June 2014 Quarterly Report

RNS Number : 1621N

Berkeley Resources Limited

24 July 2014

 



24 July 2014

ASX/AIM:BKY

BERKELEY RESOURCES LIMITED

JUNE 2014 QUARTERLY REPORT

Berkeley Resources Limited ('Berkeley' or the 'the Company') is pleased to present its quarterly report for the period ended 30 June 2014. The Company's primary focus during the period continued to be the advancement of the Salamanca Project located in Spain. Highlights during the quarter include:

·     Exploitation Concession ('Mining Licence') for Retortillo granted by Regional Government:

o  Valid for an initial period of 30 years, renewable for two further periods of 30 years;

o  Covers an area of 25.2km² and includes the entire area containing the Retortillo deposit;

o  Retortillo deposit forms part of the integrated Salamanca Project and is the first resource from which production is scheduled to commence; and

o  With the grant of Mining Licence, the approval processes associated with other key permits, including the Initial Authorisation of the process plant as a radioactive facility and the Exceptional Authorisation for Land Use (application for reclassification from rural to industrial use) of the affected surface land area at Retortillo, may now be finalised.

·     Commencement of the Salamanca Project Definitive Feasibility Study ('DFS'): 

o  DFS focussed on the integrated development of Retortillo and Alameda;

o  A number of work programs providing key inputs to the DFS, including detailed geological and structural mapping, hydrogeological studies, metallurgical testwork, and preparations for resource drilling at Retortillo, commenced during the quarter.

·     2014 drilling program at Zona 7 nearing completion: 

o  Previous drilling program at Zona 7 recorded significant high grade intersections at shallow depths and essentially doubled the strike extent of the mineralised zone. Better intercepts included 29 metres @ 3,391 ppm U₃O₈, 17 metres @ 1,260 ppm U₃O₈, 15 metres @ 1,392 ppm U₃O₈, 25 metres @ 683 ppm U₃O₈, and 13 metres @ 1,161 ppm U₃O₈;

o  2014 drill program, comprising approximately 2,750 metres of reverse circulation and 300 metres of diamond core drilling, is aimed at infilling the zone of mineralisation delineated by the prior year drilling and extending it further to the south-west. The current program, which is nearing completion, has been designed to close the existing drill pattern down to a notional 100 metre by 100 metre pattern to facilitate the estimation of a revised Inferred MRE for Zona 7.

Enquiries:

Robert Behets                                 

Berkeley Resources              

[phone]

John Prior / Paul Gillam - Nomad & Broker

Numis Securities

[phone]

OPERATIONS

Berkeley Resources Limited ('Berkeley' or 'the Company') is a uranium exploration and development company with a quality resource base in Spain. Berkeley is currently focused on advancing its wholly owned flagship Salamanca Project.

Salamanca Project

Berkeley's flagship Salamanca Project ('the Project') comprises the Retortillo, Alameda, Gambuta and Zona 7 deposits, plus a number of other Satellite deposits located in western Spain.

The Company has completed a Preliminary Feasibility Study ('PFS') on the integrated development of Retortillo and Alameda, which clearly demonstrated the Project's potential to support a significant scale, long life uranium mining operation (refer ASX announcement dated 26 September 2013).

Using only the current Mineral Resource Estimates ('MRE') for Retortillo and Alameda, which total 34.5 million pounds U₃O₈ (36.9 million tonnes at 424 ppm; 200 ppm U₃O₈ cut-off grade), as a base case scenario, the PFS showed that the Project can support an average annual production of 3.3 million pounds of U₃O₈ during the seven years of steady state operation and 2.7 million pounds of U₃O₈ over a minimum eleven year mine life. There is strong potential to increase the production profile and/or mine life through the exploitation of additional resources held by the Company (totalling 27.1 million pounds U₃O₈) and with ongoing exploration work.

The PFS was based on open pit mining, heap leaching using on-off leach pads, a centralised process plant at Retortillo, and a remote ion exchange operation at Alameda, with loaded resin trucked to the centralised plant for final extraction and purification. The open pits are shallow (maximum depth of 135m) with low strip ratios (average 1:2.1 ore to waste for the Project over the life of mine). During steady state operation the annual ore processing rate is 5.5 million tonnes. Operating costs (C1 cash costs) average US$24.60 per pound U₃O₈ over the life of mine.

The initial capital cost (nominally ± 20% accuracy) for the Project is estimated at US$95.1 million. This cost is inclusive of all mine, processing, infrastructure and indirect costs required to develop and commence production at Retortillo. A further US$74.4 million of capital, incurred in the second year of production, is required to develop Alameda and achieve steady state operation. The Project's capital cost reflects the excellent existing infrastructure, use of heap leaching as the preferred processing route, and the favoured mining contractor scenario (no mining fleet capital expenditure).

