BANNERMAN ENERGY LTD — Interim / Quarterly Report 2010

Feb 10, 2010

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STOCK EXCHANGE ANNOUNCEMENT 11 February 2010

Unaudited Financial Statements and Management’s Discussion and Analysis for the Quarter ended 31 December 2009

Bannerman Resources Limited (ASX: BMN, TSX: BAN, NSX: BMN) attaches its unaudited consolidated Financial Statements and Management’s Discussion and Analysis for the quarter ended 31 December 2009, filed in accordance with Canadian reporting regulations.

For further information please contact:

Len Jubber Peter Kerr Ann Gibbs Chief Executive Officer Chief Financial Officer Investor Relations Perth, Western Australia Perth, Western Australia Toronto, Ontario, Canada Tel: +61 (0)8 9381 1436 Tel: +61 (0)8 9381 1436 Tel: +1 416 388 7247 admin@bannermanresources.com.au ann@bannermanresources.com

About Bannerman - Bannerman Resources Limited is an emerging uranium development company with interests in two properties in Namibia, a southern African country considered to be a premier uranium mining jurisdiction. Bannerman’s principal asset is its 80%-owned Etango Project situated southwest of Rio Tinto’s Rössing uranium mine and to the west of Paladin Energy’s Langer-Heinrich mine. Etango is one of the world’s largest undeveloped uranium deposits. Bannerman is focused on the feasibility assessment and development of a large open pit uranium operation at Etango. More information is available on the Company’s website at www.bannermanresources.com.

www.bannermanresources.com

BANNERMAN RESOURCES LIMITED ABN 34 113 017 128

Corporate Office Level 1 ■ Suite 18 ■ 513 Hay Street ■ Subiaco Western Australia 6008 Post PO Box 1973 ■ Subiaco Western Australia 6904 T +61 8 9381 1436 F +61 8 9381 1068

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11 February 2010

Notice Pursuant to Part 4.3(3)(a) of National Instrument 51-102 Continuous Disclosure Obligations

The Interim Financial Statements of Bannerman Resources Limited filed for the three and six month period ended December 31, 2009 have not been reviewed by its auditor, Ernst & Young, in accordance with the standards for a review of interim financial statements as set out in the Handbook published by the Canadian Institute of Chartered Accountants.

Date: February 11, 2010

“ RONNIE BEEVOR ”

_____ Ronnie Beevor Chairman, Audit Committee Bannerman Resources Limited

BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

Consolidated Financial Statements For the Period Ended 31 December 2009 (Unaudited)

The accompanying unaudited interim financial statements for the three and six months ended 31 December 2009 have been prepared by management and approved by the Audit Committee on behalf of the Board of Directors of the Company. The Company’s auditors have not reviewed these financial statements. Readers are cautioned that these financial statements contain forward-looking information as described in the associated Management’s Discussion & Analysis.

BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

CONSOLIDATED FINANCIAL REPORT For the Period Ended 31 December 2009

Unaudited Consolidated Income Statement	3
Unaudited Consolidated Statement of Financial Position	4
Unaudited Consolidated Cash Flow Statement	5
Unaudited Consolidated Statement of Comprehensive Income	6
Unaudited Consolidated Statement of Changes in Equity	7
Notes to the Financial Statements	8

REGISTERED OFFICE

Level 1, Suite 18 513 Hay Street SUBIACO 6008 WESTERN AUSTRALIA AUSTRALIA Telephone: +61 (0)8 9381 1436 Facsimile: +61 (0)8 9381 1068

BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

CONSOLIDATED INCOME STATEMENT (UNAUDITED) (Expressed in Australian dollars) For the Period Ended 31 December 2009

Note Continuing Operations Other revenue 2 Administration and other expenses 3 Directors’ fees Stock based compensation expense Employee expenses Shareholder and listing costs Borrowing costs expense Depreciation expense Interest expense Loss from continuing operations before income tax Income tax expense Net loss for period Loss is attributed to: Equity holders of the parent company Minority interest Loss per share Basic and diluted loss per share (cents per share)	3 months 31 December 2009 3 months 31 December 2008 6 months 31 December 2009 6 months 31 December 2008 $ $ $ $ 279,735 100,991 534,343 327,853 (854,184) (848,547) (1,712,795) (1,550,932) (107,904) (70,834) (186,475) (111,667) (1,379,733) (386,730) (2,780,208) (386,730) (626,512) (304,703) (1,065,921) (582,685) (192,699) (100,635) (303,404) (191,784) (6,442) (3,031) (9,248) (6,221) (69,640) (127,240) (141,392) (142,240) (429,477) (49,657) (750,809) (49,657)
	(3,386,856) (1,790,386) (6,415,909) (2,694,063)
	- 402,682 - 402,682
	(3,386,856) (1,387,704) (6,415,909) (2,291,381)
	(3,329,245) (1,323,482) (6,300,567) (2,198,003) (57,611) (64,222) (115,342) (93,378)
	(3,386,856) (1,387,704) (6,415,909) (2,291,381)
	(1.7) (0.9) (3.2) (1.5)

The accompanying notes are an integral part of these consolidated financial statements

BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Expressed in Australian dollars) As at 31 December 2009

Note CURRENT ASSETS Cash and cash equivalents 4 Trade and other receivables 5 Other TOTAL CURRENT ASSETS NON-CURRENT ASSETS Other receivables Property, plant and equipment 7 Exploration and evaluation expenditure 6 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Interest bearing liabilities Provisions TOTAL CURRENT LIABILITIES NON CURRENT LIABILITIES Interest bearing liabilities 8 TOTAL NON CURRENT LIABILITIES TOTAL LIABILITES NET ASSETS EQUITY Issued capital 9 Reserves Accumulated losses TOTAL PARENT ENTITY INTEREST Minority Interest TOTAL EQUITY	Unaudited 31 December 2009 $ 23,242,339 1,843,277 127,245 25,212,861 26,250 1,691,614 60,338,247 62,056,111 87,268,972 1,293,596 4,593 214,639 1,512,828 8,335,936 8,335,936 9,848,764 77,420,208 86,077,190 54,603,094 (63,992,300) 76,687,984 732,224 77,420,208	Audited 30 June 2009 $ 37,577,728 865,273 77,613
		38,520,614
		26,250 1,632,722 52,557,944
		54,216,916
		92,737,530
		2,873,270 8,607 126,640
		3,008,517
		7,977,645
		7,977,645
		10,986,162
		81,751,368
		86,105,957 52,464,310 (57,691,733)
		80,878,534
		872,834
		81,751,368

The accompanying notes are an integral part of these consolidated financial statements

BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED) (Expressed in Australian dollars) For the Period Ended 31 December 2009

Note CASHFLOWS FROM/(USED IN) OPERATING ACTIVITIES Payments to suppliers and employees Interest received Net cash used in operating activities CASHFLOWS USED IN INVESTING ACTIVITIES Payments for exploration and evaluation Purchase of plant and equipment Net cash used in investing activities CASHFLOWS FROM/(USED IN) FINANCING ACTIVITIES Proceeds from equity and note issues Interest paid Cost of equity and note issues Net cash from/(used in) financing activities Net increase/(decrease) in cash held Cash and cash equivalents at beginning of period Effects of exchange rate changes on the balance of cash held in foreign currencies Cash and cash equivalents at end of period 4	3 months 31 December 2009 3 months 31 December 2008 6 months 31 December 2009 6 months 31 December 2008 $ $ $ $ (1,891,020) (1,408,955) (3,817,713) (2,288,821) 239,431 136,764 471,229 404,750
	(1,651,589) (1,272,191) (3,346,484) (1,884,071)
	(4,736,827) (4,219,463) (10,314,581) (9,345,119) (24,360) (435,198) (236,825) (1,015,420)
	(4,761,187) (4,654,661) (10,551,406) (10,360,539)
	- 10,000,000 - 11,920,000 (190,677) - (390,129) - - (660,820) (28,767) (660,820)
	(190,677) 9,339,180 (418,896) 11,259,180
	(6,603,453) 3,412,328 (14,316,786) (985,430) 29,867,825 9,719,605 37,577,728 13,639,963
	(22,033) 64,327 (18,603) 541,727
	23,242,339 13,196,260 23,242,339 13,196,260

The accompanying notes are an integral part of these consolidated financial statements

BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) (Expressed in Australian dollars) For the Period Ended 31 December 2009

Net loss after tax Other comprehensive income: Foreign currency translation Total comprehensive profit/(loss) Total comprehensive profit/(loss) is attributable to: Equity holders of the parent company Minority interest	3 months 31 December 2009 3 months 31 December 2008 6 months 31 December 2009 6 months 31 December 2008 $ $ $ $ (3,386,856) (1,387,704) (6,415,909) (2,291,381) (946,466) (1,229,742) (666,692) 4,122,914
	(4,333,322) 2,617,446 (7,082,601) 1,831,533
	(4,248,213) 2,803,969 (6,941,991) 1,777,019 (85,109) (186,523) (140,610) 54,514
	(4,333,322) 2,617,446 (7,082,601) 1,831,533

The accompanying notes are an integral part of these consolidated financial statements

BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) (Expressed in Australian dollars)

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For The Six Months Ended 31 December 2009

Balance at 1 July 2009 Equity Transactions: Share issue costs Share based payments Total comprehensive profit/(loss) Total Equity at 31 December 2009	Issued Capital Accumulated Losses Option Reserve Foreign Currency Reserve Convertible Note Reserve Minority Interest Total $ $ $ $ $ $ $ 86,105,957 (57,691,733) 48,957,335 2,567,382 939,593 872,834 81,751,368 (28,767) - - - - - (28,767) - - 2,780,208 - - - 2,780,208 - (6,300,567) - (641,424) - (140,610) (7,082,601) 86,077,190 (63,992,300) 51,737,543 1,925,958 939,593 732,224 77,420,208

For The Six Months Ended 31 December 2008

Balance at 1 July 2008 as previously reported Correction of prior period error (Note 14) Restated balance at 1 July 2008 Equity Transactions: Shares issued during the period Share based payments Equity component of convertible note Deferred tax on convertible note Total comprehensive profit/(loss) Total Equity 31 December 2008

Issued Capital Accumulated Losses Option Reserve Foreign Currency Reserve Convertible Note Reserve Minority Interest Total $ $ $ $ $ $ $ 41,797,705 (14,815,957) 46,214,800 (13,225,063) - - 59,971,485 - (33,193,302) - 8,757,348 - 861,024 23,574,930 41,797,705 (48,009,259) 46,214,800 (4,467,715) - 861,024 36,396,555 6,480,000 - - - - - 6,480,000 - - 386,730 - - - 386,730 - - - - 1,342,275 - 1,342,275 - - - - (402,682) - (402,682) - (2,198,003) - 3,975,022 - 54,514 1,831,533

48,277,705 (50,207,262) 46,214,800 614,748 939,593 915,538 46,034,411

The accompanying notes are an integral part of these consolidated financial statements

BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) (Expressed in Australian dollars)

For the Period Ended 31 December 2009

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1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

Corporate Information

Bannerman Resources Limited (“Bannerman” or the “Company”) is a company limited by shares incorporated in Australia. Bannerman’s shares are publicly traded on the Australian Securities Exchange (“ASX”) with additional listings on the Toronto Stock Exchange and the Namibian Stock Exchange.

