REG - Berkeley Energia - DFS confirms Salamanca as a low cost producer <Origin Href="QuoteRef">BKY.AX</Origin> - Part 18
14/07/2016 07:36
- Part 18: For the preceding part double click ID:nRSN1376Eq
downstream SX and ADU precipitation. The ADU precipitate
is calcined to produce U3O8. The recoveries obtained from testwork (82% including a scale-up factor of 4%) and the low acid
consumption makes heap leaching the preferred process route. Ore, when crushed, breaks along the fractures where the uranium
minerals occur, hence milling or fine crushing is not required. The 40mm liberation size is achieved with only primary and
secondary crushing. Acid leaching has been demonstrated to be the preferred process. Tank leaching, although increasing recovery
by 2-3%, has significantly higher capital and operational costs, and so is economically a less attractive process than heap
leaching.
Whether the metallurgical process is well-tested technology or novel in nature. The process method selected is the standard method for mineralogically similar uranium ores. A number of mines world-wide
operate utilising heap leaching with sulphuric acid. The plant recoveries achieved are typically similar to the results
predicted by the testwork.
The nature, amount and representativeness of metallurgical test work undertaken, the nature of the metallurgical domaining applied and the corresponding metallurgical recovery factors applied. Testwork was carried out using 1-metre high columns. Samples used for these column tests were 3 composites of drill cores.
Overall uranium recoveries reported are averages of the dissolutions achieved in 1m column testwork, multiplied by a scale-up
factor of 96%. This factor is lower than the scale-up factor used for Retortilo and Zone 7, as the factor for these deposits was
based on 6m column testwork, whereas the testwork on Alameda ore has only been carried out on 1m columns, and therefore
indicates a lower scale-up factor. The overall recovery is predicted to be 82%. Testwork is planned for Alameda ore in 6m
columns.
Any assumptions or allowances made for deleterious elements. At this stage, no deleterious elements have been identified as being of economic significance.
The existence of any bulk sample or pilot scale test work and the degree to which such samples are considered representative of the orebody as a whole. Samples used for these 1 metre column tests were 3 composites of drill cores. The 1m column tests are not accepted as being
pilot scale tests. Tests in 6m columns are planned.
For minerals that are defined by a specification, has the ore reserve estimation been based on the appropriate mineralogy to meet the specifications? The product mineralogy does not depend on the minerals in the ore, due to after the leaching process, all soluble uranium is
precipitated as U3O8
Environmental The status of studies of potential environmental impacts of the mining and processing operation. Details of waste rock characterisation and the consideration of potential sites, status of design options considered and, where applicable, the status of approvals for process residue storage and waste dumps should be reported. Environmental Impact Assesment has been done and is ready to be submitted to the authorities. Impacts identified are compatible
with environment.Waste rock characterization has been done in base of the results in the studies developed for Zona 7 and
Retortillo. Caracterization studies are based on Spanish and European Union legislation, summarized in two main decrees:·
Real Decreto 975/2009· Real Decreto 777/2012 Waste has been divided into:· Inert: comprising Tertiary cover, and
Completely Weathered lithologies with less than 40ppm of U3O8.· Non-Inert: all the lithologies with more than 40ppm U3O8
and the Partially Weathered and Unweathered materials. One waste dump has been considered for each of the two previous type of
wastes. Non-inert waste will need a liner as waste dump floor while Inert waste only need a conventional preparation based on
topsoil removal and base compaction. Waste dumps approved by the Exploitation Project. Detailed project for waste dump will be
finalize before operation starts.
Infrastructure The existence of appropriate infrastructure: availability of land for plant development, power, water, transportation (particularly for bulk commodities), labour, accommodation;or the ease with which the infrastructure can be provided, or accessed. Access infrastructure is minor due to existing roads, and the same is applicable for power, water, etc.Land acquisition hasn´t
begun but it is not expected difficulties to reach amicable agreements with the current landowners, and if any, the law allow
the company for the expropriation. Total land to be acquired is around 487Ha.The project location is not remote and
accommodation can be done in all villages and towns around.
Costs The derivation of, or assumptions made, regarding projected capital costs in the study. Capital costs have been estimated through the issue of detailed enquiries to multiple contractors and the receipt of formal
proposals by possible suppliers or contractors.
The methodology used to estimate operating costs. Mining operational cost have been calculated from formal proposals from 5 possible contractors. Of the 5 proposals, one has
been discarded because of elevated rates. The other. 4 of them are in a very close range and the selected one is the lowest. The
different between the lowest and the average of the 4 low range contractors is less than 10%.Processing cost have been estimated
based on consumptions obtained from testwork and engineering design, and proposals received from suppliers of the different
commodities. Man-power was estimated based on similar operations and cost based on a benchmarking of this cost in other
operations in country.
Allowances made for the content of deleterious elements. Deleterious elements were analysed in the ore and in the PLS, and non-deleterious elements were found at levels that could
penalize the product.
