Bannerman Resources Limited
TSX : BAN
ASX : BMN
December 14, 2009 05:11 ET
Bannerman Proceeds With Etango Project Definitive Feasibility Study
PERTH, AUSTRALIA--(Marketwire - Dec. 14, 2009) - Bannerman Resources Limited (TSX:BAN)(ASX:BMN)(NSX:BMN) ("Bannerman" or the "Company") is pleased to announce Board approval to proceed with a Definitive Feasibility Study ("DFS") following positive results from the Preliminary Feasibility Study ("PFS") on its 80%-owned Etango Project in Namibia, southwestern Africa.
The Etango Project is a large and relatively shallow uranium project in one of the world's premier uranium mining locations. The PFS has demonstrated two development options for the Etango Project comprising a bulk open pit mining operation with processing undertaken either by agitated tank leaching of a high-grade flotation concentrate or by heap leaching methods. The very favourable flotation testwork results achieved to date have elevated flotation concentrate leaching to the preferred processing option, with further confirmatory laboratory and pilot plant testwork scheduled to be completed in the March 2010 quarter.
The full version of this PFS results release can be accessed on the Company's website at www.bannermanresources.com.au or on SEDAR at www.sedar.com.
Highlights from the PFS include:
- Development scenario - The preferred route is a bulk-mining open pit operation with processing undertaken by agitated-tank leaching of a high-grade flotation concentrate.
- Internal Rate of Return - Pre-tax IRR of 22% for flotation concentrate leaching based on a long term uranium price of US$70/lb U3O8.
- Production schedule - Estimated production commencement in 2013 with annual U3O8 output between 5-7Mlbs over a +16 year mine life based on a mineable resource estimate of 231 million tonnes ("Mt") at an average grade of 211 parts per million ("ppm") U3O8 for total life-of-mine production of 97 million pounds ("Mlbs") U3O8 for the flotation concentrate leaching option. Opportunities exist for further pit expansions to add significantly to estimated life-of-mine production. Mineable resources at this stage comprise 2% Measured, 75% Indicated and 23% Inferred resource material by metal content. The incorporation of drilling completed since the resource estimate is expected to convert more of the Inferred material into the Indicated category.
- Mineral resource estimate - An updated mineral resource estimate for the Etango Project was prepared using resource modelling techniques more closely aligned with envisaged open pit mining practices. The new resource estimate, which is based on the same drilling database as the previous July 2009 estimate and reported at a cut-off grade of 100ppm U3O8, comprises Measured resources of 3.6Mt at an average grade of 249ppm U3O8 for 2.0Mlbs of U3O8, Indicated resources of 201.8Mt at 227ppm for 100.8Mlbs U3O8 and Inferred resources of 102.9Mt at 217ppm for 49.2Mlbs U3O8. Compared with the July 2009 resource estimate, the PFS resource estimate resulted in a 10% higher average grade, and reductions in tonnage and metal content of 13% and 5% respectively. Incorporation of resource definition drilling reported since mid-2009 into the resource model is expected to expand the resource estimate.
- Processing recoveries - Flotation concentrate testwork has consistently achieved a strong 5-6% mass pull of over 94% of the contained U3O8 resulting in a high-grade concentrate with an average grade of 3,500-4,000ppm U3O8. Overall processing recoveries above 90% are expected.
- Capital cost - Initial capital cost of US$555 million for flotation concentrate leaching, including mining pre-stripping and excluding working capital.
- Operating costs - Operating costs for flotation concentrate leaching in the first five years of US$38/lb U3O8, with life-of-mine operating costs estimated as US$41/lb U3O8. Given the relatively shallow nature of the open pit mine, life-of-mine average operating costs are only approximately 7% above the first five year costs, supporting the sustainable long life of the Etango operation.
