Some more positive news regarding Bannerman from Euroz...

Some more positive news regarding Bannerman from Euroz Securities;


Price Target: $1.20/sh


Reason For Update:
Update and settlement of Savanna litigation

What We Know
· In the past month BMN has appointed a new CEO, secured a A$20m funding facility and settled the Savanna Litigation. These are all important steps in the future of BMN which is now well placed to continue unimpeded on the feasibility work and ultimate development of its Etango uraniun project.
· Len Jubber, ex Perilya Ltd CEO and a mining engineer with extensive operational experience and management experience is the new CEO.
· BMN has drawn down A$10m under the Convertible Note Facility of up to A$20m with Resource Capital Fund IV LP. The conversion price of the first A$10m is A$0.612/sh – a 76% premium to 30day VWAP. The conversion price of the additional $10m would be the lesser of $0.612/sh and a 20% premium to the 30 day VWAP at time of drawdown – this is at the election of BMN.
· The consideration for the settlement of the Savanna litigation is a cash payment up to A$3.5m and 9.5m fpo BMN shares – for total consideration of ~ $10m assuming a BMN price of $0.75/sh. Upon completion of the Deed, Savanna will receive $3m cash and 5.5m shares with the balance payable upon granting of the Mining Licence.

What We Think
· The settlement of the Savanna litigation is a key milestone for BMN and removes the uncertainty this was causing for both investors and the company in its ability to continue the progression of Etango. Whilst the sum of ~$10m is at the higher end of our expectations the reality is this issue did have the potential to drag on for years.
· We are very positive on the appointement of Len Jubber as the new CEO, especially considering the fact he spent 8 years working at Rossing and is a well credentialled mining executive with a broad range of experience
· The major issue for the feasibility study is which process route is best option – heap leach or standard leach. The potential of the heap leach operation (lower capex etc) means a lot more work is required and this will be a priority over the coming months.
· In addition, the overall potential size of Etango and the surrounding area is still unknown. Much of the focus has been on proving up Etango with a view to fast tracking this resource into production, at the expense of drilling some of the other targets etc. Our view is that the overall resource could grow signficantly with more drilling at some of the other prospects identified around the granite margin, such as Oshiveli, Ompbeop etc. We believe now that BMN has sufficient funds it will look to drill some of the other targets.

Investment Case:
We are pleased to see the three major issue affectiong BMN resolved prior to Xmas namely, CEO, funding and the Litigation.
The $10m con note with option for a further $10m is sufficient for the feasbility study to be completed by end of CY’09.

Coporate activity continues in the uranium sector – particularly for Namibian based projects. In Nov’08 Forysys Metals Corp received a C$7.00/sh cash bid. Forysys has a total resource of 62mlbs of U3O8 at a grade of 0.011ppm – ie a lower grade and smaller resource than BMN. The equivalent takeover metrics BMN would be + $4.50/sh. In addition, RIO has taken 19.9% interest in Extract Resources, a fellow Namibian uraniun explorer and last year Areva paid US$2bn for Uramin with a global resource of 183mlb.

Ultimately we believe BMN will need a partner to take Etango through to development as raising say +A$500m in the current environment is impossible. Alternatively we do see potential for coporate activity which is why its important that BMN understand the larger resource potential at Etango.

Our valuation, based on the scoping study assumptions is ~ $1.20/sh assuming a long term uranium price of US$50/lb. The leverage is signifcant with a 10% increase in the uranium price adds some $0.40/sh to our valuation. This valuation is likely to change once the final process route, capital and operating costs are refined. We maintain our Speculative Buy on BMN for exposure to a major uranium resource that has potential to become a top 10 producer over time.


Good to get some positive news and see the Company moving closer towards it goals.

Have a good Christmas and New Years fellow holders.