JOHANNESBURG (miningweekly.com) – Uranium project developer Berkeley Energia is seeing a “notable” increase in public tender activity and says it expects offtake activity to intensify, once full construction of its Salamanca mine, in Spain, is under way.

In a quarterly update on Tuesday, Berkeley said that it would participate in public and private offtake opportunities with global utilities to build its offtake book this year, noting that there was potential to increase its contracted volumes by another 1.25-million pounds a year of U₃O₈ concentrate.

The Salamanca mine currently has 2.75-million pounds of U₃O₈ concentrate under long-term contracts over the first six years of production.

The Oman sovereign wealth fund, which has made a $120-million strategic investment in the mine, has the right to match any future long-term offtake transactions.

“The company has maintained its preference to combine fixed and market-related pricing across its contracts in order to secure positive margins in the early years of production, while ensuring the company remains exposed to potentially higher prices in the future,” Berkeley stated.

Berkeley added that it believed the Salamanca mine would enter production at the time when the market would tip into a supply/demand deficit.

“US utilities looking to re-contract will be competing with Chinese and Japanese reactor demand, which may lead to higher spot and term contract prices,” the company predicted.

The uranium price has been crawling sideways at the $20/lb-mark amid low demand and an acute oversupply, prompting two of the world’s largest producers – Kazakhstan’s Kazatomprom and Canada’s Cameco – to slash supply.

Berkeley said it believed the production cuts might be the turning point for the uranium market.

The firm is spending €82.3-million on building the Salamanca mine, which will produce 4.4-million pounds a year over ten years – placing the company among the top-ten global uranium producers.