warwick grigor report 11/05/2009

For those who have been wringing their hands since the SMH article, quoting Warwick Grigor, then you must read his specific comments on BMN, back in May.

Of even more interest, are the comparative tables and overview of the U3 companies on the ASX. Great reading.



(Posted by Narla, on EXT thread)

Investment Perspective: BMN was one of the first big stock market movers out of Namibia, but it has been overshadowed by its neighbour, Extract Resources, in recent months. Extractʼs Rossing South project is demonstrating higher grades and its proximity to the Rossing mine, and the
entry of RIO and then Polo Resources to the share register, is adding to the speculation on the corporate front.
Nevertheless, BMNʼs Etango resource is world class. It will be developed at some point, once it has been optimised. There is considerable grade/tonnage curve flexibility. While the resource grade is currently 207 ppm, the
start up grades will be higher. Most of the resource is within 200m of the surface with 70% of the drilling only going to this level, yet it continues for hundreds of meters at depth. Specifically when compared to Rossing, there is less marble in the rock and this means less acid consumption and less difficult comminution.

BMN is assessing process routes for a 15 mtpa operation producing 5-7 mill. lbs U3O8 p.a.(2,300-3,200 t) for a 15 year life. The prefeasibility numbers are due in June 2009. It is understood that the estimated capital costs have been
kept low at US$450-500m (even though we think this is optimistic and we have stuck to US$600m), but cash operating costs have risen to US$30-35/lb.

We have been encouraged by the appointment of Len Jubber as CEO. Len spent many years as a mining engineer at Rossing before moving to the low grade Macraes gold mine in New Zealand. It is an added bonus that he originally comes from Nambia and knows how that country works. His technical and managerial skills will be a real fillip to BMN.

Valuation Comment: Even with our higher capital cost figures and a head grade of 220 ppm, BMN looks good value on a cash generation multiple of 2.0x, on the spot price of US$46/lb. We would expect the higher long term price to be more relevant here due to the size and long life expectations.

Optimisation of the project could provide further enhancement.

Latest Significant News: BMN announced a 33% increase in the Etango Indicated Resource to 195 mill. tonnes at 207 ppm, for 89 Mlbs plus an Inferred Resource of 87 mill. tonnes at 195 ppm for 37.4 Mlbs, at a 100 gpt
cut-off.
_____________

(http://www.minesite.com/fileadmin/content/pdfs/Brokers_Notes_April_09/Uranium11May09FINALa.pdf)



Cheers, Skip

____________________________________________