TIDMBKY
RNS Number : 0368U
Berkeley Resources Limited
15 December 2011
15 December 2011
Update on the Berkeley-Enusa JV Uranium Project
Further to the last announcement 31 October, 2011, Berkeley
Resources Limited ("Berkeley" or "Company") hereby provides an
update in relation to the proposed joint venture between Berkeley
and Enusa Industria Avanzadas, S. A. ("Enusa"), and outcomes from
the recently completed Mining Domain Conceptual Basic Engineering
Report (CBER) for the restricted Mining Domain Feasibility Study
(MDFS).
The CBER was compiled by Jacobs Engineering in early November
and independently reviewed by the Spanish international engineering
company, Tecnicas Reunidas, before submission to Enusa. Enusa has
until 23 January, 2012, to form the joint venture company, NEWCO,
in accord with the Co-operation Agreement.
In accordance with the purpose provided in the Collaboration and
Consortium Agreements signed between both parties, Enusa will
utilise this time to audit the CBER of the Mining Domain
Feasibility Study submitted by Berkeley, jointly with the
additional set of documents delivered November 10th, in order to
verify that the Feasibility Study demonstrates the feasibility of
the Project, to a level specified within the Co-operation
Agreement.
Berkeley is confident the MDFS, compiled by Jacobs and
independently reviewed by Tecnicas Reunidas, demonstrates
compliance with technical, environmental, legal and economic
aspects for the potential processing of uranium within the Mining
Domain through the Quercus plant, to a standard validly accepted by
international experts in mining. Assuming the governing documents
required to constitute NEWCO are agreed between Enusa and Berkeley,
and completed, both parties will form the Joint Venture corporation
on the scheduled date of January 23rd, 2012.
The incorporation of NEWCO triggers the payment of EUR20M to
Enusa within 30 days of formation. NEWCO will be responsible for
exploitation of the uranium resources within the State Reserves
(Mining Domain) and shall be owned 90% by the Company. Berkeley has
received advice from its Spanish legal advisers, Herbert Smith,
that the agreements continue to be enforceable according to their
terms.
The MDFS is restricted to measured and indicated resources
within the Mining Domain. These Resources total 34.2mlbs U(3) O(8)
at a grade of 445ppm, with an 89% resource conversion to achieve
reserves of 30.3mlbs. Confidence levels have been raised to +- 15%
for capital estimates and to +- 10% for operating costs. Resources
included in the CBER for the restricted MDFS make up only
approximately 44% of Berkeley's total resource base, or 69% of
Berkeley-Enusa JV resources within the State Reserves.
Note that the Berkeley-Enusa Joint Venture project (JV Project)
is considered here as an entirely separate project from Berkeley's
100% owned 'Salamanca 1' project, for which the process of
licensing and permitting has already begun, as previously announced
on the 13th October 2011. Berkeley will provide a progress report
from the first-stage Feasibility Study for the Salamanca 1 project
towards the end of the year, with early estimates targeting Capex
below EUR100M, and Cash Costs below US$30/lb, for an initial
production rate of approximately 1.5mlb per annum of final uranium
product.
As the CBER presented to ENUSA, for which an overview is
attached, is restricted to only Measured and Indicated Resources
within the Mining Domain, the Company is cognisant of further
potential project enhancements that can be achieved via the
incorporation of synergies through parallel development of the
100%-owned Salamanca 1 project.
Outcomes from the CBER for the JV Project MDFS include:
-- Mining rate of 3.5 mtpa for recovery of 2.5mlbs per annum
averaged over the life of mine by tank leaching
-- Cash Operating costs of US$34.7/lb* averaged over the life of mine
-- Construction capital costs of US$228 million*
(* Assumes a US$:EUR Conversion rate of 1.38)
Enquiries - Managing Director: Brendan James Tel: +34 923 193 903
Capital Markets: Martin Eales Tel: +44 20 7029 7881
The information in this announcement that relates to Exploration
Results, Mineral Resources or Ore Reserves is based on information
compiled by Dr. James Ross, who is a Fellow of The Australian
Institute of Mining and Metallurgy and an employee of Berkeley
Resources Limited. Dr. Ross has sufficient experience which is
relevant to the style of mineralisation and type of deposit under
consideration and to the activity which he is undertaking to
qualify as a Competent Person as defined in the 2004 Edition of the
'Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves'. Dr. Ross consents to the inclusion in
the report of the matters based on his information in the form and
context in which it appears.
