Increase in grade expected to boost economics

The Retortillo deposits lie on the Exploitation Concession  (Mining Licence) CE 6605-10 which is 100% owned by Berkeley Minera España S.L., a wholly owned subsidiary of Berkeley Resources Limited.

The Exploitation Concession is valid for an initial period of 30 years and may be renewed for two additional periods of 30 years. It covers an area of 25.2km² and includes the entire area containing the Retortillo mineralisation.

No historical sites or national parks are located within the Concession.

Tenure in the form of an Exploitation Concession has been granted and is considered secure. There are no known impediments to obtaining a licence to operate in this area.

Previous exploration at Retortillo was completed initially by JEN and ENUSA, both Spanish state run companies, from the late 1950's through to the mid 1980's. Work completed by JEN and ENUSA included mapping, radiometric surveys, trenching, RC and DD drilling.

A detailed data assessment and verification of the historical data supplied by JEN and ENUSA has been undertaken by Berkeley. No significant issues with the data were detected.

The uranium mineralisation is hosted within Ordovician metasediments adjacent to granite. The mineralisation typically occurs as a sub-horizontal to shallowly dipping layer occurring between surface and 90m depth. The style of the uranium mineralisation includes veins, stockwork and disseminated mineralisation in joint/fracture filling associated with brittle deformation. Uraninite and coffinite are the primary uranium minerals. Secondary uranium mineralisation is developed in "supergene-like" tabular zones corresponding to the depth of weathering. Most of the mineralisation is hosted within totally and partially weathered metasediment. This deposit falls into the category defined by the International Atomic Energy Association (IAEA) as Vein Type, Sub Type Iberian Type.

No additional drilling data is available. All drilling data has been presented in previous ASX releases, with the most recent being April 2015.

No changes have been made to any of the drilling data reported in previous ASX releases. The purpose of this release is presentation of an update to the mineral resource estimate based on improved definition of the mineral resource at the selected mining unit block size of 5 x 5 x 6m (X x Y x Z).

Previously reported drill intersections are based on chemical assay data and are calculated using a 200ppm U₃O₈ cut-off, no high grade cut, and may include up to 2m of internal dilution.

High grade intervals that are internal to broader zones of uranium mineralisation are reported as included intervals.

No metal equivalent values were used.

All drilling was planned in such a way as to intersect expected mineralisation in a perpendicular manner. The uranium mineralisation is interpreted to be flat lying to shallowly dipping so all of the RC holes were drilled vertically.

The reported down-hole intervals are interpreted to approximate true widths.

Appropriate diagrams, including a drill plan and cross sections, are included in the main body of this release.

No new exploration results are available. All drilling and other information has been reported in previous ASX releases.

Down-hole gamma logging of all Berkeley holes was undertaken to provide eU₃O₈ data. Comparison of eU₃O₈ data with chemical assay data have shown that on average eU₃O₈ tends to underestimate at higher grades (>500ppm) and overestimate at lower grades (<200ppm). The Mineral Resource Estimate (MRE) reported in this release was estimated using chemical assay data as the primary method for grade estimation in the modelling process. eU₃O₈ data was used for grade estimation process when chemical assay data was not available.

The Company has reported the results of a PFS for the Salamanca Project which includes the Retortillo deposits (refer ASX Announcement dated 26 September 2013). The PFS included hydrogeological, geotechnical, mining, metallurgical and process engineering studies, as well as environmental impact assessments.

Further work planned for the Retortillo deposits includes additional infill drilling focused on improving geological confidence and resource classification of open pit areas scheduled to be mined post the initial two years of production (based on the PFS).

Geological studies will include detailed interpretation of lithology, structure and weathering and an assessment of potential relationships between these factors and uranium grade distribution.

Further work is also planned on a number of other exploration targets within the Retortillo Region.

N/A

Drill hole data is stored in a password protected relational database (Access). Drill data recorded in digital Excel templates is transferred to the database by the project geologist who is responsible for reviewing and validating the data. Assay data is received from the external laboratories in digital format and is loaded directly into the database after QA/QC has been checked and validates the rest of assays.