Basis of Preparation

This general purpose condensed financial report for the three and six months ended 31 December 2009 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001.

The financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of Bannerman and its controlled entities (the “Group”) as the annual financial report.

It is recommended that this interim financial report be read in conjunction with the annual report for the year ended 30 June 2009 and considered together with any public announcements made by Bannerman during the six months ended 31 December 2009 in accordance with the continuous disclosure obligations of the ASX Listing Rules.

Apart from the changes in accounting policy noted below, the accounting policies and methods of computation are the same as those adopted in the most recent annual financial report.

The financial report is presented in Australian dollars.

Statement of Compliance

The financial report complies with Australian Accounting Standards as issued by the Australian Accounting Standards Board (“AASB”) and International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board.

Going Concern

The consolidated financial statements have been prepared on the basis that the Group will continue to meet its commitments and realise its assets and settle its liabilities in the ordinary course of business. If the Group chooses to maintain its planned levels of expenditure, it will be required to raise additional capital within the next 12 months.

In the opinion of the Directors, there are reasonable grounds to believe that, as at the date of this financial report, the Group will be able to modify its expenditure and/or raise sufficient funds to meet its obligations as and when they fall due.

BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) (Expressed in Australian dollars) For the Period Ended 31 December 2009

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Changes in Accounting Policies

On 1 July 2009 the Group adopted the following applicable Standards and Interpretations, mandatory for annual periods beginning on or after 1 July 2009:

Reference	Comment
AASB 8 and AASB 2007-3	Operating Segments- AASB8/IFRS8 is a disclosure standard which requires disclosure of information about the Group’s operating segments and replaces the previous requirement to determine primary and secondary reporting segments of the Group.
AASB 101 (Revised), AASB 2007-8 and AASB 2007-10	Presentation of Financial Statements (revised 2007)– The revised standard introduces a number of terminology changes, including revised titles for the financial statements, and has resulted in a number of changes in presentation and disclosure.

The following Standards and Interpretations and all consequential amendments, which became applicable on or before 1 July 2009, have also been adopted by the Group but have had no impact on the financial position or performance of the Group, or on presentation or disclosure in its financial statements:

Reference	Comment
AASB 123 (Revised) and AASB 2007-6	_Borrowing Costs_and consequential amendments to other Australian Accounting Standards
AASB 2008-1	Amendments to Australian Accounting Standards – Share-based Payments: Vesting Conditions and Cancellations
AASB 2008-5	Amendments to Australian Accounting Standards arising from the Annual Improvements Project
AASB 2008-6	Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project
AASB 2008-7	Amendments to Australian Accounting Standards – Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate
AASB 2008-8	Amendments to Australian Accounting Standards – Eligible Hedged Items
AASB 2009-2	Amendments to Australian Accounting Standards – Improving Disclosures about Financial Instruments[AASB 4, AASB 7, AASB 1023 & AASB 1038] (IFRS 4 & IFRS 7)
AASB 2009-4	Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 2 and AASB 138 and AASB Interpretations 9 & 16] (IFRS 2, IAS 38, IFRIC 9 and IFRIC 16)
AASB 2009-7	Amendments to Australian Accounting Standards [AASB 5, 7, 107, 112, 136 & 139 and Interpretation 17] (IFRS 5, 7, IAS 7, 12, 36 and 39, IFRIC 17)

BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) (Expressed in Australian dollars) For the Period Ended 31 December 2009

2. OTHER REVENUE Interest income Sundry income 3. ADMINSTRATION & OTHER EXPENSES Administration Consulting Occupancy Insurance Impairment of available-for-sale financial assets 4. CASH & CASH EQUIVALENTS Cash at bank and on hand Short term deposits	3 months 31 December 2009 $ 279,735 -	3 months 31 December 2008 6 months 31 December 2009 6 months 31 December 2008 $ $ $ 98,847 531,126 325,709 2,144 3,217 2,144	3 months 31 December 2008 6 months 31 December 2009 6 months 31 December 2008 $ $ $ 98,847 531,126 325,709 2,144 3,217 2,144
	279,735	100,991 534,343 327,853
	545,083 199,659 85,557 23,885 -	430,799 1,007,615 901,297 265,174 471,793 419,493 66,759 185,628 114,205 42,280 47,759 72,402 43,535 - 43,535
	854,184	848,547 1,712,795 1,550,932
		31 December 2009 $ 1,667,339 21,575,000 23,242,339	30 June 2009 $ 18,577,728 19,000,000 37,577,728

Under the terms of the Convertible Note (Note 8), the Company must, unless otherwise approved,	Under the terms of the Convertible Note (Note 8), the Company must, unless otherwise approved,	Under the terms of the Convertible Note (Note 8), the Company must, unless otherwise approved,
maintain a minimum working capital (net cash) balance of not less than $3,000,000.
5. TRADE & OTHER RECEIVABLES
GST/VAT receivable	1,737,568	801,847
Other receivables	8,132	25,746
Accrued interest receivable	97,577	37,680
	1,843,277	865,273
6. EXPLORATION & EVALUATION	6 months ended	Year ended
EXPENDITURE	31 December 2009	30 June 2009
	$	$
Opening balance	52,557,944	21,975,479
Expenditure incurred during the period	8,736,537	25,584,096
Foreign currency translation movements	(956,234)	5,840,491
Impairment adjustments	-	(842,122)
	60,338,247	52,557,944

BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) (Expressed in Australian dollars) For the Period Ended 31 December 2009

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Expenditure incurred during the period comprises expenditure on drilling, geological, feasibility and associated activities.

The value of the Company’s interest in exploration expenditure is dependent upon:

• the continuance of the Company’s rights to tenure of the areas of interest;

• the results of future exploration; and

• the recoupment of costs through successful development and exploitation of the areas of interest, or alternatively, by their sale.

Etango Project – Bannerman 80%

The Etango Project is located approximately 41km by road east of the town of Swakopmund, Namibia and 47km northeast of the deep water port of Walvis Bay, and is situated southwest of Rio Tinto's Rössing uranium mine and to the west of Paladin Energy's Langer-Heinrich uranium mine. The Etango Project comprises one Exclusive Prospecting Licence (EPL3345) and is one of the world's largest undeveloped uranium deposits. Bannerman is focused on the feasibility assessment and development of a 5-7 million pounds per annum U3O8 open pit mining operation at Etango. Bannerman completed a Preliminary Feasibility Study on the Etango Project in December 2009 and has now progressed towards a Definitive Feasibility Study.

All of the costs of the Etango Project are recognised by Bannerman with a 20% minority interest shown separately.

Swakop River Project – Bannerman 80%

The Swakop River Project is located near the Langer-Heinrich uranium mine (owned and operated by a subsidiary of Paladin Energy Ltd) near Swakopmund in Namibia. The Swakop River Project consists of one Exclusive Prospecting Licence (EPL3346).

All of the costs of the Swakop River Project are recognised by Bannerman with a 20% minority interest shown separately.

Botswana Project – Bannerman 100%

Bannerman controls three prospecting licences for uranium, precious metals, base metals and platinum group minerals in Botswana. These licences are referred to as the Serule South, Serule North and Dukwe licences and are located in the Foley and Sua Pan regions in Botswana (131/2005 to 133/2005). The tenements cover an area totalling approximately 113,230 hectares.

The following tables detail the consolidated expenditures on interests in mineral properties by area of interest for the six months ended 31 December 2009 and the year ended 30 June 2009.

BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) (Expressed in Australian dollars) For the Period Ended 31 December 2009

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Exploration & Evaluation Expenditure – Six Months Ended 31 December 2009

	Areas of Interest		Etango		Swakop River	Swakop River		Botswana		Other		Total
Balance 1 July 2009			49,005,575			3,552,369		-		-	52,557,944
Drilling and consumables			4,973,966			-		-		-	4,973,966
Assays and freight			610,814			-		-		-	610,814
Geophysics & d/hole surveys			104,431			-		-		-	104,431
Salaries and wages			759,242			-		-		-	759,242
Consultants and contractors			2,050,941			-		-		-	2,050,941
Travel & accommodation			99,420			-		-		-	99,420
Other			136,445			1,279		-		-	137,724
Total expenditure			57,740,834			3,553,648		-		-	61,294,482
Foreign exchange adjustment			(900,704)			(55,531)		-		-	(956,235)
Balance 31 December 2009			56,840,130			3,498,117		-		-	60,338,247

Exploration & Evaluation Expenditure – Year Ended 30 June 2009

	Areas of Interest		Etango		Swakop River	Swakop River		Botswana		Other		Total
Balance 1 July 2008			18,543,927			2,929,470		501,860		222	21,975,479
Drilling and consumables			7,032,570			133,462		198,074		-	7,364,106
Assays and freight			2,825,966			1,118		34,714		-	2,861,798
Geophysics & d/hole surveys			321,657			4,038		-		-	325,695
Salaries and wages			1,476,016			26,651		65,399		-	1,568,066
Consultants and contractors			4,963,559			4,349		1,809		14	4,969,731
Legal & settlement			8,005,232			30		-		-	8,005,262
Travel & accommodation			163,836			34,220		30,717		-	228,773
Other			227,819			23,533		9,313			260,665
Total expenditure			43,560,582			3,156,871		841,886		236	47,559,575
Exploration written off			-			-		(841,886)		(236)	(842,122)
FX adjustment			5,444,993			395,498		-		-	5,840,491
Balance 30 June 2009			49,005,575			3,552,369		-		-	52,557,944

BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) (Expressed in Australian dollars) For the Period Ended 31 December 2009

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7. PROPERTY, PLANT & EQUIPMENT

31 December 2009 Land and buildings Vehicles Plant and equipment Office furniture and equipment 30 June 2009 Land and buildings Vehicles Plant and equipment Office furniture and equipment 8. INTEREST BEARING LIABILITIES Non Current Liabilities Secured convertible note Finance lease		Cost $ Accumulated Depreciation $ Net Book Value $ 762,365 - 762,365 455,059 (142,840) 312,219 362,574 (160,880) 201,694 661,846 (246,510) 415,336	Cost $ Accumulated Depreciation $ Net Book Value $ 762,365 - 762,365 455,059 (142,840) 312,219 362,574 (160,880) 201,694 661,846 (246,510) 415,336
		2,241,844 (550,230) 1,691,614
		775,200 - 775,200 348,295 (109,025) 239,270 337,051 (113,484) 223,567 594,190 (199,505) 394,685
		2,054,736 (422,014) 1,632,722
		31 December 2009 $ 8,326,899 9,037 8,335,936	30 June 2009 $ 7,968,414 9,231 7,977,645

In November 2008, Bannerman entered into a financing agreement with Resource Capital Fund IV L.P. (“RCF”) for $20 million through a convertible note facility comprising an initial tranche of $10 million (“First Tranche”) and a standby tranche of $10 million (“Standby Tranche”) available within 6 months from drawdown of the First Tranche. The First Tranche was drawn down on 16 December 2008 and shareholders at a general meeting held on 16 April 2009 approved the convertible note facility thereby enabling the Company to draw down on the Standby Tranche by 16 June 2009. Bannerman subsequently elected not to draw down the Standby Tranche and, pursuant to the terms of the convertible note facility agreement, Bannerman subsequently paid a break fee.

