Berkeley Energia’s Salamanca Project Progresses into Development Phase
After spending a decade on exploration and feasibility studies regarding the Samalanca project, the company has commenced with the initial infrastructure work at the venture during the quarter
Berkeley Energia Limited (ASX:BKY) released the quarterly report of its operations for the period ended 31 March 2016. The company also announced that its flagship project, the Salamanca venture has advanced into the development phase.
Completion of Feasibility Studies at the Salamanca Project
After spending a decade on exploration and feasibility studies regarding the Samalanca project, the company has commenced with the initial infrastructure work at the venture during the quarter.
Berkeley has invested over US$60 million in the project and has awarded the initial work to some of the largest Spanish contractors. The initial steps will include the re-routing of the main electrical power line and other realignments necessary to start the mine at the Retortillo pit.
The aforementioned contracts are anticipated to be executed within the next 6-8 months.
Berkeley also progressed with optimisation studies as part of the Definitive Feasibility Study (DFS) for the project, which is due for publication in June. This assessment is being conducted by MDM Engineering, who are working along with major Spanish engineering groups Iberdrola and OHL, and several other specialist local contractors.
The DFS is anticipated to confirm robust economic prospects for the Salamanca project despite the multi-year low uranium prices.
The Project Receives Strong Demand from Off-Take Partners
The company has met with key potential customers across the US, Europe and Asia, most of whom have shown positive interest in securing off-take from the project.
Having commenced the negotiations for the off-take contracts, Berkeley aims to progressively secure long term contracts until the commencement of production. The company will enter into contracts based on a combination of fixed prices and market-related prices.
Berkeley Receives Interest from Financiers and Strategic Partners
Berkeley reports that it has been approached by a number of high quality strategic partners and other financiers for the mine financing. The company states that the potential financiers are attracted to the low operating and capital cost nature of the project and the robust econimic prospects of the upcoming DFS.
The company aims to fully fund the project’s development during the second half of 2016 and is focusing on selling a minority interest in the project to a strategic partner, which may include the sale of associated off-take rights over the portion of production.
BKY gained 2% since the announcement and was last traded at $0.53 as at 10:00 am (AEST).
Author: Kaivalya Kandarpa
Apr 27, 2016
Kaivalya is an equity analyst and a client advisor at Wise-owl. She specialises in fundamental and technical analysis for large and mid-cap companies. Having completed her bachelor's degree in Business Administration majoring in Finance, Kaivalya has a comprehensive understanding of international stock market movements. She tracks local and overseas markets and compiles analytical reports for various industries.