Boss Power wins $30M settlement from BC Government

Vancouver – Boss Power (BPU-V) has made $30-million from a uranium prospect without drilling a single hole.

The windfall comes thanks to a legal settlement with the Government of British Columbia, which has agreed to pay the sum, plus legal costs, for Boss to surrender all claims to the Blizzard uranium project near Kelowna.

Boss had applied to drill the project on April 21, 2008, just days before the province announced a ban on uranium and thorium exploration. Once imposed, the company accused the province of expropriation and launched a legal battle in late 2008 for compensation. Three years later the fight is over, with both sides avoiding a potentially lengthy court battle.

“I think $30 million is a fair settlement for where we are now with the property,” said Randy Rogers, president and CEO of Boss, in a phone interview. “It saves us the risk of litigation and several years of this being tied up in appeals.”

Boss’s share price climbed 13¢ or 81.3% to 29¢ with 500,000 shares traded on the news. When the ban was announced in 2008, the company’s stock price lost 25¢ or 56% over two days to close at 20¢. The company currently has roughly 73 million shares out.

The settlement represents far more than the company invested in the project, but less than its assessed full market value. Boss ended up writing off roughly $4.5 million related to the Blizzard project, both for acquisition costs and environmental work already done. The project, meanwhile, hosts an historic resource from 1979 that estimated it contains 2.2 million tonnes grading 0.214% U₃O₈.  Factoring in 15% mining dilution, that made for about 10.4 million contained lbs. of U₃O₈, while at the time uranium was trading for about $70 per lb.

“Realistically we thought that this property would be worth, in present value, somewhere between $50 and $60 million,” said Rogers.

The project was originally put on hold in 1980 when William Bennett imposed a seven year moratorium on uranium exploration. That ban eventually lapsed, but the uranium market was bad enough that no one pursued the project. It wasn’t until 2005 that the people behind Boss Power reassembled the scattered claim ownership into a coherent property again, and in 2008 the company was set to drill 5,000 metres to twin holes, prove up the resource, and potentially move on to a feasibility study.

A twist in the story, explains Rogers, is that while uranium exploration is under B.C.’s jurisdiction, mining is regulated federally.

“It was going to be one season of drilling, and then this thing would have been a federal concern,” said Rogers. “So the province had just that very short window in which to try to stop this project.”

It later emerged in pre-trial that the company’s drilling application had been purposefully blocked and not duly considered as the province moved ahead with the exploration ban, leading Boss to added a claim of misfeasance of public office to the lawsuit.

Rogers said there were some 15-20 explorers who were affected by the ban, but that Boss was by far the most advanced.

For Gavin Dirom, president and CEO of AME BC, the settlement shows a commitment by the current government to take into account fair market value and to settling issues in a relatively timely manner.

“They’re moving to address some of these legacy issues from a few years ago, that’s very positive,” said Dirom. “Hopefully the same process will be applied to the Flathead Valley.”

Dirom said that just addressing the sunk cost, as is sometimes proposed, is “wholly inadequate and will not encourage investment in the province.”

As for Boss Power, Rogers says the company will get about $25-million net after settling with royalty payments and money owed, and the board will decide over the next few weeks what direction the company, with no other properties, will take.

“We do believe we want this to be a viable exploration vehicle,” said Rogers, though noting that “we’re not quite prepared to say we’ll continue to operate in British Columbia.” Rogers also said that Boss has associated companies that it could partner with in the Yukon and elsewhere in the world.