Geological logging is restricted to appropriate codes relevant to the local geology, mineralisation, weathering and alteration setting. A copy of the master database is linked to Surpac mining software for Mineral Resource Estimation.

Database validation checks including collar survey position, down hole survey control, assay limits, eU₃O₈ profiles, sample intervals and logging codes are completed prior to the data being transferred to the master database.

Sampling techniques and procedures, as well as QA/QC data, are reviewed internally an ongoing basis. Malcolm Titley, (CP, Geology Consultant, Maja Mining Limited) has reviewed the sampling techniques, procedures, data and resource estimation methodology. He has undertaken a number of site visits, the latest being in August 2015, to review and inspect the application of these procedures. He concludes that the sampling and analytical results available are appropriate for estimation of the Mineral Resource.

Site visits have been undertaken.

The confidence of the geological interpretation is appropriate for the current level of resource estimation. The resource is defined within mineralised envelopes which encompass all zones of significant mineralisation.

Geology and mineralisation interpretation is based on geological logging and sample assays derived from RC and DD drilling, along with cross sectional interpretations which include surface mapping information and geophysical studies.

Structural studies show dips of structures vary between 50° and 80° however; the uranium mineralisation has undergone supergene remobilisation and is interpreted to be flat lying to shallowly dipping and generally within 100m from surface.

On the deposit scale the uranium grade is controlled by both lithology and structure, while on a local scale the grade is interpreted to be influenced by supergene processes.

Geological logging and uranium assay of samples from drill holes has demonstrated the continuity of the grade and lithology between mineralised sections. Breaks in continuity are likely due to structural offsets, some of which have been observed or interpreted from surface mapping.

The main deposit (including a small satellite zone) covers an area of approximately 3km by 0.6km. A second smaller deposit to the NW covers an area of approximately 2.3km by 0.2km. The mineralisation at both deposits generally occurs within 100m of surface.

A mineralised envelope is created encompassing all zones of significant mineralisation. A number of different domains have been interpreted based on a broad mineralisation envelope at a nominal cut-off of 40ppm U₃O₈.

Geostatistical variogram modelling was used to determine appropriate parameters for estimation of uranium grade using Ordinary Kriging (OK) (for all Domains) followed by the application of Uniform Conditioning (UC) and Local Uniform Conditioning (LUC) using Isatis Software, in order to simulate the grade tonnage distribution based on a Selective Mining Unit (SMU) of 5m x 5m x 6m for all Domains..

Surpac software was used for mineralisation volume interpretation and Isatis for uranium grade estimation.

Four sources of drillhole uranium grade data was used, the proportions of data within the mineralised volume by length are:

·     Chemical U₃O₈ (ppm): 56.3%

·     Radiometric Equivalent (ppm): 30.6%

·     Portable XRF (ppm): 0.8%

·     Background waste values based on XRF and Gamma probe results (10ppm U₃O₈): 12.3%

A number of holes which were used to determine the mineralisation volume were excluded from the grade estimation process. These consisted of 32 JEN holes where the radiometric equivalent value indicated mineralisation but the eU₃O₈ value was composited over the entire mineralisation length, resulting in these holes being unsuitable for local grade estimation.

The drill hole spacing is nominally 50m by 50m, with infill spacing at 35m by 35m within the Measured Resource areas and part of the Indicated Resource.

Eight mineralisation domains were identified at Retortillo (R2, R3, R4, R5, R6, R7, S1 and S2). 1m samples composites were used to estimate grade into 20m by 20m by 6m parent blocks with 5m by 5m by 6m blocks used for UC selectivity conditioning.

