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Berkeley Energia to accelerate Salamanca development as it raises cash

Berkeley is looking to raise between £16.1mln and £24.1mln
The picture shows the drill rigs turning on Salamanca
Drill rigs turning at Salamanca

Berkeley Energia Ltd (LON:BKY, ASX:BKY) has raised £24.1mln as it looks to accelerate the development of its Salamanca uranium project in Spain.

The miner asked existing and other institutional investors to stump up between £16.1mln and £24.1mln through a placing of shares at 45p – a similar level to yesterday’s close.

Berkeley said the placing was heavily oversubscribed by institutional investors keen to back the mine development at Salamanca in Spain.

The cash will fund the construction of the crushing circuit at the centralised processing plant, as well as other infrastructure items, Berkeley said.

"The placing has been heavily oversubscribed by London based blue chip generalist institutions who will dominate the register once settlement completes."

"This successful financing is a positive endorsement of the Salamanca project, a US$100mln project that will be Europe's only major uranium mine and one of the world's biggest producers," said managing director Paul Atherley.

The development of the US$100mln project is well underway with work having started back in August.

Once complete, the mine will be Europe’s only major uranium mine and will produce over 4mln pounds of the silvery-white metal each year.

Back in September, the company announced that it had signed an outline agreement to supply the commodity trading firm Interalloys with the first million pounds of output.

The average selling price was expected to be around US$41 per pound, although broker Shore Capital thinks it might end being lower than that.

“The spot price at the time was US$24.88/lb, whereas spot is now US$18.75/lb, so we would not be surprised to see a price in the US$30/lb region in the finalised offtake contract,” Shore’s Yuen Low said.

He added that the economics will “remain attractive” even if the selling price falls to around US$30, while he claimed the project has the potential to yield much better figures.

“We reiterate our belief that there is good potential for significant ‘near-mine’ Zona 7-style discoveries (and indeed, depth and strike extensions of Zona 7 itself), which could see costs fall and project economics improve further.”

Shares were down 3% to 44.2p.

--Updates for share price, placing result and broker comment--

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