At the date of issue, the debt and equity components of the convertible note were separated according to their fair values. Total proceeds of the issue were allocated to the respective fair values of the equity and debt components with the effect that the discount on the debt component is being amortised into earnings as interest expense such that, over the term of the convertible note, the debt component will increase to the face value of $10 million at maturity.

BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) (Expressed in Australian dollars)

For the Period Ended 31 December 2009

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The interest expense recorded on the convertible note reflects an effective interest rate of approximately 18.3% over the life of the convertible note. Interest payable on the convertible note is at a coupon rate of 8% per annum and is paid quarterly in arrears in cash or shares, at Bannerman’s election.

Included in creditors and accruals is an amount of $201,644 for accrued interest on the convertible note to 31 December 2009.

The convertible note is secured by a fixed and floating charge over the Company’s assets and a share mortgage over the Company’s shares in Bannerman Mining Resources (Namibia) (Pty) Ltd. RCF is entitled at any time after drawdown until maturity to convert the principal and any accrued interest into Bannerman ordinary shares at a conversion price of $0.612 per share. On maturity (15 December 2011), if RCF has not elected to convert the principal into equity, the initial principal amount invested and any interest accrued thereon will be repayable in cash.

9. ISSUED CAPITAL

• (a) Issued and outstanding:

		Number of shares	Amount$
Issued
Balance, 1 July, 2008		145,975,036	41,797,705
	Exercise of options	4,800,000	1,920,000
	Issue toRCF	500,000	380,000
Balance 31 December 2008		151,275,036	44,097,705
	Issue to RCF (i)	500,000	380,000
	Savanna settlement (ii)	5,500,000	4,180,000
	Issue to RCF (iii)	223,398	197,260
	Issue to RCF (iv)	600,000	798,000
	Placement (v)	30,000,000	29,762,763
	Share Purchase Plan (vi)	7,500,000	7,494,997
	Exercise of vendor options (vii)	6,612,500	1,322,500
	Shareissue costs	-	(1,747,268)
Balance 30 June 2009		201,710,934	86,105,957
	Shareissue costs	-	(28,767)
Balance 31 December 2009		201,710,934	86,077,190

(i) On 17 December 2008, the Company issued RCF 500,000 fully paid ordinary shares as part of the RCF convertible note facility agreement (refer Note 8).

(ii) On 17 December 2008, the Company entered into a settlement agreement with Savanna Marble CC (“Savanna”) relating to Savanna’s legal challenge to the Company’s rights to the Etango Project exclusive prospecting licence. Under the terms of the Savanna settlement agreement, in consideration for the termination of the proceedings, Savanna was entitled to receive $3.5 million cash and 9.5 million fully paid ordinary shares in Bannerman. The initial payment comprising $3 million cash (made on 8 January 2009) and 5.5 million shares (issued on 14 January 2009) were recorded as at 31 December 2008.

BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) (Expressed in Australian dollars) For the Period Ended 31 December 2009

(i) On 17 December 2008, the Company issued RCF 223,398 fully paid ordinary shares in consideration for the payment of quarterly interest on the convertible note. (ii) On 12 June 2009, the Company issued RCF 600,000 fully paid ordinary shares as part of the break fee contained in the RCF convertible note facility agreement (refer Note 8).

(iii) On 12 June 2009, the Company completed an institutional capital raising of 30,000,000 fully paid ordinary shares at A$1.00 (C$0.875) per share.

(iv) On 29 June 2009, the Company completed a share purchase plan for 7,500,000 fully paid ordinary shares to eligible existing shareholders at A$1.00 per share.

(v) During May and June 2009, 6,612,500 vendor options were exercised at A$0.20 per share.

(b) Options on issue:

The outstanding share options as at 31 December 2009 were as follows:

The outstanding share options as at 31 December 2009 were as follows:	The outstanding share options as at 31 December 2009 were as follows:
Expiry Dates Exercise Price Balance 1 Jul 2009 Granted Exercised Expired Cancelled Balance 31 Dec 2009 Vested 31 Dec 2009
November 30, 2010 A$6.50 2,250,000 - - - 2,250,000 December 13, 2010 A$0.20 2,725,000 - - - 2,725,000 September 1, 2011 A$2.51 1,000,000 - - - 1,000,000 September 1, 2011 A$2.44 250,000 - - - 250,000 December 27, 2011 A$2.40 200,000 - - - 200,000 November 30,2011 A$7.50 2,250,000 - - - 2,250,000 June 21, 2012 A$3.70 75,000 - - 75,000 - July 27, 2012 A$1.40 - 200,000 - - 200,000 September 1, 2012 A$3.00 1,000,000 - - - 1,000,000 September 1, 2012 A$4.00 250,000 - - - 250,000 November 1, 2012 C$4.12 100,000 - - - 100,000 November 17, 2012 A$0.434 2,500,000 - - - 2,500,000 November 25, 2012 A$1.45 - 602,100 - - 602,100 January 28, 2013 A$3.64 350,000 - - 150,000 200,000 February 2, 2013 A$0.91 600,000 - - - 600,000 February 16, 2013 A$0.83 600,000 - - - 600,000 June 3, 2013 A$2.80 250,000 - - - 250,000 August 31, 2013 A$1.46 - 600,000 - - 600,000 August 31, 2013 A$1.82 - 600,000 - - 600,000 November 17, 2013 A$0.543 1,500,000 - - - 1,500,000 November 25, 2013 A$1.45 - 500,000 - - 500,000 February 2, 2014 A$1.140 600,000 - - - 600,000 August 20, 2014 A$1.510 - 250,000 - - 250,000 November 17, 2014 A$0.678 1,500,000 - - - 1,500,000 November 25, 2014 A$1.81 - 500,000 - - 500,000 February 2, 2015 A$1.43 600,000 - - - 600,000 August 20, 2015 A$1.89 - 250,000 - - 250,000 August 31, 2015 A$2.28 - 600,000 - - 600,000 November 25, 2015 A$2.26 - 500,000 - - 500,000	2,250,000 2,725,000 1,000,000 250,000 200,000 2,250,000 - 200,000 1,000,000 250,000 - 2,500,000 602,100 - - - - - - - - - - - - - - - -
18,600,000 4,602,100 - 225,000 22,977,100	13,227,100
Weighted average exercise price (A$) 2.57 1.76 - 3.66 2.40	3.17 1.8
Average life to expiry (years) 2.5 4.5 - - 2.9

BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) (Expressed in Australian dollars) For the Period Ended 31 December 2009

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Directors held 9,802,100 options as at 31 December 2009 with an average exercise price of A$2.90 per share and an average life to expiry of 2.9 years.

The following table provides the assumptions used in determining the fair value of the options granted during the period:

Grant Date	Number of Options	Dividend Yield	Expected Volatility	Risk-free Interest Rate	Expected Life	Option Exercise Price	Share Price at Grant Date	Fair Value per Option
20 Aug 2009	250,000	Nil	85%	5.0%	5 years	$1.51	$1.08	$0.70
20 Aug 2009	250,000	Nil	85%	5.0%	6 years	$1.89	$1.08	$0.72
31 Aug 2009	600,000	Nil	85%	5.0%	4 years	$1.46	$1.13	$0.67
31 Aug 2009	600,000	Nil	85%	5.0%	5 years	$1.82	$1.13	$0.70
31 Aug 2009	600,000	Nil	85%	5.0%	6 years	$2.28	$1.13	$0.73
25 Nov 2009	500,000	Nil	85%	4.92%	4 years	$1.45	$1.25	$0.77
25 Nov 2009	500,000	Nil	85%	4.92%	5 years	$1.81	$1.25	$0.80
25 Nov 2009	500,000	Nil	85%	4.92%	6 years	$2.26	$1.25	$0.82
25 Nov 2009	200,000	Nil	85%	4.92%	2.7 years	$1.40	$1.25	$0.65
25 Nov 2009	602,100	Nil	85%	4.92%	3 years	$1.45	$1.25	$0.65

Terms of Ordinary Shares

Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held and in proportion to the amount paid up on the shares. At shareholders’ meetings, each ordinary share is entitled to one vote in proportion to the paid up amount of the share when a poll is called, otherwise each shareholder has one vote on a show of hands.

Capital Management

When managing capital, management’s objective is to ensure the entity continues as a going concern as well as to obtain optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure which assists to ensure an optimal cost of capital available to the Company.

Under the terms of the convertible note (Note 8), the Company must, unless approved otherwise, maintain a minimum working capital (net cash) balance of not less than $3,000,000.

10. SUBSEQUENT EVENTS

No matters or circumstances have arisen since the end of the period which significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group not otherwise disclosed in future financial years.

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BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) (Expressed in Australian dollars) For the Period Ended 31 December 2009

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11. COMMITMENTS & CONTINGENCIES

As part of the settlement agreement as outlined in Note 9(a)(ii), a further cash payment of $0.5 million and the issue of 4.0 million ordinary shares is due to Savanna. These payments are contingent upon the grant of the Etango Project mining licence.

In order to maintain current rights of tenure to mining tenements, the Group has exploration and evaluation expenditure obligations up until the expiry of its exploration licences.

The following stated obligations, which are subject to renegotiation upon expiry of the current leases, are not provided for in the financial statements and represent a commitment of the Group:

Exploration and evaluation expenditure Not longer than one year Longer than one year, but not longer than five years Longer than five years	31 December 2009 30 June 2009 $ $ 4,450,000 6,620,000 7,100,000 7,494,000 - -
	11,550,000 14,114,000

Applications for statutory two-year renewals of the Etango (EPL 3345) and Swakop River (EPL 3346) exclusive prospecting licences, both of which were due to expire subject to renewal on 26 April 2009, were filed with the Namibian Ministry of Mines & Energy in January 2009 in accordance with the stipulated renewal application timeframes. The Etango Project title was renewed for a two year period and currently expires on 26 April 2011. The Swakop River Project title continues to undergo the renewal process. In accordance with Namibian legislation, the title remains valid while undergoing the renewal process.

