Berkeley Energia signs uranium offtake deal with Interalloys

28th Nov 2016 11:43

(ShareCast News) - Berkeley Energia has signed a binding off-take agreement with Interalloys Trading for the sale of the first production from its Salamanca uranium mine.The two parties have converted their letter of intent into a binding agreement, which includes doubling the annual contracted volumes to a total of £2m over a five year period, while there is potential to increase annual volumes further and extend the contract to a total of £3m.The companies has agreed on an average fixed price of $43.78 per pound of contracted and optional volumes. The current spot price is around $18 per pound.AIM-listed Berkeley is also in discussions with other potential offtakers over contracts with similar terms and pricing around long term benchmark levels for term contracts.Berkeley's management said that while uranium prices may remain flat in the near term, from 2018, when Salamanca is scheduled to come into production, they expect the market to be dominated by US utilities looking to re-contract amid competition from Chinese new reactor demand, which may lead to higher spot and term contract prices.Managing director Paul Atherley said: "We are delighted to have converted the previously announced Letter of Intent into a binding off-take agreement with Interalloys including the doubling of contract volumes and with fixed pricing at $43.78 per pound which would give us a very strong margin above our steady state cash cost of around US$15 per pound."With initial construction well underway and as we move closer to production we are receiving growing interest from major utilities who are looking to diversify their off-take from a low cost producer in Europe."We intend to build our uranium sales book by entering into long-term offtake contracts from now until the commencement of production."The share price rose 3.95% to 46p at 1201 GMT on Monday.