Bannerman Resources (ASX:BMN) has commenced a definitive feasibility study update at its flagship 100% owned Etango Project located in Namibia.
The study update commencement follows the successful completion of the Etango heap leach demonstration plant program.
The six phase demonstration plant program showed the strong potential to achieve and exceed the standing definitive feasibility study metallurgical parameters.
This will occur in parallel with assessment of other potential operating and capital cost reduction opportunities.
Brandon Munro, CEO, commented: “Our two year commitment to the Etango Demonstration Plant program has been a remarkable success.
“Not only have we consolidated Etango’s position as one of the most advanced large uranium projects globally, but we have also generated substantial opportunities to enhance and further de-risk the Etango project.”
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) completed in 2012 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.
Demonstration plant program
The objectives of the demonstration plant program were secured through an initial five phase test program.
Phase 1 - Commissioning (complete)
Phase 2 - Reproducibility (complete)
Phase 3 - Solution Recycle (complete)
Phase 4 - Solvent Extraction (complete)
Phase 5 - Value Engineering (complete)
During the December quarter, Bannerman completed its extended and final Phase 6 of the heap leach demonstration plant program at Etango.
The overall results of Phase 6 are comparable to the DFS parameters, including for grades significantly lower than expected average Etango head grade.
Phase 6 test-work findings have defined an upper economic limit with regard to the impact of crush size and crushing circuit options on leach performance.
Analysis
Bannerman Resources 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.
With the data collected over the past two years, Bannerman can now evaluate a stream of potential capital and operating cost wins that should collectively deliver a DFS update which substantially improves Etango’s forecast economics.
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.
Bannerman shares have raced up 150% year to date, currently priced at $0.076.