Good afternoon, everyone, and welcome to the Bannerman Energy March 2026 quarterly update webinar. We've just got a few people dropping in, but we'd like to thank you all for joining us today. We are joined by our MD and CEO, Gavin Chamberlain, today for the webinar and for this update, in what has been a very transformational quarter for us at the company. I'm going to share my screen and hand over to Gavin, so we can go through all of the highlights for the quarter. Let's see. Great. Assume you can all see that, Gavin? You've got that coming through.
Yeah, no problem. Thanks, Emma. Morning, all, welcome to this quarterly update. It really has been a transformational quarter for us, as Emma said. We've seen the successful conclusion of a really important deal for ourselves. We've spent the last two years going through a strategic funding process, this year we saw the successful conclusion of a strategic financing deal. The deal with CNNC Overseas Limited sees them putting in a investment of up to AUD 321.5 million. That's broken up into two different numbers. The one number is a straight payment of AUD 294.5 million, which is for them to buy their 45% share. They will also reimburse the current capital work that is ongoing on-site from the 1st of July until the completion of the deal.
The combination of those two aspects gives us the AUD 321.5 million. For that, they will get a 45% interest in Bannerman UK subsidiary, which in turn owns 95% of the Etango project. The completion is basically targeted for mid-2026, with the FID following shortly thereafter. While this is all going on, the capital work on-site is continuing in line with the project schedule, and allows us to continue along the track of actually getting to final completion and commissioning of the plant in September of 2028. A couple of points around the deal and the reason why we found the deal so attractive is it effectively puts us into a debt-free construction for the Etango Mine. This is obviously a pathway that delivers the best financial and offtake flexibility, reduced risk.
Knowing that our construction is funded, it allows us the luxury of being able to look at our offtake contracting very carefully in the future. The second part of the deal, and almost the cherry on top, was the aspect of the offtake contract to be signed with CNNC OL. Effectively, they will purchase 60% of the Etango production, granting us significant flexibility, as I said, in terms of being able to place the remaining 40%, which remains ring-fenced and totally under the control of Bannerman Energy. Over and above that is the long-term strategic partnership with CNNC, I think has unseen value in terms of just the Etango project, but the growing of Bannerman Energy's footprint worldwide.
Just in terms of quarterly highlights around our financial situation, we've continued with our financial rigor and control of capital expenditure, which has allowed us to have a cash balance in the bank at the end of the quarter of AUD 69.9 million and liquid assets in addition to that of AUD 12.7 million. We've only committed an additional AUD 31.1 million, and then that is well covered by the cash in the bank. As a matter of interest, our spend to date on the project is AUD 53.6 million, and in the quarter we spent just on AUD 16 million on project execution. Most importantly for this quarter, we've seen a AUD 6 increase in terms of the long-term price for uranium.
This is significant, I think, in terms of the long-term price being generally the best reflection of where the market's tending to move to. A AUD 6 increase in a quarter is significant. This supports our theory that we certainly will be seeing an improved uranium price moving forward. On the project side, we've continued with our progress. We've been extremely happy with the way the project and the contract has moved forward. We're now sitting at just on 560 people on-site. We've actually achieved 500,000 LTI hours on the project alone since we started construction. This obviously adds to the fact that we've already achieved 16 years LTI free record and the four Namibian contractors are performing on-site.
The quality of work and the safety safety control that they've put into place is phenomenal and really a first-world exercise by the Namibian contractors and the team supervising them. I would like to personally thank the team once again for delivering an excellent quarter safely, online, at least on time and on budget. What am I talking about? Is we have the bulk earthworks contract, which is about 66% complete state. What you're seeing in front of you is the commencement of the platform for the wet plant construction. To the left-hand side, you can just see the edge of the actual HDPE leach pad. The other contract which is progressing really well is we are drilling and blasting our own drainage material on site, and we're crushing that and forming the stockpile.
Once the heap leach pad is completed, we'll be able to place the drainage layer on top of the leach pad and complete the construction. This is running on track, and is about 27% complete to date. I think most easily has been the concrete contractor on site. We're now getting into serious construction work and as you can see, the concrete work has progressed significantly over the quarter. I was actually on site yesterday and this construction is now above ground level. We're really pleased with the way that the contractor is working. He has really designated and divided his site into really safe working areas and has made exceptional progress on the primary crushing building, which is the biggest concrete structure on the site.
