The Chinese are paying an initial U.S. $6.5 M for Rio’s 69% stake (36,222,566 lbs. U308) and up to an additional U.S. $100 M, contingent upon the mine’s net income over the next 7 years. The estimated total cost of the sale is roughly U.S. $2.94/lb. U308.
This last figure is an important one, as it establishes a benchmark sale price for Namibian lbs. at current spot prices: ~$2.94/lb.
One can begin to get an idea of the types of offers with which nearby Namibian developers may be approached. Forsys Metals, for instance, could expect an offer at going spot prices of approximately U.S. $338.1 M or U.S. $2.08/sh. And Deep Yellow could expect an offer of up to U.S. $306.3 M or U.S. $1.52/sh.
One thing is for certain, Namibian lbs. are being acquired at fire sale prices. It will be interesting to see if CNUC continues its regional uranium rollup strategy.
Thanks for sharing this, Tom.
You are very welcome, Bob.
What about Bannerman?
What about it? See here: https://blog.fahy.co/bannerman-resources/ Needless to say, I never really learned to love share dilution.
Sorry, was wondering about the price/share for Bannerman given the $2.94/lb. benchmark sales price.
Thank you for the link to your 2018 article and I just saw today’s update. While a novice at analyzing this kind of information, even I can see the lack of shareholder value. May be time to tune out CEO Munro and his many media appearances.
Hi Tom – could you please direct me to the new link for your Bannerman article? Or has it been taken down? Cheers Matt
Matt — Here it is: https://blog.fahy.co/bnnlf-bannerman-resources-independent-economic-analysis/
A Total All-in Cost (TAIC) of $63.71/lb. is on the high end of the curve for Namibian would-be producers. Absolute Cost Structure (ACS) and Net Profit Margin of 85% and 15% respectively are in line with Namibian peers. Bannerman’s MTQ Score is 0.2, which is a function of the low expected profit margins and high costs that are characteristic of Namibian uranium production.
At 5x Future Cash Flow, Bannerman could experience Market Cap Growth of up to 874%, which translates to $0.35/sh. See the linked report above for details.
I hope this was helpful.