Formal approvals of the renewal applications for the project tenements in Botswana were received in early March 2009.

The figures represented above reflect the Company’s intended exploration and evaluation plans for the next licence period. If the Group decides to relinquish certain leases and/or does not meet the expenditure obligations or obtain appropriate waivers, assets recognised in the balance sheet may require review to determine the appropriateness of carrying values. The sale, transfer or farm-out of exploration rights to third parties will reduce or extinguish these obligations.

12. SEGMENT REPORTING

For management purposes, the Group is organised into business units based on activities and geographical location. The two reportable operating segments are as follows:

BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) (Expressed in Australian dollars) For the Period Ended 31 December 2009

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12. SEGMENT REPORTING (CONTINUED)

Southern African Projects

The Company is undertaking a feasibility assessment of, and exploring for uranium resources in, Namibia and Botswana, southern Africa.

Corporate

The corporate segment is responsible for regulatory reporting and corporate administration.

The segment results for the six-months ended 31 December 2009 (and comparative period, the six-months ended 31 December 2008) are presented below:

Interest received Other income Depreciation Employee expenses Financing costs Stock based compensation expense Other expenses Loss before income tax Income tax Loss for the period Segment assets Included in segment assets: Cash and cash equivalents Property, plant and equipment Exploration and evaluation expenditure Segment liabilities Acquisitions of plant and equipment, exploration and evaluation, and other non- current segment assets.	Corporate Australia 31 Dec 2009 Projects Southern Africa 31 Dec 2009 Total 31 Dec 2009 $ $ $ 510,438 20,688 531,126 896 2,321 3,217 (37,567) (103,825) (141,392) (925,722) (140,199) (1,065,921) (750,806) (3) (750,809) (2,780,208) - (2,780,208) (1,858,550) (353,372) (2,211,922)
	(5,841,519) (574,390) (6,415,909) - - -
	(5,841,519) (574,390) (6,415,909)
	23,054,514 64,214,458 87,268,972
	22,021,407 1,220,932 23,242,339 210,087 1,481,527 1,691,614 - 60,338,247 60,338,247 9,290,560 558,204 9,848,764
	56,222 7,924,363 7,980,585

BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) (Expressed in Australian dollars) For the Period Ended 31 December 2009

______________

12. SEGMENT REPORTING (CONTINUED)

Interest received Other income Depreciation Employee expenses Financing costs Stock based compensation expense Other expenses Loss before income tax Income tax benefit Loss for the period Segment assets Included in segment assets: Cash and cash equivalents Property, plant and equipment Exploration and evaluation expenditure Segment liabilities Acquisitions of plant and equipment, exploration and evaluation, and other non- current segment assets.	Corporate Australia 31 Dec 2008 Projects Southern Africa 31 Dec 2008 Total 31 Dec 2008 $ $ $ 302,316 23,393 325,709 - 2,144 2,144 (37,613) (104,627) (142,240) (478,988) (103,697) (582,685) (49,657) - (49,657) (386,730) - (386,730) (1,576,398) (284,206) (1,860,604)
	(2,227,070) (466,993) (2,694,063) 402,682 - 402,682
	(1,824,388) (466,993) (2,291,381)
	14,715,132 72,177,247 86,892,379
	13,167,426 28,834 13,196,260 146,705 1,452,943 1,599,648 1,014,188 41,606,534 42,620,722 9,472,953 4,718,950 14,191,903
	461,275 24,693,206 25,154,481

13. CONTROLLED ENTITIES

Parent Entity
Bannerman Resources Limited
	% Equity	Interest
Controlled Entities	31 December 2009	30 June 2009
Elfort Nominees Pty Ltd	100	100
Bannerman Mining Resources (Namibia) (Pty) Ltd	80	80

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BANNERMAN RESOURCES LIMITED AND CONTROLLED ENTITIES

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) (Expressed in Australian dollars) For the Period Ended 31 December 2009

______________

14. CORRECTION OF PRIOR PERIOD ERROR

As reported in the Company’s financial statements for the half-year ended 31 December 2008 and the year ended 30 June 2009, two accounting treatments adopted in prior years were corrected to align the financial statements with the requirements of Australian Accounting Standards. The corrections related to:

• (i) The determination of the cost of acquisition of the Company’s 80% interest in its subsidiary company, Bannerman Mining Resources (Namibia) (Pty) Ltd. Specifically, certain share options issued to the vendors as part of the consideration were incorrectly measured at the date of acquisition. Furthermore, these options should have been treated as a derivative financial liability and subsequently measured at fair value through the profit and loss statement instead of being capitalised to the cost of the asset; and

• (ii) The correct recognition, measurement and disclosure in the income statement and balance sheet of the minority’s 20% interest in Bannerman Mining Resources (Namibia) (Pty) Ltd.

The financial statements for the year ended 30 June 2008 have been restated to correct these errors. The impact of the restatement on the financial statements for the year ended 30 June 2008 is tabulated below.

	Consolidated Balance Sheet as at 30 June 2008	Restated balance $	Previously reported balance $	Impact $
	Exploration and evaluation expenditure	21,975,479	45,550,409	(23,574,930)
	Net Assets	36,396,555	59,971,485	(23,574,930)
	Accumulated losses	(48,009,259)	(14,815,957)	(33,193,302)
	Reserves	41,747,085	32,989,737	8,757,348
	Minority interest	861,024	-	861,024
	Total Equity	36,396,555	59,971,485	(23,574,930)
	Consolidated Income Statement as at 30 June 2008	Restated balance $	Previously reported balance $	Impact $
	Gain /(Loss) on derivative liability	(4,685,115)	-	(4,685,115)
	Net loss for the period	(15,637,412)	(10,952,297)	(4,685,115)
	Net Loss attributable to:
	- Equity holders of the parent company	(15,556,292)	(10,952,297)	(4,603,995)
	- Minority interest	(81,120)	-	(81,120)

MANAGEMENT’S DISCUSSION & ANALYSIS

For the Quarter ended December 31, 2009

This Management’s Discussion and Analysis (“ MD&A ”) of Bannerman Resources Limited (“ Bannerman ” or the “ Company ”) is dated February 10, 2010 and provides an analysis of the Company’s performance and financial condition for the three months ended December 31, 2009 (the “ Quarter ”). This MD&A should be read in conjunction with the Company’s June 30, 2009 audited consolidated annual financial statements and notes thereto, and the Company’s unaudited interim consolidated financial statements for the Quarter. The financial statements (and the financial information contained in this MD&A) comply with Australian Accounting Standards as issued by the Australian Accounting Standards Board and International Financial Reporting Standards (“ IFRS ”) as issued by the International Accounting Standards Board. These documents, along with others published by the Company, including the Company’s Annual Information Form (“ AIF ”), are available under the Company’s profile on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) at sedar.com.

This MD&A may contain forward-looking statements that are based on the Company’s expectations, estimates and projections regarding its business and the economic environment in which it operates. These statements speak only as of the date on which they are made, are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. Examples of some of the specific risks associated with the operations of the Company are set out in this MD&A under “ Risk Factors ”. Actual outcomes and results may differ materially from those expressed in these forward-looking statements and readers should not place undue reliance on such statements. Readers are also referred to the “ Cautionary Note Regarding Forward Looking Statements ” in this MD&A.

References to "A$" are to Australian dollars and references to “C$” are to Canadian dollars.

Overview

Bannerman is a uranium exploration and development company listed on the Australian, Toronto and Namibian stock exchanges. Bannerman’s principal focus is the exploration and development of uranium projects in Namibia, southern Africa. The primary and most significant asset is an 80% interest in the Etango Uranium Project (“ Etango Project ”) in Namibia which is at a definitive feasibility study stage of development. Etango is one of the world’s largest undeveloped uranium deposits, and Bannerman is focused on the feasibility assessment and development of a large open pit uranium operation at Etango. The Company, through its Namibian subsidiary, also holds title to the Swakop River Exploration Project (“ Swakop River Project ”) and in addition directly holds a 100% interest in a number of exploration properties in Botswana.

The Etango Project area forms part of Exclusive Prospecting Licence (“ EPL ”) 3345 which was granted to Bannerman’s 80% subsidiary, Bannerman Mining Resources (Namibia) (Pty) Ltd, on April 27, 2006 to explore for nuclear fuels, including uranium, expressed as uranium oxide (U3O8). The title was renewed for a further two year period in May 2009 expiring April 26, 2011. A renewal application for the Company’s Swakop River Project (EPL 3346) was lodged in early 2009 in accordance with the required application timeframes and renewal of the licence is expected. As of December 31, 2009, Bannerman has spent approximately A$60 million on its Namibian licences.

To date, Bannerman’s exploration activities have defined a mineral resource at the Etango Project, reported at a lower cut-off grade of 100 parts per million (“ ppm ”) U3O8, comprising Measured and Indicated Mineral Resources of 205.4 million tonnes (“ Mt ”) grading 227ppm U3O8 for 102.8 million pounds (“ Mlbs ”) of U3O8, and Inferred Mineral Resources of 102.9Mt grading 217ppm U3O8 for 49.2Mlbs of U3O8.

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This resource estimate was prepared by the Company’s consultants, Coffey Mining Pty Ltd (formerly RSG Global). The resource estimate is fully described in the Company’s news release dated December 14, 2009, a copy of which is available on SEDAR and the Company’s website.

Following the positive results of a Scoping Study completed in September 2007, work commenced at that time on a feasibility study for the development of a uranium mine at the Etango Project in Namibia. The feasibility study is ongoing and is being undertaken in conjunction with various technical consultants including AMEC Minproc Ltd, Independent Metallurgical Operations Pty Ltd and Coffey Mining Pty Ltd. Bannerman completed and released the results of the Preliminary Feasibility Study during the Quarter, and a Definitive Feasibility Study has now commenced. Subject to ultimate completion of a successful Bankable Feasibility Study, Bannerman is targeting to bring the Etango Project into production in late 2013.

Highlights

The key highlights for Bannerman during the Quarter were as follows:

• Completion of the Etango Project Preliminary Feasibility Study demonstrating the technical and economic viability of the Project at long term contract uranium prices:

•  Production estimated to commence in late 2013 with modelled output of 5-7Mlbs U3O8 per annum over a +16 year mine life.

•  Extensive Measured & Indicated resources of 102.8Mlbs U3O8 at an average grade of 227ppm U3O8, and Inferred resources of 49.2Mlbs U3O8 at an average grade of 217ppm U3O8 (reported at a cut-off grade of 100 ppm U3O8).

