Here’s why the Bannerman Energy (ASX:BMN) share price has surged 37% in a week

Bannerman shares continue their run on the chart.
The post Here’s why the Bannerman Energy (ASX:BMN) share price has surged 37% in a week appeared first on The Motley Fool Australia. –

The Bannerman Energy Ltd (ASX: BMN) share price travelled in the green during afternoon trade on Wednesday.

Whereas the S&P/ASX 200 Index (ASX: XJO) has slipped 0.5% into the red over the past week, Bannerman shares have climbed 37%.

Let’s investigate further.

A quick recap on Bannerman Energy

Bannerman Energy is in the minerals exploration business and has projects located in Namibia.

It has the majority of its interests tied up in uranium assets, particularly open-pit uranium operations.

At market close on Wednesday, Bannerman has a market capitalisation of $289 million.

What tailwinds are behind the Bannerman Energy share price?

The Bannerman share price has been on a wild ride over the last month. In early August, the company released feasibility study results at its Etango-8 Uranium Project in Namibia.

In the report, Bannerman advised the study “confirms strong technical and economic viability of conventional open-pit mining.”

It also recognised a “maiden Etango-8 ore reserve” declaration of 117.6 million tonnes (Mt) at 232 parts-per-million (ppm) uranium for “60.3 million pounds (Mlbs)” of uranium.

As such, Bannerman is drawn to the “attractive economics” of a potential US$65 per pound of uranium, which signals a post-tax net present value (NPV) of US$222 million and post-tax internal rate of return (IRR) of 20.3%.

The company forecasts a net project cash flow of US$642 million from these calculations, after capital expenditures and tax.

Don’t forget the recent prices of uranium

Given that Bannerman is an ASX resources share that produces commodities, it can be labelled as a “price taker”.

This means its share price can fluctuate with the price of the underlying commodity cycles it has interests in, as is the case with many other minerals players.

Looking at the charts, we can see uranium spot prices have soared to 5-year highs since mid-August.

Uranium spot is now commanding US$40.05 a pound. This is a significant 33% up-step from the previous low of $30.08 on 16 August.

This relationship between the volatility of commodities and their producers’ share price generally has a lag.

That simply means that changes underlying commodity prices may be reflected in the respective industry’s share basket a short time afterwards – usually a few days.

We can see this phenomenon in the case of the Bannerman share price, as it made its move upwards on 27 August. This was around 11 days after the big increase in uranium spot prices.

Given Bannerman’s concentrated exposure to uranium assets and the fact it is a price taker on uranium, it starts to make sense why the Bannerman share price has climbed almost 40% in the last month.

Bannerman Energy share price snapshot

The Bannerman Energy share price has climbed 155% this year to date, extending the previous 12 months’ gain to 515%.

These results have far outpaced the ASX 200 return of around 25% over the past year.

The post Here’s why the Bannerman Energy (ASX:BMN) share price has surged 37% in a week appeared first on The Motley Fool Australia.

Should you invest $1,000 in Bannerman Energy right now?

Before you consider Bannerman Energy, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Bannerman Energy wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

What comes after Afterpay?

How have ASX technology shares performed during the August 2021 earnings season?

3 excellent ASX 200 (ASX:XJO) shares worth a closer look

2 highly rated ASX growth shares to buy

ASX 200 falls, Macquarie jumps, Aussie Broadband climbs

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!