Berkeley Energia : Quarterly Report December 2021

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NEWS RELEASE | 31 January 2022

Quarterly Report December 2021

Summary:

• Permitting Update:
  During the quarter Berkeley Energia Limited ("Berkeley" or the "Company") received formal notification from the Ministry for Ecological Transition and the Demographic Challenge ("MITECO") that it had rejected the Authorisation for Construction for the uranium concentrate plant as a radioactive facility ("NSC II") at the Company's Salamanca project. This decision followed the unfavourable NSC II report issued by the Board of the Nuclear Safety Council ("NSC") in July 2021.
  The Company strongly refutes the NSC's assessment and, in the Company's opinion, the NSC has adopted an arbitrary decision with the technical issues used as justification to issue the unfavourable report lacking in both technical and legal support.
  In this regard, Berkeley submitted an administrative appeal against MITECO's decision under Spanish law during the quarter.
  In Berkeley's strong opinion, MITECO has rejected the Company's NSC II application without following a legally established procedure and the Company believes that MITECO has infringed regulations on administrative procedures in Spain, as well as Berkeley's right of defense, which would imply that the decision on the rejection of the Company's NSC II application is not legal.
  The Company will continue to strongly defend its position in relation to the adverse resolution by MITECO and update the market on any material developments.
• OIA / SGRF Claim:
  During the quarter, the Company was served with a writ commencing legal proceedings in the Supreme Court of Victoria, brought by Singapore Mining Acquisition Co Pte Ltd ("SGRF") (a subsidiary of the Oman Investment Authority ("OIA")) in relation to the investment agreement and convertible note entered into in 2017.
  The Company is defending the legal proceedings and has filed its statement of defence to SGRF's claim. The Company also applied to have the legal proceedings transferred from the Supreme Court of Victoria to the Supreme Court of Western Australia, which occurred in January 2022. A directions hearing is currently scheduled for 8 February 2022.
  As previously advised, the Company strongly disputes the allegations and claims made by SGRF and will update the market with any material developments.
• Uranium Market:
  The outlook for nuclear power strengthened further during the quarter, with a number of important developments, including:
• • China planning at least 150 new reactors in the next 15 years, which would be more than the rest of the world has built in the past 35 years.
  • A bipartisan infrastructure bill was passed by the US Congress which includes US$6 billion to support existing zero-carbon nuclear facilities under threat of early retirement due to economic factors and US$2.5 billion for advanced nuclear reactors through the Department of Energy's Advanced Reactor Demonstration Program.

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• France vowing to build more nuclear reactors to meet climate goals, with President Macron stating, "To guarantee France's energy independence, to guarantee our country's electricity supply, and to reach our goals -- notably carbon neutrality in 2050 -- we will for the first time in decades revive the construction of nuclear reactors in our country, and continue to develop renewable energy."
• The European Commission announcing that consultations had begun with the Member States Expert Group on Sustainable Finance and the Platform on Sustainable Finance on a draft text of a "Taxonomy Complementary Delegated Act" covering gas and nuclear activities. The
  Commission stated, "there is a role for natural gas and nuclear as a means to facilitate the transition towards a predominately renewable-based future."

The Uranium spot price closed at US$42.10 per pound at the end of December having reached a high of US$47.40 per pound at the end of October. However, near-term demand slowed as the end of the quarter approached with the spot price decreasing slightly at the end of December to US$42.10 per pound.

Uranium price indicators reflective of the longer-term uranium market also rose during the quarter ending December at US$40.50 per pound (Long-Term); US$43.75 per pound (3-year forward price); and US$44.75 per pound (5-year forward price).

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Permitting Update:

During the quarter Berkeley received formal notification from MITECO that it had rejected the NSC II application at the Company's Salamanca project. This decision followed the unfavourable NSC II report issued by the NSC in July 2021.

The Company strongly refutes the NSC's assessment and, in the Company's opinion, the NSC has adopted an arbitrary decision with the technical issues used as justification to issue the unfavourable report lacking in both technical and legal support.

Berkeley submitted documentation, including an 'Improvement Report' to supplement the Company's initial NSC II application, along with the corresponding arguments that address all of the issues raised by the NSC, and a request for its reassessment by the NSC, to MITECO in late July (see announcement dated 23 July 2021).