•  Subject to final confirmatory metallurgical testwork, processing is to be undertaken by agitated-tank leaching of a high-grade (3,500-4,000ppm U3O8) flotation concentrate for overall uranium processing recoveries of +90%.

• The Definitive Feasibility Study is underway:

•  Key opportunities are being pursued to improve project economics and extend mine life through a range of resource expansion, mining improvement, processing flowsheet optimisation and other initiatives.

•  The next phase of metallurgical locked-cycle testwork is continuing. Final pilot plant testwork is scheduled to start in February and be completed by the end of March 2010.

•  An update of the mineral resource estimate incorporating drilling completed since mid-2009 is due for release in March 2010.

• Drilling is ongoing at Etango and totaled 283,000 metres at the end of 2009, providing geological confidence and extending the Etango deposit’s contiguous strike length to 6km.

• Etango Project Mining Licence application lodged with the Namibian Government. No substantial legislative, environmental or social impediments for project development have been identified, and local community support has been received.

• Cash reserves as at December 31, 2009 of A$23.2 million.

• Appointment of former Rio Tinto senior mining executive Dr David Smith to the Board.

Etango Project (Bannerman 80%)

Overview

During the Quarter, Bannerman announced the results of its Preliminary Feasibility Study (“ PFS ”) on the Etango Project and continued to drill aggressively to improve the confidence and size of the Etango mineral resource estimate. Bannerman has progressed to a Definitive Feasibility Study (“ DFS ”), with the next stage of metallurgical testwork and key mining study and operating cost initiatives currently underway.

The Etango Project is one of the world’s largest undeveloped uranium deposits located in a premier uranium mining jurisdiction, offering long term security of supply for end-users within the timeframe in which there is growing consensus that supply will be constrained as the nuclear renaissance gathers momentum. These factors, combined with the significant scale of forecast annual production, low technical and permitting risks, and relatively flat operating cost profile provide the Etango Project with substantial strategic value in a world where nuclear energy and the demand for uranium is projected to grow significantly.

Preliminary Feasibility Study

Since July 2009, Bannerman’s PFS activities have focused on infill and extensional drilling of the Etango deposit and, in particular, on metallurgical testwork of both heap leaching and tank-based flotation concentrate leaching processing options.

A successful initial testwork program completed on the flotation concentrate leaching option in the second half of 2009 consistently achieved a 5-6% mass pull of over 94% of the contained uranium oxide (expressed as U3O8) in the ore. This resulted in a high-grade concentrate of approximately 3,500-4,000ppm U3O8. An overall processing recovery of 91% is estimated using agitated tank leaching of the flotation concentrate. Accordingly, flotation concentrate leaching is the preferred processing route for development of the Etango Project.

The PFS mining schedule provides for approximately 16 years of production at 5-7Mlbs of U3O8 per annum. Substantial additional material is expected to be included in the ultimate open pit mine design based on recent drilling work undertaken in the northern section of the Etango deposit and with further iterations of the mine optimisation and planning process.

Life-of-mine production in the PFS is estimated as 97Mlbs U3O8. Mineable resources of 231Mt at an average grade of 211ppm U3O8 represent approximately 75% of the total mineral resource tonnage, providing potential for mine life increases. In particular, opportunities exist for further pit expansions to add significantly to life-ofmine production beyond the current mine design.

Bannerman did not declare an ore reserve estimate in the PFS. This work is scheduled for the DFS. Mineable resources for the PFS comprise 2% Measured, 75% Indicated and 23% Inferred resource material by metal content. Given the proximity of the Inferred resource material to the Measured and Indicated resources, Bannerman expects that drilling undertaken since the resource model was developed will convert a reasonable proportion of the Inferred resource material to Indicated status. This can then be considered for conversion to an ore reserve as part of the DFS[1] .

The estimated capital cost of US$555 million is based on contract mining. It excludes working capital and financing charges but includes mining establishment, waste pre-stripping and EPCM (engineering, procurement, construction and management) costs.

Estimated operating costs are US$30-35/lb U3O8 in the first two years, with an average of US$38/lb U3O8 for the first five years and US$41/lb U3O8 for the life-of-mine. These costs include capital components for contract mining equipment and certain infrastructure. Given the relatively shallow nature of the open pit

1 In accordance with relevant regulations governing the disclosure of mineral projects, it is noted that mineable resources based on Inferred resource material are considered too speculative to enable them to be classified as ore reserves.

mining operations, life-of-mine average operating costs are only approximately 7% above the first five-year costs, supporting the long term viability and supply security of the Etango operation.

Uranium producers sell the vast majority of production into long-term contracts with end-users, typically nuclear power utilities which require security of supply. Long-term contract prices were US$62-70/lb U3O8 in 2009 and Bannerman has assessed the Project on the basis of a long term contract price of US$70/lb U3O8. The Etango Project is expected to commence production in late 2013. This timing is in line with generally anticipated tightening uranium demand/supply fundamentals due to significant nuclear reactor build programs in China, India and various other Asian and European countries, and an expected reduction in secondary supplies.

Definitive Feasibility Study

Bannerman commenced a DFS on the Project with key items including:

• Updating the mineral resource model in the current quarter to incorporate results of drilling completed since May 2009.

• A detailed mining study in the June 2010 quarter, with the assistance of external mining engineering specialists, to define key mine planning initiatives to reduce mining unit operating costs following receipt of the updated mineral resource model.

• The initial phase of confirmatory metallurgical testwork, including a range of “locked-cycle” laboratory tests, is continuing. The final phase of metallurgical pilot plant testwork is scheduled to commence in February and be completed in the current quarter. This testwork will enable confirmation of the processing route immediately thereafter.

• Selection of the engineering and technical consultant panel is underway and due to be finalised in the current quarter, with selection of the optimal engineering design and costing of the processing plant and infrastructure to be aggressively pursued.

The DFS is scheduled to be completed by end 2010 or early 2011, in advance of a development decision.

Project Enhancements

A number of opportunities to reduce operating costs and extend the mine life were identified in the PFS, including:

• Reductions in operating costs – Moving into the DFS will enable more detailed analysis of opportunities to reduce operating costs and, in particular, Bannerman is focusing on:

•  incorporation of this drilling into the resource model is expected to enable more near-surface and potentially higher grade and lower cost material to be included in the mine plan in the early years;

•  further optimisation of the mine design and mining schedule based on the updated resource model, including considering in-pit dumping and the use of larger equipment and electrically-assisted haul trucks;

•  sourcing of competitively tendered contract mining quotes;

•  detailed analysis of an owner-mining strategy including capital and operating cost trade-off analysis;  optimisation of the processing circuit focusing on reducing the consumption of flotation reagents and sulphuric acid;

•  access to third party facilities and infrastructure in the local region for key consumables, including acid; and

•  synergies through employing similar equipment as nearby mines as well as the sharing of local infrastructure.

• Expected increases in mine life and total production – Mine life and total production is expected to increase due to:

•  Drilling completed and reported by Bannerman since mid-2009 is not included in the resource model used for the PFS analysis. This drilling focused on expanding and infilling the northern parts of the Etango deposit.

•  The updated resource model will be re-optimised for the higher (+90%) processing recoveries that have been achieved with the flotation concentrate leaching process.

•  Opportunities exist for further pit expansions to increase life-of-mine production. The next two optimised open pit shells beyond the PFS mine design contain approximately 35Mt of mineralised material.

• Potential for satellite pits – Bannerman recently reported results for drilling activities adjacent to the existing resource area, including the Hyena Prospect. In the two years prior to this activity, the Company concentrated almost entirely on resource definition drilling. The latest results reflect the initial phases of drilling under the desert sand cover and a follow-up drilling plan is being finalised.

Heap Leaching Alternative

The PFS also demonstrated the technical and economic viability of using a heap leaching processing option. While flotation concentrate leaching is the preferred processing option, heap leaching is considered an alternative option for development of the Etango Project.

Updated Mineral Resource Estimate

In August 2009, Bannerman commissioned Coffey Mining Pty Ltd to remodel the Etango deposit and produce a new mineral resource estimate using the widely accepted Uniform Conditioning (“ UC ”) methodology. UC modelling completed in the PFS and now underway in the DFS emulates the selective mining of smaller units than the block sizes used in previous Ordinary Kriging (“ OK ”) models. This approach more closely reflects the mining methods proposed for the Etango Project.

The UC resource estimate, as reported to the market on 14 December 2009, is shown below. Using the UC mineral resource estimate (reported at a cut-off grade of 100ppm U3O8), the estimated average resource grade increased by 10% and overall resource tonnages and contained metal reduced by 13% and 5% respectively, compared with the previous OK resource model.

Since compilation of the UC resource model, Bannerman has continued to aggressively drill the Etango deposit with a combination of infill and extensional programs being completed. Based on the results of these drilling programs, improvements are expected in both the quantum and level of confidence of the resource model in the DFS. A resource update is expected towards the end of the current quarter.

Etango Project - Mineral Resource Estimate - December 2009 Uniform Conditioning (“UC”) Method

	Measured Resources				Indicated		Resources		Inferred Resources
Lower Cut-off (ppm U3O8)	Tonnes	Grade	Contained U3O8		Tonnes	Grade	Contained U3O8		Tonnes	Grade	Contained U3O8
	(Mt)	(ppm U3O8)	(Tonnes)	(Mlbs)	(Mt)	(ppm U3O8)	(Tonnes)	(Mlbs)	(Mt)	(ppm U3O8)	(Tonnes)	(Mlbs)
100	3.6	249	900	2.0	201.8	227	45,800	100.8	102.9	217	22,300	49.2
150	3.0	268	800	1.8	146.9	262	38,500	85.0	73.5	251	18,400	40.7

Note: Figures may not add due to rounding; bulk density of 2.63t/m ~~[3]~~ ; Uniform Conditioning estimate; Panel dimensions of 25mNS x 25mEW x 10mRL (Anomaly A and Oshiveli) and 50mNS x 50mEW x 10mRL (Onkelo) and SMU dimensions of 12.5mNS x 12.5mEW x 5mRL with Information Effect.

Drilling Programs

During the Quarter, Bannerman completed 141 reverse circulation (“ RC ”) drillholes for a total of 21,147 metres, plus 19 diamond core drillholes for 4,012 metres drilled.

At December 31, 2009, Bannerman had completed 283,000 metres of drilling at the Etango Project, of which 223,000 metres has been included in the resource model, with most drilling undertaken in the Anomaly A deposit. Over 96% of the drilling results have been chemically assayed and diamond drilling constitutes about 12% of the drilling completed.

