Quarterly Activities Report

RNS Number : 3279C

Berkeley Resources Limited

30 April 2012

 



REPORT FOR QUARTER ENDED 31 MARCH 2012

SIGNIFICANT DEVELOPMENTS

Ø The Company initiated Arbitration proceedings against the joint venture partner, Enusa Industrias Avanzadas, S.A. ("Enusa") with a claim of >US$200m following repeated deadline extensions.

Ø Salamanca 1 Project progressed on a broad front with submission of core documents for the permitting process and commencement of large column tests.

Ø Encouraging down-hole radiometric results at the new Villares prospect were confirmed by the high grade assay results announced on 24 April. These include: 15m at 1,524ppm U₃O₈ from 1m in VIR001; and 9m at 2,363 ppm U₃O₈ from 6m in VIR007 at 200 ppm cut-off.

Ø Ian Middlemas was appointed Chairman and Robert Behets joined the board as a non-executive Director of the Company on 27 April 2012.  This followed the resignation of Brendan James as Managing Director and CEO now effective 27 April 2012.

Ø The Company made a placement of 5,000,000 shares and options to Mr Middlemas and Mr Behets to raise A$1.5m as part of their appointment to the board and to supplement working capital.

Ø A full review of the Company's activities in Spain will be undertaken during the next quarter following the introduction of the new board members.  The Company's estimated net cash position at the end of April is approximately A$38.5m, inclusive of the placement funds.  This reflects estimated incurred expenditure of A$3m to the end of April, including A$350,000 on the purchase of a farm and A$500,000 in drilling services at Salamanca 1.

Enquiries

Deputy Chairman	Jim Ross	Tel: [phone]
RBC Capital Markets	Martin Eales	Tel: [phone]

JOINT VENTURE WITH ENUSA:

The deadline for Enusa's assessment of the advanced form of the Mining Domain Feasibility Study (MDFS), and formation of the 90% Berkeley-owned joint venture company, NEWCO, was extended from 23 January, 2012, to 29 February, with the condition that Enusa responded to the advanced MDFS by 23 February.  As announced on 24 February Enusa did not accept this advanced version and, in addition, they did not form NEWCO on 29 February.  Therefore they are in breach of the Co-operation Agreement dated 29 January 2009.

The Co-operation Agreement clearly establishes that such a material breach requires that Enusa returns to Berkeley's Spanish subsidiary, Berkeley Minera Espana ("BME"), the non-amortised value of all its investments made and any evidenced expenses which BME may have incurred to carry out the Feasibility Study, whether or not it has been completed.  In addition, Enusa is to compensate BME for any damages caused, including any reasonable loss of profits.

Following this default, the Company entered discussions with SEPI, the 60% owners of Enusa, and agreed to refrain from initiating arbitration until 30 March.  Unfortunately, this final extension did not lead to a satisfactory outcome and the Board immediately initiated arbitration.

It is the opinion of Berkeley, and its legal advisors in Spain that Enusa has not met its contractual obligations under the Co-operation Agreement on a number of occasions.  BME, in addition to fulfilling its obligations, has consistently acted in good faith, and also provided Enusa with numerous opportunities to achieve a satisfactory outcome and avoid arbitration.  Apart from granting multiple extensions to postpone formation of NEWCO, It has also offered ENUSA alternative options to progress the project.  These alternatives have been aimed at minimising Enusa concerns, as they have been understood by Berkeley.

Berkeley considers that it has a strong case in arbitration.  This view is supported by a number of factors, including advice from BME's international legal advisors in Spain, who have considerable experience in successful commercial arbitration actions within the country.  BME is claiming compensation for the damages and losses caused by Enusa's breach of the Co-operation Agreement to a total amount estimated to be in excess of US$200m.

Regardless of this action, the Company has informed Enusa that it is prepared to collaborate at any time with the aim of achieving an amicable solution, independent of any arbitration proceedings.

SALAMANCA 1 PROJECT:

Overview:

Project activity progressed on a broad front during the quarter to build on the outcomes of the preliminary feasibility study, announced on 30 January, 2012.  The Company received confirmation from the Regional Government of Castilla y Leon that the Environmental Scoping Document was successfully processed.  In addition, the permit was received for the proposed site facilities, including core shed, analytical laboratories change rooms and office.  Key documents for the permitting process were submitted for approval, including: the Exploitation Plan; the Restoration and Closure plans; the Environmental Impact Assessment; and the Radiological Protection initial document.  It is anticipated that these documents will be distributed by the Regional Government for public consultation during the next June quarter.

