| Wed 13 Aug 2008, 13:28 | | UUU - Uranium One Inc - Announces results for Q2 2008 and Appoints Jean |
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UUU - Uranium One Inc - Announces results for Q2 2008 and Appoints Jean
Nortier as CEO
Uranium One Inc
(Incorporated in Canada)
(Registration number: 15096422420)
Share code on the JSE: UUU & ISIN: CA91701P1053
Share code on the TSX: UUU & ISIN: CA91701P1053
August 13, 2008
Uranium One Announces Results for Q2 2008 and Appoints Jean Nortier as CEO
Vancouver, British Columbia and Johannesburg, South Africa - Uranium One Inc.
("Uranium One") today reported that Jean Nortier has been appointed President
and Chief Executive Officer, as well as a director of the Company. Uranium
One also announced another record production quarter of 767,100 pounds of U3O8
for the second quarter of 2008, quarterly earnings from mine operations of
$32.9 million and substantial progress at its US Operations. The Company also
confirmed its 2008 production target of 3.1 million pounds U3O8.
All figures are in US dollars unless otherwise indicated.
Highlights:
- Record production(1) in Q2 2008 of 767,100 pounds of U3O8, an increase of
24% from 618,900 pounds of U3O8 in Q1 2008 and 42% from 539,100 pounds of
U3O8 in Q4 2007
- Attributable sales of 685,600 pounds of U3O8 for Q2 2008, which was 142%
more than attributable sales of 283,300 pounds of U3O8 in Q1 2008 and 70%
more than the average quarterly sales of 402,200 pounds of U3O8 per
quarter during 2007
- Earnings from mine operations of $32.9 million in Q2 2008 increased 102%
from $16.3 million in Q1 2008 and 72% from $19.2 million in Q2 2007
- Production guidance for 2008 remains unchanged at 3.1 million pounds
U3O8, comprising 1.8 million pounds from Akdala and 1.3 million pounds of
pre-commercial production from South Inkai, Dominion and Kharasan
- Sulphuric acid constraints in Kazakhstan eased during the quarter with
the commissioning of the Balkhash sulphuric acid plant in June
- Measured resources in the United States increased by 80% from 10.7
million pounds of U3O8 to 19.2 million pounds of U3O8
- Moore Ranch feasibility study completed with an after-tax NPV of $81
million. Life of mine average cash operating costs before taxes in 2008
terms, are expected to be $14 per pound of U3O8 and total cash costs are
expected to be $26 per pound of U3O8, including state taxes and royalties
- $100 million senior secured revolving credit facility concluded in June
- Realized cash proceeds of $66.7 million from the sale of non-core assets
- Appointment of Eben Swanepoel as Senior Vice President, Africa & Europe,
succeeding Robert van Niekerk who has been appointed Executive Vice
President, Technical Services
Ian Telfer, Chairman of the Board of Uranium One said:
"On behalf of the Board of Directors of Uranium One, I am pleased that Jean
has accepted his appointment as CEO of the Company. Jean`s performance as
interim CEO and in his previous roles with the Company has been outstanding.
Under his leadership, Uranium One has achieved a number of important
operational milestones, including another record quarter of production. We
have every confidence that Jean and the rest of his team will keep Uranium One
firmly on track to becoming one of the world`s largest uranium producers."
Jean Nortier, President and CEO of Uranium One commented:
"It is an honour to be leading Uranium One through the challenges and
opportunities that lie ahead. I am excited by the excellent management team
that Uranium One has attracted, our long life assets, the geographical
diversity of our production base and the dynamics of the market in which we
operate. It is encouraging that during the second quarter of 2008, Uranium
One achieved another record quarter of production totalling 767,100 pounds of
U3O8 and that our guidance for 2008 production remains unchanged at 3.1
million pounds. I am also pleased with the pace of development at our US
projects, the progress made in disposing of non-core assets and the conclusion
of a credit facility."
Management Changes
The Board of Directors of Uranium One has appointed Jean Nortier as President
and Chief Executive Officer, as well as a director of the Company. Mr.
Nortier has extensive experience with the Uranium One group and has previously
acted as Chief Financial Officer, Executive Vice-President Corporate
Development and most recently as Interim Chief Executive of the Group.