The secondary and tertiary screening building is also now out of the ground and the columns are completed to the first level as once again tracking according to schedule. Finally, the other big bit of concrete work is the stockpile tunnel, where the walls have now been completed and they're in preparation now for the roof pour, which will be the biggest pour poured by any Namibian contractor in Namibia ever, which is just over 1,600 cubic meters of concrete in one pour. They're busy preparing for that pour at the moment. Then the last contractor is the installation of the permanent water supply pipeline, which is 70% complete and moving ahead according to schedule. This effectively runs from the base station at Swakopmund across the national road to the first pump station.
That, ladies and gentlemen, is basically the completion of the quarterly highlights and quite happy to take questions. Emma, if you have any, please feel free.
Yeah. Thanks, Gavin. For everyone on the call, there is a Q&A button at the bottom of Zoom. Please type your questions in there, we'll get into them. Gavin, my first question, I guess, and I think that there'll be a lot of people wanting to know about this is the big question of diesel. It's not something that we're completely immune to. Obviously we have a bulk earthworks contract happening on site with a lot of trucks going around. Can you just speak to diesel, how it affects us in these early works, how it's gonna affect us going into full volume construction, where we're at with that?
Yes. Thanks, Emma. Obviously, diesel is at the front of our minds at the moment. What we did is when we heard around what was happening in the Middle East, we actually implemented immediately a strategy to try and reduce the risk for us actually physically having to stop work. That basically entailed us issuing instructions to our contractors to ensure that the diesel tanks were filled immediately. We also evaluated the overall cost risk to the project on a monthly basis. Given that we're only in construction and the predominant use of diesel at the moment, as you said, is bulk earthworks. The overall impact of diesel on a monthly basis is less than AUD 60,000.
Over and above that is we have been reassured by the Namibian government that they do have three months' worth of storage for diesel. The price risk is minimal. The risk of the project potentially being slowed down due to lack of diesel. We've also been reassured by the government that effectively they have sufficient supply at the moment and that they're not panicking and they're not looking at rationing diesel in any way. At the moment, we're keeping an eye on it. We keep monitoring it. We keep talking to the diesel suppliers, but we do not have problems, and the tanks on site at the moment are full.
Thanks, Gavin. I think to continue on that train of thought around the conflict, longer term, you know, the conflict impacting sulfuric acid supply chains. Does this make us reconsider the cost or the benefit of an acid plant for Etango? Where are we sitting, and where's the team's thoughts on sulfuric acid?
Yeah. The acid is receiving a fair amount of attention right now. I just need to point out is whether we import acid or whether we get together and support a local Namibian acid producer, the risks are similar because you still have to import the sulfur that they would need to burn to create the acid. The risks around the acid supply in the future are similar for whether you're bringing in acid or whether you're actually supporting the construction of an acid plant. From that perspective is, you know, our acid supply is required at the back end of 2028. The world could be a totally different place in two years' time. We're not spending a huge amount of time worrying about it. We have obviously been talking to suppliers of acid.
What we are seeing as well is we are seeing the fact that as the acid supply is reducing, the prices obviously are going up. What you're seeing, the predominant acid user in the world is probably the agricultural sector of the fertilizers. What we've seen is when the prices go high there, the demand tends to drop. You are getting a sort of a natural leveling of acid pricing. However, in two years' time, we do not know what the world would look like, but we will make sure that we have a solution in place long before then, and hopefully the Middle East crisis has come to an end long before then.
We have a question here on the sell-down. Any red flags, you know, the commissioning of the plant, September 2028, end of construction, cold commissioning. What do we need to see to complete that FID, complete the sell-down? I think that probably naturally progresses into where we're at with the CPs, as that is obviously part of that final transaction completion.
The progress on the CPs, all I can say is that it's moving along positively and is aligned with our intention to try and complete the deal by mid-year, and FID would follow shortly thereafter. Given that the completion of the deal in terms of our partner is seen as effectively their approval for the project to move into construction. It would be a Bannerman Energy process to achieve the FID, and we're already looking at finalizing documentation aligned with that requirement from our board.
We've got a question here. What could the potential cooperation opportunities be with CNNC beyond Etango? Obviously, their presence in country is strong. Are we seeing any of those collaborations? What will we see there, Gavin?
Yeah. From that perspective is in the local environment, it's, you know, Rössing Uranium, which is 68% owned by CNNC OL, obviously is now also dealing with an acid situation. They're also importing their acid into the port. We're busy designing our acid storage facility, we are in discussion with them around how we can potentially look at sharing some of the costs, particularly of the parts we have to install from the wharf to the different storage facilities. Those sort of synergies we can look at. However, we are competitive companies, we need to actually be very careful around what we do and don't share. Where we can work together for mutual benefit, we would look at doing that. The acid storage facility is a good case in point.