In order to reduce local bias due to extreme high grades, top cuts were applied:

·      R2: 1,100ppmU₃O₈

·      R3: 1,800ppmU₃O₈

·      R4: not applied

·      R5: 3,800ppmU₃O₈

·      R6: 2,000ppmU₃O₈

·      R7: not applied

·      S1: 2,500ppmU₃O₈

·      S2: 2,500ppmU₃O₈

Appropriate search volumes, minimum and maximum sample numbers and top cutting strategy were used based on the results of Kriging Neighbourhood Analysis.The variogram nugget % and maximum ranges in the order of major, semi-major and minorper domain in meters are presented below:

·      R2: 31%/74/72/55

·      R3: 18%/105/90/23

·      R4: 36%/44/31/25 taken from R5 as insufficient data

·      R5: 36%/44/31/25

·      R6: 32%/79/50/109

·      R7: 32%/79/50/109 taken from R6 as insufficient data

·      S1: 31%/65/85/38

·      S2: 30%/128/85/27

In-situ dry bulk densities were assigned based on zones of weathering intensity and used to estimate tonnage.

The current resource estimate was compared with the previous resource estimate (April 2015) which was based on a more constrained mineralisation envelope and Ordinary Kriging grade estimation with no adjustment for mining selectivity. The updated MRE has 4% less tonnes with a 15% higher grade for a 7% increase in metal. This increase in grade and metal was anticipated as a result of modelling the mineralisation using increased selectivity at the 200 ppm grade cut-off.

No mining production has taken place at Retortillo.

The resource model only estimates uranium.

At this stage, there are no deleterious elements or other non-grade variables identified as being of economic significance at Retortillo.

The uranium grade is estimated into the 20m (X) by 20m (Y) by 6m (Z) blocks. This compares to the average drill spacing of 35m by 35m in X and Y and an assumed mining bench height of 6m. UC and LUC were applied to the model based on PFS designed mining selectivity at a block size of 5m x 5m x 6m.

Selective mining unit dimensions are based on using a blasting and sampling pattern which is around 5m x 5m combined with open pit mining equipment suitable for controlled excavation on a 3 to 6m mining flitch height, using 125 tonnes backhoe excavators and 100 tonne dump trucks.

Uranium is the only economic metals estimated in the current resource model.

Geological interpretation controlled the volume of the resource estimate by restricting the interpretation of the mineralisation volume and associated samples to material with continuity above a nominal 40ppm U₃O₈ grade.

The domains are based on geology, structure and uranium grade with defined zones of mineralisation that show continuity along and across strike.

A further division of the model into completely weathered, partially weathered and fresh rock is applied by triangulated surfaces interpreted from the logging of the drill samples. This division is only applied for density purposes. There is no relationship or boundary effect between mineralisation and grade and weathering intensity.

Uranium grade distribution exhibits a strong positive skewness, so a top cut was applied to reduce local bias by extreme grades outliers - nominally approximating the 97.5 population percentile. The domains were assessed independently and a top cut grade was determined for each domain.

Validation of the MRE included visual inspection of the grade distribution compared to the drill data, comparison of block model statistics to the sample statistics and generation of swath plots. These confirmed that the MRE appropriately represents the grade and tonnage distribution of the uranium mineralisation at the confidence levels reported. A detailed review of the mineralisation domains, drilling data and resultant grade model  using Datamine software was completed by the CP, which compared favourably with the estimate completed using Surpac and Isatis software.

The resource tonnage is reported on a dry bulk density basis. In-situ dry bulk density measurements were completed on dry core and on RC material using a solid-fluid pycnometer. Results were corrected for moisture content. Sample grades are reported using dry weight.

The MRE has been reported using a 200ppm U₃O₈ cut-off grade. The Salamanca Project PFS demonstrated that a ~100ppm U₃O₈ cut-off is economic. Based on the current uranium market, reporting of the MRE at a 200ppm cut-off grade is both justifiable and consistent with previous published MRE's for this style of mineralisation.

The PFS demonstrated that the Retortillo resource can potentially be extracted using open pit mining methods, with the recovery of uranium through the application of acid heap leach methods.