In addition, Robert van Niekerk has been appointed Executive Vice President,
Technical Services. Uranium One`s Technical Services Division is based in
Denver and has been formed to house Uranium One`s technical skills base and
will be deployed to oversee project evaluation, feasibility studies, major
capital projects, reserve and resource estimations and exploration for Uranium
One globally.
Succeeding Mr. van Niekerk, Uranium One has appointed Eben Swanepoel as Senior
Vice President, Africa and Europe. Mr. Swanepoel has over 25 years experience
in mining operations in southern Africa. From 2005 to 2007, he was General
Manager at Tati Nickel Mining Company in Botswana, where he oversaw the
successful turn-around of the open pit and trackless underground operations.
Prior to that, Mr. Swanepoel served as a Senior Project Manager for Anglo
Platinum, where he was responsible for four major trackless, narrow-reef and
open pit operations. Mr. Swanepoel holds a Masters of Engineering degree from
the University of Witswatersrand.
Financial Review
During Q2 2008 the Company sold 685,600 pounds of U3O8 at an average realized
price of $72 per pound resulting in revenue of $49.4 million, compared to
sales of 244,200 pounds of U3O8 and revenue of $23.3 million during Q2 2007.
The average cash cost per pound sold(2) was $14 per pound during Q2 2008,
compared to $12 per pound sold during Q1 2008. The higher operating expenses
during Q2 2008 are primarily due to higher sulphuric acid costs experienced
during the quarter. With the recent commissioning of a new sulphuric acid
plant in Kazakhstan, the price for sulphuric acid has decreased significantly
and the Company does not expect the cost per pound sold at Akdala to increase
further during 2008.
Earnings from mine operations during the second quarter of 2008 were $32.9
million, an increase of 102% over first quarter 2008 earnings from mine
operations of $16.3 million.
Primarily as a result of impairments recognized on non-core assets held for
sale, the net loss from continuing operations for Q2 2008 was $68.2 million,
or $0.15 per basic and diluted share, compared to a net loss from continuing
operations for Q1 2008 of $10.3 million, or $0.02 per basic and diluted share.
Adjusted net earnings(2) for Q2 2008 were $6.6 million, or $0.01 per basic and
diluted share compared to an adjusted net loss during Q1 2008 of $10.3
million, or $0.02 per basic and diluted share.
Consolidated cash and cash equivalents were $133.1 million as at June 30, 2008
compared to $160.2 million at March 31, 2008.
The Company received cash proceeds during Q2 2008 of $66.7 million through the
sale of non-core investments and will continue to seek to dispose of other
selected non-core investments, including its remaining shareholding in Aflease
Gold which has a current market value of approximately $52 million.
Also during the second quarter, Uranium One concluded a senior secured
revolving credit facility. Under the terms of the facility, the Company has
the ability to borrow up to $100 million from the lead lenders, Bank of
Montreal and The Bank of Nova Scotia. The facility has a two year term, and
may be extended for a further year with lender consent.
Operations Review
Akdala Uranium Mine (70%), Kazakhstan
In line with the production plan for 2008, Akdala produced 621,800 pounds of
U3O8, of which 435,300 pounds is attributable to Uranium One. The average
cash operating cost per pound of U3O8 sold was $14 during the quarter.
Commissioning of the precipitation and filtration circuit was completed and
the circuit is now fully operational. This enables Akdala to produce
yellowcake on site, reducing its dependency on external processing facilities,
decreasing transport lead times and reducing costs.
Projects Review
South Inkai Uranium Project (70%), Kazakhstan
Pre-commercial U3O8 production from South Inkai during Q2 2008 continued to
exceed expectations and totalled 367,300 pounds, of which 257,100 pounds is
attributable to Uranium One. This represents a 78% increase over Q1 2008 pre-
commercial U3O8 production levels of 206,400 pounds, of which 144,500 pounds
is attributable to Uranium One. Average flow rates, as well as the
concentration of uranium in solution, have shown quarter over quarter
increases since the start of pilot production in Q4 2007. As a result of the
continued out-performance of the ramp-up at South Inkai, Uranium One has
increased its attributable U3O8 production guidance for 2008 from 500,000
pounds to 910,000 pounds, assuming receipt of regulatory approval for
industrial production, which is expected during the second half of 2008.