What are the current thoughts on the Etango expansion? What's the earliest the expansion could occur?
Still, our strategy around that hasn't changed. Effectively, five years from the commencement of operations of Etango 8, we would want to have Etango 16 in production. That allows us around about two years to finalize study work and then three years to do the funding and build the project. The important point around Etango 16, though, is that it would be built concurrently with operations. The way it's been designed at this point is not to have to shut down any mining of Etango 8. We would be able to continue production in Etango 8 while we build Etango 16. The other important point is that the infrastructure, the power, the water, and the roads do not need any upgrading. They've already been sized correctly to be able to cater for Etango 16.
We shouldn't have any shutdowns while we tie into existing infrastructure.
Fantastic. Just back to obviously the conversation around the transaction completion, how soon after that completion will we receive those final payments from CNNC OL? I guess at what point does it then push out the project timeline, like any delays on that? At what point do we see a push out of project timeline?
We would like to get FID mid-year, but the longest update on the contract is September. Potentially at this point in time, we aligned with the schedule, and we see no risk around the schedule moving out. However, if it does push too far past mid-year, then there may be one or two delays to our ultimate schedule. However, there are aspects in the schedule that we still believe we can optimize and actually catch up any time that we may lose.
With the AUD 70 million cash, AUD 30 million in commitments, if that sell-down drags on, and if we see a push out, how are we thinking about liquidity, working capital, and overruns?
Yeah. I mean, we've been very, very disciplined in terms of keeping and maintaining a cash flow level that is satisfactory to us and the board. We will continue to do that. What we would need to do is we will assess the spend versus the balance at all points. At the end of the day is building up a war chest to make sure that you don't get into a situation where your cash flow is too low, is very realistic. On the back of that as well is we are construction funded. We still need to get working capital funding in as well, and that's something that we're working on at the moment.
We've seen some large RFPs from U.S. utilities recently. Are we bidding into those? Is there any reason that the CNNC offtake ownership could distract from our bidding on those RFPs from the U.S.?
No, I think that's actually been a very positive outcome, is in fact our relationships with the U.S. utilities are still strong and sound. We have received congratulatory notes from a number of them on the fact that we've managed to achieve this deal and are moving forward into construction. We are still looking at RFPs. We're still responding to RFPs. However, as I said, we have got a little bit of flexibility now with the 60% at market rates with no floor or ceiling. That allows us to actually be a little more selective in terms of we're under no pressure at the moment to sign RFPs and to win RFPs.
It's more around making sure the message around the pricing is getting through to utilities. So we are continuing with our be patient, be prepared, and this is one of those that falls under be patient.
Okay. Thanks, Gavin. Now look, most of the questions come through. If anyone's got any last-minute questions, they can pop them in. We will round out there. Gavin, what can we look forward to in this next quarter? Obviously, we've got the completion of the CPs. You know, at that point, hopefully announcing that FID, an updated construction schedule to come out with that, and costs. Anything else in this next quarter?
No, I think more of the same. I would expect that the contractors will continue to perform the way we expected. Right now as well, we are out in the market on tender for the structural mechanical piping and platework contract. We could see some information around that as well, which is the next significant contract that we would place. Really more of the same. We've been very considered in the way we approach the execution of this project, and we intend to continue along those lines. I think the exciting bit is that we really could see an announcement around the completion of the deal. That would be the ultimate first prize for all of us if we can complete this deal in the next quarter.
One last question that's come through is that we're seeing neighboring African countries adjust company tax rates higher, and nations bringing in, like, free carry. Is there any changes in Namibia? How is the government at this point?
We've had some very positive interactions with the government over the last couple of months. Particularly around the deal. You know, we managed to meet with the mining minister, the deputy mining minister, and we've only had positive feedback. We're not seeing any pushing around our existing conditions in terms of tax rates and our 5% ownership through One Economy Foundation has been seen as sufficient in terms of our mining license requirements. We're not seeing any pressure on us at this point in time.
Okay. Great. Thank you very much, Gavin. Thank you everyone for joining us. If anyone has any further questions on the quarterly, on the project at any point, please reach out to me. I think most of you have my email. You can reach me and I'm always happy to take any questions. Thank you all very much for joining us. Gavin, thank you. Enjoy your day in Namibia and we've seen you all.
Thank you very much. Great. Thank you all.
Recording-