Salamanca JV Project CBER Overview
Project Background
Berkeley's Feasibility Study for the Berkeley-Enusa Joint
Venture Project (JV Project) commenced in May 2009, following
Cabinet approval of the Co-Operation Agreement between Berkeley and
ENUSA. Final Mineral Resource Estimates were announced in September
2010, based on a combination of chemical and e-grades from
historical drilling, supplemented by Berkeley diamond and RC
drilling with both chemical and e-grades, for the three Feasibility
Study deposits. This study was focussing on a tank leach scenario
with a production rate of 2.1 Mlbs (0.95 Kt) of U(3) O(8) per annum
with the Sageras, Palacios North and Alameda South deposits
providing the initial feed to the Quercus Plant.
To reinforce and refine the results of the feasibility study,
Berkeley continued working and developing the engineering and
geological aspects during 2011. These results are reflected in the
Conceptual Basic Engineering report (CBER) which also concludes the
feasibility of the project (for this purpose, the study complied by
Jacobs and independently reviewed by Tecnicas Reunidas has also
evaluated the technical, environmental, legal and economic aspects
about the potential processing of uranium of the Mining Domain
through the Aguila plant, to a standard validly accepted by
international experts in mining).
Mineral Resources
Spain has a long mining history and is one of the world's
leading producers of various commodities. Uranium was discovered in
1957 and several significant deposits were exploited by government
agencies from the 1970's up until 2000 when the Quercus Processing
Plant was closed in response to persistent low uranium prices.
Uranium on the Iberian Peninsula occurs in 3 main geological
settings.
-- Vein Deposits: Hosted in Pre Hercynian meta-sedimentary and granitic rocks
-- Sandstone Deposits: Hosted in Permo Triassic fluvial sediments
-- Lignite Deposits: Hosted in Tertiary basins
By far the largest concentration of economic uranium
mineralisation is located in the western part of Spain within
meta-sedimentary sequences that form part of the Central Iberian
Zone (CIZ) of the Iberian Massif. The CIZ consists of a complex
melange of Precambrian, Cambrian and Ordovican lithologies
overprinted by poly-phase deformation generated before and during
the Variscan and Alpine orogenies. Mineralisation is classified by
the International Atomic Energy Association (IAEA) as Iberian
vein-type, and occurs in a network of narrow veins, fractures and
breccias as pitchblende and coffinite with minor sulphide and
carbonate gangue. Individual ore deposits are generally between
0.5km and 2km in strike length with the width of mineralisation
varying between 100m and 500m and usually occurring from the
surface down to 100m.
Berkeley has been exploring for uranium in the Iberian Peninsula
since 2005 and during this time has undertaken a comprehensive
exploration programme including more than 71,000m of reverse
circulation (RC) and diamond drilling, flying 6,000 line kms of
airborne geophysics.
The MDFS is restricted to the Alameda South, Sageras and
Palacios North deposits. Results from diamond and RC drilling at
these deposits, reported in the June and September quarters, were
incorporated into existing resource models and new estimates
provided by AMC Consultants (UK) Limited (AMC). The net change for
these three deposits was an increase of 1mlbs to 35.5mlbs U3O8 at a
grade of 446ppm, with the increase essentially at Alameda South.
Ninety six percent of these resources are in the Measured and
Indicated categories.
Note that resources considered for the CBER study of the MDFS
make up only approximately 44% of total BKY resources, or 69% of
the Salamanca JV resources within the State Reserves.
