BMN - another recommendation in Canada
by, 25th-November-2007 at 06:08 AM (6800 Views)
A friend sent me the GMP analyst report from Canada which is another positive report for BMN.
Their final pluck for tonnage is between 150-200Mt, but only containing 70-100 m lbs U. However, they're using the same grade for that calculation.
Good to see them identify the potential at Goanikontes, but not sure if they put this in the valuation.Overall, we believe that these two resource expansions could result in a deposit with roughly 150 million to 200 million tonnes of ore, which is roughly 2.7 to 3.6 times the size of the interim resource. Using a similar grade, this may result in an in situ uranium total of 70 million to 100 million pounds of U3O8. Although this would be a very large resource expansion, intercepts to date have encountered consistent uranium grades over very wide interceptions.
Namibia: Goanikontes (80%)
The current resource at Goanikontes is contained within a deposit called Goanikontes Anomaly A. It is important to note that Anomaly A is only one of the areas within the Goanikontes property (EPL3345) where Bannerman has encountered significant interceptions of wide mineralization. As marked at the bottom of the following map, Anomoly A sits on the western edge of a formation called the Palmenhorst Dome.
Bannerman has identified Onkelo, just north of Anomoly A, where historic drilling by Elf Aquitaine in 1976-78 intersected 60 metres at 269 ppm U3O8 and 28 metres at 423 ppm.
The company has also identified Ompo, which is on the eastern edge of the Palmenhorst Dome. Ompo has a concentration of outcropping alaskites with the highest aerial radiometric anomaly in the companyís data.
Ombuga and Ombepo are to the north near the Rossingburg Dome. In this area, the company noted a historic drill hole from Rio Tinto from the 1970s that returned 57.2 metres of 230 ppm U3O8. These intersections highlight the potential for deposits beyond Anomaly A.
Historic results from these areas have shown similarities in grade across wide mineralized intervals. In order to test these targets, Bannerman has planned an exploration budget of roughly A$6 million which is expected to continue for the next 8 years.
Enterprise Value per Pound of U3O8
If we assume the resources at Goanikontes increase to 100 million pounds (100% basis), then Bannerman would be trading at roughly $4/lb, which is considerably lower than the peer group average of $12/lb and under the current producer average of $13/lb. Although the EV per pound of valuation technique is not the most sophisticated, to a certain degree uranium stocks have traded on this basis in this cycle. Using this metric, we see considerable upside for Bannermanís share price.
The biggest risk they see, as most of us would, is the chance of a large scale nuclear accident, that would dint the entire sector.
Bloody hell I hope there's not a nuclear disaster in the next little while!
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