Bannerman Energy Ltd (ASX: BMN) shares are starting the week in a positive fashion.
In morning trade, the ASX uranium stock is up 8% to $3.24.
Why is this ASX uranium stock racing higher?
Investors have been scrambling to buy the company's shares this morning after it released the results of a scoping study.
Bannerman's study was evaluating future higher throughput and operating life cases for its flagship Etango Uranium Project in Namibia.
Management notes that two future phase options have been evaluated. These are a post ramp-up expansion in throughput capacity to 16 Mtpa (known as Etango-XP) or an extension of operating life to 27 years (known as Etango-XT).
Outside this, the company remains committed to advancing Front End Engineering and Design (FEED), offtake marketing, and strategic financing workstreams on its base case 8 Mtpa Etango development (known as Etango-8).
It highlights that the scoping study evaluation of the Etango-XP and Etango-XT cases has been undertaken to demonstrate the potential technical and economic viability of subsequent expansion and/or life extension options for Etango following the successful construction and ramp-up of Etango-8.
Scoping study results
For Etango-XP, the results are as follows:
- Life of Mine (LOM) U3O8 output of 95.2 Mlbs over 16 years
- Annual average U3O8 output (post plant expansion) of 6.7 Mlbs
- Expansion phase capex of US$325 million
- LOM average all-in-sustaining cash cost (AISC) of US$42.5/lb U3O8
For Etango-XT, its results were:
- LOM U3O8 output of 95.2 Mlbs over 27 years
- Annual average U3O8 output of 3.5 Mlbs
- No expansion phase capex
- LOM average AISC of US$45.3/lb U3O8
And for the purpose of comparing with its existing Etango-8 plans, here's what the company is targeting currently:
- LOM 52.6 Mlbs over 15 years
- Annual average U3O8 output of 3.5 Mlbs
- Zero expansion capex
- LOM average AISC of US$38.1/lb U3O8
Essentially, both Etango-XP and Etango-XT will produce the same amount of uranium, but one will do it in almost half the time and at a slightly lower cost if the company invests US$325 million.
'Supercharged' economics
Bannerman's executive chairman, Brandon Munro, was very positive on the outlook for the Etango project, particularly given how strong uranium prices have become in recent times.
U3O8 spot prices recently increased to a 16-year high of over US$100 per lb, which is significantly higher than the project's base case assumptions. Munro commented:
I am delighted that we have more formally demonstrated the longer-term optionality delivered by our large-scale Etango uranium resource. While the XP and XT cases are readily viable at our base case Etango-8 DFS price assumption of US$65/lb, their economics are clearly supercharged in higher price scenarios.
As such, what the Scoping Study emphatically evidences is the significant underlying value residing in Etango's huge 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 initial Etango-8 development, affords Bannerman substantial real option value across a range of long-term uranium price outcomes.
This ASX uranium stock is now up 150% over the last 12 months.
