TIDMBKY
RNS Number : 4314W
Berkeley Energia Limited
27 April 2016
BERKELEY ENERGIA LIMITED
NEWS RELEASE | 27 April 2016 | AIM/ASX BKY
Quarterly Report March 2016
Highlights
Ø After a decade of exploration and feasibility studies and more
than US$60 million of investment in the Salamanca project, initial
infrastructure work commenced during the quarter signalling the
move into the development phase. Contracts were awarded to major
Spanish contractors for the re-routing of the main electrical power
line and realignment of an existing road
Ø Optimisation studies continued during the quarter and have
been focused on reducing the steady state cost of US$15.60 per
pound of uranium produced and have generated some encouraging
results. These studies are aimed at making the Salamanca project
one of the world's lowest cost uranium producers
Ø The definitive feasibility study is well advanced and is due
to be published in June. The study is being carried out by MDM
Engineering (part of the Amec Foster Wheeler group) working in
conjunction with the major Spanish engineering groups, Iberdrola
and OHL, as well as a number of specialist local contractors. The
study is expected to confirm the Salamanca project's robust
economics even at the current low uranium prices
Ø Off-take negotiations are progressing well, with major global
utilities confirming their strong interest in securing production
from the project. Negotiations have commenced with selected
utilities regarding off-take contracts during the initial years of
production. The aim is to progressively enter into long term
offtake contracts from now until the commencement of production
Ø Commitment to the revitalisation of the local community
remains of the utmost importance to the Company and is embodied in
a co-operation agreement with the local municipalities. The policy
of preferentially hiring and training local residents has been very
well received with the latest skills training programme for
potential employees being heavily oversubscribed
Ø The exploration programme targeting the discovery of further
Zona 7 type deposits continued during the quarter. Wet weather
conditions have restricted access to the high priority targets and
these will now be drilled later in the year
Ø The Company is fully funded through the definitive feasibility
study and into the development phase with A$6 million in cash and
no debt
For further information contact:
Paul Atherley Hugo Schumann Paul Shackleton / Nick
Prowting (Nomad)
Managing Director Corporate Jay Ashfield (Broker)
Manager
+44 207 478
+44 207 478 3900 3900 WH Ireland Limited
info@berkeleyenergia.com +44 207 220 1666
Commencement of development of the Salamanca project.
After a decade of exploration and feasibility studies and more
than US$60 million of investment, initial infrastructure work
commenced at the project during the quarter, signalling the
Company's move into the development phase.
The Company has selected some of Spain's largest infrastructure
contractors to initiate work which includes the re-routing of the
main electrical power line to service the project and a four
kilometre realignment of an existing road, following which mining
is expected to start at the Retortillo pit.
With all major approvals in place and with the continued strong
support and backing of the local authorities, the award of these
contracts has enabled the Company to progress with equipment
ordering and contractual permitting. Execution of the contracts is
expected to take 6-8 months.
Optimisation studies drive down operating costs
Throughout the quarter the Company progressed with optimisation
studies as part of the definitive feasibility study for the
project.
The definitive feasibility study, which is due for publication
in June, is being carried out by MDM Engineering (part of the Amec
Foster Wheeler group), who are working in conjunction with major
Spanish engineering groups Iberdrola and OHL, as well as a number
of specialist local contractors. The study is expected to confirm
the Salamanca project's robust economics even at current uranium
prices.
The optimisation studies have included an upgrade of the
geological models to bring a portion of the resources into the
Measured Category; an optimisation of pit slope angles based on new
geotechnical models; the review of pit designs taking into account
new geotechnical models with greater selectivity of mining units
based on the optimisation of cut-off grades; optimisation of
metallurgical performance supported by the results of more detailed
column tests; the review of the waste management procedures; and an
analysis of different production ramp up scenarios in order to use
internally generated cash flows to fund growth.
Strong demand from off-take partners, with commercial
negotiations now underway
During the quarter, the Company continued to engage with major
utilities and trading houses and has now met with key potential
customers across the US, Europe and Asia, many of whom have shown
high levels of interest in securing off-take from the project.
Negotiations have commenced with selected utilities regarding
off-take contracts during the initial years of production. The aim
is to progressively enter into long term offtake contracts from now
until the commencement of production. The Company will engage with
high quality utility companies globally and aim to enter into a
combination of fixed-pricing and market-related pricing contracts,
looking to balance certainty over pricing for financiers whilst
maintaining an exposure to any future increases in the uranium
price.
Fixed price contracts are typically based on the industry long
term price indicator (currently around US$44/lb) at the time the
contract is concluded, and increased over the term of the contract.
Market-related contracts are different as they may be based either
on the spot price or the long-term price and that price is as
quoted at the time of delivery of the product rather than at the
time the contract is concluded.
