Berkeley Energia has signed a letter of intent with European based commodity trading company Interalloys Trading Limited relating to the sale of the 1m lbs of production from the Salamanca uranium mine in Spain.
The agreement envisages the sale of up to 1m lbs of uranium concentrate over five years starting from the opening of the mine, which will be extendable by mutual consent. The average price expected is above $41/lb compared with the current spot price of around $25/lb. Discussions are under way to finalise the non-binding agreement into an offtake contract by the end of the year.
Berkeley sees uranium prices may remaining flat in the near term, but from 2018, when Salamanca is scheduled to come into production, the market is expected to be dominated by US utilities looking to re-contract in competition with Chinese new reactor demand, which will push up prices. The cost of production at Salamanca is put at $15m/lb.
“We intend to build our uranium sales book by entering into long term off-take contracts from now until the commencement of production," said managing director Paul Atherley. Early stage work is fully funded, and the company hopes to secure a deal for full mine financing by December.