The drilling has provided Bannerman with confidence in its geological understanding of the Etango Project and has extended the known mineralised contiguous strike length to approximately 6km. Drilling has rarely penetrated deeper than 350-400 metres below surface, with the focus being on the delineation of near-surface resources to support an open pit mining decision. The Etango deposit remains open at depth to the west, and potential exists for mine life extensions.

The drilling program for early 2010 involves further infill diamond drilling at Oshiveli, hydrological drilling for ground-water monitoring and sterilisation drilling for the proposed site infrastructure.

Onkelo and Oshiveli

Diamond drilling during the quarter at the Oshiveli and Onkelo areas within the Etango Project continued to confirm the near-surface broad zones of uranium mineralisation encountered in previous drilling, and also filled the previously undrilled gap between Oshiveli and Onkelo. Drilling targeted the conversion of Inferred to Indicated resources as well as identifying additional near-surface mineralisation which could be incorporated into the Etango Project resource model and feasibility study mining plans.

The results continue to support the geological interpretations and grade assessments in the Onkelo and Oshiveli areas, and the intersected mineralisation is expected to add to the size and classification of the resource estimate in this location. The results will be incorporated in the current quarter into a new mineral resource estimate.

Ondjamba, Jackal and Giraffe

Further reconnaissance and sterilisation drilling was completed at the Ondjamba, Jackal and Giraffe Prospects. A number of the RC drillholes at Ondjamba intersected uranium mineralisation in the form of high grade narrow structures, and further drilling in this area is being considered. Drilling confirmed no anomalous results for the Jackal and Giraffe Prospects.

Environmental and Social Impact Assessment (“ESIA”)

During the Quarter, Bannerman lodged an ESIA for the Etango Project with the Namibian Ministry of Environment and Tourism. The ESIA was conducted and reviewed by independent environmental consultants. The Environmental Protection Act of Namibia requires a detailed ESIA for all mining projects. The ESIA supports the application for environmental clearance from the Namibian Ministry of Environment and Tourism.

No substantial legislative, environmental or social impediments have been identified for development of the Etango Project. The Erongo region already hosts a number of large uranium mines and projects. Uranium mining and processing is well understood in the local communities and by Government regulatory authorities. The Etango Project enjoys local community support and is expected to have a significant positive impact on the Erongo regional and Namibian national economies, including on local employment and training.

Mining Licence

On December 21, 2009, Bannerman announced it had lodged a Mining Licence application for the Etango Project with the Namibian Ministry of Mines and Energy.

Exploration

Etango Project (Bannerman 80%)

The Etango deposit, comprising the Anomaly A, Oshiveli and Onkelo resource areas, covers a mineralised area of approximately 5km[2] and lies wholly within EPL 3345. EPL 3345 covers a total area of approximately 500km[2] within the local geological region often referred to as “alaskite alley” due to the number of identified alaskite granite-hosted uranium deposits in the area.

On October 22, 2009, Bannerman announced the intersection of a new alaskite-hosted mineralised zone named “Hyena” located 1km south of Anomaly A. The identification of this mineralised zone occurred during the initial phases of step-out exploration drilling to the south of the Anomaly A deposit. The Hyena Prospect, comprising two distinct parallel zones, was discovered by the pattern drilling of lines of vertical exploration drillholes across the general strike of the stratigraphy in the area immediately to the south of Anomaly A. A follow-up drilling program is being finalised. The proximity of Hyena to the existing Etango resource area indicates the potential for discovery of additional mineralisation under the desert sand cover in the southern part of the Etango tenement.

Swakop River Project (Bannerman 80%)

The Swakop River licence covers an area of approximately 800km[2] and contains extensive paleo-channel targets with uranium mineralisation in calcretised sediments. These calcretised sediments are similar to those hosting uranium mineralisation at the adjacent Langer Heinrich operation. No drilling work was undertaken during the quarter.

Botswana Project (Bannerman 100%)

Bannerman controls three Prospecting Licences (131/2005 to 133/2005) for uranium, precious metals, base metals and platinum group minerals in Botswana. These licences are referred to as the Serule South, Serule North and Dukwe Licences and are located in the Foley and Sua Pan regions in Botswana. The tenements cover an area of 2,308km[2] . Work during the quarter comprised data compilation and reviews with the objective of finalising the exploration strategy for this project in the current quarter.

Corporate

Board Appointment

On November 24, 2009, the Company announced the appointment of senior mining executive Dr David Smith to the Board as a Non-Executive Director, with effect from November 25, 2009.

Dr Smith has over 30 years’ of technical, operational and senior management experience within the Rio Tinto organisation. He was until recently the President of Rio Tinto Atlantic covering the Simondou Project in Guinea, West Africa. Previous to that, he was Managing Director of Rio Tinto’s Pilbara iron ore operations in Western Australia comprising Hamersley Iron and Robe River Mining, together the second largest iron ore producing operation in the world. Prior to Dr Smith’s appointment to Rio Tinto's iron ore operations in 2001, he was the Chief Executive Officer of Rössing Uranium Limited in Namibia responsible for annual sales of over 5Mlbs of uranium oxide to power utilities worldwide. He also chaired the Rössing Foundation, a key component of Rio Tinto’s corporate social responsibility activity in Namibia. Dr Smith is a qualified metallurgist residing in Perth, Western Australia, and his formal qualifications include a Bachelor of Science and Ph.D. in Metallurgy from the University of New South Wales in Australia.

Company Secretary Appointment

Following the end of the quarter, Mr Glen Smith was appointed to the position of Company Secretary effective January 21, 2010 following the resignation of the previous Company Secretary.

Annual General Meeting

The Company’s Annual General Meeting was held on November 24, 2009 in Perth. As reported to the market immediately following the meeting, all resolutions were passed.

Results of Operations

The Company incurred a net loss of A$3.4 million for the Quarter compared with a net loss of A$1.4 million for the prior corresponding quarter ended December 31, 2008. The result for the Quarter was attributable primarily to non-cash share-based compensation expenses, interest costs, and corporate and administrative expenses.

Operating expenses for the Quarter totaled A$3.7 million versus A$1.9 million for the prior corresponding period, with the key items including administrative costs of A$0.9 million (A$0.8 million in the prior period), stock based compensation expense of A$1.4 million (A$0.4 million), employee costs of A$0.6 million (A$0.3 million) and interest expenses of A$0.4 million (A$0.1 million). The higher level of operating costs reflects the increased personnel base of the Company and its significantly expanded commitment to development activities associated with the Etango Project, as well as the interest-bearing A$10 million convertible note facility which was drawn down in mid December 2008.

Interest income for the Quarter was A$0.3 million compared with A$0.1 million in the prior period.

Capitalised exploration and evaluation expenditure increased by A$2.5 million in the Quarter reflecting expenditure incurred on drilling and assays, feasibility study activities, project personnel costs and a favourable foreign exchange translation adjustment.

Summary of Quarterly Results

	Dec 2009	Sep 2009	Jun 2009	Mar 2009	Dec 2008	Sep 2008	Jun 2008	Mar 2008
Interest income (A$’000)	280	255	81	79	99	227	388	16
Net loss (A$’000)	(3,387)	(3,029)	(5,175)	(2,013)	(1,790)	(904)	(1,565)	(1,080)
Basic/Diluted loss per share (A$)	(0.02)	(0.01)	(0.03)	(0.02)	(0.01)	(0.01)	(0.01)	(0.01)
Cash and cash equivalents (A$’000)	23,242	29,868	37,578	4,620	13,196	9,720	13,640	20,983
Total assets (A$’000)	87,269	91,108	92,738	54,194	59,824	42,037	37,530	37,161
Total liabilities (A$’000)	9,849	10,734	10,986	9,334	13,789	1,733	1,133	464
Net assets (A$’000)	77,420	80,374	81,751	44,860	46,035	40,304	36,397	36,697

The historical quarterly results, as tabulated above, have been re-stated due to the correction of two accounting treatments adopted in prior periods. The corrections were detailed in the independently reviewed consolidated Australian financial statements for the half-year ended December 31, 2008 and are also set out in the audited financial statements for the year ended June 30, 2009.

The growth trend in total assets over the previous quarters reflects various equity capital raisings, including the A$37.5 million capital raising undertaken in the June 2009 quarter, and the Company’s activities in exploring and evaluating its properties, in particular, the feasibility and drilling activities undertaken on the

Etango Project in Namibia. Total assets also reflect the capitalised costs associated with the litigation settlement with Savanna Marble CC (“ Savanna ”) in December 2008.

The loss incurred in each quarter reflects the general and administrative costs of the Company and, in particular, the stock-based compensation expense relating to vendor, employee and director stock options.

Cash balances reflect the movements related to expenditure and the various capital raising programs undertaken by the Company, comprising the issue of shares and convertible notes.

Discussion of Quarterly Cash Flows

Cash Flows A$’000	December Quarter 2009	December Quarter 2008	December YTD 2009	December YTD 2008
Operating activities Investing activities Financingactivities	(1,652) (4,761) (191)	(1,272) (4,655) 9,339	(3,347) (10,551) (419)	(1,884) (10,361) 11,259

Cash outflow from operating activities during the Quarter was A$1.7 million compared with A$1.3 million for the prior corresponding period. The increase was due primarily to higher general and administrative costs.

Cash outflow from investing activities during the Quarter was A$4.8 million, similar to the prior corresponding period.

Cash outflows from financing activities for the Quarter were A$0.2 million compared with an inflow of A$1.9 million for the prior period. The outflow for the Quarter primarily reflects interest paid on the A$10 million convertible note. The inflow of A$9.3 million in the prior corresponding quarter reflected the receipt of proceeds of the A$10 million convertible note, net of issue costs.

Discussion of Financial Position

Cash and cash equivalents

Cash and cash equivalents were A$23.2 million as at December 31, 2009 versus A$37.6 million as at June 30, 2009. The decrease reflects the expenditure incurred on exploration, feasibility and corporate activities.

Trade and other receivables

Trade and other receivables were A$1.8 million as at December 31, 2009 (June 30, 2009: A$0.9 million) with the balance primarily reflecting VAT receivables in Namibia.

Property, plant and equipment

Property, plant and equipment was A$1.7 million as at December 31, 2009 (June 30, 2009: A$1.6 million) reflecting the purchase of vehicles, net of depreciation charges.

Exploration and evaluation expenditure

Capitalised exploration and evaluation expenditure increased to A$60.3 million as at December 31, 2009 (June 30, 2009: A$52.6 million) reflecting the capitalisation of costs relating to the Etango Project feasibility study, resource definition drilling and assaying, and other exploration costs, net of foreign currency translation movements. Key items of capitalised expenditure in the six month period relate to drilling and consumables

(A$5.0 million), assays and freight (A$0.6 million), personnel costs (A$0.8 million) and feasibility study contractors and other consultants (A$2.1 million). A foreign exchange credit of A$1.0 million was also recorded in the 6 month period.

