(MENAFN- ProactiveInvestors - UK) Berkeley Energia Ltd (LON:BKY) has concluded a deal to sell uranium from its Spanish mine for an average of more than double the current market price and at double the volumes agreed in an initial outline agreement.
The AIM-listed mine developer has a binding contract with trader Interalloys to supply two million pounds of the metal annually over five years, with the potential to extend that to three million pounds.
The average fixed price to be paid under the off-take agreement is US$43.78.
Uranium, a central component to nuclear power generation, is changing hands for around US$18 per pound.
Importantly, the firm's cash costs of unearthing the material are around US$15 per pound.
Berkeley said it is in discussions with other potential 'off-takers'.
The company's Salamanca mine is slated to come on stream in 2018, which is expected to coincide with a sharp upturn in demand for the silver-white metal.
Analysts say at that point US utilities will be looking to re-contract supply, but will likely run up against competition from Chinese reactors, which ought to push up prices.
Managing director Paul Atherley said he was 'delighted' to have concluded his first supply deal for the Salamanca operation.
'With initial construction well underway and as we move closer to production we are receiving growing interest from major utilities who are looking to diversify their offtake from a low cost producer in Europe,' he added.
'We intend to build our uranium sales book by entering into long term offtake contracts from now until the commencement of production.'
Earlier this month the company raised just over £24mln to accelerate the development of the project. Total costs to build Salamanca are put at £77mln.
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