Berkeley Energia Limited (LON:BKY), the uranium exploration group, is embarking on a drilling programme that will hopefully enhance the potential of its Salamanca property in eastern Spain.
Twelve 250m holes are planned for the Zona 7, a high grade area that has already transformed the economics of the project.
The plan assess whether there is the scope to extend Zona 7, with a further 15 holes to be drilled to the south.
Significant potential
The second of two rigs will be deployed to Las Eras to drill 11 shallower 80m holes. They will test ground just five kilometres from Zona 7.
The area was previously drilled and a number of broad, near-surface high-grade intersections similar to those reported in Zona 7 were “documented” but never followed up.
“This information, when combined with the geological setting, the recently reinterpreted geophysical data and a large radiometric anomaly has however provided the basis for the high priority ranking of this target,” Berkeley told investors.
Backed by some of the most successful uranium entrepreneurs in the business, in the shape of Robert Behets and Ian Middlemas, the men behind the rise and billion dollar sale of Mantra Resources to a Russian uranium giant, and run by seasoned mining promoter Paul Atherley (Murchison, Leyshon), Berkeley has all the key skills to make a success of the Salamanca project.
And the project itself has real promise. Following the inclusion of a Zona 7 last November, a pre-feasibility study for Salamanca envisioned the production of 4.3mln pounds of uranium per year at steady state, averaging out over an 18 year mine life at 3mln pounds.
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The cost to get that production up and running will be relatively modest too, in mining terms, at just US$81.4mln for an initial operation.
The study predicted that life of mine cash costs should run at US$17.5 per pound, which compares favourably enough with the prevailing spot price of around US$28, and extremely well to the more aggressive longer term prices that most analysts are modelling.
Contract prices are expected to come in at around US$44 per pound, at which price the project generates a 57% internal rate of return.
What’s more, ongoing definitive feasibility work is indicating that there could be scope to cut costs further.