Berkeley Eng Regulatory News (BKY)

15 December 2011

Update on the Berkeley-Enusa JV Uranium Project

Further to the last announcement 31 October, 2011, Berkeley Resources Limited ("Berkeley" or "Company") hereby provides an update in relation to the proposed joint venture between Berkeley and Enusa Industria Avanzadas, S. A. ("Enusa"), and outcomes from the recently completed Mining Domain Conceptual Basic Engineering Report (CBER) for the restricted Mining Domain Feasibility Study (MDFS).

The CBER was compiled by Jacobs Engineering in early November and independently reviewed by the Spanish international engineering company, Tecnicas Reunidas, before submission to Enusa. Enusa has until 23 January, 2012, to form the joint venture company, NEWCO, in accord with the Co-operation Agreement.

In accordance with the purpose provided in the Collaboration and Consortium Agreements signed between both parties, Enusa will utilise this time to audit the CBER of the Mining Domain Feasibility Study submitted by Berkeley, jointly with the additional set of documents delivered November 10th, in order to verify that the Feasibility Study demonstrates the feasibility of the Project, to a level specified within the Co-operation Agreement.

Berkeley is confident the MDFS, compiled by Jacobs and independently reviewed by Tecnicas Reunidas, demonstrates compliance with technical, environmental, legal and economic aspects for the potential processing of uranium within the Mining Domain through the Quercus plant, to a standard validly accepted by international experts in mining. Assuming the governing documents required to constitute NEWCO are agreed between Enusa and Berkeley, and completed, both parties will form the Joint Venture corporation on the scheduled date of January 23rd, 2012.

The incorporation of NEWCO triggers the payment of €20M to Enusa within 30 days of formation. NEWCO will be responsible for exploitation of the uranium resources within the State Reserves (Mining Domain) and shall be owned 90% by the Company. Berkeley has received advice from its Spanish legal advisers, Herbert Smith, that the agreements continue to be enforceable according to their terms.

The MDFS is restricted to measured and indicated resources within the Mining Domain. These Resources total 34.2mlbs U3O8 at a grade of 445ppm, with an 89% resource conversion to achieve reserves of 30.3mlbs. Confidence levels have been raised to +- 15% for capital estimates and to +- 10% for operating costs. Resources included in the CBER for the restricted MDFS make up only approximately 44% of Berkeley's total resource base, or 69% of Berkeley-Enusa JV resources within the State Reserves.

Note that the Berkeley-Enusa Joint Venture project (JV Project) is considered here as an entirely separate project from Berkeley's 100% owned 'Salamanca 1' project, for which the process of licensing and permitting has already begun, as previously announced on the 13th October 2011. Berkeley will provide a progress report from the first-stage Feasibility Study for the Salamanca 1 project towards the end of the year, with early estimates targeting Capex below €100M, and Cash Costs below US$30/lb, for an initial production rate of approximately 1.5mlb per annum of final uranium product.

As the CBER presented to ENUSA, for which an overview is attached, is restricted to only Measured and Indicated Resources within the Mining Domain, the Company is cognisant of further potential project enhancements that can be achieved via the incorporation of synergies through parallel development of the 100%-owned Salamanca 1 project.

Outcomes from the CBER for the JV Project MDFS include:

·; Mining rate of 3.5 mtpa for recovery of 2.5mlbs per annum averaged over the life of mine by tank leaching

·; Cash Operating costs of US$34.7/lb* averaged over the life of mine

·; Construction capital costs of US$228 million*

(* Assumes a US$:€ Conversion rate of 1.38)

Enquiries - Managing Director: Brendan James Tel: +34 923 193 903

Capital Markets: Martin Eales Tel: +44 20 7029 7881

Salamanca JV Project CBER Overview

Project Background

Berkeley's Feasibility Study for the Berkeley-Enusa Joint Venture Project (JV Project) commenced in May 2009, following Cabinet approval of the Co-Operation Agreement between Berkeley and ENUSA. Final Mineral Resource Estimates were announced in September 2010, based on a combination of chemical and e-grades from historical drilling, supplemented by Berkeley diamond and RC drilling with both chemical and e-grades, for the three Feasibility Study deposits. This study was focussing on a tank leach scenario with a production rate of 2.1 Mlbs (0.95 Kt) of U3O8 per annum with the Sageras, Palacios North and Alameda South deposits providing the initial feed to the Quercus Plant.

