East Kalkaroo Mineralisation Issues Could Raise Costs for Boss Energy
Boss Energy has released its FY26 guidance for the Honeymoon Uranium Operation, targeting 1.6 million pounds of uranium production and forecasting positive cash flow for the year. However, challenges in mineralisation continuity at East Kalkaroo may increase sustaining capital costs and impact future production.
- FY26 uranium production guidance set at 1.6 million pounds U3O8
- C1 cash costs forecast between A$41-45 per pound
- All-in sustaining costs expected at A$64-70 per pound
- Sustaining capital expenditure projected at A$29-32 million
- Independent review underway due to mineralisation continuity concerns at East Kalkaroo
Operational Progress and FY26 Outlook
Boss Energy Limited has provided detailed guidance for the fiscal year 2026 at its Honeymoon Uranium Operation in South Australia. Following a successful ramp-up in FY25 where production and cost targets were exceeded, the company expects to produce 1.6 million pounds of uranium oxide (U3O8) in FY26. This marks a continuation of steady operational growth, with the mine anticipated to generate positive free cash flow and for Boss Energy as a whole to become cash flow positive during the year.
The company forecasts C1 cash costs between A$41 and A$45 per pound and all-in sustaining costs (AISC) ranging from A$64 to A$70 per pound. These figures reflect an increase from FY25, driven primarily by a decline in average ore grade (tenor) and adjustments to lixiviant chemistry aimed at improving recovery rates despite higher specific consumptions.
Capital Expenditure and Wellfield Development
Capital expenditure for FY26 is split between sustaining capital of A$29-32 million and project and supporting infrastructure costs of A$27-30 million. Sustaining capital will focus on building four to five new wellfields, which are expected to support not only FY26 production but also an additional 900,000 pounds in FY27. Infrastructure spending includes completion of key processing columns and extensions to trunklines and high-voltage power for new wellfields at East Kalkaroo and Brooks Dam.
Challenges at East Kalkaroo and Future Implications
Recent delineation drilling at East Kalkaroo has revealed less continuity in mineralised horizons than previously assumed in earlier feasibility studies. This could necessitate additional injection and extraction wells, increasing sustaining capital expenditure per pound of uranium produced. Boss Energy has incorporated these higher costs into its FY26 guidance but acknowledges that this development poses challenges to achieving the nameplate capacity outlined in prior studies.
In response, the company is commissioning an independent expert review to assess the impact of these geological findings on operational assumptions and future production forecasts. The market will be closely watching the outcomes of this review for indications of potential adjustments to Boss Energy’s medium-term production plans.
Looking Ahead
While FY26 guidance paints a positive picture of continued growth and cash flow generation, the uncertainties around mineralisation continuity at East Kalkaroo introduce a degree of caution. Boss Energy’s ability to manage these geological challenges and control capital costs will be critical to sustaining its upward trajectory. Investors and analysts will be keen to see how the independent review shapes the company’s strategic direction beyond FY26.
Bottom Line?
Boss Energy’s FY26 guidance signals growth and profitability, but geological uncertainties at East Kalkaroo warrant close attention.
Questions in the middle?
- How will the independent review alter production and cost assumptions for East Kalkaroo wellfields?
- What impact will increased sustaining capital have on Boss Energy’s longer-term cash flow and profitability?
- Can Boss Energy maintain or improve uranium recovery rates amid declining ore grades and changing lixiviant chemistry?
