Bannerman Resources is continuing joint venture discussions with third parties to develop the Etango uranium project in Namibia after receiving a "highly conditional" acquisition proposal from China's Hanlong Mining Investment.
Hanlong Mining Investment is a subsidiary of a Chinese conglomerate, the Sichuan Hanlong Group. It has offered Perth, Australia-based Bannerman A$0.612 ($0.654) per share for 100% of the company, by way of a scheme of arrangement.
Bannerman is working to develop Etango, formerly known as Goanikontes, with a view to a mine start-up in 2015. Production of 2000-2500 tU per year for 20 years is envisaged. The company has been working to find a suitable joint venture partner to facilitate the financing, development and operation of the project. A takeover would give Hanlong control of Etango, which Bannerman describes as "large-scale and low technical risk."
Bannerman's board of directors alleges that the timing of Hanlong's bid has been chosen to take advantage of a low share price which it says has been adversely affected by macro issues such as the events at Fukushima and weak global equity markets. Bannerman chairman David Smith said that corporate interest in the company was "understandable" in a world where nuclear power would continue to play a key role in meeting growing energy needs as well as alleviating greenhouse gas emissions. "Etango is a strategic asset which is highly leveraged to a stronger uranium price in a world where security of supply is one of the most important issues for nuclear power generators and utilities," he added.
Hanlong's proposal is described as "highly conditional", including a requirement for due diligence to be completed by 30 September 2011, the receipt of various Chinese approvals, a recommendation from the Bannerman board, support from major shareholders, and the continuity of Bannerman senior management amongst other stipulations.
A request for a three-month period of exclusivity has been turned down by Bannerman as being inappropriate "given the absence of agreement on price and the conditionality of the proposal." Therefore, while discussions with Hanlong are ongoing, Bannerman says that it will continue with other joint venture discussions.
"There can be no certainty that the Hanlong proposal will proceed and it is possible that a final position will not be known for some months," Bannerman noted in its announcement of Hanlong's proposal.
Commercial uranium mining began in Namibia in 1976, and the country currently has two operating mines, Rössing and Trekkopje, which between them are capable of producing 10% of the world's uranium. Etango is about 30 kilometres south west of the Rössing uranium mine. Earlier this year, the Namibian government announced that state-owned mineral exploration company Epangelo Mining Ltd would have exclusive control over new strategic minerals developments, including uranium. Existing licences and applications are not affected by the measure. Bannerman already holds the relevant exploration licences for Etango and applied for a mining licence in 2009.
Researched and written
by World Nuclear News