The Conversation (0)
Sep. 28, 2014 09:30PM PST
The company’s Etgano uranium deposit in Namibia is uneconomic at current prices, but it may achieve success when they go up.
Bannerman Resources (TSX:BAN,ASX:BMN) announced last week that it has awarded contracts to construct and operate a demonstration heap leach plant at its Etango uranium deposit in Namibia.
The total cost of the plant is expected to be AU$1.4 million, and upon completion in early 2015 it is scheduled to run for at least 12 months, providing larger-scale proof of concept of the current processing flow sheet, as well as generating valuable operating data that can then be used to provide feedback into final plant design.
However, like most of the world’s current stable of undeveloped uranium deposits, Etango remains uneconomic at the prevailing uranium price.
A definitive feasibility study was completed in late 2012, outlining plans for a long-lived operation producing between 6 and 8 million pounds per year of U3O8 for over 20 years — but at a cost. The study estimates pre-production CAPEX of $870 million with an average life-of-mine cash operating cost of $46 per pound U3O8. Despite having slightly lower cash costs in the early years of the operation, it is likely that a price of nearer to $70 per pound will be required to justify development of Etango. That said, few — if any — new greenfields projects are able to justify development at prices below $60 per pound, and most require prices above $80 per pound.
The uranium spot price has increased almost 30 percent since its lows of August to currently sit at $36.50 per pound. The uranium market is somewhat illiquid and still dominated by opaque, long-term contracts, but in recent weeks, market perception seems to be shifting toward the recognition of the potential for medium-term deficits; that’s largely due to gradual increases in demand from new reactors approaching commissioning, industrial action in Canada and political problems in Russia. But there is still some way to go.
In the case of Bannerman, the longer game seems key. The high incentive prices required for new developments to proceed, coupled with the extreme time lag generally required for the approval of new uranium mines is finally raising the recognition of longer-term deficits. In July this year, major resource investor Resource Capital Funds invested in Bannerman via a $5-million convertible note, sufficient to provide the company with funding to continue low-key feasibility work and progress through the permitting process in expectation of the uranium price recovering. In effect, funds to keep the asset secure in a holding pattern.
Bannerman’s key advantages then are the size of Etango and its location in a reasonably stable country that is demonstrably friendly to uranium mining. Etango has been extensively drilled and moved to a JORC and NI 43-101 compliant reserve of 279.6 million tonnes at 194 ppm U3O8, for a total of 119.3 million pounds contained U3O8, making it one of the larger undeveloped uranium deposits in the world, albeit low grade, and therefore of strategic interest to potential end users.
As a low-grade, bulk tonnage operation, there is probably little the company can do to appreciably reduce its planned operating costs, but it can continue to reduce technical and political risk via small plants such as the one announced this week. If it’s able to do that, when the price does reach the trigger point, it will be ready to fire — or be sold.
Securities Disclosure: Brad George holds no investment interest in any of the companies mentioned.
Brad George is a geologist by trade, and has spent over 25 years working in the mining industry around the world in a variety of capacities. Primarily focused on exploration, Brad has gained extensive experience in iron ore, base metals and gold on five continents. He has extensive experience in the management of public resource companies.
Upon completing an MBA, Brad spent several years in London as a partner in a boutique brokerage house, developing a franchise as a rated mining and metals analyst. Brad now resides in Perth, Western Australia.
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Generation Uranium (CSE:GEN, OTCQB:GENR, FRA:W85) is a Canadian exploration company focused on wealth creation through discovery within the uranium sector. The company’s primary strategy is to build a high-caliber exploration team that can rapidly test and drill high-potential targets, de-risking projects for potential takeover by larger producers. Currently centered in the prolific Thelon and Angikuni Basins of Nunavut, the company is also actively evaluating additional project acquisitions in the Athabasca Basin to expand its portfolio.
The company is led by a veteran management team with nearly 30 years of experience in mineral development. CEO Michael Collins has a significant track record of building and exiting public companies, including the co-founding of Bluerock Resources, a conventional uranium producer during the 2000-2008 cycle. This expertise is paired with a focused business model that leverages modern geophysical targeting to accelerate exploration timelines and reduce costs, ensuring the company can deliver results quickly in a bullish uranium market.
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Key Project
Yath Project - Nunavut, Canada
The Yath Project is Generation Uranium’s flagship project. This 100 percent owned property covers about 120 square kilometers within the underexplored Thelon Basin in Nunavut, Canada. The project is located where the Yathkyed and Angikuni sub-basins meet, which is a region known globally for high-grade uranium potential. It sits directly along the same trend as the Angilak Project owned by ATHA Energy (TSXV:SASK, OTCQB:SASFK, FWB:XSU.F), which contains the Lac 50 deposit, one of the highest-grade uranium resources found outside of the Athabasca Basin with a historical mineral resource estimate of 43.3M lbs at an average grade of 0.69 percent U3O8.
The Yath Project is contiguous to the Lac 50 trend and is crossed by several regional faults and basin boundaries. Past exploration work has already identified high priority targets, while surface sampling in the area has produced uranium grades from boulders, with some testing at 9.81 percent, 3.95 percent, and 2.14 percent U3O8.
The company has commenced its initial field program at the site, set to define and rank drill targets. Historic showings will be combined with new anomalies from the MMT geophysics survey, preparing the project for an anticipated drill permit.
Management Team
Michael Collins - CEO & Director
Michael Collins is a professional geoscientist with nearly 30 years of experience in mineral exploration. He has co-founded several public companies, including Exploits Discovery, Prime Mining (acquired in 2025), and Nuclear Fuels (merged with Premier American Uranium in 2025). He is also currently a director of First Atlantic Nickel.
Christoph Bruening - Director
Christoph Bruening is the founder and managing partner of Value Relations GmbH, a full-service investor relations and public relations agency in Frankfurt with over 25 years of excellence, focusing on mining, exploration, biotech and health care. In addition, he has listed over 600 companies on the Frankfurt Stock Exchange and is a speaker and author of several publications, including on rare earths and uranium.
Dallas Miller - Director
Dallas Miller has been working within the international mining industry for over 15 years, working with BHP and Santos Ltd. He has experience on the ground from an operational standpoint, as well as being an integral part of raising millions of dollars in capital funding for both private and public companies in recent years.
Roger Leschuk - VP Corporate Development
Roger Leschuk has been in corporate management for over two decades, with the past 15 years dedicated to corporate development and investor relations. He has experience participating in and assisting with mergers and acquisitions, and was an investment advisor for various services such as stocks, mutual funds and tax-sheltered investments. He is a Chartered Investment Manager and a Fellow of the Canadian Securities Institute.
Monty Sutton - CFO
Monty Sutton brings over 35 years of experience in public markets and corporate governance. He previously served as CFO for Nuclear Fuels from its IPO through its acquisition.
