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Berkeley Energia confident it has its timing right at Salamanca

The company has appointed Amec Foster Wheeler to handle the EPC side of things at Salamanca

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Of course, nothing is certain in the world of commodities but Berkeley is quietly confident uranium prices will be rise when Salamanca starts production in 2019

Berkeley Energia Ltd (LON:BKY) is awarding major contracts and filling key management positions for construction of the Salamanca mine, commencing in the New Year.

Amec Foster Wheeler, now part of the FTSE 250 listed Wood Group, has been selected to deliver a fixed price engineering, procurement and construction (EPC) solution for the construction of the mine, plant and associated infrastructure.

WATCH: Crucial week for Berkeley Energia as it receives initial US$65mln Salamanca financing

Around half of the new staff required for the first phase of constructed activity will be recruited from the local villages of Retortillo and Villavieja.

"Having completed the financing, we have selected our preferred mining and construction contractors and will be pouring concrete in the new year,” said Paul Athereley, managing director of Berkeley Energia.

READ: Berkeley Energia focused on construction at Salamanca

“We are commencing construction just as the industry leaders Cameco and Kazatomprom implement major production cuts at their Tier I mines which will tip the uranium market into the long awaited supply deficit during 2018," he added.

Shares in Berkeley Energia were up 4.4% in early deals, though those gains had evaporated by the end of the morning.

In a message to shareholders managing director Paul Atherley touched on the subject of whether the company had got its timing right, given that several commentators have noted that Berkeley will be constructing just as industry giants Cameco and KazAtomProm are cutting production.

"But these are no ordinary cuts; these are not high-cost mines being closed in the face of twelve year low uranium prices," Atherley argued.

"Next month Cameco will be shutting the jewel in its crown, the McArthur River mine, the world’s biggest and lowest cost uranium mine and the betting is that they will keep it closed until uranium prices are nearly double where they are now.

"The word on the street is that JP Morgan, who are bringing KazAtomProm to market next year, have suggested that the IPO will go much better if uranium prices are higher and are behind KazAtomProm’s surprise 20% three-year production cuts.

"Whatever the reasons behind these unprecedented cuts, analysts are forecasting them to quickly tip the uranium market into the long-awaited supply deficit," Atherley revealed.

"The uranium price has jumped 40% off the twelve-year lows and analysts are upgrading their forecasts for 2018.

"Whilst there is nothing certain in the commodity markets and there will be ups and downs, we are quietly confident that by commencing construction now we will be delivering into much higher uranium prices when we start production in 2019," he added.

Berkeley believes it will be the only major producer in the world coming into production at the time Salamanca starts producing.

Quick facts: Berkeley Energia Ltd

Price: 15 GBX

LSE:BKY
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Market Cap: £38.79 m
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