The Company has commenced negotiations with selected utilities
regarding off-take contracts for deliveries of yellowcake during
the initial 3-5 years of production from the project.
General market consensus appears to be that whilst uranium
prices are expected to remain flat in the near term there are an
increasing number of utilities that will be re-contracting off-take
from 2018 onwards and are looking to enter into such contracts
during the current calendar year.
Strong interest from financiers and strategic partners
Owing to the low operating and capital cost nature of the
project and the extremely robust project economics, the Company has
been approached by numerous high quality strategic partners and
other financiers for the mine financing.
The Company is considering a range of financing options with a
view to fully funding the project's development during the second
half of 2016. The Company is focused on minimising dilution in
order to protect the equity value of its shareholders.
The preferred funding route is through the sale of a minority
interest in the project to a strategic partner at a valuation that
reflects the net present value of the project. The potential sale
of a project interest may include associated off-take rights over a
minority portion of production on commercial terms.
Major exploration programme has commenced targeting multiple
Zona 7 style deposits
The first phase of a major exploration programme targeting
further Zona 7 style deposits began at the Salamanca project during
the quarter.
An extensive geological review has identified new targets which
have the potential to host the new style of mineralisation
discovered at the Zona 7 deposit. This was based on recently
reinterpreted geophysical data and historical information from
previous drilling across the licence area.
These near surface targets lie within ten kilometres of the
approved location of the proposed process plant and are being
followed up with a two phase reverse circulation drill
programme.
Wet weather conditions during the winter period restricted
access to the highest priority targets and these will now be
drilled later in the year. Drilling has commenced at the Luis
target and results of the programme will be reported in the coming
months.
Commitment to the community and environment
The Company is committed to the revitalisation of the local
community and being a good neighbour in the regions in which it
operates.
It has been by far the biggest investor in a rural community
suffering from decades of under investment and will continue to
invest and cooperate to promote local employment in a region with a
high level of unemployment, especially amongst its youth.
The Company has to date received over 20,000 applications for
the first 200 direct jobs it will create. Once developed, the mine
is expected to create 450 direct jobs. The University of Salamanca
has estimated that there will be a multiplier of 5.1 indirect jobs
for every direct job created, resulting in over 2,700 jobs being
created as a result of the investment.
The Company has formalised its "good neighbour and good
community business partner" commitment via a Cooperation Agreement
with the highly supportive local municipalities which, in addition
to significant royalties and taxes being paid by the Company, gives
priority to the employment and training of local residents and the
preferential support for businesses by sourcing goods and services
locally.
In late 2015, the Company carried out its first training course
in the local community areas. The training course focused on
blasting techniques for the future operations and was attended by
over 30 local residents, with recognised diplomas being issued upon
graduation.
(MORE TO FOLLOW) Dow Jones Newswires
April 27, 2016 02:00 ET (06:00 GMT)
In April 2016 the Company advertised a driver training course
for approximately 35 individuals from the local region.
Participants will be given a license to operate mobile equipment on
completing the course. The course has been heavily oversubscribed
with over 60 applications received to date from local
residents.
Training programmes will continue to run throughout 2016 to
ensure that sufficient people from the local communities are
qualified for jobs created during the construction and mining
phases.
The Company's commitment to the development of the area and its
inhabitants goes beyond those working in the mining industry. The
Company has offered to participate in the management of the Elderly
Residence of Retortillo which is currently closed due to lack of
funding.
The Company's commitment to the environment remains a priority
and, as outlined in the Environmental License and the Environmental
Measures Plan, it will plant trees over some 75 to 100 hectares of
land in the region.
Growth in Uranium demand
As the Company moves ahead into the development phase, demand
for its product continues to grow throughout the world. Last week
Zhou Rongsheng, CEO of CGN Uranium Resources, said that they are
looking to acquire more uranium assets.
The news comes following the publication of a report by the WNA
which outlined that less than a quarter of Chinese nuclear fuel
supplies come from domestic uranium mining and exploration and
plans for new mines have increased significantly since 2000. By
international standards, China's ores are low-grade and production
has been inefficient and they are therefore ramping up
international arrangements to obtain fuel.
Agneta Rising, President of the WNA, said: "Nuclear is very
competitive compared to other renewables, because it doesn't need
backup systems as other clean sources do to generate power
constantly. It is a reliable and low-carbon source for energy
already existing today."
The increased demand for nuclear as an alternative fuel source
comes at an ideal time for the Company. The ultralow cost Salamanca
project is one of the only projects in the world with the potential
to go into construction at current uranium prices, leaving the
Company ideally placed to capitalise on this increase in demand for
its product.
Corporate
As at 31 March 2016, the Company has cash reserves of A$6
million and no debt.
