LONDON--Berkeley Energia (BKY.LN) Monday said it has signed a binding off-take agreement with Interalloys Trading Ltd. to sell the first production from its Salamanca uranium mine in Spain.

The parties have converted a previously announced letter of intent into a binding agreement that includes a doubling of annual contracted volumes to a total of 2 million pounds ($2.5 million) over a five-year period. The potential exists to increase annual volumes further as well as extend the contract to a total of GBP3 million.

Berkeley is in talks with other potential off-takers about contracts with terms similar to those outlined in the Interalloys Agreement, with pricing at or around long-term benchmark levels for term contracts.

While uranium prices may remain flat in the near-term, from 2018, when Salamanca is scheduled to come into production, Berkeley said it expects the market to be dominated by U.S. utilities looking to re-contract, who will also be competing with Chinese new reactor demand, which may lead to higher spot and term contract prices.

"We're receiving growing interest from major utilities looking to diversify their off-take from a low-cost producer in Europe," Managing Director Paul Atherley said.

Shares at 0847 GMT were up 1.5 pence, or 2%, at 75 pence.

Write to Philip Waller at philip.waller@wsj.com

(END) Dow Jones Newswires

November 28, 2016 04:27 ET (09:27 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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