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Berkeley Energia clears way to production at Salamanca with US$120mln Oman investment

Last updated: 07:55 30 Aug 2017 EDT, First published: 02:25 30 Aug 2017 EDT

picture of uranium element
Funds will carry Salamanca through to production

Berkeley Energia Limited (LON:BKY) has arranged the finance to bring its Salamanca uranium project into production through a US$120mln convertible loan and option package with Oman’s sovereign wealth fund.

The deal will see Oman become a substantial shareholder in the company, with an option to become an offtake partner.

Terms will see the fund provide Berkeley with an interest-free and unsecured loan of US$65mln convertible at 50p per share, a near 11% premium to last night’s closing price, it said in a statement.

WATCH: Berkeley Energia inks 'phenomenal' US$120mln strategic financing deal

If converted, the wealth fund will take a 28% stake in Berkeley, which can be increased by a further 9% through the exercise of three further tranches of shares at 85p, which will raise a further US$55mln for the company and make a total investment of US$120mln.

Tim Keating, private equity manager for mining and resources at State General Reserve Fund said: "The Salamanca mine matches our investment criteria of being a long life, low cost mine development opportunity with outstanding economic fundamentals.”

READ: Berkeley Energia on-track to be one of world’s top uranium miners

Paul Atherley, Berkeley’s managing director, added Salamanca was one of the only handful of major uranium mines currently in development.

“The project benefits from a rare combination of low up front capital cost and very low operating costs and due in part to its location in the heart of the European Union we are able to contract supply at prices well above the current spot price.

“The fund's interest in matching our future off-take contracts will further enhance our revenue stream."

In a note to clients, analysts at Liberum Capital said: “Market will be happy that a deal has been done in such weak uranium market conditions and that the strike for note is not lower than the previous equity placing of $30m at 45p in Nov’16 and is at a premium of 10% to today’s share price inline with our expectations.”

They repeated a ‘hold’ rating on the stock with a price target of 60p.

In late afternoon trading, shares in Berkeley Energia were up over 9%, or 49.5p at 49.5p.

-- Adds broker comment, share price --

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