Trade and other payables

Trade and other payables were A$1.3 million as at December 31, 2009 (June 30, 2009: A$2.9 million).

Interest-bearing liabilities

Interest-bearing liabilities as at December 31, 2009 totaled A$8.3 million (June 30, 2009: A$8.0 million) primarily attributable to the A$10 million convertible note.

The convertible note was accounted for at the date of issue by allocating the assessed equity component to equity reserves, and the present value of the debt component to non-current liabilities. Interest is accreted to the carrying value of the convertible note over its life such that the carrying value of the convertible note will be equal to its face value of A$10 million as at the date of maturity, being December 15, 2011.

Equity

Issued capital remained at A$86.1 million as at December 31, 2009 (June 30, 2009: A$86.1 million). A minor movement occurred during the 6 month period reflecting the recognition of share issue costs.

Liquidity and Capital Resources

The Company’s cash reserves as at December 31, 2009 totaled A$23.2 million.

The Company’s principal requirement for cash over the next 12 months will be for the feasibility study for the Etango Project, including drilling costs, and other exploration activities. The Company presently expects its cash reserves to fund the planned activities into the second half of 2010, however the level of expenditure over this period will be dependent on the results of DFS work and exploration activities, and will require the Company to consider raising capital in the second half of 2010.

Assuming the Etango Project DFS is positive, further funding will be required for development and construction of the operation via a combination of equity and debt. Key matters which will require funding include construction of plant and other infrastructure, mining pre-strip and working capital. The success and pricing of any such capital raising and debt financing will be dependent upon the prevailing market conditions at the time, the outcome of the feasibility study and future exploration programs.

To date, Bannerman has not generated revenues from operations nor recorded any cost of sales and, as a result, is considered to be in the development stage. The underlying value of the mineral properties and related deferred costs are entirely dependent on the existence of economically recoverable reserves and the ability of the Company to obtain the necessary financing to complete the development and construction of the operation, and upon future profitable production.

Substantially all of Bannerman’s efforts are devoted to financing and developing the Etango Project. The Company intends to raise the balance of the funds required to develop the Etango Project and, until the Etango Project begins to produce income, for working capital needs.

The Company will ultimately have capital requirements in excess of its currently available capital resources. To date, the Company has been successful in raising its required funds through the exercise of outstanding share options and equity and debt offerings. However, there can be no assurance that the Company will have sufficient funds to meet its future capital requirements or that additional financing will be available on terms acceptable to the Company in the future.

There are significant uncertainties regarding the trends in U3O8 prices and the availability of equity for project financing. Although the Company, like many market commentators and industry participants, has a very positive view regarding the medium and longer term fundamentals of the uranium price, the current world economic situation has created a difficult environment for companies to access project financing. This poses a risk for Bannerman in the pursuit to maintain the current timeline required to develop the Etango Project. The Company is, however, continually evaluating its possible financing sources.

Financial Instruments and Related Risks

The Company is exposed to commodity price, foreign exchange and interest rate risks in the normal course of its business operations. The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework and approach.

(a) Fair Value

The fair value of financial instruments represents the amounts that would have been received from or paid to counterparties to settle these instruments. The carrying amount of all financial instruments classified as current approximates their fair value because of the short term maturities and normal trade term of these instruments.

(b) Liquidity Risk

The Company has in place a planning process to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. The Company ensures that there are sufficient funds to meet its short term business requirements, taking into account the anticipated cash inflows and its holding of cash and cash equivalents.

In the normal course of business, the Company enters into contracts that give rise to commitments for future minimum payments. The following table provides a summary of the type and maturities of the Company’s contractual liabilities as at December 31, 2009:

Contractual Obligations	Total A$’000	Less than 1 Year A$’000	1-3 Years A$’000	4-5 Years A$’000	After 5 Years A$’000
Long term debt (convertible note) Long term debt interest Litigation settlement* Tenement expenditure Administrative and operating leases	10,000 1,600 3,300 11,550 300	- 800 3,300 4,450 300	10,000 800 - 7,100 -	- - - - -	- - - - -
Total Contractual Obligations	26,750	8,850	17,900	-	-

• May be satisfied through the issue of shares, at the Company’s election.

** Upon receipt of the Etango mining licence, the Company is obligated to pay A$0.5 million cash and 4.0 million shares (calculated at a notional price of A$0.70 per share for the purposes of the above table).

Long term debt comprises the convertible note which, unless converted into shares, will be repayable by the Company to the holder on December 15, 2011. The convertible note accrues interest at a coupon rate of 8.0%pa and is payable quarterly in arrears, in either cash or shares at the Company’s election.

The litigation settlement relates to the settlement with Savanna in December 2008. The Company has already paid the first tranche of the settlement payment and is due to pay the second trance upon receipt of the mining licence for the Etango Project. The Company applied for the Etango Project mining licence in December 2009 and grant of the licence is expected in 2010. The second tranche payment comprises A$0.5 million in cash and 4.0 million Bannerman shares.

Tenement expenditure represents the minimum stated expenditure covenants on the Company’s exploration licences in Namibia. Other contractual obligations represent normal operating and office leases.

(c) Foreign Exchange Risk

The Company undertakes transactions in foreign currencies and reports the results of its operations in Australian dollars, its functional currency. It is therefore exposed to foreign exchange risk arising from transactions denominated in foreign currency and the translation of foreign currency balances to Australian dollars. The Company conducts its exploration and development activities in Namibia and thereby a substantial portion of the Company’s assets, liabilities and expenses are denominated in Namibian dollars which is tied to the South African Rand.

The Company does not currently engage in foreign currency hedging, and the exposure of the Company’s financial assets and liabilities to foreign exchange risk is minimal. As at December 31, 2009, approximately 5% of cash reserves were held in Namibian dollars.

(d) Interest Rate Risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Company’s cash equivalents are highly liquid and earn interest at market rates in short term fixed and variable term deposits. Due to the short term nature of these financial instruments, fluctuations in market interest rates do not have a significant impact on the fair values of the financial instruments as at December 31, 2009.

(e) Credit Risk

The Company is exposed to credit risk primarily associated with GST/VAT receivables from governments and with cash and cash equivalents. The carrying amount of assets included on the balance sheet represents the maximum credit exposure.

Off-Balance Sheet Arrangements

There were no off-balance sheet arrangements as at December 31, 2009.

Related Party Transactions

Remuneration (including fees and the issue of share options) was paid or is payable to the directors of the Company in the normal course of business. The Company pays its non-executive personnel consulting fees for extra services, if any, performed outside of normally expected non-executive duties. These transactions are made on commercial terms and conditions and at market rates.

Critical Accounting Estimates

The preparation of the financial statements requires management to make estimates and assumptions that affect reported amounts in the financial statements. Management continually evaluates its estimates and assumptions in relation to the Company’s assets, liabilities, contingent liabilities, revenue and expenses. Management bases its estimates and assumptions on historical experience and on other various factors it believes to be reasonable under the circumstances. Actual results may differ from these estimates and assumptions, and may materially affect the Company’s financial results or financial position in future periods.

Management has identified the following matters for discussion in this MD&A. Further details of the nature of these estimates and assumptions can be found in the relevant notes to the financial statements.

Valuation and impairment of exploration and evaluation expenditure

When funds are expended for exploration on the Company’s mineral properties, the Company makes a determination as to the likelihood that the activities conducted will result in the eventual discovery of a mineable deposit. Where the determination is made that the potential for a future mineable deposit exists, from which the future cash flows will exceed the amount expended, the Company capitalises the expenditures to the value of the property. Once in production, the capitalised costs will be amortised on a units of production basis over the property’s expected economic life.

The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Company decides to exploit the related project itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale. Factors which could impact the future recoverability include the level of mineral resources and reserves, future technological changes which could impact the cost of mining, future legal changes (including changes to environmental restoration obligations), changes to commodity prices and the issue of a mining licence. To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future, this will reduce profits and net assets in the period in which this determination is made.

The Company reviews the carrying value of each property that is in the exploration/development stage by reference to the project economics including the timing of the exploration and/or development work, the work programs and the exploration results experienced by the Company and others. The review of the carrying value of each property will be made by reference to the estimated future realisable cash flows from its operation or sale. As at December 31, 2009, the Group had consolidated exploration and evaluation assets of A$60.3 million (June 30, 2009: A$52.6 million).

Share-based payment transactions

The Company measures the cost of equity-settled transactions with directors, employees and contractors by reference to the fair value of the equity instruments at the date at which they are granted and taking into consideration the likelihood on non-market-based conditions occurring. The Company measures the cost of cash-settled share-based payments at fair value at the grant date using the Black-Scholes option pricing model and taking into account the terms and conditions upon which the instruments were granted. Differences in estimated future stock price volatility, interest rates and other factors can have a material effect on the calculation of stock-based compensation expense and derivative values. As such, the values derived may change significantly from period to period and are subject to significant uncertainty. The Company recorded a total stock based compensation expense of A$1.4 million for the Quarter (December 2008 quarter: A$0.4 million).

Income taxes

The determination of the ability of the Company to utilise tax loss carry-forwards to offset future income tax payable requires management to exercise judgment and make certain assumptions about the future performance of the Company. Management is required to assess whether it is probable that the Company would benefit from these prior losses and other future tax assets. Changes in economic conditions, metal prices and other factors could result in revisions to the estimates of the benefits to be realised or the timing of utilising the losses. Currently the Company has recorded a valuation allowance against its carry-forward tax losses. When amounts that are considered not likely to be utilised to reduce future tax payable are determined to be likely to be utilised in the future, the valuation allowances against these losses would be removed by recording a future income tax recovery in the income statement.

New Accounting Standards

Australian Accounting Standards and interpretations which have recently been issued or amended but are not yet effective have not been early-adopted by the Company. Note 1 to the financial statements for the Quarter contains disclosures regarding those standards and interpretations. The Company will monitor the effect of

the new standards and has concluded that these standards, if early-adopted, would not have a significant effect on the December 31, 2009 financial statements.

Key Economic Trends and the Uranium Industry

Worldwide developments continue to strongly favour nuclear power as a sustainable energy source. New reactor build programs have been announced for many countries, in particular in the Asian region where nuclear energy growth plans are particularly strong in China and India.

Recent industry surveys point towards the long term growth trend of the nuclear power sector and, as a result, the expected increase in uranium demand to fuel the growing nuclear power plant fleet. This is expected to have a long term upward influence on the uranium price, in particular on the long term contract prices at which most producers sell the vast majority of their uranium production.

