Bannerman aims for top 10

SITE VISIT

Swakopmund, Namibia — Bannerman Resources’ (BNNLF-O, BMN-A) Welwitschia uranium project in Namibia is named after a rather ugly plant found exclusively in the Namib Desert of southwestern Africa, where the company is actively drilling.

But Bannerman doesn’t take its inspiration from the leathery, lifeless-looking Welwitschia, which can survive for 400 to 1,500 years.

Rather, the company is looking to Rio Tinto’s (rtp-n, rio-l) 30-year-old Rossing uranium mine, 20 km northeast of the company’s own growing deposit, as a more realistic example to emulate.

Rossing (69%-owned by Rio Tinto) is the world’s largest open-pit uranium mine, supplying 7% of the world’s uranium. Exploration so far indicates that Bannerman’s Goanikontes Anomaly A deposit, the main focus of Welwitschia, is on strike with the Rossing mine. Similar grades, host rocks and Rossing’s tried and tested processing methodology will likely smoothen Bannerman’s path to production, and could bring the company’s goal of becoming one of the world’s top 10 uranium producers within reach.

What Bannerman needs next is tonnage. An updated resource, due out by year-end, will be followed by a bankable feasibility study in mid-2008. But a scoping study that came out in September provides an idea of what Bannerman thinks it can achieve.

Bannerman sees construction for an open-pit mine by late 2009, with the goal of producing as much as 4,000 tonnes (8.8 million lbs.) U3O8 per year by 2011.

So far, the company has reported an interim inferred resource of 55 million tonnes grading 0.0219% (219 parts per million) U3O8, or 27 million lbs. U3O8, using a cutoff grade of 0.01%. Bannerman managing director Peter Batten is reluctant to broadcast it, though.

“It has done nothing but confuse the market,” Batten says in the living room of a spacious villa in Swakopmund, a Namibian tourist haven where the golden desert sand dunes collide with the rough Atlantic.

About 25 km from Goanikontes, the rented home Swakopmond doubles as the company’s Namibian office and a home away from home for the Australian management.

“A lot (of people) thought twenty-seven million pounds was all we had — they didn’t know we had an aggressive drill program,” Batten says. “But we can only consider what we know.”

The deposit includes a 21-million-tonne core grading 0.0308% (308 ppm) U3O8 and is based on drilling to an average depth of 80 metres over a 1.4-km strike length. Since then, the strike has been extended to at least 2.3 km, and drilling has extended beyond 300 metres deep.

In a year’s time, Bannerman has done nearly 3,500 metres of diamond drilling and more than 40,000 metres of RC drilling.

The company currently has four drill rigs in action on a 100 by 100-metre spacing, with another two on the way. The focus is Goanikontes Anomaly A, which is one of 10 anomalies found in the area known as the Palmenhorst Dome. The company plans to explore the other anomalies next year.

A total of 257 holes were drilled on Anomaly A during the 1970s and 1980s. Bannerman has validated 40% of those by drilling comparative diamond holes and twinning historical holes.

Bannerman has also completed more than 6,000 metres of RC drilling at its nearby Swakop River project.

Scoping study

The study found that the alaskite material that hosts the uranium mineralization is very similar to the alaskite mined and processed at the Rossing mine. The dominant uranium minerals are uranite, pitchblende and uranophane.

So far the resource has only been modelled on alaskites, not sediments, but Batten is quick to point out that 40% of Rossing uranium production comes from sediments.

Rossing has a reserve of 37,000 tonnes U3O8 and a resource of 135,000 tonnes U3O8. Rio Tinto produced 3,600 tonnes U3O8 in 2006 with a goal to reach 4,000 tonnes this year, eventually increasing capacity to 4,500 tonnes U3O8 per year.

With a conceptual resource of 100 million lbs. U3O8 and a mine life of 12 to 15 years, Bannerman’s study looked at a 15-million-tonne-per-year mining operation at Welwitschia with two potential grades: 0.0219% and 0.03% U3O8.

The operation would produce a maximum of 4,000 tonnes U3O8 each year and a minimum of 2,900 tonnes U3O8, using a uranium price of US$45 per lb.

Operating costs were estimated at US$27.18 per lb. U3O8, which includes the cost of contract mining.

Capital costs were estimated at a maximum of US$400 million with an accuracy of 30%.

The mine would be a conventional open pit, drill and blast followed by load and haul. The stripping ratio is expected to be between 1.5 and 2. The project would include the same conventional acid-leach process used at Rossing, which yields a 90% recovery rate.

The processing plant would use communition, acid-leach, solvent extraction, and precipitation and calcinations circuits.

The company looked at both dry and wet communition circuits — the water-saving dry circuit uses a 2-stage crush producing a 1.3-mm product compared with a 425-nanometre product through the wet circuit, which uses a conventional single-stage crush followed by an semi-autogenous grinding (SAG) ball mill circuit.

High-pressure grinding rolls (HPGR) is the process fundamental to dry communition, and is commonly used in the cement and diamond industries, but not in other mineral processing.