Metallurgical test work was advanced at Mintek in Johannesburg and included column testing of representative mineralisation for the first three years of production (see below).  Diamond and RC drilling was focussed on upgrading of resources at Santidad and also providing initial samples for metallurgical test work, as detailed below.  In addition, exploration drilling in proximity to the Retortillo deposit was initiated, with the aim of supporting and extending the production profile at the Salamanca 1 Project.  Initial RC drilling at the new Villares prospect intersected shallow, high grade mineralisation.  Project engineering work was focussed on development of the hydrogeological and geotechnical models.

Drilling and Exploration:

Reverse circulation ("RC") and diamond drilling during the quarter is summarised in Table1 with respective totals of 7,790m and 735m.  Most RC drilling, and all diamond drilling, was focussed on the Santidad deposit, with 59 RC holes, totalling 3,331m, being drilled at the Villares prospect.

Santidad deposit:

The program of RC drilling to upgrade the inferred resources and undertake condemnation drilling for mine design, was completed for a total of 101 holes totalling 5,828m.  In addition, 12 diamond holes have provided additional geological information to enable a more detailed geological interpretation, plus samples for metallurgical test work.

Prospect	RC Q1		RC TOTAL
	Holes	Metres	Holes	Metres
Retortillo-Santidad	74	4,459	74	4,459
Villares	59	3,331	59	3,331
Total	133	7,790	133	7,790
Project	DDH Q1		DDH Total
	Holes	Metres	Holes	Metres
Retortillo-Santidad	12	735	12	735
Total	12	735	12	735

Table 1: Drilling Completed during 2012

Radiometric data for the resource drilling at Santidad confirms known mineralisation, however the closer spacing indicates less continuity than previously interpreted and it appears that some reduction in resources is likely.  A new resource will be calculated once assay results are received in April.  
The deposit is open to the north-west and drilling for additional resources can be considered, once access to this area is negotiated.  Notable intersections are summarised in Table 2, and all intersections in Appendix A.

Diamond drilling for geotechnical studies at Retortillo and Santidad was initiated in the current quarter.

Santidad	From	To	Thick	U3O8
	(m)	(m)	(m)	(ppm)
SNR-211	26.0	31.0	5.0	423
	33.0	34.0	1.0	336
	37.0	39.0	2.0	604
SNR-280	0.0	19.0	19.0	313
SNR-287	10.0	14.0	4.0	2356
SNR-289	58.0	68.0	10.0	357
	73.0	76.0	3.0	656
SNR-297	43.0	51.0	8.0	769

Table 2: Santidad - Significant Intersections at 200ppm cut-off.

Villares prospect:

This new prospect, is located approximately 7km north of Retortillo, and was first identified in the helicopter-borne radiometric and magnetic survey that Berkeley carried out in 2007.  Its potential was recently confirmed with a combination of ground radiometric survey and geological mapping, and by analysis of results from historical localised drilling by ENUSA.  Villares, and other anomalies in the Salamanca 1 area, have remained untested since Berkeley halted exploration in 2008, following onset of the GFC.

The drilling has been focussed in the Zona 19 and Zona 4 areas of the prospect, with several additional holes testing for possible continuity between other small surface anomalies.  Encouraging radiometric results in 23 of the 59 RC holes have been confirmed by the first batch of assays for 9 holes in the Zona 19 area.  They confirm the presence of shallow, high grade mineralisation in four of these holes, including: 15m at 1,524ppm U₃O₈ from 1m in VIR-001 and 9m at 2,363ppm U₃O₈ from 6m in VIR-007.  Results for these 4 holes are shown in Table 3.

Comparison of down hole radiometric results and chemical assays has been applied to the other 50 holes.  It indicates that significant, or anomalous, mineralisation has been intersected in 19 of these 50 holes for which only radiometric data is currently available.  A summary of all intersections is given in Appendix A.

At Zona 19 the assay and radiometric data has outlined mineralisation ranging from 25-75m in width over a strike length of about 300m.  The thickness ranges from 2-15m at depths from surface to 28m.   Uranium mineralisation is hosted within sediments, similar to the host rocks at Retortillo and Santidad, and is open along strike to the northwest and southeast. Drill access to test for extensions is under negotiation with landowners.

The down hole radiometric data from Zona 4 has outlined potential mineralisation up to 100m in width over a strike length of at least 300m.  The thickness ranges from 2-25m at a depth of 5-50m.  However, whilst most radiometric grades within this 300m long zone appear to be >200ppm U₃O₈, the variable relationship between assays and radiometrics at Zona 19 indicates that assay data is needed to properly gauge their true significance.