Definitive Feasibility Study

The Definitive Feasibility Study ('DFS') for the Project commenced during the quarter following finalisation of the Scope of Work.

The key areas of focus for the DFS include:

·     Resource infill drilling programs aimed at upgrading the classification of specific portions of the current Retortillo and Alameda MRE's to the Measured category;

·     Further metallurgical testwork programs, including additional column leach work (six metre columns), in combination with ion exchange ('IX') at Alameda and solvent extraction ('SX') and ammonium diuranate ('ADU') precipitation at Retortillo to generate more detailed information relating to the pH and acid consumption optimisation, design and sizing of the IX and SX units, and final product specification;

·     Development of a Geo-Met model which will incorporate additional geological and metallurgical parameters into the resource block model to support metallurgical process modelling and mine planning and optimisation;

·     Open pit optimisation, detailed mine design and production scheduling using the upgraded MRE block models;

·     Enhanced design of the project infrastructure and site facilities;

·     Undertaking engineering studies to support capital and operating cost estimates for the Project to a level of accuracy of nominally ±10%; and

·     Undertaking an evaluation of the various alternatives for funding the development of the Project and the sale of future uranium production (including uranium marketing and off-take arrangements).

During the quarter a number of work programs providing key inputs to the DFS, including the resource infill drilling program at Retortillo, the metallurgical testwork program, development of Geo-Met models and hydrogeological studies for both sites, were advanced.

Geology and Drilling

Following completion of the detailed design of the infill drilling program for Retortillo, which is aimed at upgrading the resource classification of the areas to be mined during the initial two years of the PFS production schedule to the Measured category, activities including land owner authorisation, site access and drill site preparation were undertaken during the quarter.

The drilling program will comprise approximately 70 reverse circulation ('RC') holes for 4,600m and four diamond core ('DD') holes for 300m. The program has been designed to close the existing drill pattern down to a notional 35m by 35m pattern within the areas targeted while the core obtained from the DD drilling will facilitate enhanced geological and structural understanding of the deposit.

The RC component of the resource drilling program commenced at Retortillo in mid-July.

A detailed geological and structural mapping exercise at Retortillo was also completed by experts from the University of Salamanca during the quarter. The outputs of the mapping exercise, including a new 1:1,000 scale geological map, has resulted in an improved understanding of the structural and stratigraphic controls on uranium mineralisation at Retortillo (and the broader region hosting the Retortillo Satellite deposits) and provided a detailed geological framework for resource estimation, hydrogeological and geotechnical studies.

Hydrogeology

Eight short (15m depth) piezometer holes were drilled at Retortillo as part of the DFS hydrogeological program during the quarter. The objective of the piezometer holes is to enable the water flow in a small creek proximal to the proposed open pit to be compared with water table in the surrounding areas. The piezometers will also be used for pumping and tracer tests.

A geophysical survey (Electrical Resistivity Tomography, 'ERT') was completed at Retortillo, with data collected on eight cross sections and four long sections. The sections have highlighted the main faults/fractures within the deposit and surrounding area. The spatial location of the fault/fracture zones will be taken into account when siting drainage boreholes around the proposed open pit.

Independent consultant, FRASA, has commenced the process of updating the three dimensional ('3D') hydrogeological model with all new information from the additional hydrogeological investigations being undertaken at Retortillo. The updated model will be used to refine the water management system developed for the site.

At Alameda, pumping tests were conducted in the north-western and eastern areas of the site in order to confirm the hydraulic conductivity within these areas and the capacity to produce a sufficient water supply for the project. The data showed high transmissivity in the northwest and lower transmissivity in the east. The results are being used to update the hydrogeological model for the site.

Metallurgical Testwork

Preparation for the three composite samples, representative of various mining phases at Retortillo, is nearing completion and it is anticipated that the six metre columns will be loaded with agglomerated material and the testwork program will commence in late July.

Permitting

A major permitting milestone was achieved during the quarter with the grant of the Exploitation Concession ('Mining Licence') for Retortillo by the Regional Government of Castilla and León (refer ASX announcement dated 24 April 2014). The Retortillo deposit forms part of the Salamanca Project and is the first resource from which production is scheduled to commence.

The grant of the Mining Licence for Retortillo is a major milestone for the Company and follows the approval of Exploitation and Reclamation and Closure Plans for the proposed mining operation submitted by Berkeley, and the completion of a number of studies and technical review sessions with relevant government agencies. The granting of the Mining Licence has also taken into account the prerequisite approval of the Company's Environmental and Social Impact Assessment ('ESIA') by the environmental authorities (the Environmental Licence for Retortillo was awarded in October 2013), and the favourable recommendation report issued by the Nuclear Safety Council.