Kharasan Uranium Project (30%), Kazakhstan
Development activities are continuing at Kharasan, but have been slower than
originally anticipated. Acidification of the first well field at Kharasan
commenced in March 2008; however, due to a slower than expected increase in
the concentration of uranium in solution, the commencement of pilot production
has been delayed. As a result, the Corporation is adjusting is 2008 pre-
commercial U3O8 production guidance for Kharasan from 220,000 pounds to 50,000
pounds.
Dominion Uranium Project (100%), South Africa
During Q2 2008 pre-commercial production from the Dominion Uranium Project was
74,700 pounds of U3O8 and 1,800 ounces of gold, compared to 42,900 pounds U3O8
and 1,200 ounces of gold during Q1 2008. Underground development during the
second quarter was 3,880 metres, an increase of 6% over the first quarter.
The underground ore blasted grade improved to 0.54 kg/tonne during the second
quarter, compared to 0.36 kg/tonne in the first quarter. Underground ore
processed through the plant totalled 94,300 tonnes during the second quarter,
an increase of 37% over the 69,000 tonnes processed during the first quarter.
The grade of underground ore delivered to the plant was 0.43 kg/tonne during
Q2 2008. Total metallurgical plant recoveries on the blended underground ore
and surface tailings material are estimated to be approximately 70% currently,
compared to 67% when last reported. Although progress is being made, the ramp-
up at Dominion continues to be slower than anticipated and the Corporation now
expects pre-commercial U3O8 production to be 320,000 pounds for the year,
instead of the 590,000 pounds previously anticipated.
Powder River Basin ISR Projects (100%), United States
In accordance with NI 43-101, a feasibility study for the Moore Ranch project
was completed by engineering consulting companies TREC, Inc. and BRS
Engineering, Inc. The study has concluded that the Moore Ranch project is
technically and economically feasible. Two alternatives were evaluated: a
satellite plant option with toll processing of uranium-bearing resins at Power
Resources Inc., and a 2 million pound per year central processing plant
("CPP") alternative. Highlights from the feasibility study (CPP alternative)
include:
- After-tax NPV at an 8% discount rate of $81 million
- After-tax IRR of 106%
- Life of mine average cash operating costs per pound of $13.70
- Life of mine average total cash costs, including royalties, of $26.30 per
pound
- Start-up capital expenditures, including pre-production costs, of $33
million
- Probable reserves at Moore Ranch of 4.3 million tons at a grade of 0.054%
containing 4.6 million pounds U3O8
- Steady state production levels of 1 million pounds per year
The economic analysis assumed a price of $64 per pound U3O8. The feasibility
study considered production from the Moore Ranch deposit only. The 1 million
pound per annum excess capacity in the central ISR processing facility could
be used for potential production from additional projects owned by Uranium One
in the Powder River Basin, but the additional resources were not considered in
the feasibility study.
The NRC and WDEQ technical reviews of the application to build and operate an
in situ uranium recovery facility at the Moore Ranch Project are currently in
progress and the Corporation expects to receive the licence and permit during
2009. Production from Moore Ranch is anticipated to commence during 2010.
Other Powder River Basin properties where delineation drilling and
environmental data collection for permitting purposes is ongoing include the
Ludeman, Allemand-Ross and Peterson projects.
Great Divide Basin ISR Projects (100%), United States
In the first week of July 2008, the Corporation submitted applications to the
US federal and state authorities for the licence and permits to construct and
operate an in situ uranium recovery facility at the Antelope and JAB projects.
A central processing facility is being planned for construction at the
Antelope project, with a satellite facility installed at JAB. The central
processing facility is planned to have a capacity of 2 million pounds of U3O8
per year. In addition to processing resin from the satellite plant at JAB, the
Antelope central processing facility would have the capacity to accept resins
from other Uranium One projects in the Great Divide Basin. Those potential
projects include Twin Buttes, Cyclone Rim, West JAB, Stewart Creek, Crooks
Creek and Bull Springs.
A drill program is anticipated to recommence at the Antelope project during Q3
2008.
Hobson and La Palangana (99%), United States
The refurbishment of the fully permitted and licenced Hobson facility has now
been successfully completed. Due to a longer than expected permitting process
for the La Palangana uranium project, pre-commercial production is now
expected to commence in 2009 and accordingly pre-commercial production of
35,000 lbs U3O8, previously estimated for late 2008, will not be attained.