These initial results confirm the presence of shallow high grade mineralisation at the Villares prospect and highlight the potential to identify additional uranium resources in outcropping and covered areas in proximity to the Retortillo and Santidad deposits.  Further drilling is planned to test the additional targets identified.

Villares	From	To	Thick	U3O8
	(m)	(m)	(m)	(ppm)
VIR-001	1.0	16.0	15.0	1,524
	25.0	28.0	3.0	612
VIR-003	2.0	5.0	3.0	312
	9.0	11.0	2.0	1,990
VIR-007	6.0	15.0	9.0	2,363
VIR-009	4.0	8.0	4.0	857
	19.0	22.0	3.0	1,299

Table 3: Villares RC Drilling - Significant Intersections, 200ppm cut-off

Metallurgical Test work and Project Engineering:

The program of test work initiated in the December quarter, on a representative 4.7 tonne sample from Retortillo, was continued at the Mintek laboratories in Johannesburg. It includes:

Ø Bench scale comminution tests;

Ø ISO-pH tests;

Ø Diagnostic assay and agglomerate acid cure tests;

Ø Geomechanical tests:

Ø 6m column tests; and

Ø Solvent extraction test work through to ADU precipitation and analysis.

The program is well advanced and is targeted for completion in the June quarter.  Nine column tests are in progress and although early results are encouraging with respect to recovery and reagent consumption, firm conclusions cannot be drawn until column residues are analysed.  Upgrading of the hydrogeological model to provide a 3D transitional regime was continued, and the geotechnical model is being advanced to a final design status.  Completion of both models is targeted for completion in the June quarter.

CORPORATE

On 27 April the board completed the appointment of Ian Middlemas as Non-executive Chairman and Robert Behets as a Non-Executive Director of the Company.  These appointments will significantly strengthen the board's corporate and technical capacity following the departure of Mr Brendan James as Managing Director.

A full review of the Company's activities in Spain will be undertaken during the next quarter following the introduction of the new board members.

The information in this announcement that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Craig Gwatkin, who is a Member of The Australian Institute of Mining and Metallurgy and is an employee of Berkeley Resources Limited.  Mr. Gwatkin 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'.  Mr. Gwatkin consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Appendix A: All assayed Drill Intersections