The Mining Licence is valid for an initial period of 30 years and may be renewed for two additional periods of 30 years. It covers an area of 25.2km² and includes the entire area containing the Retortillo Mineral Resource Estimate.

With the grant of the Mining Licence, the approval processes associated with other key permits including the Initial Authorisation of the process plant as a radioactive facility and the Exceptional Authorisation for Land Use (application for reclassification from rural to industrial use) of the affected surface land area at Retortillo, may now be finalised.

The process of obtaining all other permits necessary for the development of Retortillo continued to advance during the quarter.

The Environmental Scoping Document ('ESD')for Alameda and the proposed power line to supply grid power to the site was resubmitted to the relevant authorities during the quarter. The ESD has been updated to incorporate the PFS results and inputs from the granting of the Environmental and Mining Licenses for Retortillo. The Company and its environmental consultants, MAGMA, subsequently met with the authorities and presented an overview of the ESD in early July.

Exploration - Zona 7

The next phase of drilling program at Zona 7 commenced in May and was nearing completion at the time of this report.

Zona 7 is located approximately 10km to the northwest of the proposed location of the centralised processing plant at Retortillo and currently hosts an Inferred Mineral Resource Estimate ('MRE') of 3.9 million tonnes averaging 414 ppm U₃O₈ for a contained 3.6 million pounds of U₃O₈ at a lower cut-off grade of 200 ppm U₃O₈ (refer ASX June 2012 Quarterly Report).  

The potential extension of Zona 7 to the southwest towards Las Carbas was identified as a priority drill target following a review of all available data for the regional tenements surrounding the existing resources. An 18 hole, 1,133m RC drill program was subsequently completed in mid-2013 to test this priority target. 

Assay results returned from this drilling program in August 2013 confirmed that the Zona 7 mineralisation extends a further 1,200m to the southwest of the current resource area. The drilling, which was carried out on an approximately 400m by 100m grid, essentially doubled the strike extent of the mineralised zone and it remains open. Significant high grade intersections were recorded at shallow depths (from 9m to a maximum depth of 84m), with thicknesses up to 29m. Better intercepts included 29m @ 3,391 ppm U₃O₈, 17m @ 1,260 ppm U₃O₈, 15m @ 1,392 ppm U₃O₈, 25m @ 683 ppm U₃O₈ and 13m @ 1,161 ppm U₃O₈ (refer ASX announcement dated 7 August 2013).

The current  Zona 7 program, which comprises 38 RC holes for approximately 2,750m and three DD holes for approximately 300m, is aimed at infilling the zone of mineralisation defined by the 2013 drilling and extending it further to the south-west. The program has been designed to close the existing drill pattern down to a notional 100m by 100m pattern to facilitate the estimation of a revised Inferred Mineral Resource for the prospect.

The RC drilling component of the 2014 program was recently completed, and the DD drilling will be concluded in early August. Assay results are pending.

The data obtained from both the 2013 and 2014 drilling programs will form the basis for an upgraded Inferred Mineral Resource for Zona 7, anticipated to be completed in the December quarter.

CORPORATE

At 30 June 2014, the Company had cash reserves of A$20.2 million.

The Company continues to maintain a strong focus on cost control across all areas of the business.

Competent Persons Statement

The information in this Report that relates to Exploration Results and Mineral Resources is based on information compiled by Craig Gwatkin, who is a Member of The Australian Institute of Mining and Metallurgy and was an employee of Berkeley Resources Limited at the time of initial disclosure.  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. This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.

The information in this Report that relates to the Pre-Feasibility Study is based on information compiled by Neil Senior of SENET (Pty) Ltd. Mr. Senior is a Fellow of The South African Institute of Mining and Metallurgy and 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. Senior consents to the inclusion in this Report of the matters based on his information in the form and context in which it appears. This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.

Production Target

The Production Target stated in this Report is based on the Company's Pre-Feasibility Study ('PFS') for the Salamanca Project as released to the ASX on 26 September 2013, which included the following material assumptions:

•    Minimum Life of Mine ('LOM')        11 years (including 7 years of steady state operation)

•    Mining Method                                                Open pit for Retortillo and Alameda

•    Strip Ratios                                     1:2.6 for Retortillo and 1:1.8 Alameda (ore to waste, averages over  LOM)

•    Mining Cut-off Grades                    105 ppm U₃O₈ for Retortillo and 90 ppm U₃O₈ for Alameda

•    Overall Pit Wall Slope Angles       35-45 degrees for Retortillo and 35-55 degrees for Alameda

•    Processing Method                        Heap leaching using on-off leach pads at Retortillo and Alameda, followed by uranium recovery and                                                                                      purification by solvent extraction, ammonium diuranate precipitation and calcination at Retortillo

•    Ore Processing Rates                   2.2 million tonnes per annum for Retortillo and 3.3 million tonnes per annum for Alameda during steady                                                                state operation