Risk Factors

The Company’s operations and results are subject to a number of different risks at any given time, including the following:

• Mineral price and exchange rate volatility may affect the profitability and the financial position of Bannerman;

• Bannerman will require additional capital in the future and no assurance can be given that such capital will be available at all or available on terms acceptable to Bannerman;

• Exploration and production may not prove successful, involve risks and have no guaranteed outcome;

• Development of the Etango Project will require granting of additional licences;

• Licenses are subject to renewal;

• The Namibian Government is pursuing a “Broad Based Economic Empowerment” regime and at this time the particulars of any such regime are unlegislated;

• Bannerman has to compete for access to land, resources and personnel;

• Bannerman’s insurance coverage does not cover all of its potential losses, liabilities and damage related to its business and certain risks are uninsured or uninsurable;

• Mineral resource estimates are estimates only and Bannerman has no formal reserve estimate;

• Bannerman’s activities are subject to environmental risks and regulations;

• Bannerman’s operations are subject to other forms of government regulation and permitting;

• Shares of Bannerman are subject to share price volatility;

• Bannerman operates in foreign jurisdictions;

• Bannerman’s Namibian operations are conducted through a non-wholly-owned subsidiary;

• Currency fluctuations may affect Bannerman’s revenue from its operations;

• Bannerman relies on its key personnel and the loss of one or more of these persons may adversely affect the Company;

• The effectiveness of Bannerman’s hedging practices, if any, depend on external factors beyond the Company’s control;

• Bannerman does not have any production revenues;

• Mining is inherently dangerous and subject to conditions or events beyond the control of Bannerman, and any operating hazards could have a material adverse effect on its business; and

• The mining industry is an intensely competitive industry, and Bannerman may have difficulty effectively competing with other mining companies in the future.

The Company’s risk factors are discussed in detail in the Company’s AIF.

Outstanding Securities Data

The Company has on issue ordinary shares, stock options and the convertible note. The following is a summary of the Company’s capital structure as at the date of this MD&A:

	Number of Securities
	Ordinary Shares 201,710,934 Options over Unissued Shares 22,977,100 Convertible Note (if converted) 16,339,869 Contingent – Shares and Options 4,184,600
	Total Fully Diluted 245,212,503

The contingent amount comprises 4.0 million shares issuable to Savanna upon receipt of the Etango Project mining licence (refer earlier discussion under “ Corporate ” above), and 184,600 options issuable to a NonExecutive Director upon shareholder approval (refer further comments below).

The details of the stock options on issue as at the date of this MD&A are tabulated below:

Expiry Dates	Exercise	Balance	Vested
	Price
November 30, 2010	A$6.50	2,250,000	2,250,000
December 13, 2010	A$0.20	2,725,000	2,725,000
September 1, 2011	A$2.51	1,000,000	1,000,000
September 1, 2011	A$2.44	250,000	250,000
December 27, 2011	A$2.40	200,000	200,000
November 30,2011	A$7.50	2,250,000	2,250,000
July 27, 2012	A$1.40	200,000	200,000
September 1, 2012	A$3.00	1,000,000	1,000,000
September 1, 2012	A$4.00	250,000	250,000
November 1, 2012	C$4.12	100,000	-
November 17, 2012	A$0.434	2,500,000	2,500,000
November 25, 2012	A$1.45	602,100	602,100
January 28, 2013	A$3.64	200,000	-
February 2, 2013	A$0.91	600,000	-
February 16, 2013	A$0.83	600,000	-
June 3, 2013	A$2.80	250,000	-
August 31, 2013	A$1.46	600,000	-
August 31, 2013	A$1.82	600,000	-
November 17, 2013	A$0.543	1,500,000	-
November 25, 2013	A$1.45	500,000	-
February 2, 2014	A$1.140	600,000	-
August 20, 2014	A$1.510	250,000	-
November 17, 2014	A$0.678	1,500,000	-
November 25, 2014	A$1.81	500,000	-
February 2, 2015	A$1.43	600,000	-
August 20, 2015	A$1.89	250,000	-
August 31, 2015	A$2.28	600,000	-
November 25, 2015	A$2.26	500,000	-
		22,977,100	13,227,100
Weighted average
exercise price (A$)		2.40	3.17
Average life to expiry	(years)	2.9	1.8

As at the date of this MD&A, the Directors hold 9,802,100 options with an average exercise price of A$2.90 per share and an average life to expiry of approximately 2.9 years.

Subject to shareholder approval at Bannerman’s next Annual General Meeting (to be held late in 2010), Bannerman agreed to issue to a Non-Executive Director, Dr. David Smith, 184,600 options exercisable at A$1.45 per share with a period to expiry of three years.

Disclosure Controls and Procedures and Internal Controls over Financial Reporting

The Company maintains appropriate information systems, procedures and controls to ensure that information used internally and disclosed externally is complete and reliable. The Company is continuing to review and develop appropriate disclosure controls and procedures and internal controls over financial reporting for the nature and size of the Company’s business.

Disclosure Controls and Procedures

The Company’s disclosure controls and procedures (“ DCP ”) are designed to provide reasonable assurance that all relevant information is communicated to the Company’s senior management to allow timely decisions regarding disclosure. Access to material information regarding the Company is facilitated by the small size of the Company’s senior management team and workforce. The Company is continuing to develop appropriate DCP for the nature and size of the Company’s business.

Internal Controls over Financial Reporting

Internal controls over financial reporting (“ ICFR ”) are designed to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of financial statements in compliance with IFRS. The Board is responsible for ensuring that management fulfills its responsibilities in this regard. The Audit Committee fulfills its role of ensuring the integrity of the reported information through its review of the interim and annual financial statements. As at December 31, 2009, the Chief Executive Officer and Chief Financial Officer, with participation of the Company’s management, concluded that there were no material weaknesses at the end of the Quarter or changes to the Company’s internal controls during the Quarter which have materially affected, or are considered to be reasonably likely to materially affect, the Company’s ICFR.

Limitations of Controls and Procedures

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, believe that any DCP or ICFR, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. The design of any systems of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected.

Cautionary Note Regarding Forward Looking Statements

Certain information contained in this MD&A constitutes “forward-looking information”, which may include, but is not limited to, statements or information regarding possible events, conditions or results of operations that is based upon assumptions about future economic conditions and courses of action. All information other than

matters of historical fact may be forward-looking information. In some cases, forward-looking information can be identified by the use of words such as “seeks”, “expects”, “is expected”, “anticipates”, “budget”, “plans”, “estimates”, “continues”, “forecast”, “projects”, “intends”, “believes”, “predicts”, “scheduled”, “potential”, “targets”, “may”, “could”, “would”, “might”, “will” and similar words or phrases (including negative variations) suggesting future outcomes or statements regarding an outlook. Forward-looking information in this MD&A includes, but is not limited to, statements about drill results, commodity prices and core intersection lengths, in that they constitute estimates, based on certain assumptions of mineralization that may be encountered if a deposit were to be mined.

By its nature, forward-looking information involves known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to differ materially from those expressed or implied by such forward-looking information. Some of the risks and other factors that could cause actual results to differ materially from those expressed in the forward-looking information contained in this MD&A include, but are not limited to:

• risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits and conclusions of economic evaluations;

• results of initial feasibility, pre-feasibility and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with the Company’s expectations;

• risks relating to possible variations in reserves, grade, planned mining dilution and ore loss, or recovery rates and changes in project parameters as plans continue to be refined;

• mining and development risks, including risks related to accidents, equipment breakdowns, labour disputes (including work stoppages and strikes) or other unanticipated difficulties with or interruptions in exploration and development;

• the potential for delays in exploration or development activities or the completion of feasibility studies;

• risks related to the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses;

• risks related to commodity price and foreign exchange rate fluctuations;

• the uncertainty of profitability based upon the cyclical nature of the industry in which the Company operates;

• risks related to failure to obtain adequate financing on a timely basis and on acceptable terms or delays in obtaining governmental approvals or in the completion of development or construction activities;

• risks related to environmental regulation and liability;

• political and regulatory risks associated with mining and exploration; and

• other risks and uncertainties related to the Company’s prospects, properties and business strategy.

A discussion of these and other factors that may affect our actual results, performance, achievements or financial position is contained in “ Risk Factors ” and elsewhere in this MD&A and in the Company’s AIF. Although the Company has attempted to identify important factors that could cause actual results or events to differ materially from those described in the forward-looking information, readers are cautioned that this list is not exhaustive and there may be other factors that we have not identified. Readers are cautioned not to place undue reliance on forward-looking information contained in this MD&A. Forward-looking information is based upon management’s beliefs, estimates and opinions as at the date of this MD&A, and no assurance can be given that these will prove to be correct. Furthermore, the Company undertakes no obligation to update or revise forward-looking information if these beliefs, estimates and opinions or other circumstances should change, except as otherwise required by applicable law.

Technical Disclosures

The Company has not completed feasibility studies on its projects. Accordingly, there is no certainty that such projects will be economically successful. Mineral resources that are not ore reserves do not have demonstrated economic viability.

The information in this report relating to the Mineral Resources of the Etango Project is based on resource estimates completed by Mr Neil Inwood and Mr Iain Macfarlane both of whom are full time employees of Coffey Mining Pty Ltd. Each of Messrs. Inwood and Macfarlane are Members of The Australasian Institute of Mining and Metallurgy and have sufficient experience relevant to the style of mineralisation and types of deposits under consideration and to the activity which is being undertaken to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”, and are independent consultants to Bannerman and Qualified Persons as defined by Canadian National Instrument 43-101. Messrs. Inwood and Macfarlane consent to the inclusion in this report of the matters based on their information in the form and context in which it appears.

The information in this report relating to the geology and exploration results of the projects owned by Bannerman Resources Ltd is based on information compiled by Mr Kieron Munro, Head of Geology of Bannerman and a full time consultant to the Company. Mr Munro is a Member of the Australian Institute of Geoscientists, a Recognised Professional Organisation by the Australasian Joint Ore Reserves Committee, who has sufficient experience relevant to the style of mineralisation and types of deposits under consideration and to the activity which is being undertaken to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” and as a Qualified Person for purposes of Canadian National Instrument 43-101. Mr Munro consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this report relating to mining studies undertaken on the Etango Project was completed by Mr Harry Warries of Coffey Mining Pty Ltd, a consultant to Bannerman Resources Ltd. Mr Warries is a Member of The Australasian Institute of Mining and Metallurgy and has extensive experience relevant to the activity which is being undertaken. Mr Warries consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this report relating to the metallurgical testwork undertaken on the Etango Project samples was completed by Mr Daryl Evans of Independent Metallurgical Operations Pty Ltd, a consultant to Bannerman Resources Ltd. Mr Evans is a Member of The Australasian Institute of Mining and Metallurgy and has extensive experience relevant to the activity which is being undertaken. Mr Evans consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.