Namibia – Bannerman Resources and its independent technical consultants (primarily AMEC Foster Wheeler and Optiro) have completed an optimisation study on the geological modelling and mine planning aspects of the Etango definitive feasibility study (DFS), which was completed in April 2012.
The OS also reflects updated capital and operating cost estimates.
Key outcomes of the OS (at a life-of-mine price of $75/lb U3O8):
- Project net present value (NPV8%) of US$419 million (previously $69 million).
- Post-tax internal rate of return (IRR) of 15% (previously 9%).
- Average annual production of 7.2 Mlb U3O8 over an initial 15.7 year open pit mine life;
- 9.2 Mlb U3O8 per annum over the first five full production years (previously 7.9 Mlb).
- Average life-of-mine cash operating costs of $38/lb U3O8 (reduced 17%);
- $33/lb U3O8 over the first five full production years (reduced 20%).
- Pre-production capital of $793 million including mining fleet (reduced 9%).
- Rapid payback from first production (4.4 years) and initial mine life to payback ratio of 3.6 times.
- Total operating cash flow of $3.7 billion before capital and tax, and free cash flow of $1.6 billion after capital and tax. From production commencement, average annual operating cash flow of $236 million and free cash flow of $150 million. Peak annual free cash flow of $392 million.
- Potential upside from heap leach demonstration plant results and other identified opportunities still to be incorporated via additional optimisation work.
Says Bannerman CEO Len Jubber:
“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.
“When coupled with the success of the heap leach demonstration plant, the optimisation study clearly places Etango at the forefront of the global development pipeline of projects likely to produce at or above 2 Mlb U3O8 per annum.
“The outstanding improvements in key project metrics reflect the sustained and diligent professionalism of the Bannerman technical team and independent consultants. The favourable demonstration plant results and unconverted mineral resources deliver considerable potential to further enhance the economics and longevity of the Etango project.
“Importantly, Bannerman has now established a sound project platform for extensive engagement with the global nuclear industry. The technical and financial credibility that comes with Etango’s advanced stage of study will be of critical benefit to Bannerman during this educating and marketing process.
“Moreover, at a time when most uranium projects are subject to lengthy and uncertain permitting timeframes, it is comforting to be operating in Namibia where three major uranium mines have been permitted and largely constructed during the past 10 years.
“With the growing debate around climate change and the commitment of major players such as the USA and China to reducing greenhouse gas emission, nuclear energy as a baseload electricity source, is expected to have a central role in meeting the growth of future energy needs. Whilst wind and solar energy will no doubt have a role to play, there is no substitute for more nuclear energy when targeting significant reductions in emissions and increases in overall energy supply.”
“We will continue to move the Etango project forward in a professional manner, looking to capitalise on its advanced project status and early mover advantage into the consensus forecast improvement in uranium market activity and pricing.”
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