DIY Investor Magazine
/
September 2016
20
BERKELEY ENERGIA’S SALAMANCA PROJECT
AT A GLANCE
Low initial capital requirement - $95.7 million
4.4 million lbs of uranium per year at a low cash cost
of $15.06/lb
Shallow deposits of very high grade –
735 PPM - uranium
85% + recovery rate from ore, cost effective access
to sulphuric acid
Easy access to first world transport infrastructure
Delivers solid returns even with uranium price low
Increasing demand from EU, US, India, China in 2018
when price is expected to rise
EU funding and support and profits buoyed by falling
Euro vs USD
Potential for further deposits in the area
Being in Spain is seen as a key advantage of
Salamanca because of its ready-made infrastructure
and construction and engineering expertise; such a
development in a remote and inaccessible location
such as parts of Africa and Australia could easily add
$150 million to the initial capital requirement.
When asked what key points potential investors should
know about Berkeley Energia, Mr Atherley said: ‘We
have an outstanding project that offers near-term
development with low upfront capital and low operating
costs within a first world jurisdiction—the project, when
built, will be worth many multiples of our current market
capitalization and if you are in the uranium business
you have to be looking at this project’.
Berkeley Energia does tick a lot of boxes and it is little
wonder that it has secured a financing agreement with
Resource Capital Funds, which is the largest private
equity fund in the mining space.
The fact that Resource Capital Fund invested in BKY
is significant given the highly stringent due diligence
requirements of the fund covering technical, permitting
and social and economic factors, and that it did so
at a 15% premium to the shares’ 30-day average is a
ringing endorsement. Other major shareholders include
Anglo Pacific Group, and Majedie Asset Management
and more recently BlackRock and Fidelity, adding
significant weight to the register.
The share price has had an impressive run, going from
16p to 45p over the past year and analysts’ target
prices show that they expect there to be more to come
with real catalysts on the near term horizon including
off-take deals, exploration results from Zona 7 and
financing deals with strategic partners.
The first profits from production are not expected until
the end of 2018, so as is often the case, timing any
investment will be crucial; some investors might be
happy to ride out the long term performance by buying
and holding, others might prefer to trade in and out
during the mine’s (and therefore, probably, the share
price’s) different phases.
WH Ireland and Australian broker, Argonaut, suggest a
target of 120p/share, with Numis suggesting 100p and
Dundee Securities 110p, versus the current share price
of 43p. Full analysts’ reports can be found
.
Each of the four brokers forecast revenues starting at
around $270m in 2018 rising to some $350m by 2020,
by when annual net cash generated before further
investment will amount to between $150m and $195m,
with reported annual net profit of up to $170m.
