(MENAFN- ProactiveInvestors - UK) Berkeley Energia PLC (LON:BKY) has appointed a subsidiary of the FTSE 250-listed consultant Amec Foster Wheeler (LON:AMFW) to carry out the front-end engineering and design for its Salamanca uranium mine in Spain.
MDM Technical Africa is a specialist in projects such as Berkeley's.
It will oversee this crucial execution phase, during which the plans for the site are translated into equipment procurement packages and awards to specialist subcontractors.
It will work from the blue-print provided by the company's definitive feasibility study (DFS) of Salamanca and hand in glove with the utilities giant Iberdrola and Spanish civil engineering group OHL.
Berkeley expects the mine to go into production in 2018.
Initial construction began with the re-routing of the existing electrical power line to service the project and a four-kilometre realignment of an existing road to allow for the commencement of mining of the Retortillo pit.
Managing Director Paul Atherley said: "Amec Foster Wheeler will play a crucial role in the successful development of the low cost Salamanca mine, which is the only uranium mine in the world currently in construction."
July's DFS showed that over an initial ten-year period, Salamanca can produce an average of 4.4 million pounds per year at US$13.30 per pound and cash cost of US$15.06 per pound.
It is expected to generate an average annual net profit after tax of US$116 million.
The study placed a net present value (NPV) on the operation of US$531.9mln, and upfront capital costs to build the mine were slated at US$95.7mln.
With operating costs almost exclusively in Euros and revenue coming in in US dollars, it is expected to benefit from continuing deflationary pressures in the EU.
The initial mine life of 14 years based on measured and indicated resources of 59.8 million pounds.
Exploration is aimed at converting some of the inferred 29.6 million pounds into mineable material.
'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 off-take to a low cost producer in Europe,' said MD Atherley.
Last week the AIM and ASX-listed mine developer has signed an outline agreement to supply the commodity trading firm Interalloys with the first million pounds of output from the Salamanca project.
The average selling price is expected to be above US$41 per pound. This compares favourably with the current US$25 spot price for the metal, which used in nuclear power.
It will also provide a very healthy profit margin, with the cost of production at Salamanca put at US$15mln.
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