Berkeley Energia now just one permit away from all-clear to build Spanish uranium mine

Berkeley Energia (ASX: BKY) has been granted its Urbanism Licence (UL) — essentially a Spanish land use permit that is required before construction begins — for its Salamanca uranium mine, located to the west of Madrid near the Portuguese border.

This means only one more approval is required — the authorisation for construction of the uranium concentrate plant and its classification as a radioactive facility (known as NSC II).

The company said the granting of the UL by the Municipality of Retortillo is a “significant permitting milestone for Berkeley and a positive step in the development of the project”.

In March, Berkeley submitted documentation regarding NSC II to the country’s Nuclear Safety Council technical team and discussions with the team have been ongoing.

The company is now working on written responses to questions by the council and expects to complete the task in the coming weeks.

Aspiring to be in top 10 uranium producers

The company plans to be producing 4.4 million pounds of uranium a year, which would put it in the top 10 producers. The top three are KazAtomProm of Kazakhstan, Canada’s Cameco and Areva of France.

Production costs at Salamanca have been estimated at a total cash cost of US$15.06 per pound (A$21.14/lb). Spot uranium has seen a 30% price increase this year and has risen to a high of US$33/lb (A$46.3/lb).

In July 2016, Berkeley published the results of a definitive feasibility study (DFS) showing the Salamanca project will be one of the world’s lowest cost producers, capable of generating strong after-tax cash flows through the current low point in the uranium cycle.

The project had a net present value of US$531.9 million (A$746.6 million) with an internal rate of return of 60%.

“With operating costs almost exclusively in euros and a revenue stream in US dollars, the project is expected to continue to benefit from the effects of deflationary pressures within the EU,” the company stated.

Further uranium market tightening expected

In its recent second quarter report, Berkeley reported analysts are expecting further tightening of the uranium market.

Several producers have suffered disruptions due to COVID-19 and there has been uncertainty as to the pandemic’s impact on the nuclear fuel chain.

However, it is now being reported that Cameco is planning to restart its Cigar Lake mine in northern Saskatchewan next month. It was closed in March due to virus concerns.

Nevertheless, some analysts have expressed doubts about this happening as the number of virus cases continues to rise in North America.

KazAtomProm has extended its reduced operations.

Meanwhile, there are reports that end-use demand is on the rise.