WINDHOEK – The Namibian government and an Australian uranium development company have agreed to walk away from a transaction that would have seen the Namibian state-owned mining company Epangelo having shares in the yet to be developed uranium mine.
Bannerman Resources, which is developing a uranium mine in the Erongo Region, said they could not agree with Epangelo Mining, a state-owned entity, on the price for the shares. Epangelo wanted to buy a 5 percent shareholding in the uranium project, with an option to increase the shareholding to 10 percent. However, Epangelo’s due diligence did not value the shares at the same price that Bannerman Resources is asking.
“The parties have been unable to complete a mutually acceptable agreement reflecting the commercial substance of the Term Sheet,” the company said in a statement without giving the value of the shares. The two agreed in April this year that Epangelo would take up shareholding in Bannerman Resources’ uranium project 38 kilometres east of Swakopmund.
The agreement included a condition that Epangelo first complete its due diligence investigations and obtain acquisition finance within four months. The four-month period lapsed last week, and while Epangelo did complete its due diligence it did not agree with the price attached to the shares. Nevertheless, the statement says Bannerman is in a solid position in the current weak equity and uranium markets, with good cash reserves estimated at A$9.6 million (about N$82 million) as at 30 June 2012 and a recently completed Definitive Feasibility Study on the uranium project.
“Monthly expenditures will now be low and, whilst Bannerman is under no compulsion to transact the Etango Project at cyclically low prices, Bannerman will continue to pursue local Namibian and international development partners in a manner which will deliver fair value to shareholders,” said the statement.
The uranium project, labelled Etango Uranium project, is estimated to contain a huge reserve of undeveloped uranium deposits that when mined could produce seven to nine million pounds of uranium yellow cake (Triuranium octoxide U3O8) annually for the first five years and around six to eight million pounds every year henceforth. Bannerman Resources’ feasibility study estimates the life of the mine at a minimum of 16 years with good potential for expansion via the conversion of the existing inferred resource.