Indicative parameters used for pit optimisation purposes were:

Uranium selling price: US$65/lb U₃O₈,

Total Mining Cost: US$14.5/lb U₃O₈

Mining recovery: 98%

Mining dilution: 2%

Plant Process Cost: US$12.8/lb U₃O₈

Recovery U₃O₈: 85%

Royalties: 1.2%

Berkeley has completed a number of metallurgical testwork programs for Retortillo as part of the scoping, PFS and definitive feasibility studies, including column leach tests at commercial height (6m). These tests have shown that heap leaching can achieve uranium recoveries of at least 85%.

Berkeley was granted a Favourable Declaration of Environmental Impact ('Environmental Licence') for Retortillo in October 2013 following submission of the Company's Environmental and Social Impact Assessment ('ESIA') together with the Exploitation Plan and the Reclamation and Closure Plan.

The Company's waste management and rehabilitation assumptions were detailed in the ESIA and Reclamation and Closure Plan.

Spent ore from the on-off heap leach pads ('ripios') will initially be stored on the heap leach pads and subsequently backfilled into isolated and lined (clay layer and HDPE liner) areas within the mined pits on a continuous basis once sufficient space is available.

Acid Rock Drainage (ARD) and Natural Occurring Radioactive Materials (NORM) waste will be placed onto temporary dumps designed with the required isolation system (clay layer and HDPE liner) until the waste is backfilled into the mined pits towards the end of the mine life. At the end of the mine life, the entire volume of ripios, ARD and NORM waste will be fully encapsulated within the mined pits, and the surface rehabilitated as per the existing profile and vegetation.

Bulk density values were derived from 477 core and solid fluid pycnometer measurements.

The in-situ dry bulk density values are:

·      Completely weathered: 2.28g/cm³

·      Partially weathered: 2.39g/cm³

·      Fresh rock: 2.62g/cm³

Fresh and slightly weathered rock is competent enough to ensure the method used takes into account any rock porosity. A factor derived from comparison with DD core was used to adjust the weathered material.

The density measurements have been classified by weathering intensity, defined by the geological logging. Three dominant zones have been identified - completely weathered, partially weathered and fresh rock. The average of the density data from each zone was applied in the resource model.

The reported MRE has been classified as Measured, Indicated or Inferred after consideration of the following:

·      Adequate geological evidence and drill hole sampling is available to imply geological and grade continuity.

·      Adequate in-situ dry bulk density data is available to estimate appropriate tonnage factors.

·      Adequate mining, metallurgy and processing knowledge to imply potential prospect for eventual economic extraction.

The reported MRE has been classified with consideration of the quality and reliability of the raw data, the confidence of the geological interpretation, the number and spacing of intercepts through the mineralised zones and knowledge of grade continuity gained from observation and geostatistical analysis.

The reported MRE and its classification are consistent with the CP's view of the deposit. The CP was responsible for determining the resource classification.

An external review was undertaken by SRK on the MRE reported in July 2012. The review concluded that the estimate was considered to reflect the understanding of the geology and grade continuity.

Malcolm Titley (Geology Consultant, Maja Mining Limited) reviewed this and the previous MRE reported in April 2015 and concluded that the estimates appropriately represented the grade and tonnage distribution of uranium mineralisation at confidence levels commensurate with the reported resource classification.

The confidence level is reflected in the resource classification category chosen for the reported MRE. The definition of current Mineral Resources is appropriate for the level of study and the geological confidence imparted by the drilling grid.

The reported MRE is considered appropriate and representative of the grade and tonnage at the 200ppm U₃O₈ cut-off grade. The application of geostatistical methods has helped to increase the confidence of the model and quantify the relative accuracy of the resource on a global scale. It relies on historical data being of similar standard as recent infill drilling. The relevant tonnages and grade are variable on a local scale and have been simulated using UC and LUC for SMU dimensions of 5m by 5m by 6m.

The CP considers that the drilling grid in the area that was the focus of the 2014 infill drilling campaign is sufficient for classification of a Measured Mineral Resource.

The Retortillo deposits are likely to have local variability. The global assessment is an indication of the average tonnages and grade estimate for each geological domain.

No production has been carried out at Retortillo.