Berkeley Eng Regulatory News (BKY)

BERKELEY ENERGIA LIMITED

NEWS RELEASE | 8 June 2016 | AIM: BKY

Premium Financing Update

Berkeley Energia Limited is pleased to announce that the equity component of the recently announced financing with Resource Capital Funds (RCF) has successfully completed.

The equity financing comprised the issue of US$5 million worth of ordinary shares in the Company at a price of 32 pence per share which represented a premium of approximately 9% to the 10-day VWAP and 15% to the 30-day VWAP, highlighting the strength of the project and its robust economics even at the current low uranium prices. The material terms of the subscription agreement are described in Appendix 1.

Previously announced as part of the financing, RCF has also agreed to provide an additional US$5 million through the sale of a 0.375% fully secured net smelter royalty over the project, with formal documentation currently being completed. The royalty is consistent with the Company's focus on minimising dilution in order to protect the equity value of its shareholders.

Managing Director Paul Atherley commented:

"The funding allows us to undertake the initial infrastructure development ahead of the commencement of main construction and financing later in the year.

In addition it has allowed us to recommence drilling at a number of the previously identified high potential exploration targets, including extensions to the Zona 7 deposit to the south and at depth.

The results of the optimization studies being undertaken as part of the definitive feasibility study to be published in the next couple of months are expected to demonstrate the Salamanca project's robust economics even at the current low uranium prices."

Key terms of the royalty financing include the following:

Cash Investment: US$5 million to Berkeley in return for the sale of a 0.375% fully secured net smelter royalty over future revenues from the Salamanca project.

Net Smelter Royalty: The royalty will be calculated based on 0.375% of revenue received by Berkeley from uranium ore sold, less permitted deductions. Any sales of uranium ore made other than on arm's length terms, will be deemed to have been made on arm's length terms at a deemed sales price.

Royalty Payments: Berkeley will pay the 0.375% net smelter royalty within 60 days of the end of each quarter.

Security: Berkeley to provide a mortgage or other forms of security including pledges or liens where applicable to RCF over its interests in the Salamanca project tenements.

Conditions Precedent: Entry into the formal documentation which is currently being finalised between the companies and satisfaction of certain other conditions including delivery and lodgement of the security to RCF.

Transfer of Interests: Berkeley may not sell, assign, transfer or dispose of part or all of the project tenements unless the incoming party executes a deed of covenant agreeing to comply with the terms of the royalty, including the provision of security over the project tenements and a guarantee and indemnity from its holding company.

Project financiers: The terms of the royalty do not restrict Berkeley's ability to incur debt or grant additional royalties, including the ability for Berkeley to grant prior ranking security in favour of third party financiers of the Salamanca project, subject to appropriate intercreditor arrangements recognising the royalty payable to RCF.

First Right of Refusal: Berkeley has a first right of refusal to purchase the royalty if RCF proposes to sell or transfer the royalty, other than a transfer to a related entity of RCF.

Undertakings: Berkeley provides RCF with various undertakings in respect of the Salamanca project including maintaining the Salamanca project tenements in good standing and in compliance with applicable laws, not commingling uranium ore from the Salamanca project tenements with other products, keeping royalty records and notifying RCF of any intention to relinquish the Salamanca project tenements to enable RCF to acquire those tenements, to the extent permitted.

RCF Information Rights: Berkeley agrees to provide RCF with rights to information such as financial statements, information relating to mining operations, the right to inspect the books and records of Berkeley relating to the Salamanca project tenements and royalty and the right to conduct technical audits of the project.

Events of Default: The events of default include non-payment by Berkeley of the royalty which is not remedied, Berkeley failing to comply with the material terms of the royalty agreement and an insolvency event occurring in relation to Berkeley. An event of default entitles RCF to enforce its security over the Salamanca project tenements.

The terms of the royalty were documented in a binding term sheet executed by Berkeley and RCF. The term sheet was executed at the same time as the subscription agreement and prior to RCF holding 10% of the ordinary shares and becoming a substantial shareholder in Berkeley. The parties agreed to enter into long form documentation incorporating the above material terms of the royalty and also include usual representations and warranties, including that Berkeley has valid title to the Salamanca project tenements and has complied with relevant laws relating to the project tenements, and other undertakings which are considered standard for a royalty of this nature.

For further information please contact:

About RCF

RCF is one of the Company's largest shareholders holding around 13.2% (upon completion of the subscription agreement) of the issued capital. Since inception, RCF has supported 148 mining companies, with projects located in 47 countries and across 29 commodities. Further information about RCF can be found on its website (www.resourcecapitalfunds.com).

RCF has a strong team of investment professionals, with wide ranging industry and technical expertise and a demonstrated history of investments in mining globally. RCF's track record is based on its ability to pick technically and commercially compelling assets and support management to achieve desired outcomes whilst remaining throughout a source of patient capital. RCF aims to partner with companies to build strong, successful and sustainable businesses and in doing so strives to earn superior returns for all shareholders.

Appendix 1: Material Terms of Completed Subscription Agreement

· Subscription Amount: US$5 million

· Subscription Price: A$0.625 (£0.32) per share

· Number of Subscription Shares issued: 11,011,700 ordinary fully paid shares

· Completion Date: 19 May 2016

· On the Completion Date, RCF paid the Subscription Amount to Berkeley and Berkeley issued the Subscription Shares to RCF (or its nominated custodian).

· The Subscription Shares are fully paid ordinary shares in Berkeley and rank equally in all respects, including for dividends, distributions, rights and other benefits, with existing shares.

· Berkeley applied for quotation of the Subscription Shares on ASX and AIM and ensured that the Subscription Shares were freely tradable following issue.

· Berkeley provided representatives and warranties to RCF including that the Subscription Shares would rank equally with existing fully paid ordinary shares, be freely tradable, that Berkeley was in compliance with its continuous disclosure obligations, there was no material change in the financial position of Berkeley since its last financial statements and there was no pending or threatened litigation against Berkley which would have a material adverse effect on the company.

· RCF provided representatives and warranties to Berkeley including that RCF made its own assessment of Berkeley and conducted its own investigations into the company in deciding to subscribe for the Subscription Shares, RCF is in compliance with all relevant laws and regulations upon entering into the subscription agreement and subscribing for the Subscription Shares (including in respect to section 606 of the Corporations Act, if applicable), RCF agrees to be bound by Berkeley's constitution upon the issue of the Subscription Shares and RCF is an 'accredited investor' (as defined in Rule 501(a) of Regulation D promulgated by the U.S. Securities Act) and has the knowledge and experience to evaluate an investment in the Subscription Shares and has the financial resources to allow it to make the investment in the Subscription Shares and to tolerate any losses therefrom.