To reinforce and refine the results of the feasibility study, Berkeley continued working and developing the engineering and geological aspects during 2011. These results are reflected in the Conceptual Basic Engineering report (CBER) which also concludes the feasibility of the project (for this purpose, the study complied by Jacobs and independently reviewed by Tecnicas Reunidas has also evaluated the technical, environmental, legal and economic aspects about the potential processing of uranium of the Mining Domain through the Aguila plant, to a standard validly accepted by international experts in mining).

Mineral Resources

Spain has a long mining history and is one of the world's leading producers of various commodities. Uranium was discovered in 1957 and several significant deposits were exploited by government agencies from the 1970's up until 2000 when the Quercus Processing Plant was closed in response to persistent low uranium prices.

Uranium on the Iberian Peninsula occurs in 3 main geological settings.

·; Vein Deposits: Hosted in Pre Hercynian meta-sedimentary and granitic rocks

·; Sandstone Deposits: Hosted in Permo Triassic fluvial sediments

·; Lignite Deposits: Hosted in Tertiary basins

By far the largest concentration of economic uranium mineralisation is located in the western part of Spain within meta-sedimentary sequences that form part of the Central Iberian Zone (CIZ) of the Iberian Massif. The CIZ consists of a complex melange of Precambrian, Cambrian and Ordovican lithologies overprinted by poly-phase deformation generated before and during the Variscan and Alpine orogenies. Mineralisation is classified by the International Atomic Energy Association (IAEA) as Iberian vein-type, and occurs in a network of narrow veins, fractures and breccias as pitchblende and coffinite with minor sulphide and carbonate gangue. Individual ore deposits are generally between 0.5km and 2km in strike length with the width of mineralisation varying between 100m and 500m and usually occurring from the surface down to 100m.

Berkeley has been exploring for uranium in the Iberian Peninsula since 2005 and during this time has undertaken a comprehensive exploration programme including more than 71,000m of reverse circulation (RC) and diamond drilling, flying 6,000 line kms of airborne geophysics.

The MDFS is restricted to the Alameda South, Sageras and Palacios North deposits. Results from diamond and RC drilling at these deposits, reported in the June and September quarters, were incorporated into existing resource models and new estimates provided by AMC Consultants (UK) Limited (AMC). The net change for these three deposits was an increase of 1mlbs to 35.5mlbs U3O8 at a grade of 446ppm, with the increase essentially at Alameda South. Ninety six percent of these resources are in the Measured and Indicated categories.

Note that resources considered for the CBER study of the MDFS make up only approximately 44% of total BKY resources, or 69% of the Salamanca JV resources within the State Reserves.

Mineral Resources at Alameda South, Sageras and Palacios North

(200ppm U3O8 cut-off)

Figure 1.1 Conceptual Basic Engineering Deposit Mineral Resource Estimates

Mine Design and Ore Reserves

AMC Consultants (UK) Limited (AMC) was commissioned to prepare the mining section of the CBER. This section includes the mine geotechnical evaluation, mining cost estimation, pit optimisations, pit designs, ore reserve estimates and mine scheduling. The three deposits were scheduled to feed a process plant located at the Aguila site. Ore at Alameda will be crushed adjacent to the pit and then conveyed 10.7 km overland to the plant at Aguila.

The geotechnical evaluations resulted in similar slope designs for the three deposits. for slopes of up to 140m in height as shown in Figure 1.2.

Figure 1.2 Slope Parameters for each Deposit for Slopes up to 140m in Height

Ore Reserves were estimated by AMC using a uranium price of €46.43/lb and based on the evaluation of detailed pit designs. Results are summarised in Figure 1.3 which indicates conversion of almost 89% of Measured and Indicated resources to reserves.

Figure 1.3 Mine Inventory for the Salamanca Project

Metallurgical Processing Plant

Technical aspects of the Aguila and Alameda processing facilities are outlined and discussed together with the underpinning metallurgical testwork on which the various plant designs are based.

The main strategies to develop the process have been the following:

1) Single Processing Plant - The ore from all three open pits (Sageras, Alameda and Palacios) will be treated in one central tank leaching based processing facility to be located on the Aguila site.

2) Ore Feed Rate Driven Mining Plan - The project's combined mining production plan has now been engineered to generate a consistent ore feed rate and combined head grade to the central processing plant.

3) Overland Conveying of Primary Crushed Alameda Ore - RoM ore from the Alameda mine site will be primary crushed on site before being transferred 10,7 km via an overland conveying system to the central Aguila Ore Processing Facility.