Competent Persons Statement
The information in this report that relates to the
Pre-Feasibility Study is extracted from the announcement entitled
'Zona 7 transforms Salamanca project economics' dated 4 November
2015 which is available to view on Berkeley's website at
www.berkeleyenergia.com. The information in the original ASX
announcement is based on, and fairly represents, information
compiled by Mr Francisco Bellon, a Competent Person who is a member
of the Australasian Institute of Mining and Metallurgy. Mr Bellon
is the General Manager Operation for Berkeley and a holder of
shares, options and performance rights in Berkeley. Mr Bellon has
sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person
as defined in the 2012 Edition of the 'Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves'. Berkeley confirms that it is not aware of any new
information or data that materially affects the information
included in the original market announcements and, in the case of
estimates of the Production Target and related forecast financial
information (other than the Net Present Value and Internal Rate of
Return Calculations) derived from the Production Target, all
material assumptions and technical parameters underpinning the
estimates in the relevant original market announcement continue to
apply and have not materially changed. Berkeley confirms that the
form and context in which the Competent Person's findings are
presented have not been materially modified from the original
market announcement.
The information in this report that relates to the Net Present
Value and Internal Rate of Return calculations is extracted from
the announcement entitled 'Quarterly Report December 2015' dated 29
January 2016 which is available to view on Berkeley's website at
www.berkeleyenergia.com. The information in the original ASX
announcement is based on, and fairly represents, information
compiled by Mr Francisco Bellon, a Competent Person who is a member
of the Australasian Institute of Mining and Metallurgy. Mr Bellon
is the General Manager Operation for Berkeley and a holder of
shares, options and performance rights in Berkeley. Mr Bellon has
sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person
as defined in the 2012 Edition of the 'Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves'. Berkeley confirms that it is not aware of any new
information or data that materially affects the information
included in the original market announcements and Net Present Value
and Internal Rate of Return calculations all material assumptions
and technical parameters underpinning the estimates in the relevant
original market announcement continue to apply and have not
materially changed. Berkeley confirms that the form and context in
which the Competent Person's findings are presented have not been
materially modified from the original market announcement.
Forward Looking Statement
Statements regarding plans with respect to Berkeley's mineral
properties are forward-looking statements. There can be no
assurance that Berkeley's plans for development of its mineral
properties will proceed as currently expected. There can also be no
assurance that Berkeley will be able to confirm the presence of
additional mineral deposits, that any mineralisation will prove to
be economic or that a mine will successfully be developed on any of
Berkeley's mineral properties.
Appendix 1: Summary of Mining Tenements
As at 31 March 2016, the Company had an interest in the
following tenements:
Location Tenement Name Percentage Status
Interest
------------- ------------------------- ----------- --------
Spain
Salamanca D.S.R Salamanca 100% Granted
28 (Alameda)
D.S.R Salamanca 100% Granted
29 (Villar)
E.C. Retortillo-Santidad 100% Granted
E.C. Lucero 100% Pending
I.P. Abedules 100% Granted
I.P. Abetos 100% Granted
I.P. Alcornoques 100% Granted
I.P. Alisos 100% Granted
I.P. Bardal 100% Granted
I.P. Barquilla 100% Granted
I.P. Berzosa 100% Granted
I.P. Campillo 100% Granted
I.P. Castaños 100% Granted
2
I.P. Ciervo 100% Granted
I.P. Dehesa 100% Granted
I.P. El Águlia 100% Granted
I.P. Espinera 100% Granted
I.P.Halcón 100% Granted
I.P. Horcajada 100% Granted
I.P. Mailleras 100% Granted
I.P. Mimbre 100% Granted
I.P. Oñoro 100% Granted
I.P. Pedreras 100% Granted
E.P. Herradura 100% Pending
I.P. El Vaqueril 100% Pending
------------- ------------------------- ----------- --------
Cáceres
I.P. Almendro 100% Granted
I.P. Ibor 100% Granted
I.P. Olmos 100% Granted
Badajoz
I.P. Don Benito 100% Granted
Este - U
I.P. Don Benito 100% Granted
Este - C
I.P. Don Benito 100% Granted
Oeste - U
I.P. Don Benito 100% Granted
Oeste - C
------------- ------------------------- ----------- --------
Ciudad Real
I.P. Damkina 100% Granted
Fraccion 1
I.P. Damkina 100% Granted
Fraccion 2
I.P. Damkina 100% Granted
Fraccion 3
------------- ------------------------- ----------- --------
A new application for Exploitation Concession Lucero was
submitted with no tenements disposed of during the quarter ended 31
March 2016. There were no changes to beneficial interest in any
mining tenements due to Farm-in or Farm-out agreements. No
beneficial interest in Farm-in or Farm-out agreements were acquired
or disposed during the quarter.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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