•    Heap Leach Feed Grades              306 ppm U₃O₈ for Retortillo and 322 ppm U₃O₈ for Alameda (averages over LOM)

•    Metallurgical Recovery                  85% for Retortillo and Alameda

•    Acid Consumption                          18 kilograms per tonne for Retortillo and Alameda

•    Mining Costs                                  US$14.50 per pound U₃O₈ for Retortillo and US$9.76 per pound U₃O₈ for Alameda (average LOM C1                                                                                      cash operating costs, assumes contract mining)

•    Processing Costs                           US$12.80 per pound U₃O₈ for Retortillo and US$10.41 per pound  U₃O₈ for Alameda (average LOM C1                                                                   cash operating costs)

•    General and Administrative Costs US$2.03 per pound U₃O₈ for Retortillo and US$1.56 per pound U₃O₈ for Alameda (average LOM C1                                                                                        cash operating costs)

•    Upfront Capital Costs                     US$95.1 million to deliver initial production at Retortillo and a further US$74.4 million at Alameda to                                                                                      achieve steady state

•    Discount Rate                                 8%

•    Uranium Price                                 US$65 per pound U₃O₈

•    Exchange Rate                               US$/€ 1.28

The PFS and Production Target were based solely on the Retortillo and Alameda Indicated Mineral Resources, being 14.4 million tonnes averaging 378 ppm U₃O₈ for a contained 12.0 million pounds U₃O₈ and 20.0 million tonnes averaging 455 ppm U₃O₈ for a contained 20.1 million pounds U₃O₈ respectively, at a lower cut-off grade of 200 ppm U₃O₈. The PFS and Production Target do not incorporate any Inferred Mineral Resources.

The Indicated Mineral Resources underpinning the Production Target were prepared by a Competent Person in accordance with the requirements in Appendix 5A (JORC Code). This information was first disclosed on 26 September 2013 under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. The Competent Person Statement relating to the Indicated Mineral Resources is above.

The Company confirms that the material assumptions underpinning the PFS and Production Target referenced in the 26 September 2013 release continue to apply and have not materially changed.

Forward Looking Statement

Statements regarding plans with respect to the Company's mineral properties are forward-looking statements. There can be no assurance that the Company's plans for development of its mineral properties will proceed as currently expected. There can also be no assurance that the Company will be able to confirm the presence of additional mineral deposits, that any mineralisation will prove to be economic or that a mine will successfully be developed on any of the Company's mineral properties.

Appendix 1: Summary of Mining Tenements

As at 30 June 2014, the Company had an interest in the following tenements:

Location	Tenement Name	Interest	Status
Spain
Salamanca	D.S.R Salamanca 28 (Alameda)	100%	Granted
	D.S.R Salamanca 29 (Villar) E.C Retortillo-Santidad	100% 100%	Granted Granted
	I.P. Abedules	100%	Granted
	I.P. Abetos	100%	Granted
	I.P. Alcornoques	100%	Granted
	I.P. Alisos	100%	Granted
	I.P. Bardal	100%	Granted
	I.P. Barquilla	100%	Granted
	I.P. Berzosa	100%	Granted
	I.P. Campillo	100%	Granted
	I.P. Castaños 2	100%	Granted
	I.P. Ciervo	100%	Granted
	I.P. Dehesa	100%	Granted
	I.P. El Águlia	100%	Granted
	I.P. Espinera	100%	Granted
	I.P. Horcajada	100%	Granted
	I.P. Mailleras	100%	Granted
	I.P. Mimbre	100%	Granted
	I.P. Oñoro	100%	Granted
	I.P. Pedreras(Fractions 1 - 4)	100%	Granted
	I.P. Alimoche	100%	Pending
	I.P. El Vaqueril	100%	Pending
	I.P. Halcón	100%	Pending
Cáceres	I.P. Almendro	100%	Granted
	I.P. Ibor	100%	Granted
	I.P. Olmos	100%	Granted
Badajoz	I.P Don Benito Este - U	100%	Pending
	I.P Don Benito Este - C	100%	Pending
	I.P Don Benito Oeste - U	100%	Pending
	I.P Don Benito Oeste - C	100%	Pending
Ciudad Real	I.P Damkina Fraccion 1	100%	Granted
	I.P Damkina Fraccion 2	100%	Granted
	I.P Damkina Fraccion 3	100%	Granted

Exploitation Concession for Retortillo-Santidad was granted during the quarter ended 30 June 2014. No tenements were acquired or disposed of during the quarter ended 30 June 2014. There were no changes to beneficial interest in any mining tenements due to Farm-in or Farm-out agreements. No beneficial interest in Farm-in or Farm-out agreements were acquired or disposed during the quarter.

 

END

 

 

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