4) Primary Crushed Ore Handling & Storage - Primary crushed ore delivered to the head of the central Aguila processing facility will be combined in a 2 hour capacity surge bin before being further processed in secondary and tertiary crushers and screen circuits and then conveyed to an 8.5 hour capacity covered mill circuit feed bunker.

5) ARD Solution Handling & Treatment - All acid rock drainage solution collection, pumping and treatment facilities were considered in the design scope of the new centralized processing facilities.

The modified process designs developed in this phase of the project offer considerable improvements over those initially proposed in the MDFS. These improvements, listed below, extend into all areas of the plant design and its associated costs;

·; Simplified and easier to operate process flowsheet

·; Lower plant CAPEX costs

·; Lower plant OPEX costs

·; Enhanced operational flexibility

·; The adaptation of a mining plan that is more in line with its associated plant design and which better recognises the capacity of grinding and processing facilities.

Whilst the original plant design has been enhanced during this phase of the project, Berkeley sees scope for further optimisation in certain areas of the plant flowsheet. These will be addressed in the detailed engineering. In addition, Berkeley believes there may be further cost saving opportunities by reviewing the mixer-settler technology currently selected as the basis for the SX circuit design. Alternative technologies, such as the combined mixer-settler, may bring added value to this area of the plant design.

Dry Tailings Management

Berkeley Minera España (BME) commissioned Golder Associates Global Ibérica in June 2011, to prepare a study for the surface containment of tailings produced from the JV Project. The conceptual basic design has been completed in accordance with international standards including: to be robust; to suit the planned operational methods for the mine and process plant; to meet the environmental requirements for a safe and secure facility within Spain; and to provide flexibility for future expansion and management options of the tailings management facilities (TMFs). These standards include: recommendations of the International Commission on Large Dams (ICOLD); and the Operation, Maintenance and Surveillance Manual for Tailings Management Facilities (Mining Association of Canada).The objectives of the study were to:

·; Provide a safe and stable tailings management facilities designed to be technically viable and environmentally appropriate;

·; Provide a tailings disposal scheme suitable for storing a total of 18.4 Mm3 for a 15 year mine life;

·; Provide an engineering design which is appropriate for future closure of the facility;

·; Present the information in a form suitable to allow a decision to be made to further develop the design and operate the project during the detailed stage.

The findings of this study are as follows:

·; Three potential sites were identified for the disposal of the dry tailings generated. The site selected complies with storage capacity requirements, minimises operation costs for the facility due to its proximity to the plant site and minimises potential liabilities both during operation and after closure.

·; The design of the TMFs has been adopted taking in consideration environmental and engineering guidelines as set out by Spanish and International regulations as well as to ensure the safe and secure containment of nearly 18.4 Mm3 of dry tailings materials, divided into main TMF 10 Mm3, and Sageras In-Pit 8.4 Mm3.

·; The design of the facility has been undertaken based on an assumed dry density for the deposited tailings of 1.9 t/m3. This assumption is considered to be conservative and, therefore, the design has significant potential to accommodate further capacity or alternatively to reduce the final height of the TMF embankments.

·; Based on the geological information available for the site, and the estimated geotechnical characteristics of the dam embankment construction materials, the design complies with international standards for resistance against geotechnical failure both under static and pseudo static conditions.

·; In order to minimise construction costs, the main TMF will be phased and will make use of excavated borrow materials or mine waste rock, suitably selected such that the engineering specifications for the project are achieved. Long term stability, both physical and chemical, will be favoured by the installation of a protective HDPE liner, as well as the installation of an embankment drainage system.

·; Consolidation of the tailings will be encouraged by the installation of an impoundment drainage system. This will also minimise the potential for contamination of the ground beneath the facility.

Environmental Studies

The environmental section of the CBER identifies the main environmental aspects of the JV Project in the light of initial results of the performed Baseline Studies. The Project assessed in the environmental study is based on preliminary mine planning information provided by Berkeley up to September, 2011 and includes the Aguila deposits (Sageras& Palacios), Alameda South deposit and the Aguila uranium processing plant (Aguila Plant).

The findings of this study are as follows:

·; The environmental management plan of the project is being developed in full compliance with the different legislation and regulations applicable to the region in which the project is located. It is fully compliant, not only with the Spanish regulations, but also with the requirements of international best practice, which includes the guidelines of The World Bank Group, the International Finance Corporation (IFC) and the Equator Principles.

·; A strict evaluation will be concluded on the habitat of protected birds in terms of Natura 2000 legislation.

