Post Mortem | Boss Energy Thesis

What a day. This certainly wasn’t what everyone was expecting. There’s a lot to unpack and reflect on here.

RECAP…and a slight rant first.

Let’s start with some of the negatives. First, there was the recent analyst update that seemingly leaked information before its official release. Then, we had the sudden departure of Duncan, and now it appears that the ramp-up in the later stages will potentially require more capital, possibly leading to lesser quality. Namesake capacity appears under threat.

Ouch…

Like many others, I’ve been holding on for quite some time. Transparency is key here: I’m currently in the red and I averaged down with not as much capital as I would have liked. I got in at the previous 52-week low, rode it all the way up to $4.75, and then watched it plummet again, leaving me with 100% profits I could have locked in. In hindsight, I realise it wasn’t my usual risk management approach to miss out on booking profits, especially when the fundamentals, the macro picture, and my overall thesis all suggested that momentum was on our side.

It's amazing how quickly the narrative can shift. Just four weeks ago, we were riding high, believing we had one of the top uranium companies in the world, complete with a solid management team and impressive production numbers. Now we’ve dropped from $4.75 all the way down to $1.90. This isn’t just a miscalculation or a simple oversight in our thesis; I believe this is an orchestrated event.

Consider the facts: from the moment directors started selling off shares at the high, we experienced a very orchestrated run-up to $4.75, seemingly riding the macro theme fueled by SPROT buying, Trump’s praise for the nuclear sector, and clever announcements like Encore meeting production expectations and Honeymoon achieving the same.

Once all the good news was out, it wasn’t clear why we would think to cash out during the recent surge — after all, nothing had really changed. Short sellers seemed to be retreating, and the trading volume didn’t indicate any massive negativity. Only as the stock began to trickle down day by day over the past couple weeks did something peculiar start to unfold behind the scenes. The US markets were booming, and even on some days, the ASX uranium stocks were performing well, yet our stock kept slipping lower and lower. This caught my attention, however, not to this magnitude.

The first major warning sign was Duncan’s departure; it felt like an isolated issue, albeit a disappointing one. I had assumed this was the cause of the bleeding and those in the know trading and taking some risk off the table. However, with this latest update and the webinar call, the narrative has changed, and trust has eroded. How long were they planning to sit on this negative report, revealing updated expectations for the final ramp-up?

Such reports take time to prepare, and this information would have been known months prior. It makes sense that short sellers didn't rush for the exits as we surged; perhaps a few took profits, but a good 14% remained, waiting for a day like today. Sitting on negative news like this means leaks can materialise from anywhere. The short sellers must have had some sense that this negativity was on the horizon; otherwise, there wouldn’t have been such a pronounced short position worth millions. You don’t take sure bets without sure evidence.

We have all watched Axe Capital, this is not a joke, all it takes is a bit of cash to get an employee to give up sensitive info. I know many in the industry, what they do, is beyond what we are capable of organising.

This is the part that’s really disappointing. It certainly doesn’t reflect well, and the handling of the situation was far from satisfactory. I can’t help but feel disappointed; this is the second time—first with Botanix and now this. Both cases were managed rather poorly. It would have been better if this negative information about the Westfields had been shared before all the pump developments. Whether intentional or not, it leaves a bad taste.

Despite this, I maintain my long-term belief in the uranium sector and have narrowed my focus on Boss Energy as the company that will guide me through this journey. Somewhat a little bruised now.

Bear Points:

- The long-term capacity raises questions about both volume output and quality.

- Namesake capacity under threat and changes the long term revenue expectations and importantly MARGINS.

- There will be additional capital expenditures needed to address this recent setback.

- Operational production costs and the all-in cost are higher than anticipated.

- Uncertainty around asset life span now with ramp up issues beyond FY27 in doubt.

Bull Points:

- We remain a low-cost producer and can sustain operations even if the spot price decreases.
- We are at present still profitable when we sell product.

- The company has a strong balance sheet with ample cash on hand and 1.4 million pounds of uranium.