This news release should be read in conjunction with Uranium One`s second
quarter 2008 Management Discussion and Analysis filed with SEDAR and available
on our website, www.uranium1.com, in the "Investors" section under "Quarterly
Reports".
Conference Call Details
Uranium One will be hosting a conference call and webcast to discuss the
second quarter 2008 results today starting at 10:00 a.m. (Eastern Time).
Participants may join the call by dialling toll free 1-800-587-1893 or 1-416-
915-5763 for local calls or calls from outside Canada and the United States.
A live webcast of the call will be available through CNW Group`s website at:
www.newswire.ca/webcast
A recording of the conference call will be available for replay for a two week
period beginning at approximately 12:00 p.m. today by dialling toll free 1-877-
289-8525 or 1-416-640-1917 for local calls or calls from outside Canada and
the United States. The pass code for the replay is 21279862. A replay of the
webcast will be available on our website at www.uranium1.com
About Uranium One
Uranium One Inc. is a Canadian-based uranium producing company with a primary
listing on the Toronto Stock Exchange and a secondary listing on the JSE
Limited (the Johannesburg stock exchange). The Corporation owns 70% of the
operating Akdala Uranium Mine in Kazakhstan and is also developing the South
Inkai and Kharasan Uranium Projects in Kazakhstan. Uranium One owns the
Dominion Uranium Project in South Africa, as well as the Honeymoon Uranium
Project in South Australia. In the United States, Uranium One has extensive
property holdings in Wyoming, Texas, Utah and New Mexico, including the
Shootaring Canyon Mill and the Hobson ISR facility.
(1) Comprised of commercial production from Akdala, as well as pre-commercial
production from South Inkai and Dominion.
(2) The Corporation has included non-GAAP performance measures: sales price
per pound of U3O8, cost per pound of U3O8 sold, adjusted net earnings /
loss and adjusted net earnings / loss per share. The Corporation reports
total cash costs on a sales basis. In the uranium mining industry, these
are common performance measures but do not have any standardized meaning,
and are non-GAAP measures. The Corporation believes that, in addition to
conventional measures prepared in accordance with GAAP, the Corporation
and certain investors use this information to evaluate the Corporation`s
performance and ability to generate cash flow. The additional information
provided herein should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with GAAP.
For further information, please contact:
Jean Nortier
Chief Executive Officer
Tel: + 27 82 418 2241
Chris Sattler
Senior Vice President, Corporate Development and Investor Relations
Tel: + 1 416 350 3657
Cautionary Statement
No stock exchange, securities commission or other regulatory authority has
approved or disapproved the information contained herein.
Forward-looking statements: This press release contains certain forward-
looking statements. Forward-looking statements include but are not limited to
those with respect to the price of uranium and gold, the estimation of mineral
resources and reserves, the realization of mineral reserve estimates, the
timing and amount of estimated future production, costs of production, capital
expenditures, costs and timing of the development of new deposits, success of
exploration activities, permitting time lines, currency fluctuations,
requirements for additional capital, government regulation of mining
operations, environmental risks, unanticipated reclamation expenses, title
disputes or claims and limitations on insurance coverage and the timing and
possible outcome of pending litigation. In certain cases, forward-looking
statements can be identified by the use of words such as "plans", "expects" or
"does not expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or "believes"
or variations of such words and phrases, or state that certain actions, events
or results "may", "could", "would", "might" or "will" be taken, occur or be
achieved. Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Uranium One to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking statements. Such risks and uncertainties include, among
others, the actual results of current exploration activities, conclusions of
economic evaluations, changes in project parameters as plans continue to be
refined, possible variations in grade and ore densities or recovery rates,
failure of plant, equipment or processes to operate as anticipated, accidents,
labour disputes or other risks of the mining industry, delays in obtaining
government approvals or financing or in completion of development or
construction activities, risks relating to the integration of acquisitions, to
international operations, to prices of uranium and gold as well as those
factors referred to in the section entitled "Risk factors" in Uranium One`s
Annual Information Form for the year ended December 31, 2007, which is
available on SEDAR at www.sedar.com, and which should be reviewed in
conjunction with this document. Although Uranium One has attempted to identify
important factors that could cause actual actions, events or results to differ
materially from those described in forward-looking statements, there may be
other factors that cause actions, events or results not to be as anticipated,
estimated or intended. There can be no assurance that forward-looking
statements will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking
statements. Uranium One expressly disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except in accordance with applicable
securities laws.
