ASX-listed Bannerman Energy reports on strong progress during the quarter, as it advances preparedness for the targeted development phase of the Etango Uranium Project and demonstrated Etango’s superior leverage to, and scalability with, higher uranium price outlooks through delivery of the Etango-XP/XT Scoping Study.
Bannerman Executive Chairman, Brandon Munro, said: “The strong progression in project workstreams during the quarter steadily advanced the fully-permitted Etango project towards construction, in parallel with financing and offtake marketing workstreams, as we drive towards being in a position to take a positive Final Investment Decision. We were particularly pleased to demonstrate, via the Etango-XP/XT Scoping Study, the long-term optionality afforded by our large-scale Etango resource and a clear pathway towards becoming a 6.7 mlbs pa producer.”
Etango Uranium Project (Bannerman 95%)
Etango-8 FEED Activities FEED continued to progress on schedule and budget and is expected to be completed in Q2 2024. The detailed engineering design activities have commenced to position the Etango so that execution can commence as soon as a positive Final Investment Decision (FID) is taken.
Process Engineering: All heap leach and ion exchange test work is complete, and improvements are being included in the process design. The Dry Plant process simulation was finalised, and vendor information was included for the main mechanical equipment. The mass and water balance, and piping and instrument diagrams for the dry plant have been completed, with good progress being made on the Wet Plant section.
Mechanical Engineering: Mechanical packages have all been received back from the market, and adjudications of the structural, mechanical, and piping packages have been completed. Mechanical equipment sizing and detailing of layouts based on certified vendor information is on track.
Electrical, Instrumentation and Control: The single-line diagrams are complete and the load lists have been updated with the latest equipment loads. Optimisation of the operational technology selection and system architecture is proceeding.
Civil, Infrastructure and Earthworks: Packages for bulk earthworks and bulk concrete have been adjudicated and the final recommendation has been made for award. The ripios dump design optimisation is on track to incorporate the selected vendor conveyor solution. A surface water management study was commissioned to review the current design and ensure any potential flood mitigation measures are effective.
Early Construction Works: The early works contracts for the construction water supply and the mine access road are on schedule to achieve the planned completion date of July 2024.
Financing
During the quarter, Bannerman advanced its financing activities for the Etango Project. The Company is evaluating and progressing various funding sources, including conventional project debt, as well as potential offtake and joint venture opportunities with strategic counterparties who can add value to the Etango Project.
As previously advised, Bannerman has appointed Azure Capital and Vermilion Partners (both global affiliates of French financial services institution Natixis) to advise on and assist with the execution of the optimal funding mix for Etango.
Bannerman remains committed to establishing a highly robust financial base for the Etango Project. The Company’s focus is on closely aligning its strategic financial planning with its development and operational goals, thereby ensuring the long-term success and sustainability of Etango.
Offtake Marketing
During the quarter, Bannerman advanced its product marketing initiatives, including further meetings with target offtake counterparties and nuclear industry participants. The Company’s overarching product marketing strategy continues to be centred on, and driven by, a detailed understanding of utility requirements and preferences.
Bannerman’s well-established position with respect to offtake marketing is that the Company will not diminish the long-term underlying value of Etango by committing to contracting its planned uranium output on price (and other terms) that it considers unrepresentative of long-term market fundamentals and producer opportunity. With yellowcake term contract liquidity and pricing continuing to build momentum during the quarter in line with tightening uranium market fundamentals, the threshold for undertaking such contracting activities is now significantly closer to being reached.
Etango-XP and Etango-XT Scoping Study
On 13 March 2024, Bannerman announced the completion of a Scoping Study evaluating future higher throughput and operating life cases for the Etango Project. Two future phase options were evaluated: a post ramp-up expansion in throughput capacity to 16 Mtpa (Etango-XP) or an extension of operating life to 27 years (Etango-XT).
Bannerman remains fully committed to the timely development of its base-case 8 Mtpa Etango development (Etango-8), which was the subject of a Definitive Feasibility Study (DFS) (refer Bannerman ASX release dated 6 December 2022, Etango-8 Definitive Feasibility Study) and subsequent FEED workstreams. The Etango-8 Project is a highly attractive standalone project.
The Scoping Study evaluation of the Etango-XP and Etango-XT cases was undertaken to demonstrate the ready technical and economic viability of subsequent expansion and/or life extension options for Etango post successful construction and ramp-up of the base-case Etango-8 Project.
Key outcomes include:
Etango-XP (mine and plant throughput expanded to 16 Mtpa from operational Year 5):
- Life of Mine (LOM) U3O8 output of 95.2 Mlbs over 16 years (Etango-8 DFS: 52.6 Mlbs over 15 years)
- Annual average U3O8 output (post plant expansion) of 6.7 Mlbs (Etango-8: 3.5 Mlbs)
- Expansion phase capex of US$325M (Etango-8: zero)
- LOM average all-in-sustaining cash cost (AISC) of US$42.5/lb U3O8 (Etango-8: US$38.1/lb)
Etango-XT (life extension with mine and plant throughput maintained at 8 Mtpa):
- LOM U3O8 output of 95.2 Mlbs over 27 years (Etango-8 DFS: 52.6 Mlbs over 15 years)
- Annual average U3O8 output of 3.5 Mlbs (Etango-8: 3.5 Mlbs) • No expansion phase capex (Etango-8: zero)
- LOM average AISC of US$45.3/lb U3O8 (Etango-8: US$38.1/lb)
The Etango-XP/XT Scoping Study has categorically demonstrated second-phase growth optionality under the base case Etango-8 approach to initial project development. This highlights the significant underlying value residing in Etango’s large-scale uranium resource in terms of its substantial in-ground leverage to, and scalability with, higher uranium price outlooks.
The ability to enact either the XP or XT plans, post-delivery of the base case Etango-8 development, affords Bannerman substantial real option value across a range of long-term uranium price outcomes. Future feasibility work on the Etango-XP and Etango-XT options is capable of ready fast-tracking (at the relevant point in time) given all resource drilling, geotechnical, metallurgical, process and environmental workstreams have already been completed as part of previous DFS-level project evaluation.