- Forecasted production for fiscal year 2026 is 1.6 million pounds, and this looks promising if all goes well.

- Solid assets and interest in strong jurisdiction areas – US and Aust.

It seems they’ve brought this issue to light now because the macro theme is still strong, likely to cushion the impact as they forge ahead. It will take time to commission and analyse the results of the independent report regarding these issues. In this scenario, a single positive announcement could help us rebound. With this transparency, we can better gauge our future expectations.

Boss Energy remains a solid asset; they have other avenues to explore with Encore and Laramide, and their initial production from the Honeymoon project is still robust. Although the market tends to price in a slightly lesser quality and reduced volume, we’re still a strong player in uranium production, moving forward steadily. For those who are talking about site rehabilitation and the long-term asset life being over in a couple years, I don’t think this is the case at all.

They have two years of production at their current guidance, 1.6m pounds, and I think it is achievable, that is roughly 3.2m pounds plus 1.4m pounds in storage, if they decided they needed cash and wanted to offload it all at $85US a pound, it would generate $380m USD. We have the cash and capabilities to resolve this and also expand in other areas. Boss Energy still remains a very strong Uranium player, with interest in favourable jurisdictions, with no debt, and is still producing Uranium while they figure out the next stages. It is not dead in the water.

We have 2 years of runway is the way I look at it. In this time frame anything can happen, they are still an operating asset. This is still not the worse Uranium play out there. The nuclear thematic is only getting stronger and the long term view remains the same.

Their strategy has always been to wait until the spot price is in their favour—something we’ve all known from the beginning, so this isn’t a surprise.

Perhaps at $6 this justified the full expectations and namesake capacity with the spot pushing higher at the time. However, at less than $2 a share we are undervalued even if capacity is not as strong as the asset time horizon shifts. $200m+ and we are now not even a $1b MC. There is upside.

So, coming back to the original thesis: is it broken? I’dsay it’s intact, perhaps with a few scrapes.

What’s next for me? I will hold onto all my shares and won’t sell, even if the price sees a slight increase. In fact, I’ve added to my position, and it’s now my second-largest holding. I now have clearer risks to track and will take some slight profits on the next upward swing. My mistake was not booking profits in stages along the way and listening to the many experienced Uranium traders here.

In the uranium sector, it’s not surprising to see a 100% increase within two months, only to retreat again—that’s the nature of this volatile market. So, is the story over? Absolutely not, in my view.

In the upcoming quarters, I’m looking for the new CEO andthe uranium sector to deliver on several points to justify holding my position:

- The spot price needs to remain steady and gradually rise towards $80 and sustain that level. Not in anyones control.

- Boss Energy should provide a detailed update on the commissioned external report regarding the current issue, clarifying whether things are as dire as they seem. Not sure how long this will take and when these results would be announced. This should calm the nerves of shareholders if it is not as doom and gloom.

- Production guidance for this current quarter should be met or exceeded if they want to restore trust.

- Securing even just one utility contract on favourable terms would bring in some cash.

- Exploring potential interests or further synergies with Laramide and Encore should also be on the table.

- Looking for short interest to reduce as the real trade has been executed perfectly from them. If they hang around I will be interested to know why and dig deeper?

- Observe broker data on who is buying, retailers exited in droves today. I want to watch who is accumulating.

That is all I can muster up right now. I wanted to lay out my ideas and thoughts transparently. I am no Uranium or mining expert. From the report and the information I have gathered from others, the westfield result is not great, but it is not the end of the world and nor the end of a company in the position boss is in.

Like every investment, patience is going to be needed while this gets repaired. We will remain a traders playground until the next quarterly or any update comes out.

We just need to see how it all plays out and how the bigger Uranium thematic unfolds in the background. Management now have their hands full to provide holders a clear update on what they believe is going to be the new capacity and at what cost and will have to deliver or exceed production in the mean time to keep us all holding.

Good luck to all holders and traders.