Bannerman Resources (TSX:BAN,ASX:BMN) announced last week that it has awarded contracts to construct and operate a demonstration heap leach plant at its Etango uranium deposit in Namibia. The total cost of the plant is expected to be AU$1.4 million, and upon completion in early 2015 it is scheduled to run for at least 12 months, providing larger-scale proof of concept of the current processing flow sheet, as well as generating valuable operating data that can then be used to provide feedback into final plant design. However, like most of the world's current stable of undeveloped uranium deposits, Etango remains uneconomic at the prevailing uranium price. A definitive feasibility study was completed in late 2012, outlining plans for a long-lived operation producing between 6 and 8 million pounds per year of U3O8 for over 20 years — but at a cost. The study estimates pre-production CAPEX of $870 million with an average life-of-mine cash operating cost of $46 per pound U3O8. Despite having slightly lower cash costs in the early years of the operation, it is likely that a price of nearer to $70 per pound will be required to justify development of Etango. That said, few — if any — new greenfields projects are able to justify development at prices below $60 per pound, and most require prices above $80 per pound. The uranium spot price has increased almost 30 percent since its lows of August to currently sit at $36.50 per pound. The uranium market is somewhat illiquid and still dominated by opaque, long-term contracts, but in recent weeks, market perception seems to be shifting toward the recognition of the potential for medium-term deficits; that's largely due to gradual increases in demand from new reactors approaching commissioning, industrial action in Canada and political problems in Russia. But there is still some way to go.