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Bannerman Resources tastes further success at Etango uranium

Bannerman Resources (ASX:BMN; TSX:BAN; NSX:BMN) has substantially de-risked heap leaching operations at its Etango uranium project in Namibia with more success in an ongoing plant demonstration program.

The latest results from the program have further supported assumptions and projections outlined in the Definitive Feasibility Study as well as subsequent DFS optimisations.

A recent optimisation of Etango resulted in a dramatic improvement of the project's net present value form US$69 million to US$419 million, with production averaging 7.2 million pounds of U3O8 a year over an initial 15.7-year open pit mine life.

The new demonstrate plant work has underlined the feasibility of this outlook with fast and high leach extraction on a 60-tonne sample.

Average total leach extraction ranged from 91% to 93% during the trials, compared to an 87% rate projected in the DFS.

A sulphuric acid consumption recorded at a rate of 18 kilograms per tonne in the DFS was further reduced to 15 kilograms per tonne.

Visual observation confirmed uniform percolation through the material and integrity of the agglomerate while other performance metrics indicated the DFS scale-up factors would be conservative.

Large-scale testing of 180 tonnes of material since the start of heap leach demonstration plant work in April has established a significant metallurgical database.

Improved economics

Success in process plant demonstrations has coincided with studies which have outlined a 17% reduction in life-of-mine operating costs to US$38 per pound of U3O8 and a 9% reduction in pre-production capital costs to US$793 million.

Post-tax internal rate of return has also improved from 9% to 15%, with payback from first production now expected in 4.4 years.

Total operating cashflow has been estimated at US$3.7 billion before capital and tax, while free cashflow of US$1.6 billion is expected after capital and tax.

Peak annual free cash flow is contemplated at US$392 million.

Bannerman can also reduce upfront capital by about US$56 million through the use of leased equipment in its fleet.

Importantly, the streamlined economics at Etango are supported by both better-than-expected results from the heap leaching operation, logistics improvements and enhanced mining metrics, including a reduction of strip ratio from 3.3 in the original DFS to 2.8.

This will flow from a 16.4% increase in annual output during the first five full years of production to 9.2 million pounds of U3O8.

Measured and indicated resources at Etango total 165 million pounds of U3O8.

Corporate update

The recent operational refinements at Etango have also paralleled ownership consolidation, debt extinguishing and new funding for Bannerman.

The company has confirmed the terms of a move announced last month to acquire 100% ownership of the project via an arrangement with major shareholders Resource Capital Fund IV L.P., Resource Capital Fund VI L.P. and Mr Clive Jones, a Bannerman director and shareholder.

The transactions will result in Bannerman not only taking full control of Etango, but becoming debt free and securing A$4 million through a $1 million cash payment and an equity placement of about 63.3 million shares to RCF VI for $3 million.

The deal is also set to result in the extinguishment of $12 million in debt through the conversion of convertible notes held by RCF into Bannerman shares and the sale of a 1.5% royalty over Etango to RCF for $6 million.

The shareholdings of RCF IV and RCF VI would move to about 20.4% and 19.3% of Bannerman's issued share capital, respectively. The shareholding of Clive Jones has the potential to increase to about 19.6%, assuming that all relevant shares are issued to him rather than his nominees.


The latest results from the heap leach demonstration program at Etango indicate that the project's DFS and DFS optimisation assumptions may be conservative, with significant room to benefit from increased efficiencies.

This will no doubt provide further comfort to those parties interested in future offtake or participation in the project development, or both.

Success in the large-scale testing has also supported the project with a substantial metallurgical database and served to de-risk the processing flowsheet, a critical optimisation consideration in the uranium sector.

The results confirm the low technical risk associated with the processing flowsheet. This is in addition to the proven mining configuration adopted in the DFS and DFS Optimisation Studies and location in arguably the premier uranium mining jurisdiction status of Namibia.

The demonstration plant results also support the potential to unlock further value suggested by unconverted resources at the site and the recent DFS optimisation work, which resulted in a six-fold increase in Etango's net present value to US$419 million.

This work further illustrates Etango's early-mover advantage within the consensus forecast improvement for the uranium and establishes a sound project platform for Bannerman to engage with global nuclear players during the marketing process.

Etango is clearly at the forefront of the global development pipeline of projects likely to produce at or above 2 million pounds of U3O8 per annum.

Jurisdictionally, it benefits from proximity to a uranium export-rated port at Walvis Bay, only 47 kilometres away, and political stability in Namibia.

Namibia has been ranked the most attractive African investment jurisdiction by the Fraser Institute Mining Company Survey.

Also, consolidation of Bannerman's ownership of Etango is expected to provide considerable structural benefits when project financing is sought for development. The transactions with RCF rend Bannerman debt free with new funds that allow Etango to be taken to the next stage.

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