Mineral Resources at Alameda South, Sageras and Palacios
North
(200ppm U(3) O(8) cut-off)
Deposit Resource Tonnes U(3) O(8) U(3) O(8) U(3) O(8) Category Berkeley U(3) O(8)
------------------- -------------- ------- ---------- ---------- ---------- --------- --------- ----------
Category (Mt) (ppm) (t) (Mlbs) (%) (%) (Mlbs)
------------------- -------------- ------- ---------- ---------- ---------- --------- --------- ----------
Sageras Measured 4,7 380 1.795 4,0 39% 90% 3,6
------------------- -------------- ------- ---------- ---------- ---------- --------- --------- ----------
Indicated 6,4 430 2.750 6,1 60% 90% 5,5
---------------------------------- ------- ---------- ---------- ---------- --------- --------- ----------
Subtotal M+I 11,1 409 4.545 10,0 100% 90% 9,0
---------------------------------- ------- ---------- ---------- ---------- --------- --------- ----------
Inferred 0,0 258 6 0,0 0% 90% 0,0
---------------------------------- ------- ---------- ---------- ---------- --------- --------- ----------
Total 11,1 408 4.551 10,0 100% 90% 9,0
---------------------------------- ------- ---------- ---------- ---------- --------- --------- ----------
Palacios North Measured 1,0 497 483 1,1 24% 90% 1,0
------------------- -------------- ------- ---------- ---------- ---------- --------- --------- ----------
Indicated 2,8 495 1.401 3,1 70% 90% 2,8
---------------------------------- ------- ---------- ---------- ---------- --------- --------- ----------
Subtotal M+I 3,8 496 1.883 4,2 94% 90% 3,7
---------------------------------- ------- ---------- ---------- ---------- --------- --------- ----------
Inferred 0,5 258 117 0,3 6% 90% 0,2
---------------------------------- ------- ---------- ---------- ---------- --------- --------- ----------
Total 4,3 470 2.001 4,4 100% 90% 4,0
---------------------------------- ------- ---------- ---------- ---------- --------- --------- ----------
Alameda South Indicated 20,0 455 9.107 20,1 95% 90% 18,1
------------------- -------------- ------- ---------- ---------- ---------- --------- --------- ----------
Inferred 0,7 657 468 1,0 5% 90% 0,9
---------------------------------- ------- ---------- ---------- ---------- --------- --------- ----------
Total 20,7 462 9.576 21,1 100% 90% 19,0
---------------------------------- ------- ---------- ---------- ---------- --------- --------- ----------
Combined Measured 5,7 400 2.277 5,0 14% 90% 4,5
------------------- -------------- ------- ---------- ---------- ---------- --------- --------- ----------
Indicated 29,2 453 13.258 29,2 82% 90% 26,3
---------------------------------- ------- ---------- ---------- ---------- --------- --------- ----------
Subtotal M+I 34,9 445 15.535 34,2 96% 90% 30,8
---------------------------------- ------- ---------- ---------- ---------- --------- --------- ----------
Inferred 1,2 497 592 1,3 4% 90% 1,2
---------------------------------- ------- ---------- ---------- ---------- --------- --------- ----------
Total 36,1 446 16.127 35,5 100% 90% 32,0
---------------------------------- ------- ---------- ---------- ---------- --------- --------- ----------
Figure 1.1 Conceptual Basic Engineering Deposit Mineral Resource
Estimates
Mine Design and Ore Reserves
AMC Consultants (UK) Limited (AMC) was commissioned to prepare
the mining section of the CBER. This section includes the mine
geotechnical evaluation, mining cost estimation, pit optimisations,
pit designs, ore reserve estimates and mine scheduling. The three
deposits were scheduled to feed a process plant located at the
Aguila site. Ore at Alameda will be crushed adjacent to the pit and
then conveyed 10.7 km overland to the plant at Aguila.
The geotechnical evaluations resulted in similar slope designs
for the three deposits. for slopes of up to 140m in height as shown
in Figure 1.2.
Figure 1.2 Slope Parameters for each Deposit for Slopes up to 140m in Height
Ore Reserves were estimated by AMC using a uranium price of
EUR46.43/lb and based on the evaluation of detailed pit designs.
Results are summarised in Figure 1.3 which indicates conversion of
almost 89% of Measured and Indicated resources to reserves.
