PERTH (miningweekly.com) – An optimisation study into Bannerman's Etango uranium project, in Namibia, has led to improved project economics.

Based on average yearly production of 7.2-million pounds of uranium oxide (U₃O₈) over an initial mine life of 15.7 years, the project was expected to have a net present value (NPV) of $419-million and a post-tax internal rate of return (IRR) of 15%.

This compared with the 2012 definitive feasibility study (DFS) NPV estimate of $69-million and a post-tax IRR of 9%, while the initial DFS estimated an average yearly output of 6.9-million pounds U₃O₈.

The optimisation study also decreased the expected preproduction capital by 9%, from $870-million to $793-million.

“The optimisation study has strongly repositioned Etango, demonstrating project economics that are highly competitive at consensus incentive long-term uranium prices. Importantly, the work has also confirmed the technical robustness of the DFS,” said Bannerman CEO Len Jubber.

He noted that, when coupled with the success of the heap leach demonstration plant, the optimisation study placed Etango at the forefront of the global development pipeline of projects likely to produce at or above two-million pounds of U₃O₈ a year.

Jubber on Wednesday said Bannerman would continue to move the Etango project forward and was looking to capitalise on its advanced project status and early-mover advantage into the consensus forecast improvement in uranium market activity and pricing.

Subject to the remaining study work, requisite sales contract procurement and project financing, the Etango project had been targeted for first production in the first half of 2020.

Meanwhile, Bannerman on Wednesday also announced plans to move to full ownership of the Etango project, as well as extinguishing some A$12-million in debt and raising A$3-million in new capital.

Bannerman would move to acquire the remaining 20% in the Etango project from the current owners by way of a share issue. The miner would issue some 123.4-million new shares, representing 17.4% of the company’s enlarged issued share capital, along with A$1-million in cash.

Further, Bannerman would convert some A$8-million of convertible notes held by shareholder Resource Capital Fund (RCF) into new Bannerman shares, at a conversion price of 7.5c each, and sell a 1.5% royalty over the Etango project to RCF for A$6-million.

The payment would be made through a A$2-million cash issue, and the extinguishment of the residual convertible notes held by RCF.

In addition, some A$3-million would also be raised through an equity placement of 63.3-million new Bannerman shares to shareholder RCF VI, priced at 4.74c each.

Following the transaction, RCF and RCF VI would hold a respective 20.4% and 19.3% interest in Bannerman.

“Moving to 100% ownership of the world-class Etango project is something we have long sought to achieve. In addition to the greater economic interest, consolidation of the holding structure is expected to provide considerable structural benefits when project financing is sought for development of Etango,” Jubber said on Wednesday.

“The transaction with RCF will deliver us a debt-free balance sheet with new funds that allow Etango to be taken to the next stage.”