Bannerman Resources (ASX:BMN) has entered the 2017 calendar year with a pro-forma cash balance of $5 million positioning it well within an environment of improving uranium sector sentiment.
During the December quarter, Bannerman completed its extended Phase 6 of the heap leach demonstration plant program for its flagship 100% owned Etango Project located in Namibia.
Phase 5 was completed in the September 2016 quarter delivered clear potential for substantial capital and operating cost savings at Etango.
This Phase 6 test-work was undertaken during the December quarter and results will be available during this current March quarter.
Brandon Munro, CEO, commented: “I am delighted with Bannerman’s progress over another successful quarter. Uranium sector sentiment is improving, supply and demand dynamics are tightening and we can foresee a number of catalysts potentially coming into play in 2017.”
Background
Bannerman’s principal asset is its 100%-owned Etango Project located near Rio Tinto Ltd’s (ASX:RIO) Rössing uranium mine, Paladin Energy Ltd’s (ASX:PDN) Langer Heinrich uranium mine and China General Nuclear Power Corp’s Husab uranium mine currently under construction.
A definitive feasibility study (DFS) has confirmed the technical, environmental and financial (at consensus long term uranium prices) viability of a large open pit and heap leach operation.
Since 2015, Bannerman has conducted a large scale heap leach demonstration program to provide further assurance to financing parties and generate process information.
Based on the DFS, production is expected to be 7-9 million pounds U3O8 per year for the first five years and 6-8 million pounds U3O8 per year thereafter.
Current mine life of 16 years has significant expansion potential through the conversion of existing Inferred Resource as well as the deposit being open at depth.
Analysis
Bannerman’s strong cash position places it in a sustainable position to continue advancing its Etango project in a uranium market that is showing signs of turning.
The uranium spot price reached a 12 year low in November 2016 and has subsequently increased 25% through January 2017.
In a significant move, uranium producer Kazatomprom recently announced that it would cut uranium oxide production by 10% in 2017.
Evidence of supply constraints continues to build while the demand outlook also improves.
Ten new nuclear reactors were commissioned during 2016.
Bannerman shares have doubled over the past month, currently priced at $0.056.