Mineral Inventory Tonnes Grade U(3) O(8)
---------------------------------------------------
Pit Category (Mt) (ppm) (Mlbs)
--------------------------------------- ---------- ------- ------ ----------
Sageras Proven 5.3 326 3.8
Probable 5.9 391 5.1
Palacios Proven 0.8 478 0.8
Probable 2.2 425 2.1
Alameda Proven
---------------------------------------
Probable 21.7 387 18.5
-------------------------------------------------- ------- ------ ----------
Total Proven 6.1 346 4.6
Total Probable 29.7 391 25.6
--------------------------------------------------- ------- ------ ----------
Total Mineral Inventory 35.8 383 30.3
--------------------------------------------------- ------- ------ ----------
(*Values may not sum due to rounding)
Figure 1.3 Mine Inventory for the Salamanca Project
Metallurgical Processing Plant
Technical aspects of the Aguila and Alameda processing
facilities are outlined and discussed together with the
underpinning metallurgical testwork on which the various plant
designs are based.
The main strategies to develop the process have been the
following:
1) Single Processing Plant - The ore from all three open pits
(Sageras, Alameda and Palacios) will be treated in one central tank
leaching based processing facility to be located on the Aguila
site.
2) Ore Feed Rate Driven Mining Plan - The project's combined
mining production plan has now been engineered to generate a
consistent ore feed rate and combined head grade to the central
processing plant.
3) Overland Conveying of Primary Crushed Alameda Ore - RoM ore
from the Alameda mine site will be primary crushed on site before
being transferred 10,7 km via an overland conveying system to the
central Aguila Ore Processing Facility.
4) Primary Crushed Ore Handling & Storage - Primary crushed
ore delivered to the head of the central Aguila processing facility
will be combined in a 2 hour capacity surge bin before being
further processed in secondary and tertiary crushers and screen
circuits and then conveyed to an 8.5 hour capacity covered mill
circuit feed bunker.
5) ARD Solution Handling & Treatment - All acid rock
drainage solution collection, pumping and treatment facilities were
considered in the design scope of the new centralized processing
facilities.
The modified process designs developed in this phase of the
project offer considerable improvements over those initially
proposed in the MDFS. These improvements, listed below, extend into
all areas of the plant design and its associated costs;
-- Simplified and easier to operate process flowsheet
-- Lower plant CAPEX costs
-- Lower plant OPEX costs
-- Enhanced operational flexibility
-- The adaptation of a mining plan that is more in line with its
associated plant design and which better recognises the capacity of
grinding and processing facilities.
Whilst the original plant design has been enhanced during this
phase of the project, Berkeley sees scope for further optimisation
in certain areas of the plant flowsheet. These will be addressed in
the detailed engineering. In addition, Berkeley believes there may
be further cost saving opportunities by reviewing the mixer-settler
technology currently selected as the basis for the SX circuit
design. Alternative technologies, such as the combined
mixer-settler, may bring added value to this area of the plant
design.
Dry Tailings Management
Berkeley Minera Espana (BME) commissioned Golder Associates
Global Iberica in June 2011, to prepare a study for the surface
containment of tailings produced from the JV Project. The
conceptual basic design has been completed in accordance with
international standards including: to be robust; to suit the
planned operational methods for the mine and process plant; to meet
the environmental requirements for a safe and secure facility
within Spain; and to provide flexibility for future expansion and
management options of the tailings management facilities (TMFs).
These standards include: recommendations of the International
Commission on Large Dams (ICOLD); and the Operation, Maintenance
and Surveillance Manual for Tailings Management Facilities (Mining
Association of Canada).The objectives of the study were to:
-- Provide a safe and stable tailings management facilities
designed to be technically viable and environmentally
appropriate;
-- Provide a tailings disposal scheme suitable for storing a
total of 18.4 Mm(3) for a 15 year mine life;
-- Provide an engineering design which is appropriate for future closure of the facility;
-- Present the information in a form suitable to allow a
decision to be made to further develop the design and operate the
project during the detailed stage.
The findings of this study are as follows:
-- Three potential sites were identified for the disposal of the
dry tailings generated. The site selected complies with storage
capacity requirements, minimises operation costs for the facility
due to its proximity to the plant site and minimises potential
liabilities both during operation and after closure.
-- The design of the TMFs has been adopted taking in
consideration environmental and engineering guidelines as set out
by Spanish and International regulations as well as to ensure the
safe and secure containment of nearly 18.4 Mm(3) of dry tailings
materials, divided into main TMF 10 Mm(3) , and Sageras In-Pit 8.4
Mm(3) .
