Bannerman (BMN) Yellowcake leverageUranium developer Bannerman...

Bannerman (BMN) Yellowcake leverage

Uranium developer Bannerman (BMN) delivered a Pre-Feasibility Study (PFS) for its 80% owned Etango project in Namibia.

The PFS articulated higher than expected operating costs of US$38/lb for the first five years, and US$41/lb over the life of mine (LOM). Argonauts expectations were US$35/lb LOM.

The market responded viciously, marking the stock down from $1.15 to $0.63 in three trading sessions.

Although BMN deserved some pain, the market has over-reacted. Etango retains a number of redeemable features:

Size The remodeled resource (Uniform Conditioning method) of 152Mlb @ 227ppm enables a large production rate of 5-7Mlb pa over a +16 year mine life
Exploration upside - >30km of prospective alaskite stratigraphy
Rigorous costs The US$25-$35/lb operating costs often quoted by junior uranium competitors could prove optimistic when subject to more rigorous studies
Flotation concentrate option Laboratory scale test-work has demonstrated 5-6% mass pull, if proven on a larger scale this could lead to significant capital and operating cost reductions
Ultimately BMN is a highly leveraged play. At Argonauts long term uranium price forecast of US$70/lb the stock is valued at $1.01. At US$80/lb the valuation rises to $1.77 and at US$60 it falls to $0.24. Current long term prices are ~US$65/lb.

BMN offers patient believers long-term uranium leverage.