Development of Salamanca uranium project on track
In releasing its half yearly report on Wednesday, Berkeley Energia (ASX:BKY LSE:BKY ) informed the market that preparations for the Salamanca uranium project located in Spain were on track with the group having completed major land acquisitions ahead of mine development, ordered the main equipment for the crushing circuit and engaged an engineering firm to undertake the Front End Engineering and Design (FEED) works.
Some of the highlights of the last six months have included the release of the Definitive Feasibility Study (DFS), which confirmed Salamanca as one of the world’s lowest cost uranium producers, as well as the negotiation of an offtake agreement with Interalloys.
The oversubscribed US$30 million capital raising attracted high profile London based institutional investors, leaving the company funded through to the construction phase while also providing working capital.
Further promising news emerged last week with the ASX announcing that BKY would be included in the All Ordinaries index effective from March 20, an important development in terms of attracting stronger interest from institutional investors.
Despite the planets aligning for BKY, its share price has retraced from a high of $1.20 in late January to trade in the vicinity of 90 cents. This could perhaps represent a buying opportunity given it arguably relates to a normal drop-off in newsflow over the Christmas period and in the lead up to the commencement of construction.
The fact remains that the same dynamics which underpinned a 50% share price increase between mid-December and late January remain relevant. A number of brokers cover the stock and the consensus 12 month price target is $1.30, perhaps supporting the fact that a resumption of news flow in 2017 will provide share price momentum.
However, it should be noted that broker projections and price targets are only estimates and may not be met. Also, historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.