The Bannerman Energy Ltd (ASX: BMN) share price travelled in the green during afternoon trade on Wednesday.
Whereas the S&P/ASX 200 Index (ASX: XJO) has slipped 0.5% into the red over the past week, Bannerman shares have climbed 37%.
Let's investigate further.
A quick recap on Bannerman Energy
Bannerman Energy is in the minerals exploration business and has projects located in Namibia.
It has the majority of its interests tied up in uranium assets, particularly open-pit uranium operations.
At market close on Wednesday, Bannerman has a market capitalisation of $289 million.
What tailwinds are behind the Bannerman Energy share price?
The Bannerman share price has been on a wild ride over the last month. In early August, the company released feasibility study results at its Etango-8 Uranium Project in Namibia.
In the report, Bannerman advised the study "confirms strong technical and economic viability of conventional open-pit mining."
It also recognised a "maiden Etango-8 ore reserve" declaration of 117.6 million tonnes (Mt) at 232 parts-per-million (ppm) uranium for "60.3 million pounds (Mlbs)" of uranium.
As such, Bannerman is drawn to the "attractive economics" of a potential US$65 per pound of uranium, which signals a post-tax net present value (NPV) of US$222 million and post-tax internal rate of return (IRR) of 20.3%.
The company forecasts a net project cash flow of US$642 million from these calculations, after capital expenditures and tax.
Don't forget the recent prices of uranium
Given that Bannerman is an ASX resources share that produces commodities, it can be labelled as a "price taker".
This means its share price can fluctuate with the price of the underlying commodity cycles it has interests in, as is the case with many other minerals players.
Looking at the charts, we can see uranium spot prices have soared to 5-year highs since mid-August.
Uranium spot is now commanding US$40.05 a pound. This is a significant 33% up-step from the previous low of $30.08 on 16 August.
This relationship between the volatility of commodities and their producers' share price generally has a lag.
That simply means that changes underlying commodity prices may be reflected in the respective industry's share basket a short time afterwards – usually a few days.
We can see this phenomenon in the case of the Bannerman share price, as it made its move upwards on 27 August. This was around 11 days after the big increase in uranium spot prices.
Given Bannerman's concentrated exposure to uranium assets and the fact it is a price taker on uranium, it starts to make sense why the Bannerman share price has climbed almost 40% in the last month.
Bannerman Energy share price snapshot
The Bannerman Energy share price has climbed 155% this year to date, extending the previous 12 months' gain to 515%.
These results have far outpaced the ASX 200 return of around 25% over the past year.
