nearly 49% over two days, with a drop of 9.1% to $1.73 noted during early trading sessions.
Key Factors Behind the Decline
The swift sell-off was triggered by a concerning financial outlook for FY26 released by Boss Energy, that highlighted several potential hurdles in achieving expected operational efficiencies:
- The company acknowledged challenges in maintaining nameplate capacity, attributing this largely to anticipated inconsistencies in mineralisation and leachability.
- To address these concerns, an independent review by specialists is set to begin shortly to evaluate the impact on the feasibility study assumptions.
Furthermore, Boss provided guidance that sharply contrasted with analysts’ expectations:
- C1 Cash Cost Guidance: A$41-45/lb, notably exceeding Macquarie’s forecast of A$34.93/lb (23% higher).
- All-in Sustaining Costs (AISC): Estimated at A$64-70/lb against Macquarie’s A$47.29/lb (41.7% higher).
- Capital Expenditure (Capex): Forecasted to be A$56-62m as opposed to the anticipated A$36m (64% higher).
- Production Estimates: Projected output of 1.6 million pounds, falling short of the anticipated 1.72 million pounds (a 7% miss).
Revisiting the Feasibility Study
Boss Energy’s Enhanced Feasibility Study (EFS) released in June 2021 provided optimistic forecasts, including new capital and operating estimates, establishing a net present value (NPV) of A$308.7 million. Key assumptions from the EFS now appear overly optimistic:
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Uranium Pricing: Initially set at US$60/lb, current market prices hover around US$70/lb. While beneficial, this does not sufficiently counterbalance the rising costs.
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Sustaining Costs: The EFS predicted life-of-mine AISC at US$25.62/lb, yet the mid-point of the FY26 guidance translates to US$43.64/lb—a drastic increase.
- Capital Expenditure: Forecast reductions in capex, previously anticipated to decline from A$90m in FY24 to A$37m in FY26, faced a significant setback with the new guidance.
Consequently, the inflated FY26 costs could diminish the project’s NPV by as much as A$100 million.
Escalating Cash Burn and Financial Overview
As of 30 June 2025, Boss Energy reported cash and liquid assets totalling A$224 million, with no debt. However, their liquidity has been under scrutiny as it remains between A$220-250 million, despite a significant 42% reduction in cash holdings from A$63.7 million in March to A$36.5 million in June. This decline was partially offset by increased uranium inventory levels, bringing the overall liquidity position to a standstill.
Wellfield Concerns
The FY26 update further emphasised issues with wellfield continuity: drilling results indicated less mineralisation than expected. This could lead to a need for additional wellfields, raising operational costs significantly, with the company needing to revise its cash cost projections related to wellfields upwards. Currently, Boss operates three wellfields, with plans to increase this number to nine by March 2026.
Conclusion
The nearly 50% drop in Boss Energy’s share price might seem drastic for what began as minor financial adjustments. However, the reality is that the company has issued significant upward revisions to FY26 costs and capital expenditures, contrasting sharply with earlier economic study assumptions.
The cumulative effect of these factors could greatly impact project valuation. With deteriorating economic conditions, increasing cash burn, changes in leadership, and uncertainties related to the forthcoming expert review, the market’s adverse reaction seems justified. An alarming scenario looms for Boss: if the expert review deems the project unviable at current uranium prices, the reality that their flagship initiative may fail to yield the expected returns becomes increasingly plausible.
In navigating this turmoil, Boss Energy may need to act swiftly to reassure investors and align operational strategies with revised expectations.
