bmn v ext, page-27

From the EXT forum today. Trying to justify why EXT should have a MC of 3x BMN's.


Hi Barry,

I observe that you didn't answer my questions. Wonder why that might be?

You say: "200 ppm is irrelevant in the region"

but Bannerman say: "Lifting the cut-off grade, as shown in the tables above, has the potential to materially increase the average grade of the resource while still maintaining a substantial resource tonnage and metal content. For example, an increase in the cut-off grade from 100 ppm to 200 ppm U3O8 results in the average grade of the Indicated Resource increasing 33% from 207 ppm to 275 ppm U3O8. This characteristic of the deposit is expected to provide increased mining and economic flexibility for the Etango Project." (http://www.bannermanresources.com/s/Namibia.asp )

THEY don't seem to think it's irrelevant. Irrespective of the region, a higher grade resource is considerably more valuable.

Seeing as you don't want to answer, I will. At a 100ppm cutoff, BMN's CURRENT resource is slightly smaller than EXT's. At a 200ppm cuttoff, it is more like 75Mlb, whereas EXT's is still above 120Mlb.

I'd be more interested in your answer to the likely future resource question. AFAICS, BMN have pretty much drilled out their main deposit. No major upgrades are expected (though not impossible).

OTOH, EXT are in the middle of a drilling programme on a second major target (Zone 2) which has already returned highly promising results. Moreover, significant resource upgrades are expected for EXT's existing resources as results of further drilling are incorporated into the resource model.

By the end of 2009, it is likely that EXT's resource WILL be at least 3x the size of BMN's with an average grade 50% higher.

That's why Rio Tinto are interested and why a market cap 3x higher than BMN's sounds about right to me, given the current state of development of the two companies' projects. By the end of 2009, there is a significant chance that the gap in market caps will have grown wider, if EXT meets or exceeds my expectations - or if Rio's interest turns into an offer either by RIO or another bidder.

Best regards,

Mark