PERTH (miningweekly.com) – Uranium developer Berkeley Energia has signed an offtake agreement with commodity trader Interalloys Trading for the sale of first production from the Salamanca mine, in Spain.
The offtake agreement followed a letter of intent (LoI), which was signed in September.
Berkeley Energia told shareholders on Monday that the offtake agreement doubled the yearly contracted volumes considered in the LoI to a total of two-million pounds over a five-year period, with potential remaining to increase volumes further, as well as to extend the contract to a total of three-million pounds.
A combination of fixed and market-related pricing will apply in order to secure positive margins in the early years of production, while ensuring Berkeley Energia remains exposed to potentially higher prices in the future.
The company noted that an average fixed price of $43.78/lb of contracted and optional volumes has been agreed upon.
“We are delighted to have converted the previously announced LoI into a binding offtake agreement with Interalloys, including the doubling of contract volumes with fixed pricing at $43.78/lb, which would give us a very strong margin above our steady state cash cost of around $15/lb,” said Berkeley Energia MD Paul Atherley.
He noted that with initial construction well under way, the company was receiving growing interest from major utilities that were looking to diversify their offtake from a low-cost producer in Europe.
The Salamanca project is expected to deliver about 4.3-million pounds a year of uranium oxide over a mine life of 18 years. All major approvals for the development of the project are already in place. Project development started in March this year.
Edited by: Creamer Media Reporter
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