A definitive feasibility study (DFS) into the Etango 8 uranium project, in Namibia, has confirmed the project’s economic viability with at least $320-million (about N$5.4 billion) in pre-production funding needed to achieve the outcomes considered in the DFS, ASX-listed Bannerman Energy said.
While the company was confident that it would be able to raise sufficient capital to meet this demand, the company also noted that it could pursue other value realisation strategies, including sale, partial sale or joint ventures at Etango 8.
Based on a nameplate capacity of eight-million tonnes a year, the Etango project is expected to have a mine life of 15 years, producing 52.6-million pounds of uranium oxide, averaging 3.5-million pounds a year.
“The DFS estimated a preproduction capital expenditure (capex) of US$317-million, up from the US$274-million estimated in the 2021 prefeasibility study (PFS), while all-in sustaining costs (AISC) for the project have dropped from the US$40.3/lb estimated in the PFS to US$38.10/lb.
“The project’s net present value (NPV) is now estimated at US$209-million, down from the US$222-million estimated in 2021, while the internal rate of return has also decreased from 20.3% to 17%,” the company said.
The DFS was based on a uranium price of $65/lb.
“The DFS has confirmed, to a definitive level of study, that the Etango 8 project firmly warrants development. At a base-case uranium price of $65/lb, Etango 8 delivers attractive projected returns from a development that has been heavily derisked via deep prior technical and demonstration plant activity,” said Bannerman CEO Brandon Munro.
“Underscoring Etango’s impressive leverage, the projected NPV more than doubles at a uranium price assumption of US$80/lb. While the Etango 8 economics are robust at US$65/lb, we believe a number closer to US$80/lb will be necessary to incentivise sufficient production across the industry to meet uranium demand this decade.
“Given the challenging global supply chain environment, we are pleased to have kept the increase in preproduction capex to approximately 15%, which includes contingency and anticipated investment in port acid-handling infrastructure. Within that context, we are especially pleased to have captured a 5% reduction in forecast AISC through more efficient power usage and purchasing arrangements,” said Munro.
“We have commenced front end engineering and design and are moving firmly down the path towards production at the precise moment the world wakes up to the essential role of nuclear power. Our mining licence application was submitted in August 2022 and we are well underway with parallel offtake and project finance workstreams. All of this activity is driving towards a targeted positive final investment decision on Etango 8, uranium market conditions permitting, during the second half of 2023.”
Construction of the Etango 8 project is expected to take 34 months to complete, including detailed design.
The Etango Uranium Project (Etango Project) is located in the Erongo Region of Namibia, approximately 30 kilometres to the east-south-east of Swakopmund. It is positioned within a highly established uranium mining jurisdiction, where the mining and export of uranium via the Walvis Bay deep-sea port facility has been ongoing for over 40 years. The Etango Project is owned by Bannerman Energy Ltd, through its 95%-owned subsidiary Bannerman Mining Resources (Namibia) (Pty) Ltd.
PROGRESS TIMELINE
Planned development of the Etango Project involves bulk open pit mining of a large, relatively homogenous uranium deposit followed by crushing, acid heap leaching, Ion Exchange (IX) with Nano Filtration (NF), and uranium recovery into yellowcake product (U3O8). In April 2012, Bannerman completed a DFS (DFS 2012) for the Etango Project. The DFS 2012 was based on a 20Mtpa mine and heap leach process throughput. Mine planning, engineering design and capital and operating cost estimation was undertaken to an accuracy of ±15%. In March 2015, Bannerman commissioned an industrial scale plant to demonstrate the heap leach configuration and assumptions. The results of the trials demonstrated strong support for the DFS 2012 metallurgical parameters. In November 2015, Bannerman completed a DFS Optimisation Study (OS 2015). The OS 2015 saw a pre-production capital cost estimate of US$793M for average life-of-mine (LOM) production of 7.2 Mlbs U3O8 per annum at a LOM average C1 cash cost of US$38/lb.
In 2019, Bannerman commenced an evaluation of various project scaling and scope opportunities under a range of potential development parameters and market conditions. Indicative outcomes of this work highlighted strong potential for a scaled-down initial development of the Etango Project. As a result, Bannerman commenced work on a Scoping Study into such a development. The Etango-8 Scoping Study (August 2020) provided an early-stage confirmation of the technical and commercial viability for development of the Etango Project at an 8Mtpa throughput rate. Importantly, much of this Scoping Study evaluation was heavily informed by the detailed study work undertaken across all relevant disciplines as part of the DFS 2012 and OS 2015. The Etango-8 Scoping Study development also, critically, maintained the real option of modular expansion, up to potentially the 20Mtpa scale envisaged by the DFS 2012 and OS 2015. Following completion of the Etango-8 Scoping Study, the PFS process was commenced with targeted completion in mid-2021.
MINING LICENSE
Earlier this year, Bannerman announced that it had submitted its Mining Licence application with the Ministry of Mines and Energy (MME) for the proposed Etango-8 uranium mine.
The development means the company will be expected to submit a Definitive Feasibility Study (DFS) for Etango-8, which has now been completed as part of its engagement process with the Mines ministry.
Bannerman already has Environmental Clearance Certificates (ECC) for the Etango Uranium Project and linear infrastructure, which remain current and were based on an extensive Environmental and Social Impact Assessment and Environmental and Social Management Plan.