Bannerman Sells Initial 5% In Namibian Project For A$3.9 Million

Bannerman Resources Ltd. (BMN.AU) said Tuesday that it has agreed to sell a minority stake in a key Namibian uranium project, raising an initial about A$3.9 million (US$4 million) toward the estimated US$870 million capital cost to bring the Etango project into production.

Namibia's state-owned mining company, Epangelo Mining Co., will buy a 5% interest in Bannerman's local subsidiary and has an option to acquire a further 5% stake, the Australian company 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 future nuclear power stations. 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 the Rossing mine, near the central western coast of Namibia.

"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; [phone]; [e-mail]