In addition, this press release uses the terms "measured resources",
"indicated resources", "inferred resources", "probable reserves" and "proven
reserves" as defined in accordance with the Canadian Institute of Mining,
Metallurgy and Petroleum (CIM) Standards on Mineral Resources and Mineral
Reserves, adopted by CIM Council on August 20, 2000, as may be amended from
time to time by the CIM, in accordance with National Instrument 43-101 -
Standards of Disclosure for Mineral Projects. A mineral resource is a
concentration or occurrence of natural, solid, inorganic or fossilized organic
material in or on the earth`s crust in such form and quantity and of such a
grade or quality that it has reasonable prospects for economic extraction. The
location, quantity, grade, geological characteristics and continuity of a
mineral resource are known, estimated or interpreted from specific geological
evidence and knowledge. A measured mineral resource is that part of a mineral
resource for which quantity, grade or quality, densities, shape and physical
characteristics can be estimated with a level of confidence sufficient to
allow the appropriate application of technical and economic parameters to
support mine planning and evaluation of the economic viability of the deposit.
The estimate is based on detailed and reliable exploration, sampling and
testing information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drillholes that are spaced
closely enough to confirm both geological and grade continuity. An indicated
mineral resource is that part of a mineral resource for which quantity, grade
or quality, densities, shape and physical characteristics can be estimated
with a level of confidence sufficient to allow the appropriate application of
technical and economic parameters to support mine planning and evaluation of
the economic viability of the deposit. The estimate is based on detailed and
reliable exploration and testing information gathered through appropriate
techniques from locations such as outcrops, trenches, pits, workings and
drillholes that are spaced closely enough for geological and grade continuity
to be reasonably assumed. An inferred mineral resource is that part of a
mineral resource for which quantity and grade or quality can be estimated on
the basis of geological evidence and limited sampling and reasonably assumed,
but not verified, geological and grade continuity. The estimate is based on
limited exploration and sampling gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drillholes. Mineral
resources are not mineral reserves and there is no assurance that any mineral
resources will ultimately be reclassified as proven or probable reserves.
Mineral resources which are not mineral reserves do not have demonstrated
economic viability. A mineral reserve is the economically mineable part of a
measured or indicated mineral resource demonstrated by at least a preliminary
feasibility study. This study must include adequate information on mining,
processing, metallurgical, economic and other relevant factors that
demonstrate, at the time of reporting, that economic extraction can be
justified. A mineral reserve includes diluting materials and allowances for
losses that may occur when the material is mined. Mineral reserves are sub-
divided in order of increasing confidence into probable and proven categories.
A probable mineral reserve is the economically mineable part of an indicated
mineral resource and, in some circumstances, a measured mineral resource
demonstrated by at least a preliminary feasibility study. This study must
include adequate information on mining, processing, metallurgical, economic
and other relevant factors that demonstrate, at the time of reporting, that
economic extraction can be justified. A proven mineral reserve iss the
economically mineable part of a measured mineral resource demonstrated by at
least a preliminary feasibility study. This study must include adequate
information on mining, processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that economic extraction
is justified.
For the purposes of National Instrument 43-101 Standards of Disclosure for
Mineral Projects of the Canadian Securities Administration (NI 43-101), Mr.
M.H.G. Heyns, Pr.SCI.Nat. (SACNASP), MSAIMM, MGSSA, Senior Vice President of
Uranium One Inc., is the qualified person who prepared or supervised the
preparation of the information that forms the basis of the scientific and
technical disclosure contained in this press release.
Investors are cautioned not to assume that all or any part of the mineral
deposits in the measured and indicated resource categories will ever be
converted into reserves. In addition, "inferred resources" have a great amount
of uncertainty as to their existence and economic and legal feasibility. It
cannot be assumed that all or any part of an Inferred mineral resource will
ever be upgraded to a higher category. Under Canadian rules, estimates of
Inferred mineral resources may not form the basis of feasibility or pre-
feasibility studies or economic studies except for preliminary assessments as
defined under NI 43-101. Investors are cautioned not to assume that all or any
part of an Inferred resource exists or is economically or legally mineable.
For further information about Uranium One, please visit uranium1.com.
Date: 13/08/2008 13:28:01 Produced by the JSE SENS Department.
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