UPDATE: Bannerman To Step Up Talks With Potential Development Partners

Bannerman Resources Ltd. (BMN.AU) will step up negotiations with potential backers for a key uranium project it is developing in Namibia now that a completed study supports estimates that the operation can produce up to 9 million pounds a year, Chief Executive Officer Len Jubber said Tuesday.

The Australian company is pushing ahead with the Etango project near the central western coast of the southern African country as a "nuclear renaissance" takes hold in Asia, Jubber said in a telephone interview.

Bannerman plans to continue investigations into the potential longevity of Etango, which the definitive feasibility study found currently has a mine life of at least 16 years, Jubber said. "It is a big project, so we're trying to get a feel for just how big," Jubber added.

Bannerman has been discussing possible investment in the project with interested parties for several years, but will now step that up, he said, adding that the company remains open to options including working with an established mine operator or an Asian energy company seeking long-term supplies of uranium.

Earlier Tuesday, Bannerman in a statement said it has agreed to sell a minority stake in the unit that owns the project, raising about A$3.9 million (US$4 million) toward the estimated US$870 million capital cost of bringing Etango to production.

Namibia's state-owned mining company, Epangelo Mining Co., will buy a 5% interest and has an option to acquire a further 5% stake, it said. After the initial sale, Bannerman will hold 76% of the unit that owns the Etango project and nonexecutive director Clive Jones and former director Nathan McMahon will together have 19%.

The agreement comes amid heightening interest in sources of uranium to power planned new nuclear power stations in countries including China and India. China Guangdong Nuclear Power Holding Corp. and China-Africa Development Fund this year bought Australia's Extract Resources Ltd., which is developing a promising uranium deposit that neighbors Rio Tinto PLC's (RIO) producing Rossing mine in Namibia.

Bannerman said it has now completed a definitive feasibility study for Etango, which supports building an operation that would produce between 7 million and 9 million pounds a year of U3O8 uranium for the first five years and then 6 million-8 million pounds annually to rank Etango as one of the world's largest uranium-only projects. Etango is located southwest of Rio's Rossing mine.

"The number of technically viable, globally significant uranium projects is small, and there is an emerging consensus that uranium prices will need to rise substantially in order to incentivize new supply," said David Smith, chairman of Bannerman. "The involvement of Epangelo as a key partner in the Etango project designates the start of a new period in advancing the Etango project."

-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094; robb.stewart@dowjones.com

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