Berkeley Energia has received shareholder approval for a strategic investment agreement with the sovereign wealth fund of the Sultanate of Oman to finance the development of the Salamanca mine.
Under the investment agreement, Berkeley has received a $120m fund commitment.
Following the fulfilment of relevant conditions, the company has received $65m in initial funding in the form of an interest-free, unsecured loan.
The investment will be used to fully fund the capital costs required for production at the Salamanca mine, which is under construction.
Berkeley Energia managing director Paul Atherley said: “We are delighted to have now closed the Oman financing transaction, which fully de-risks the capital costs required to bring the Salamanca mine into production.
“With the funding in place, we will now award the main engineering, procurement, and construction (EPC) and mining contracts and begin major earthworks in the new year, focusing first on the installation of the crushing circuit.
“The Salamanca mine, with some of the lowest operating costs globally, is being constructed at the bottom of the uranium price cycle and when production commences the market is expected to be dominated by US utilities looking to re-contract, who will at the same time be competing with Chinese and Japanese reactor demand.”
Once the mine is commissioned, the $65m loan can be converted into ordinary shares at 50p a share.
If the Oman fund exercises an options package at an average price of 85 pence per share, it is expected to result in an additional $55m.
Based on a definitive feasibility study, the Salamanca project is estimated to produce an average of 4.4Mlb of uranium a year over an initial ten-year period.
The project also has a net present value (NPV) of $531.9m and an internal rate of return (IRR) of 60%.