Berkeley Energia has signed a letter of intent (LoI) with commodity trading company Interalloys Trading regarding the sale of up to one million pounds of uranium concentrate from the Salamanca mine in Spain.
Under the agreement, uranium will be sold for a period of five years when production starts. In order to secure positive margins in the early years of production, a combination of fixed and market-related pricing will apply for the agreement.
Berkeley Energia and Interalloys are currently holding talks to finalise the non-binding agreement into an offtake contract by the year-end.
Talks are also taking place with another party regarding a sales contract with similar terms to those in the Interalloys agreement.
Berkeley Energia managing director Paul Atherley said: "We are delighted to have signed an agreement over our first million pounds of offtake at contemplated pricing above $41 per pound, which would give us a very strong margin above our steady state cash cost of around $15 per pound.
"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 to a low cost producer in Europe.
"We intend to build our uranium sales book by entering into long-term offtake contracts from now until the commencement of production."
The Salamanca mine is expected to come into production in 2018.
The mine design incorporates new methods for helping minimise the environmental impact and continuous rehabilitation to enable land being used for mining and processing to be quickly restored to agricultural use afterwards.