DIY Investor Magazine
/
September 2016
18
In the last issue of DIY Investor Magazine we helped
to celebrate the 21st anniversary of the London Stock
Exchange’s Alternative Investment Market – AIM –
and considered the ways in which it had evolved in
becoming one of the world’s pre-eminent small cap
exchanges.
The last year has been difficult for AIM with a large
number of it’s ‘diggers and drillers’ delisting due to low
oil and commodity prices and there have been fewer
IPOs than at any time since the financial crisis.
The need for quality has never been greater and in this
article we take a closer look at Berkeley Energia
, a uranium mining company
that has been receiving conspicuously positive
attention from analysts and look at some salient factors
that should be considered by any potential investor.
Describing itself as a ‘high impact, clean energy
company’, Berkeley Energia Ltd, listed on AIM and the
Australian Stock Exchange, is focused on bringing its
wholly owned Salamanca uranium mine in Spain into
production.
Located three hours west of Madrid, the mine now has
all the EU and national permissions it requires and
earlier this year broke ground, following the award of
initial infrastructure contracts in March.
Investors can look forward to a strong pipeline of
newsflow including potential off-take contracts with
major utilities, deals with strategic partners for the full
mine financing, and results from exploration drilling at
the exceptional Zona 7 deposit which could point to
increased production potential.
DIGGING DEEPER – DIY INVESTOR TAKES A CLOSE LOOK AT
AIM-LISTED URANIUM MINER, BERKELEY ENERGIA
The Salamanca mine’s initial capital requirement is
a modest US$95.7 million which, coupled with its
extremely low operating costs of $13.30/lb, means
the company is capable of generating strong after tax
cash flows, even at the current low point in the uranium
cycle. As one of the only companies able to go into
development in the current market, Berkeley will be
well placed to capitalise on the expected increase in
demand for its product from the US, India and China
from 2018 onwards.
Because of its Australian listing Berkeley Energia (BKY)
is permitted to include analysts’ reports on its website
and whilst they may differ in terms of the way in which
they value the business, there is general agreement
that its share price could rise making it one of the few
mining stocks currently in favour.
Discovery of the high grade Zona 7 deposit just over
18 months ago was a game changer for the company;
it contains more than 30 million lbs of uranium, lying
just four metres below the surface, and when it is in full
production it will rank in the top ten producers and one
of the lowest cost mines in the world, including the only
significant source of supply in Europe.
An exploration programme, aimed at making new
discoveries and upgrading the significant base of
Inferred resources into the mine schedule is now
ongoing and has the potential to maintaining annual
production at over 4Mlbs a year on a continuous basis
as well as extend the mine life beyond the 14 years
currently expected.
[WE HAVE] THE ONLY URANIUM ASSET OF ANY SIZE IN
EUROPE … EUROPE HAS 160 NUCLEAR REACTORS IN
TOTAL AND THEY CURRENTLY HAVE ONE VERY SMALL
URANIUM MINE FEEDING THEM
WE ARE VERY STRONGLY POSITIONED TO GET THIS
ASSET GOING AT THE VERY LOWEST POINT IN THE
CYCLE, ONCE IN PRODUCTION WE’LL LOOK TO
CAPITALISE ON THE VERY LARGE DEMAND FROM
CHINESE AND OTHERS BUILDING NEW REACTORS
THAT WILL TRANSFORM THE URANIUM PRICE