The scoping study found that there are more than 500 operations worldwide that use HPGR to some degree, including the Cerro Verde copper mine in Peru, run by Phelps Dodge, now a subsidiary of Freeport-McMoRan Copper & Gold (FCX-N) and Adanac Molybdenum’s (AUA-T, AUAYF-O) Ruby Creek molybdenum mine in British Columbia.

“The ability to use less water is a major positive aspect of this technology for use in water-scarce environments like Namibia,” Batten says.

The processing methods will be tested in the bankable feasibility study.

Bannerman says it could save up to US$28 million by using radiometric sorting to reduce flow through the circuit by up to 23%, or 11.6 million tonnes per year. This, in turn, would reduce the amount of acid and other reagent consumption, water usage, crushing requirements and power costs.

Infrastructure

The drive from Swakopmund to the Goanikontes deposit is one best enjoyed with the windows rolled up.

Wide and flat, the gravel roads are so well-maintained that motorists travel at highway speeds, though in the arid conditions, the inevitable dust creates a thick beige fog.

Aside from good roads, existing railway infrastructure links the area to Namibia’s only deepwater port in Walvis Bay, just 40 km away.

Much more of a concern than transport are water and power.

The project would require 30 megawatts of power, which the company plans to get from the national grid on a tie-in basis. For this, the company will need an 11-km-long, 66-kilovolt line. Discussions with the government power utility, NamPower, have begun.

Currently, Namibia imports most of its power from ESCOM, in South Africa, but with supply shortages there, the Namibian government plans to build a 400- to 600-megawatt power line link from Zambia that is supposed to be ready by late 2009.

Bannerman is also counting on NamWater, the government water utility, to supply it with 3.45 to 5.25 million cubic metres of water per year.

On account of ongoing drought-like conditions, notes are posted in even the poshest of hotel bathrooms in the capital city of Windhoek, urging guests to conserve water.

NamWater has promised to build a 25- to 30-million-cubic-metre water desalination plant on the coast, 38 km north of Swakopmund, for use by the uranium industry by late 2009. Bannerman would need to construct a pipeline to carry the water 40 km to Goanikontes.

Forsys Metals (FSY-T, FOSYF-O) has signed an offtake agreement with NamWater, to supply its Valencia uranium project — which will require up to 3 million cubic metres of water per year — by the en
d of 2009.

That’s a full year before production from Goanikontes would begin.

“Should it become apparent in early 2009 that NamWater cannot supply water, there is ample time to undertake alternative arrangements to sign third-party agreements for water,” Batten says.

NamWater is already obliged to supply the Rossing mine and Paladin Resources’ (PDN-T, PDN-A) Langer Heinrich mine, which went into production last March. Together, the mines currently require about 7.5 million cubic metres of water per year. NamWater will need an alternative source for these two mines from 2010, and the only viable option is desalination.

Uramin, a subsidiary of Areva (ARVCF-Q), plans to build its own desalination plant that would produce 15 million cubic metres water per year, at last count. The company says it will need about 12 million cubic metres of water per year to produce 3 million lbs. U3O8 at its Trekkopje project by the end of 2008.

The dusty desert sands can be dangerous to inhale — particularly in an already highly radioactive area. Alpha radiation is something that Bannerman is addressing.

When radioactive particles are ingested into the body, the radiation can be very destructive within a short range.

“The potential is minuscule but it’s the perception,” Batten says, as a group of analysts, journalists and geologists adjust their disposable dust masks and safety glasses.

Bannerman insists on a strict procedure for its personnel. Drillers and other workers are picked up and dropped off at the company’s core shack, where they must shower and change their clothes before and after work. Each day, they are supplied with a clean set of coveralls.

“What we do is overkill,” Batten says.

But the company’s actions minimize the threat associated with handling reverse-circulation drill core in the blustery unsheltered desert.

Batten says that, generally speaking, it’s easier to operate in Namibia than Western Australia, where the company is based.

Mining companies now complain of getting tangled in green and red tape in WA, where uranium mining is not allowed, and the exploration and mining of all other minerals has become difficult.

“It used to be the case that you could apply for a licence and be confident that you would be able to be exploring in the following field season,” Batten says. “I have previously had an application in the process for over five years awaiting native title clearance,” he says.

He rants of poor infrastructure for shipping and exporting that the government has been reluctant to upgrade.

Batten is quite positive about working in Namibia, which was rated second behind Sweden in Resource Stocks world risk survey.

“Although our licences in Namibia were originally refused and we had to access the appeal process, our licences were granted in twelve months,” Batten says.

Australia was rated highest in the survey in 2004, but fell to eighth place this year. Canada was rated fourth, while Pakistan rounded off the list at no. 32, as the riskiest country.

Bannerman plans to list on the Toronto Stock Exchange by November and will then tender for the bankable feasibility study, followed by a financing to fund it.

The company is confident in what the feasibility study will bring, based on its success so far.

“We have delivered on schedule despite the project now being several times larger than our original assessment — fact proving far better than fiction,” Batten wrote in an email. “The only reason we may be delayed in meeting any of our targets will be the increase in size of the project and the work required to define the resource limits.”