·; The trans-boundary impacts of the project have been considered and are not expected to be relevant; though the EIA process provides the opportunity to fulfil the requirements established by the government authorities if deemed necessary.

·; All site derived waters have been addressed in the process design. A pilot plant treating the equivalent of the ENUSA derived contaminated site water has been operated. This pilot plant campaign confirmed that the Agueda River waste load allocations and the gazetted residual elemental assays could be achieved.

·; Project closure, in terms of the handling and processing of mine wastes and leach residues, has been an integral component of the project design.

In summary the CBER has identified all environmental issues associated with the planned JV Project and have been addressed to a level commensurate with the Study.

Closure and Long term Aspects

As a component of BME´s overall environmental stewardship for the Project, a Reclamation and Closure Plan (Plan) has been designed to meet regulatory requirements through a concurrent reclamation and closure approach. This approach provides a template for operational measures that will be employed during the life of the facility.

Final reclaimed facility surface design considers both aftercare, for radiological protection purposes, and habitat. Agricultural use was considered for the broader area.

One of the major initiatives of the Plan will be to facilitate concurrent reclamation of the waste rock dump areas and dry stacking tailings areas. This approach utilizes the development of waste rock as backfill for the pits to integrate mine waste into the mining operation. Therefore, reclamation costs will be expended as the operation progresses.

Waste rocks dumps have a design layout focus on lessening the visual impact of the mining operation from points along the road to Saelices, and the town itself.

In addition to the requirements set forth by BME, the major elements of this Plan are dictated by regulatory requirements contained in the Mining Law and Environmental Impact Assessment / Integrated Environmental Authorisation process.

In summary the Mining Domain Conceptual Basic Engineering Report has identified all Closure and long-term aspects associated with the planned JV Project and have addressed them to a level commensurate with the Study.

Capital Cost Estimate

The Capex has been compiled with information provided from various sources as highlighted below:

The estimate has been prepared based on a typical Engineering, Procurement, Construction and Management (EPCM) contract basis, with the selected EPCM contractor providing and awarding sub-contracts for and on behalf of Berkeley, Capex estimates are provided to a confidence level of +-15%.

Capital cost estimates achieved from the CBER for the MDFS are summarised below.

* The above summarised capital costs are presented at the Base Date of Q4 2011, un-escalated.

Operating Cost Estimate

Estimates of operating expenditure (Opex), provided to a confidence level of +/-10%, are based on the following:

·; Considered Mine production restricted to the Aguila (Sageras and Palacios) and Alameda South Mines only;

·; Ore processing at the current Aguila Process Plant (3.5Mtpa whole ore processing) using some of the existing Quercus Plant Facilities to produce an average of 2.5Mlbs per annum of final uranium product;

·; New designated Tailings Management Facilities at both the Aguila plant and Sageras pit.

A breakdown of the calculated overall operating cost (per tonne of ore treated), assuming contractor mining, is detailed in Figure 1.8 below.

Contract mining costs were sourced from local mining contractors. The mining costs shown include mining labour requirements and energy consumed. The quotations for contract mining are included in Appendix 3.

Processing costs are based upon Spanish personnel operating practice and unit supply price quotations. The cost given includes operating, maintenance, metallurgy laboratory and auxiliary personnel, and half of the total general cost.

Financial Analysis Key Points

·; Total Cash Costs/lb of uranium production averages €25.14/lb for the Life of Mine;

·; Processing costs/tonne of ore treated averages €9.34/t over the Life of Mine.

·; Mining cost/tonne of ore averages €5.70/t over the Life of Mine.

·; Initial Plant Capital Costs (Base date Q4 2011) to reach 3.5 Mtpa ore treatment via ore sourced from both Águila and Alameda is €165M. During the life of the project additional capital expenditure is required to prepare waste dumps and facilities that will be used at a later stage.

·; The total Capital cost of the life of the project sums €257M. The Capex figure includes a 10% contingency and sustaining capital of 0.50%;

·; The rehabilitation and closure costs for the two sites at Aguila and Alameda South are estimated at €58M;

·; Total Production Cost/lb of uranium production, including Capex, averages €37.40/lb for the Life of Mine;

CONCLUSION

This CBER, complied by Jacobs and independently reviewed by Tecnicas Reunidas, has evaluated the technical, environmental, legal and economic aspects for the potential processing of uranium within the Mining Domain through the Quercus plant, to a standard validly accepted by international experts in mining. The conclusion of this evaluation is that the project is feasible. This conclusion is aligned with the results of the Feasibility Study previously submitted to Enusa as it demonstrates the feasibility of the project.