Any assumptions or allowances made for deleterious elements. N/A
The source of exchange rates used in the study. Consensus of different analysts
Derivation of transportation charges. Estimated based on proposals of courier companies
The basis for forecasting or source of treatment and refining charges, penalties for failure to meet specification, etc. Estimated based on the industry standards
The allowances made for royalties payable, both Government and private. 1% Royalty is payable to Anglo Pacific Group, Plc and 0.375% royalty is payable to Resource Capital Fund, and 2.5% Royalty
payable to ENUSA25% on benefits has been considered as a fix tax in Spain.
Revenue factors The derivation of, or assumptions made regarding revenue factors including head grade, metal or commodity price(s) exchange rates, transportation and treatment charges, penalties, net smelter returns, etc. Projected U3O8 concentrate quality is consistent with the results of metallurgical test work data completed for the project,
compared against standard product specifications at converters. Uranium revenues are based on the latest published long term
contract pricing forecasts (LT mid-range) from UxC. Prices escalate from US$39.1/lb in 2017 to US$67.7/lb by 2030. The company
considers this a conservative estimate of long term prices, with analyst consensus forecasts reaching US$65 per pound long
term.Commercialisation costs of 1% have been applied to gross revenues to reflect transportation costs, insurances and
commissions. All prices are based on 2016 constant United States dollars.
The derivation of assumptions made of metal or commodity price(s), for the principal metals, minerals and co-products. U3O8 pricing forecasts are based on the latest published long term contract pricing forecasts (LT mid-range) from UxC. Prices
escalate from US$39.1/lb in 2017 to US$67.7/lb by 2030.
Market assessment The demand, supply and stock situation for the particular commodity, consumption trends and factors likely to affect supply and demand into the future. The uranium market is currently characterised by high inventory levels, oversupply and depressed demand levels, largely due to
the ongoing effects of the Fukushima disaster in Japan in 2011 which resulted in the closure of all Japanese nuclear reactors.
The spot uranium price has fallen in response, and most mines are currently operating at or near marginal cost, with significant
production now coming off stream by higher cost producers. A major increase in demand is expected from China and India where
large scale reactor build programs are ongoing. Analyst consensus forecast is for the uranium market to turn into deficit around
2021/2022 when price recovery is expected to increase significantly to the analyst consensus long term incentive price of
US$65/lb
A customer and competitor analysis along with the identification of likely market windows for the product. Customers are expected to originate from the US, Asia (in particular China, Japan and India) and Europe and will either be large
nuclear utilities or trading houses. The company is currently in discussions with numerous global utilities and trading houses
regarding off-take contracts and is confident that demand will exist for its product from the commencement of production and
throughout the life of mine.
Price and volume forecasts and the basis for these forecasts. Uranium revenues are based on the latest published long term contract pricing forecasts (LT mid-range) from UxC. Prices escalate
from US$39.1/lb in 2017 to US$67.7/lb by 2030. The company considers this a conservative estimate of long term prices, with
analyst consensus forecasts reaching US$65 per pound long term.Volume sold averages 3.5X m lbs per annum over the life of mine
and is based on the Company's expectations that sufficient demand exists from Asian, US and European customers for such
material.
For industrial minerals the customer specification, testing and acceptance requirements prior to a supply contract. Not applicable
Economic The inputs to the economic analysis to produce the net present value (NPV) in the study, the source and confidence of these economic inputs including estimated inflation, discount rate, etc. The Salamanca Project is made up of the Retortillo, Santidad, Zona 7 and Alameda sites. Although the ore reserves discussed in
this Table 1 represent the Retortillo and Santidad sites only the project has been evaluated as a whole and the following
information relating to the financial evaluation represents the input parameters and results for the entire project.The after
-tax NPV of the projected cash flows is US$531.94 million at an 8-percent (real) discount rate.The after-tax internal rate-of
-return is 60 percent.Capital is projected to be committed beginning in 2017.All costs and prices are based on 2016 constant
United States dollars (zero inflation assumed).Up-front Capital Costs Mining & mine related facilities = US$22.4 million (US$9.9
million for Retortillo, US$6.1 million for Zona 7 and US$6.3 million for Alameda)Processing & plant related infrastructure =
US$197.1 million (US$78.7 million for Retortillo, US$50.3 million for Zona 7 and US$68.1 million for Alameda)Other capex
including G&A = US$ 15.1 million (US$7.1 million for Retortillo, US$2.7 million for Zona 7 and US$5.3 million for Alameda)Up
-front capital costs = US$.95.7 millionA contingency of 6% applied to capex requirements for all Project facilities.Production
(tons)Total Tonnes Mined over Life-of-Mine = 61.3 million (16.1 million tonnes at Retortillo, 18.8 million tonnes at Zona 7 and
26.5 million tonnes at Alameda)Plant recovery = 87% for Retortillo, 93% for Zona 7, and 82% for AlamedaLife of Mine = 13.75
yearsAverage Production Steady State = 4.4 million pounds U308Average Life of Mine Production = 3.5 million pounds U308Total
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