The Improvement Report was complemented by an Independent Expert's technical opinion on the hydrogeological aspects of the project produced by Prof. Rafael Fernández Rubio, Emeritus Professor of Hydrogeology at the Polytechnic University of Madrid.

Further documentation was submitted to MITECO in early August, in which the Company, with strongly supported arguments, dismantled all of the technical issues used by the NSC as justification to issue the unfavourable report. The Company again restated that the project is compliant with all requirements for NSC II to be awarded and requested its NSC II Application be reassessed by the NSC (see announcement dated 5 August 2021).

These submissions to MITECO were made as part of the previously disclosed hearing process in relation to the unfavourable NSC II decision.

In addition, the Company requested from MITECO access to the files associated with the Authorisation for Construction and Authorisation for Dismantling and Closure for the radioactive facilities at La Haba (Badajoz) and Saelices El Chico (Salamanca), which are owned by ENUSA Industrias Avandas S.A., in order to verify and contrast the conditions approved by the competent administrative and regulatory bodies for other similar uranium projects in Spain.

Based on a detailed comparison of the different licensing files undertaken by the Company following receipt of these files, it is clear that Berkeley, in its NSC II submission, has been required to provide information that does not correspond to: (i) the regulatory framework, (ii) the scope of the current procedural stage (i.e. at the NSC II stage), and/or (iii) the criteria applied in other licensing processes for similar radioactive facilities). Accordingly, the Company considers that the NSC has acted in a discriminatory and arbitrary manner when assessing the NSC II application for the Salamanca project.

These additional arguments were detailed in a further letter sent to MITECO in which Berkeley requested that the additional arguments be incorporated into its file and, in view of the outlined deficiencies of the NSC's unfavourable report, the procedure be returned to the NSC for a new report to be issued correcting these deficiencies (see announcement dated 29 October 2021).

In Berkeley's strong opinion, MITECO has rejected the Company's NSC II Application without following the legally established procedure, as the Improvement Report has not been taken into account and sent to the NSC for its assessment, as requested on multiple occasions by the Company.

In this regard, the Company believes that MITECO have infringed regulations on administrative procedures in Spain, as well as Berkeley's right of defence, which would imply that the decision on the rejection of the Company's NSC II Application is not legal.

Taking this into account, Berkeley has submitted an administrative appeal against MITECO's decision under Spanish law during the quarter.

The Company will continue to strongly defend its position in relation to the adverse resolution by MITECO and update the market on any material developments.

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Following the receipt of MITECO's rejection of NSC II, the Company's previously submitted Initial Authorisation ('NSC I') applications for Zona 7 and Alameda have been dismissed by MITECO. In conjunction with the appeal against the rejection of NSC II, the Company will also strongly defend its position in relation to the NSC I dismissals and has submitted administrative appeals against the NSC I decisions for Alameda and Zona 7.

Project Update:

The Company continued with its commitment to health, safety and the environment as a priority.

During the upcoming March 2022 quarter, the Company will measure and report its performance against the planned 2021 objectives in the areas of health, safety, environment and sustainability.

Monitoring Programs

As a result of the decision regarding NSC II as discussed above, the Company has suspended its radiological monitoring programs and rationalised other project related activities until its appeal process against the decision is concluded.

Uranium Market:

The outlook for nuclear power strengthened further during the quarter, with a number of important developments, including:

• China planning at least 150 new reactors in the next 15 years, which would be more than the rest of the world has built in the past 35 years.
• A bipartisan infrastructure bill was passed by the US Congress which includes US$6 billion to support existing zero-carbon nuclear facilities under threat of early retirement due to economic factors and US$2.5 billion for advanced nuclear reactors through the Department of Energy's
  Advanced Reactor Demonstration Program.
• France vowing to build more nuclear reactors to meet climate goals, with President Macron stating
  "To guarantee France's energy independence, to guarantee our country's electricity supply, and to reach our goals -- notably carbon neutrality in 2050 -- we will for the first time in decades revive the construction of nuclear reactors in our country, and continue to develop renewable energy."
• The European Commission announcing that consultations had begun with the Member States Expert Group on Sustainable Finance and the Platform on Sustainable Finance on a draft text of a "Taxonomy Complementary Delegated Act" covering gas and nuclear activities. The Commission stated, "there is a role for natural gas and nuclear as a means to facilitate the transition towards a predominately renewable-based future."