- Opportunities - Key opportunities to improve project economics include the early mining of additional near-surface mineralisation delineated in more recent drilling at Oshiveli, increases to the Etango resource estimate following incorporation of drilling undertaken since July 2009, flotation optimisation, the use of electrically-powered (known as trolley-assist) mine haulage trucks, third party development of a local sulphuric acid plant and further mine scheduling optimisation.
- Heap leaching option - The PFS has also examined a heap leach processing option, however the work on this processing route has been placed on hold given the very encouraging results from the flotation concentrate testwork. The heap leach option is expected to have metallurgical recoveries of approximately 85% and result in life-of-mine production of 91Mlbs U3O8. Capital costs for a heap leach scenario are estimated at US$607 million, including mining pre-stripping and excluding working capital, and operating costs are forecast at US$41/lb U3O8 for the first five years and US$44/lb U3O8 for the life-of-mine. Heap leaching is modelled to deliver a pre-tax IRR of 16% based on a uranium price of US$70/lb U3O8.
- Permitting - Bannerman is on schedule to lodge the Etango Project mining licence application and associated environmental permitting documentation with the Namibian Government prior to the end of 2009. No substantial legislative, environmental or social impediments have been identified to the Etango Project to date, and local community support has been received.
- Work program - Bannerman is now undertaking a three month confirmatory metallurgical testwork program before a final processing route decision is made as part of the DFS. The DFS will continue through 2010 and is scheduled for completion in early 2011, at which time a development decision is expected to be made.
Referring to the PFS results, Bannerman CEO Len Jubber said: "Our Preliminary Feasibility Study has demonstrated robust economics for the large-scale Etango Project. The relatively low grade of the deposit is counteracted by a range of site-specific features including the shallowness and low strip ratio of planned mining activities, good metallurgical characteristics of the ore, and proximity to infrastructure. The first phase of the Definitive Feasibility Study will encompass further metallurgical testing to confirm the flowsheet which will form the basis for follow-on detailed engineering design."
Mr Jubber added: "With the results of the PFS now available, Bannerman will also further its existing dialogues with potential strategic partners and financing providers in order to investigate various alternative options for financing the development of the Etango Project."
PFS and Cautionary Notice
The PFS estimates reflect 100% of the Etango Project (ignoring ownership and financing structure), are stated in unescalated real 2009 dollars and are presented in US$ unless otherwise noted.
The PFS results are indicative only. They are based on various assumptions considered reasonable by Bannerman and its external technical consultants, but which may or may not be ultimately achieved. Technical and economic estimates in the PFS are prepared to a tolerance of ±30% other than for the processing aspects of the flotation concentrate leaching option which, given the metallurgical testwork status, reflect a ±40% tolerance. The final decision to proceed with development of the Etango Project will be based on the DFS which will include the preparation of a formal ore reserve estimate. Accordingly, at this PFS stage, there is no certainty that the Etango Project will be developed or, if developed, will be economically viable.
It should be noted that Bannerman is not declaring an ore reserve estimate as part of the PFS, with this work being scheduled for the DFS. Estimates of mineable PFS resources comprise 2% Measured, 75% Indicated and 23% Inferred resource material by metal content. However, given the proximity of the Inferred resource material to the Measured and Indicated resources, the Company expects that the drilling undertaken and planned since the preparation of the resource model would convert a reasonable proportion of the Inferred resource material to Indicated status such that this can then be considered for conversion to an ore reserve as part of the DFS. In accordance with relevant regulations governing the disclosure of mineral projects, readers are cautioned that mineable resources based on Inferred resource material are considered too speculative geologically to enable them to be classified as ore reserves.
Further important cautionary and technical disclosures are set out under Regulatory Disclosures below.
Conference Call and Webcast Notice
Bannerman held a conference call and simultaneous on-line slideshow on Monday December 14th at 9:00 a.m. (Australian Western Standard Time) during which the CEO, Mr. Len Jubber, discussed the results of the PFS. The webcast is accessible from a link on the Bannerman website at www.bannermanresources.com.au.
