MEY 6.90% 13.5¢ marenica energy ltd

the fundamentals...

  1. 522 Posts.
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    Hello everybody,

    Today Bannerman Resources (another namibian uranium explorer) published their PFS.The market reacted with a 30 % crash.

    These are the Bannermans facts:

    -150 Mlbs at 210 ppm (MEY = 38.6 Mlbs at ~155 ppm)

    -operating costs of 41 USD/lbs (MEY = ~30 USD according to CEO Young)

    -capex of 550 Mio USD needed

    -16 year minelife

    -all assumptions based on a uranium price of 70 USD/lbs

    What does that mean for Marenica?

    You cant compare Bannerman with Marenica,here is why:

    1.Marenicas uranium is much closer to surface than Bannermans (not going deeper than 40 m) meaning significantly lower operating costs.


    2.The area of the Marenica project is plain,while Bannermans looks like some moon crater area,with accordingly aftermaths for the operating costs.

    3. (and most important of all) Arevas Trekkoppje is located just some 30 km from Marenica !!!

    Now this is the key point for Marenica.While Bannerman would have to pay 550 Mio USD to build a processing plant,Marenica wouldnt have to pay anything in case AREVA would be willing to buy Marenica.


    Just as a reminder Areva just built a plant for 1.4 Bio USD for their Trekkoppje area,where they will process 120 ppm grade uranium.

    (MEY has 140-196 ppm,probably ending at an average grade of something like 180 ppm for the paleochannels resource)

    Future upside potential:

    -Springbok results are expected this year ( Dome of potential primary uranium)

    -final resource upgrade in january,probably taking Marenica to the 45-50 Mlbs area (another 15-30 % upgrade)

    -probably increasing the average grades to the 170-180 ppm area

    -scoping study to be complished late in Q1 2010

    -Commencing of a drilling program for the third most southerly dome in Q1 2010 ???

    (this is the one,which is expected to be the source for Arevas Trekkoppje-just some speculation,but imagine this would be true...)

    -There was a sell-off of over 5 Mio AUD worth of Bannerman shares today.This is money,which might want to be reinvested in the namibian uranium sector (some more speculation on my part)

    MEY is currently valued well below 2 USD/lbs.

    AREVA paid nearly 18 USD/lbs in 2007 (at the uranium peak with spot prices being around 150 USD)

    So IMO it is not unreasonable to value MEYs resources at 5-6 USD/lbs (in case of a sale) which would mean shareprices well above todays levels...

    These are the fundamentals,lets see what the markets makes out of it...

    Regards

    Wantedman
 
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