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Berkeley Energia reports strong interest from financiers for Salamanca project

Staff Writer |
Berkeley a clean energy company, is focused on bringing its wholly owned Salamanca mine into production, initial construction began earlier last year and will continue throughout 2017.

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This world class uranium project is being developed in an historic mining area in western Spain, about three hours west of Madrid.

Following recent ministerial approval, the company has now received all the European Union and National level approvals required for the initial development.

During the half year, the company signed a binding off-take agreement with Interalloys Trading Limited for the sale of the first uranium production from the Salamanca mine.

The parties converted the previously announced Letter of Intent into a binding agreement that included a doubling of annual contracted volumes to a total of two million pounds over a five-year period.

Potential exists to increase annual volumes further as well as extend the contract to a total of three million pounds.

A combination of fixed and market related pricing will apply in order to secure positive margins in the early years of production whilst ensuring the company retains the ability to achieve potentially higher prices in the future.

An average fixed price of $43.78 per pound of contracted and optional volumes was agreed between the parties. This compares with a prevailing spot price, of approximately $18 per pound at that time.

The company is in discussions with other potential off-takers in relation to contracts with terms similar to those outlined in the Interalloys Agreement with pricing at or around long term benchmark levels for term contracts.

Contracts for sale will be entered into in the ordinary course of business as the company actively builds its off-take book with high quality off-takers as the project advances towards commercial production

$30 million raised from London institutions in oversubscribed fundraise

During the half year, the company successfully raised $30 million from London's generalist blue chip institutions who now constitute a significant portion of the share register.

The placing was completed at a price of 45 pence per share, a slight discount to the share price at the time

Proceeds from the raise are being used to accelerate the development of the Salamanca mine, including construction of the crushing circuit, the centralised processing facility and land acquisition.

In addition, the funding will allow for the completion of the FEED activities, the commencement of construction and provide working capital.

This strong institutional support for this successful financing was a positive endorsement of the Salamanca mine.

Study confirms Salamanca mine as one of the world's lowest cost uranium producers

An independent study released during the half year confirmed that the future Salamanca mine as one of the world's lowest cost producers, capable of generating strong after tax cash flow through the current low point in the uranium price cycle.

A DFS has reported that over an initial ten year period the project is capable of producing an average of 4.4 million pounds of uranium per year at a cash cost of $13.30 per pound and at a total cash cost of $15.06 per pound, which compares with the current spot price of $22 per pound and term contract price of $41 per pound.

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