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Bannerman Resources Ltd: THE INVESTMENT CASE
INVESTMENT OVERVIEW

Bannerman Resources to benefit from cost reductions at Etango

The Etango mine is expected to be a top 10 producer once developed.
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INVESTMENT OVERVIEW: BMN The Big Picture
Based on the DFS, uranium production is expected to be between seven and nine million pounds per year for the first five years

Bannerman Resources Limited (ASX:BMN), like most players in the uranium sector, has had its share of challenges.

However, the fact remains that its Etango Uranium Project is one of the world’s largest undeveloped uranium projects.

It is in Namibia, southern Africa, one of the world’s top five uranium producing nations with substantial mining infrastructure.

It could be argued that Bannerman has flown under the radar over the last 12 months despite having made substantial progress in completing research studies.

Shares jump 10%

Importantly, in an environment of depressed uranium prices, these studies have been aimed at reducing capital and production costs at its Etango project.

As outlined below, the results are impressive and it seems that the market has begun to acknowledge the company’s prospects.

Management did a good job in explaining the relevance and potential impact of its technological progress when delivering its quarterly activities report at the end of April.

This triggered an increase in the company’s share price of more than 10%.

High profile neighbours

There is no doubting the quality of Bannerman’s resource and the reason it has fallen out of favour can simply be put down to industry dynamics.

With large deposits nearby, it is obvious that Etango is in a highly prospective area.

Uranium deposits in close proximity include Rio Tinto’s Rössing mine, Paladin’s Langer Heinrich mine and China General Nuclear Power Corporation’s Husab mine.

Much of the lead-up work completed

Etango is one of the few uranium projects in the world with a completed definitive feasibility study (DFS) and environmental permitting.

Furthermore, the mine is expected to be a top 10 producer once developed.

Based on the DFS, uranium production is expected to be between seven and nine million pounds per year for the first five years.

Production is then expected to be between six and eight million pounds thereafter.

Based on the DFS, Etango is expected to have a minimum mine life of 16 years with significant expansion potential through the conversion of the existing inferred resource, as well as the deposit being open at depth and along strike.

Prospects further enhanced by new technology

With the industry landscape and uranium pricing having changed significantly since the DFS was completed, Bannerman started a processing optimisation study (OS) in 2017.

It aims to incorporate the favourable results obtained in a Heap Leach Demonstration Plant Program, a development that may significantly change the project dynamics.

The layout design of the demonstration plant took advantage of a historical exploration camp and the topography of the area, and the flowsheet resembles the front-end of the processing plant up to the heap leaching stage.

The potential positive impact on project economics was highlighted further in mid-April when Bannerman outlined the cost savings that could be delivered from a membrane study.

This tested the effectiveness of five different membrane types on two different solution streams, both generated from the Etango heap leach demonstration plant.

READ: Bannerman Resources membrane study delivers cost savings to Etango

The results and recommendations from the processing OS will be incorporated into the DFS update.

This will occur in conjunction with definitive level procurement aimed at capturing the broader cost deflation that has occurred in the resources sector since 2012.

Savings from lower acid consumption

The heap leach test work also consistently showed acid consumption averaging 14.4 kilograms per tonne compared to the DFS projection of 17.6 kilograms per tonne.

The scaled-up acid consumption was reduced to a level of 16.8 kg/tonne.

Further detailed engineering work will be done in the DFS update to accurately reflect the operating savings achieved with this lower acid consumption.

This will also incorporate the other opportunities identified to reduce acid costs such as membrane acid recovery.

Management is targeting further operating cost improvements and it anticipates savings of more than US$3 per pound across the life of mine.

At forefront of global development pipeline

Management said that the continued technical enhancement since the 2012 DFS repositions Etango and has confirmed the technical robustness of the project metrics.

Bannerman noted the globally significant comparators that have been highlighted by the mining and processing optimisation studies and the extensive confirmatory test work.

Management said that these findings placed Etango at the forefront of pending global development projects with targeted annual production at or above two million pounds.

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