Santidad RC Drilling

							Drill Intersections  > 200ppm U3O8
Hole ID	Easting	Northing	Elev.	Depth	Azim	Dip	From	To	Thick	U3O8
	(m)	(m)	(m)	(m)	(º)	(º)	(m)	(m)	(m)	(ppm)
SNR-208	716867	4522455	766.0	70.0	0	-90	33.0	34.0	1.0	205
							44.0	45.0	1.0	320
							48.0	53.0	5.0	240
SNR-209	716844	4522411	764.0	50.0	0	-90	No significant intersection
SNR-210	716890	4522285	768.0	52.0	0	-90	No significant intersection
SNR-211	716820	4522367	771.0	50.0	0	-90	26.0	31.0	5.0	423
							33.0	34.0	1.0	336
							37.0	39.0	2.0	604
SNR-212	716913	4522221	768.0	51.0	0	-90	No significant intersection
SNR-213	716778	4522394	776.0	67.0	0	-90	24.0	33.0	9.0	247
							50.0	51.0	1.0	210
SNR-214	716960	4522203	758.0	40.0	0	-90	No significant intersection
SNR-215	717006	4522291	764.0	40.0	0	-90	No significant intersection
SNR-216	716983	4522247	758.0	40.0	0	-90	No significant intersection
SNR-217	717174	4522180	762.0	55.0	0	-90	21.0	23.0	2.0	272
SNR-218	717039	4522138	765.0	40.0	0	-90	No significant intersection
SNR-219	717060	4522178	761.0	40.0	0	-90	No significant intersection
SNR-220	717081	4522218	756.0	60.0	0	-90	No significant intersection
SNR-221	717121	4522078	770.0	50.0	0	-90	No significant intersection
SNR-222	717081	4522218	756.0	60.0	0	-90	No significant intersection
SNR-223	717146	4522020	771.0	52.0	0	-90	No significant intersection
SNR-224	717225	4522063	768.0	50.0	0	-90	28.0	29.0	1.0	235
SNR-225	717202	4522018	764.0	52.0	0	-90	No significant intersection
SNR-226	717287	4522287	749.0	56.0	0	-90	No significant intersection
SNR-227	716937	4522373	754.0	50.0	0	-90	No significant intersection
SNR-228	717193	4522216	758.0	46.0	0	-90	No significant intersection
SNR-229	716913	4522329	760.0	40.0	0	-90	No significant intersection
SNR-230	717249	4522107	768.0	56.0	0	-90	27.0	28.0	1.0	200
SNR-231	717030	4522335	746.0	38.0	0	-90	No significant intersection
SNR-232	717250	4522750	736.2	64.0	0	-90	No significant intersection
SNR-233	717104	4522262	750.0	35.0	0	-90	No significant intersection
SNR-234	717037	4522537	751.0	60.0	0	-90	No significant intersection
SNR-235	717301	4522450	726.6	55.0	0	-90	No significant intersection
SNR-236	717491	4522742	729.1	60.0	0	-90	No significant intersection
SNR-237	717756	4522503	720.8	60.0	0	-90	No significant intersection
SNR-238	717502	4522493	722.1	64.0	0	-90	No significant intersection
SNR-239	717498	4522243	758.1	67.0	0	-90	49.0	52.0	3.0	266
SNR-240	717750	4522250	732.9	60.0	0	-90	No significant intersection
SNR-241	717800	4521795	720.2	55.0	0	-90	No significant intersection
SNR-242	717746	4522002	732.6	54.0	0	-90	No significant intersection
SNR-243	717470	4521990	746.9	70.0	0	-90	No significant intersection
SNR-244	717271	4522040	763.7	70.0	0	-90	No significant intersection
SNR-245	717422	4521899	743.6	70.0	0	-90	No significant intersection
SNR-246	717249	4521990	758.1	70.0	0	-90	No significant intersection
SNR-247	717378	4521817	734.0	40.0	0	-90	No significant intersection
SNR-248	717223	4521950	754.6	70.0	0	-90	No significant intersection
SNR-249	715874	4523145	726.1	75.0	0	-90	No significant intersection
SNR-250	715906	4523303	733.8	94.0	0	-90	50.0	56.0	6.0	265
							63.0	64.0	1.0	808
							77.0	79.0	2.0	272
							87.0	88.0	1.0	266
SNR-251	715896	4523189	726.0	70.0	0	-90	No significant intersection
SNR-252	715885	4523271	734.9	80.0	0	-90	16.0	18.0	2.0	1441
							36.0	39.0	3.0	467
							51.0	52.0	1.0	218
							60.0	61.0	1.0	218
							65.0	66.0	1.0	386
SNR-253	715923	4523131	725.4	70.0	0	-90	No significant intersection
SNR-254	715857	4523231	734.3	80.0	0	-90	11.0	14.0	3.0	200
							41.0	42.0	1.0	222
SNR-255	715838	4523387	745.0	76.0	0	-90	No significant intersection
SNR-256	715816	4523340	746.6	70.0	0	-90	14.0	26.0	12.0	257
							32.0	38.0	6.0	209
SNR-257	715917	4523081	729.2	30.0	0	-90	No significant intersection
SNR-258	715792	4523300	747.6	64.0	0	-90	No significant intersection
SNR-259	715947	4523051	735.5	40.0	0	-90	No significant intersection
SNR-260	715766	4523258	749.1	82.0	0	-90	65.0	66.0	1.0	318
SNR-261	715961	4523100	729.6	43.0	0	-90	No significant intersection
SNR-262	716063	4523063	745.4	40.0	0	-90	21.0	23.0	2.0	334
