BMN 5.71% 3.7¢ bannerman resources limited

additional comments from d&d

  1. 4,627 Posts.
    Hi People

    Interesting to see that D&D took the time out to put up some additional comments regarding BMN, the tone of which comes across as a huge disappointment that their stop of 85c got triggered. Dr Alex Cowie discusses the phone conversation he had with Peter Kerr the CFO to discuss the market response to the PFS.

    Kerr goes on to say that most questions have revolved around the operating cost figure of US$41/lb, but felt this unjustified. Stating this was within the range given previously(US$35/lb +/- 30%). He pointed out that the vast majority of producers' uranium sales are into long-term contracts and the prices in 2009 have been within the US$62-72 range, this means that the profit margin is far better than when calculated against the spot price of US$44. Which is what we have all been saying the last 2 days.

    He goes on to state that the uranium spot price is of minimal relevance to producers as the majority of their production is sold under long term contract arrangements (now haven't we been saying that too?) to utility buyers who want long term security of supply. Also the US$41 figure is the average figure for the sixteen or more years of the mine. In the first five years, the costs will average US$38/lb with the initial years showing strong operating cash-flows.

    Kerr says that Bannerman's next goal is to complete the DFS, and that, with the PFS supplying base level of information, the DFS will target operating cost savings. Bannerman is cashed up to carry this out, and updates should be released through the year. Next is filing of the mining licence application, a resource update for the drilling over the last six months, further resource definition and exploration drilling, and metallurgical test-work results. The DFS will be undertaken in 2010 and is scheduled to be released in the first quarter of 2011.

    Being cashed up means the fall in the shareprice won't affect any of BMN's plans for next year, it will be business as usual with talks ongoing with strategic partners over the next 3-6 months.

    He finished by saying that the end users of uranium are concerned with security of supply, mine life and sovereign risk. All boxes that Bannerman aims to tick in the future.

    So there you have t from the horses mouth so to speak.


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