Sign up Australia
Proactive Investors - Run By Investors For Investors

Berkeley Energia to bring Salamanca on stream just as uranium market tips into deficit

Berkeley Energia is funded to production, and set to make a significant impact on the uranium market
management
Salamanca is the only major uranium mine being developed in the world today

The flagship asset of Berkeley Energia Ltd (LON:BKY)(ASX:BKY) is the Salamanca uranium project in Spain. The plan is to build this project into one of the world’s lowest cost uranium mines, capable of generating strong after-tax cash flows that will be robust even at low uranium prices.

A recently-completed definitive feasibility study demonstrated that over an initial ten-year period Salamanca is capable of producing an average of 4.4mln pounds of uranium per year at a cash cost of US$13.30 per pound and a total cash cost of US$15.06 per pound.

All told, the project has a net present value of US$531.9mln and an internal rate of return of 60%, using a discount rate of 8%.

Recent uranium price trading range allows for plenty of margin

Spot prices have recently been running some way higher than US$20 per pound in recent months, so there is plenty of margin on offer. What’s more, the term contract price is much higher at US$41 per pound.

Strong Resource base provides for long-term upside

The definitive feasibility study for Salamanca was based solely around the indicated and measured resource base, which currently totals 59.8mln pounds of U3O8.

The study did not incorporate any of the inferred resources, which total 29.6mln pounds of U3O8.

Potential exists to maintain steady state production by successfully converting these inferred resources into indicated resources with further drilling.

Salamanca the only major uranium development as market tips into deficit

Paul Atherley, the company’s chief executive outlined the significance of Salamanca in the global uranium context to an audience at this year’s Indaba mining conference in South Africa.

“As the uranium market tips into deficit Salamanca is the only major uranium mine being developed in the world today,” he said.

And he highlighted the likely upward trend in demand going forward by arguing that the equivalent of ten more Hinkley Point power stations will be needed to power the UK government’s 2040 electric vehicle targets.

Berkeley Energia will help meet the demand that arises for power in the coming years. It will be the world’s ninth largest producer of uranium when it hits nameplate capacity of 4.4mln pounds per year, ahead of Paladin (ASX:PDN).

Well supported by institutions

Institutions and management make up 70% of the share register. Among the most prominent names with stakes in Berkeley Energia are Resource Capital Funds, Anglo Pacific Group (LON:APF), Blackrock, Fidelity, Majedie and River & Mercantile.

The company’s construction debt is provided by the Sultanate of Oman, and conversion of a significant portion of it would add a significant sovereign wealth fund to the register too.

 

View full BKY profile View Profile

Berkeley Energia Ltd Timeline

Related Articles

oil and gas operations
August 02 2018
The agreement includes up to US$35mln in costs regarding the development of Aminex’s remaining 25% interest in the Ruvuma PSA, which would include the Ntorya project
Offshore oil rig
Mon
Plexus has a suite of POS-GRIP-enabled products ready for market
picture of gas flare
February 13 2018
A new gas generator also came on stream recently and has started to produce the first power from the project

No investment advice

The information on this Site is of a general nature only. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions. You acknowledge and understand that neither the Company, its related bodies corporate, the information providers or their affiliates will advise you personally about the nature, potential value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter. You should read our FSG and any other relevant disclosure documents and if necessary seek persona advice prior to making any investment decision.

You understand and agree that no Content (as defined below) published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person.

You understand that in certain circumstances the Company, its related bodies corporate, the information providers or their affiliates may have received, or be entitled to receive, financial or other consideration in connection with promoting, and providing information about, certain entities on the Site and in communications otherwise provided to you.

You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate. From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Before you act on any general advice we provide, please consider whether it is appropriate for your personal circumstances.

© Proactive Investors 2018

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use