-- The design of the facility has been undertaken based on an
assumed dry density for the deposited tailings of 1.9 t/m(3) . This
assumption is considered to be conservative and, therefore, the
design has significant potential to accommodate further capacity or
alternatively to reduce the final height of the TMF
embankments.
-- Based on the geological information available for the site,
and the estimated geotechnical characteristics of the dam
embankment construction materials, the design complies with
international standards for resistance against geotechnical failure
both under static and pseudo static conditions.
-- In order to minimise construction costs, the main TMF will be
phased and will make use of excavated borrow materials or mine
waste rock, suitably selected such that the engineering
specifications for the project are achieved. Long term stability,
both physical and chemical, will be favoured by the installation of
a protective HDPE liner, as well as the installation of an
embankment drainage system.
-- Consolidation of the tailings will be encouraged by the
installation of an impoundment drainage system. This will also
minimise the potential for contamination of the ground beneath the
facility.
Environmental Studies
The environmental section of the CBER identifies the main
environmental aspects of the JV Project in the light of initial
results of the performed Baseline Studies. The Project assessed in
the environmental study is based on preliminary mine planning
information provided by Berkeley up to September, 2011 and includes
the Aguila deposits (Sageras& Palacios), Alameda South deposit
and the Aguila uranium processing plant (Aguila Plant).
The findings of this study are as follows:
-- The environmental management plan of the project is being
developed in full compliance with the different legislation and
regulations applicable to the region in which the project is
located. It is fully compliant, not only with the Spanish
regulations, but also with the requirements of international best
practice, which includes the guidelines of The World Bank Group,
the International Finance Corporation (IFC) and the Equator
Principles.
-- A strict evaluation will be concluded on the habitat of
protected birds in terms of Natura 2000 legislation.
-- The trans-boundary impacts of the project have been
considered and are not expected to be relevant; though the EIA
process provides the opportunity to fulfil the requirements
established by the government authorities if deemed necessary.
-- All site derived waters have been addressed in the process
design. A pilot plant treating the equivalent of the ENUSA derived
contaminated site water has been operated. This pilot plant
campaign confirmed that the Agueda River waste load allocations and
the gazetted residual elemental assays could be achieved.
-- Project closure, in terms of the handling and processing of
mine wastes and leach residues, has been an integral component of
the project design.
In summary the CBER has identified all environmental issues
associated with the planned JV Project and have been addressed to a
level commensurate with the Study.
Closure and Long term Aspects
As a component of BME's overall environmental stewardship for
the Project, a Reclamation and Closure Plan (Plan) has been
designed to meet regulatory requirements through a concurrent
reclamation and closure approach. This approach provides a template
for operational measures that will be employed during the life of
the facility.
Final reclaimed facility surface design considers both
aftercare, for radiological protection purposes, and habitat.
Agricultural use was considered for the broader area.
One of the major initiatives of the Plan will be to facilitate
concurrent reclamation of the waste rock dump areas and dry
stacking tailings areas. This approach utilizes the development of
waste rock as backfill for the pits to integrate mine waste into
the mining operation. Therefore, reclamation costs will be expended
as the operation progresses.
Waste rocks dumps have a design layout focus on lessening the
visual impact of the mining operation from points along the road to
Saelices, and the town itself.
In addition to the requirements set forth by BME, the major
elements of this Plan are dictated by regulatory requirements
contained in the Mining Law and Environmental Impact Assessment /
Integrated Environmental Authorisation process.
In summary the Mining Domain Conceptual Basic Engineering Report
has identified all Closure and long-term aspects associated with
the planned JV Project and have addressed them to a level
commensurate with the Study.