SNR-263	715955	4523165	726.2	70.0	0	-90	No significant intersection
SNR-264	716026	4523117	738.7	40.0	0	-90	7.0	11.0	4.0	214
							15.0	17.0	2.0	565
SNR-265	715995	4523201	729.1	70.0	0	-90	24.0	25.0	1.0	301
SNR-266	716009	4523182	732.1	46.0	0	-90	No significant intersection
SNR-267	716038	4523022	743.7	50.0	0	-90	10.0	11.0	1.0	200
SNR-268	715985	4523141	732.5	40.0	0	-90	No significant intersection
SNR-269	715987	4523036	739.5	52.0	0	-90	25.0	26.0	1.0	213
SNR-270	716157	4523035	752.5	40.0	0	-90	No significant intersection
SNR-271	716015	4522966	753.8	90.0	0	-90	11.0	15.0	4.0	200
							57.0	58.0	1.0	200
							72.0	73.0	1.0	205
SNR-272	716136	4522997	756.7	40.0	0	-90	No significant intersection
SNR-273	715694	4523339	763.2	65.0	0	-90	No significant intersection
SNR-274	716500	4523375	730.5	60.0	0	-90	No significant intersection
SNR-275	715998	4523503	743.1	61.0	0	-90	No significant intersection
SNR-276	716501	4523500	748.1	60.0	0	-90	No significant intersection
SNR-277	716241	4523499	752.7	60.0	0	-90	No significant intersection
SNR-278	716625	4523375	736.1	60.0	0	-90	No significant intersection
SNR-279	716153	4522901	770.2	60.0	0	-90	No significant intersection
SNR-280	716253	4522990	755.0	52.0	0	-90	0.0	19.0	19.0	313
SNR-281	716225	4522939	763.0	50.0	0	-90	No significant intersection
SNR-282	716399	4522936	752.4	50.0	0	-90	No significant intersection
SNR-283	716479	4522895	749.0	46.0	0	-90	No significant intersection
SNR-284	716374	4522895	754.5	50.0	0	-90	No significant intersection
SNR-285	716197	4522894	770.4	50.0	0	-90	No significant intersection
SNR-286	716449	4522847	757.2	50.0	0	-90	5.0	8.0	3.0	207
							12.0	14.0	2.0	223
SNR-287	716340	4522853	762.7	61.0	0	-90	10.0	14.0	4.0	2356
							48.0	50.0	2.0	1434
SNR-288	716661	4522690	752.5	50.0	0	-90	No significant intersection
SNR-289	716429	4522772	767.3	94.0	0	-90	58.0	68.0	10.0	357
							73.0	76.0	3.0	656
SNR-290	716580	4522557	777.4	64.0	0	-90	30.0	37.0	7.0	213
SNR-291	716812	4522533	759.2	50.0	0	-90	12.0	13.0	1.0	229
SNR-292	716627	4522420	790.5	100.0	0	-90	No significant intersection
SNR-293	716742	4522414	779.0	67.0	0	-90	34.0	45.0	11.0	282
							50.0	52.0	2.0	251
SNR-294	715270	4523790	774.0	55.0	0	-90	No significant intersection
SNR-295	715292	4523844	767.3	50.0	0	-90	No significant intersection
SNR-296	715252	4523760	779.3	58.0	0	-90	37.0	41.0	4.0	392
							47.0	49.0	2.0	936
SNR-297	715347	4523749	773.5	60.0	0	-90	32.0	33.0	1.0	266
							43.0	51.0	8.0	769
SNR-298	715335	4523707	779.5	55.0	0	-90	24.0	26.0	2.0	567
SNR-299	715306	4523663	786.1	66.0	0	-90	30.0	31.0	1.0	284
							58.0	59.0	1.0	251
SNR-300	715546	4523596	760.9	60.0	0	-90	No significant intersection
SNR-301	715523	4523551	765.0	60.0	0	-90	No significant intersection
SNR-302	715499	4523507	772.0	60.0	0	-90	No significant intersection
SNR-303	715544	4523483	769.6	50.0	0	-90	No significant intersection
SNR-304	715590	4523572	758.1	55.0	0	-90	3.0	8.0	5.0	296
							16.0	20.0	4.0	201
							23.0	24.0	1.0	245
SNR-305	715655	4523481	760.5	57.0	0	-90	29.0	30.0	1.0	859
							41.0	43.0	2.0	211
SNR-306	715632	4523437	767.2	60.0	0	-90	11.0	16.0	5.0	271
							21.0	22.0	1.0	535
							36.0	38.0	2.0	270
SNR-307	715609	4523393	773.3	66.0	0	-90	No significant intersection
SNR-308	715744	4523434	754.8	70.0	0	-90	No significant intersection

Villares RC Drilling

							Drill Intersections  > 200ppm U3O8
Hole ID	Easting	Northing	Elev.	Depth	Azim	Dip	From	To	Thick	U3O8
	(m)	(m)	(m)	(m)	(º)	(º)	(m)	(m)	(m)	(ppm)
VIR-001	718548	4527388	711.8	58.0	0	-90	1.0	16.0	15.0	1524
							25.0	28.0	3.0	612
VIR-002	718568	4527433	712.0	50.0	0	-90	No significant intersection
VIR-003	718510	4527405	710.7	50.0	0	-90	2.0	5.0	3.0	312
							9.0	11.0	2.0	1990
VIR-004	718528	4527454	709.6	50.0	0	-90	No significant intersection
VIR-005	718527	4527339	715.3	50.0	0	-90	No significant intersection
VIR-006	718478	4527352	715.5	50.0	0	-90	No significant intersection
VIR-007	718638	4527337	714.3	50.0	0	-90	6.0	15.0	9.0	2363
VIR-008	718655	4527384	714.2	50.0	0	-90	No significant intersection
VIR-009	718618	4527304	716.0	46.0	0	-90	4.0	8.0	4.0	857
							19.0	22.0	3.0	1299

 

END

 

 

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