BMN 2.50% 3.9¢ bannerman resources limited

fat prophets chooses bannerman

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    Hey Folks,

    Just thought Id share with you FP's free email:

    It's bizarre behaviour. Just a couple of months ago people were prepared to pay over $4 for a share in promising emerging uranium producer Bannerman Resources, yet today the shares languish around the $2.15 mark. If they were a buy at $4, surely they are a buy at almost half that price, aren't they?

    Cricket And Uranium - A Strange But True Mix

    We could have picked any number of companies other than Bannerman who have seen their share price halve in the past couple of months. A little further down, we'll show you why we've chosen Bannerman, and why we think this exciting uranium company could be on the cusp of something huge.

    For cricket fans, as an aside, did you know that the company is named after Charles Bannerman, the Australian opening batsman who, in 1877, had the honour of facing the first ball ever bowled in Test cricket? He went on to score 165, which still today remains the highest score by an Australian batsman on debut. Also, his 165 runs, out of Australia's total of 245, is still the highest proportion (67.35%) of a completed innings in a Test match.

    Jumping back to Bannerman the uranium company, the share price movement over the past couple of months is quite enlightening. It shows more than anything how in the short-term, share prices often move more because of fear and greed than the performance of the underlying company.

    Many investors make the simple mistake of assuming the short-term performance of the share price accurately mirrors the performance of the underlying company.

    Nothing could be further from the truth. Forget short-term share price movements, except when they allow you to buy great companies at cheap prices, and to sell mediocre companies at great prices.

    The one key thing to remember is that in the long-term, it is the performance of the underlying company that drives the performance of the share price.

    72 Million Pounds Of Uranium

    As for Bannerman Resources, the company recently announced an updated resource statement, increasing its contained uranium from 27 million pounds to over 72 million pounds.

    In our most recent report to Fat Prophets members, we estimated its uranium project could generate operating cashflow of $160 million a year, which compares extremely favourably with its total market capitalisation of $280 million.

    Bannerman remains one of a select few uranium plays in the Fat Prophets portfolio, and we look forward to continuing to follow its progress as it heads towards full production around mid-2011.
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