About Bannerman - Bannerman Resources Limited is an emerging uranium development company with interests in two properties in Namibia, a southern African country considered to be a premier uranium mining jurisdiction. Bannerman's principal asset is its 80%-owned Etango Project situated southwest of Rio Tinto's Rossing uranium mine and to the west of Paladin Energy's Langer-Heinrich mine. Etango is one of the world's largest undeveloped uranium deposits. Bannerman is focused on the feasibility assessment and development of a large open pit uranium operation at Etango. More information is available on the Company's website at www.bannermanresources.com.
The Company has not completed feasibility studies on its projects. Accordingly, there is no certainty that such projects will be economically successful. Mineral resources that are not ore reserves do not have demonstrated economic viability.
Certain disclosures in this release, including management's assessment of Bannerman Resources Ltd's plans and projects, constitute forward-looking statements that are subject to numerous risks, uncertainties and other factors relating to Bannerman's operation as a mineral development company that may cause future results to differ materially from those expressed or implied in such forward-looking statements. The following are important factors that could cause the Company's actual results to differ materially from those expressed or implied by such forward looking statements: fluctuations in uranium prices and currency exchange rates; uncertainties relating to interpretation of drill results and the geology, continuity and grade of mineral deposits; uncertainty of estimates of capital and operating costs, recovery rates, production estimates and estimated economic return; general market conditions; the uncertainty of future profitability; and the uncertainty of access to additional capital. Full descriptions of these risks can be found in the Company's various statutory reports, including its Annual Information Form available on the SEDAR website, www.sedar.com. Readers are cautioned not to place undue reliance on forward-looking statements. Bannerman Resources Ltd expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
The information in this release relating to the geology and exploration results of the projects owned by Bannerman Resources Ltd is based on information compiled by Mr Kieron Munro, Head of Geology of Bannerman and a full time consultant to the Company. Mr Munro is a Member of the Australian Institute of Geoscientists, a Recognised Professional Organisation by the Australasian Joint Ore Reserves Committee, who has sufficient experience relevant to the style of mineralisation and types of deposits under consideration and to the activity which is being undertaken to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and as a Qualified Person for purposes of Canadian National Instrument 43-101. Mr Munro consents to the inclusion in the release of the matters based on his information in the form and context in which it appears.
The information in this report relating to the Mineral Resources of the Anomaly A and Oshiveli deposits within the Etango Project is based on a resource estimate completed by Mr Neil Inwood and the information in this news release relating to the Mineral Resources of the Onkelo deposit within the Etango Project is based on a resource estimate completed by both Mr Iain Macfarlane and Mr Neil Inwood who are full time employees of Coffey Mining Pty Ltd. Messrs. Inwood and Macfarlane are Members of The Australasian Institute of Mining and Metallurgy and have sufficient experience relevant to the style of mineralisation and types of deposits under consideration and to the activity which is being undertaken to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves", and are independent consultants to Bannerman and Qualified Persons as defined by Canadian National Instrument 43-101. Messrs. Inwood and Macfarlane consent to the inclusion in this release of the matters based on their information in the form and context in which it appears.
The information in this release relating to mining studies undertaken on the Etango Project was completed by Mr Harry Warries of Coffey Mining Pty Ltd, a consultant to Bannerman Resources Ltd. Mr Warries is a Member of The Australasian Institute of Mining and Metallurgy and has extensive experience relevant to the activity which is being undertaken. Mr Warries consents to the inclusion in the release of the matters based on his information in the form and context in which it appears.
The information in this release relating to the metallurgical test work undertaken on the Etango Project was completed by Mr Daryl Evans of Independent Metallurgical Operations Pty Ltd, a consultant to Bannerman Resources Ltd. Mr Evans is a Member of The Australasian Institute of Mining and Metallurgy and has extensive experience relevant to the activity which is being undertaken. Mr Evans consents to the inclusion in the release of the matters based on his information in the form and context in which it appears.