Berkeley Energia Ltd.: Study confirms the Salamanca project as one of the world’s lowest cost uranium producers
(firmenpresse) - Study confirms the Salamanca project as one of the worlds lowest cost uranium producers
14 July 2016; An independent Study has confirmed the Salamanca project as one of the worlds lowest cost producers capable of generating strong after tax cash flow through the current low point in the uranium price cycle.
A Definitive Feasibility Study 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 US$13.30 per pound and at a total cash cost of US$15.06 per pound which compares with the current spot price of US$26 per pound and term contract price of US$41 per pound.
During this ten year steady state period, based on the most recent UxC forward curve of uranium prices, the project is expected to generate an average annual net profit after tax of US$116 million.
Managing Director Paul Atherley commented: The Salamanca project is capable of generating strong, sustainable cash flow though the low point in the uranium price cycle. We have commenced initial infrastructure works and are aiming to establish the operation as one of the worlds top ten producers, reliably supplying long term customers from the heart of the European Union.
With operating costs almost exclusively in Euros and a revenue stream in US dollars the project is expected to continue to benefit from the effects of deflationary pressures within the EU.
The project benefits greatly from the well-established EU funded infrastructure in the region with an initial capital cost of only US$95.7 million which is low by international standards for a project of this size.
The Company is of the view that whilst uranium prices will remain soft in the near term, from 2018, when Salamanca is scheduled to come on line, the market is expected to be dominated by US utilities looking to re-contract. These utilities will also be competing with Chinese new reactor demand, which may lead to higher prices.
The Company has recently been approached by a number of utilities looking to secure long term offtake agreements. These discussions are underway and offtake arrangements are being negotiated.
The project has an initial mine life of 14 years based on mining and treating only the Measured and Indicated resources of 59.8 million pounds.
An annual exploration programme, which will take advantage of generous taxation incentives, has been aimed at making new discoveries and converting some of the 29.6 million pounds of Inferred resources into the mine schedule with the objective of maintaining annual production at over 4 million pounds a year on an ongoing basis.
This programme has commenced with drilling underway looking to extend the Zona 7 deposit at depth and to the south as well as testing nearby targets to the north. Initial results are expected to be reported shortly.
The mine design incorporates the very latest thinking on minimal environmental impact and continuous rehabilitation such that land used during mining and processing activities is quickly restored to agricultural usage.
The Company has established a good neighbour and business partner relationship with the local community. In addition to the creation of 450 direct jobs and up to 2,000 indirect jobs in a community hard hit by long term unemployment, the Company will actively support the local businesses and the activities of the local municipalities.
With approvals in place for initial infrastructure development, work has now commenced on the road realignment and power line upgrade ahead of the main construction.
For further information please contact:
Paul Atherley---
Managing Director---
+44 207 478 3900---
info(at)berkeleyenergia.com
Hugo Schumann
Commercial Manager
+44 207 478 3900
AIM/ASX: BKY
Table 1 - Summary of Key Study Outputs
Definitive Feasibility Study Results (to
a maximum accuracy variation +/-
10%)
Net Present Value (NPV) (Post-taUS$531.9m
x
(at)
8%)
Internal Rate of Return 60%
(Post-tax)
Mine Life 14 years
First Production 2018
Annual Saleable Production 4.4 Mlb of
(steady state U
operation) 3O8
Annual Saleable Production 3.5 Mlb of
(life of U
mine) 3O8
C1 Cash Cost (steady state US$13.30 /
operation) lb
C1 Cash Cost (life of mine) US$15.39 /
lb
C2 Cash Cost (steady state US$15.06 /
operation) lb
C2 Cash Cost (life of mine) US$17.15 /
lb
Up-Front Capital US$95.7m
Stripping Ratio - Life of Mine (1:1.4
ore:waste
)
Peak Annual EBITDA US$226.3m
Here is the link of the full press release: http://www.asx.com.au/asxpdf/20160714/pdf/438kgwz3q5rj72.pdf
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