Capital Cost Estimate
The Capex has been compiled with information provided from
various sources as highlighted below:
Mining AMC
---------------------------- ------------------
Process Plant Jacobs
---------------------------- ------------------
Ore Transport DuroFelguera
---------------------------- ------------------
Water Management RPQ Aquaterra
---------------------------- ------------------
Radiological Protection Paulka
---------------------------- ------------------
Owners Costs/Sustaining Berkeley
Capital
---------------------------- ------------------
Waste & Tailings Management Golder Associates
---------------------------- ------------------
Closure Costs Golder Associates
---------------------------- ------------------
The estimate has been prepared based on a typical Engineering,
Procurement, Construction and Management (EPCM) contract basis,
with the selected EPCM contractor providing and awarding
sub-contracts for and on behalf of Berkeley, Capex estimates are
provided to a confidence level of +-15%.
Capital cost estimates achieved from the CBER for the MDFS are
summarised below.
Project Component Cost Estimate (EURM)*
-------------------------------- ----------------------
Owners Costs 20
-------------------------------- ----------------------
Mining (all pits) 19.9
-------------------------------- ----------------------
Dumps Building 10
-------------------------------- ----------------------
Tailings Facility 16.9
-------------------------------- ----------------------
Land Acquisition 4.8
-------------------------------- ----------------------
Mine Infrastructure 8.2
-------------------------------- ----------------------
Treatment Plant 130.5
-------------------------------- ----------------------
General Pre & post-operational
Cost 22.5
-------------------------------- ----------------------
Sustaining Capital 3.4
-------------------------------- ----------------------
Contingency 21.2
-------------------------------- ----------------------
Total Project Costs 257.3
-------------------------------- ----------------------
Figure 1.7 Capital Cost Estimates
* The above summarised capital costs are presented at the Base
Date of Q4 2011, un-escalated.
Operating Cost Estimate
Estimates of operating expenditure (Opex), provided to a
confidence level of +/-10%, are based on the following:
-- Considered Mine production restricted to the Aguila (Sageras
and Palacios) and Alameda South Mines only;
-- Ore processing at the current Aguila Process Plant (3.5Mtpa
whole ore processing) using some of the existing Quercus Plant
Facilities to produce an average of 2.5Mlbs per annum of final
uranium product;
-- New designated Tailings Management Facilities at both the Aguila plant and Sageras pit.
A breakdown of the calculated overall operating cost (per tonne
of ore treated), assuming contractor mining, is detailed in Figure
1.8 below.
Category Unit Average Cost
------------------- ------------------ -------------
Mining Costs EUR/t processed 5.70
Processing Costs EUR/t processed 9.34
G&A EUR/t processed 0.43
------------------- ------------------ -------------
Total EUR/t processed 15.47
------------------- ------------------ -------------
Figure 1.8 Operating Cost per Tonne
Contract mining costs were sourced from local mining
contractors. The mining costs shown include mining labour
requirements and energy consumed. The quotations for contract
mining are included in Appendix 3.
Processing costs are based upon Spanish personnel operating
practice and unit supply price quotations. The cost given includes
operating, maintenance, metallurgy laboratory and auxiliary
personnel, and half of the total general cost.
Financial Analysis Key Points
-- Total Cash Costs/lb of uranium production averages EUR25.14/lb for the Life of Mine;
-- Processing costs/tonne of ore treated averages EUR9.34/t over the Life of Mine.
-- Mining cost/tonne of ore averages EUR5.70/t over the Life of Mine.
-- Initial Plant Capital Costs (Base date Q4 2011) to reach 3.5
Mtpa ore treatment via ore sourced from both Aguila and Alameda is
EUR165M. During the life of the project additional capital
expenditure is required to prepare waste dumps and facilities that
will be used at a later stage.
-- The total Capital cost of the life of the project sums
EUR257M. The Capex figure includes a 10% contingency and sustaining
capital of 0.50%;
-- The rehabilitation and closure costs for the two sites at
Aguila and Alameda South are estimated at EUR58M;
-- Total Production Cost/lb of uranium production, including
Capex, averages EUR37.40/lb for the Life of Mine;
CONCLUSION
This CBER, complied by Jacobs and independently reviewed by
Tecnicas Reunidas, has evaluated the technical, environmental,
legal and economic aspects for the potential processing of uranium
within the Mining Domain through the Quercus plant, to a standard
validly accepted by international experts in mining. The conclusion
of this evaluation is that the project is feasible. This conclusion
is aligned with the results of the Feasibility Study previously
submitted to Enusa as it demonstrates the feasibility of the
project.
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