| Fri 14 Nov 2008, 14:01 | | UUU - Uranium One Announces Results for Q3 2008 |
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UUU - Uranium One Announces Results for Q3 2008
News Release
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
NEWS RELEASE
November 14, 2008
Uranium One Announces Results for Q3 2008
Vancouver, British Columbia - Uranium One Inc. ("Uranium One") today reported
operational and financial results for the third quarter of 2008. The Company
also provided updated guidance for its operation and development projects.
The financial statements, as well as the accompanying management`s discussion
and analysis, are available for review at www.uranium1.com and should be read in
conjunction with this news release.
All figures are in US dollars unless otherwise indicated.
Highlights:
- Attributable sales of 848,100 pounds of U3O8 for Q3 2008, which was 24%
higher than attributable sales of 685,600 pounds of U3O8 in Q2 2008
- Average realized sales price during Q3 2008 of $67 per pound, generating
revenue of $56.7 million
- Earnings from mine operations for Q3 2008 were $36.6 million, an increase
of 11% from $32.9 million in Q2 2008
- Production(1) for Q3 2008 was 704,600 pounds of U3O8, a decrease of 8% from
767,100 pounds of U3O8 in Q2 2008 and an increase of 31% from 538,400
pounds of U3O8 in Q3 2007
- Joint ventures established with Mitsui & Co., Ltd. for the Company`s
Australian assets, including the Honeymoon project, subject to certain
regulatory approvals which are expected to be received before the end of
the year
- Write down of mineral interests, plant and equipment of $2.8 billion,
offset by a reduction in future income tax liabilities of $0.8 billion,
resulting in a net impairment of $2.0 billion
- Steve Magnuson succeeded Dave Hodgson as Chief Operating Officer. Mr.
Magnuson is a professional engineer with 30 years mining experience,
primarily in uranium in situ recovery (ISR) operations. Most recently, he
was Vice President of Operations for a U.S. subsidiary of Cameco
Corporation, with responsibility for ISR operations in Wyoming and Nebraska
as well as the Inkai Joint Venture in Kazakhstan. Mr. Hodgson will remain
a member of the board of directors of Uranium One.
Recent disruptions in global credit and financial markets have resulted in a
deteriorating economic climate, which led to the asset impairments outlined
above.
In response to these conditions, Uranium One has taken a number of steps to
reduce or defer previously planned capital and corporate expenditures, including
placing the Dominion Project on care and maintenance, deferring project start-up
at Hobson, obtaining a partner to fund the development of Honeymoon and
implementing significant reductions in exploration expenditure and corporate
costs across all operations. The Company will continue to re-evaluate
expenditure to ensure liquidity objectives are met.
Jean Nortier, President and CEO of Uranium One commented:
"Uranium One has responded to the current challenging economic conditions by re-
evaluating our project portfolio and focusing on our low cost assets in
Kazakhstan, while continuing to develop our key projects in other jurisdictions.
Our cash resources on hand are sufficient to continue to develop our priority
projects."
Outlook
Uranium One`s attributable production estimate for 2008 has been revised to 2.8
million pounds of U3O8 from 3.1 million pounds of U3O8 as a result of the
decision to place Dominion on care and maintenance, lower than expected
production from South Inkai due to reduced sulphuric acid deliveries and a later
than expected start-up of pilot production at Kharasan.
Total attributable production for 2009 is estimated at 3.5 million pounds,
comprising 1.8 million pounds from Akdala, 1.5 million pounds from South Inkai
and 0.2 million pounds from Kharasan. Total attributable production for 2010 is
estimated at 5.6 million pounds.
The Corporation expects the average cash cost per pound of U3O8 sold(2) at
Akdala during 2009 to be approximately $15 per pound. The cash cost per pound
of U3O8 sold at South Inkai during 2009 is expected to average $28 per pound,
decreasing to approximately $20 per pound by the end of the year.
Uranium One`s total contracts for sales of U3O8 amount to 26 million pounds, of
which 80% have weighted average floor prices, subject to escalation, of
approximately $45 per pound.
During 2009, Uranium One expects to incur capital expenditures of $21 million
for the development of assets in Wyoming and $6 million toward the costs of
constructing a sulphuric acid plant in Kazakhstan. Care and maintenance costs
at Dominion are expected to be $12 million for 2009.
Capital expenditures by Betpak Dala and Kyzylkum are funded through the joint
ventures` working capital or third party debt facilities. Subject to closing of
the joint venture transactions, Uranium One`s Australian joint ventures, which
include the Honeymoon project, will be funded from the cash commitment of
approximately $82 million (A$104 million) from Mitsui in 2009.
General and administrative costs, excluding non-cash items, are expected to be
approximately $28 million for 2009. Exploration expenditure for 2009 is
expected to be $12 million.
The first dividend from the Corporation`s Betpak Dala joint venture is expected
to be received in Q4 2008, with regular dividend payments from Betpak Dala
expected from 2009 onwards.
Directors
Subsequent to the quarter end, Messrs. William Sheriff and William Lupien
resigned as directors of Uranium One. The Corporation wishes to express its
appreciation for their service to Uranium One.
Third Quarter Financial Review
During Q3 2008 the Company sold 848,100 pounds of U3O8 at an average realized
price of $67 per pound resulting in revenue of $56.7 million, compared to sales
of 685,600 pounds of U3O8 and revenue of $49.4 million during Q2 2008.
The average cash cost per pound of U3O8 sold was $14 per pound during Q3 2008,
unchanged from Q2 2008.
Earnings from mine operations during Q3 2008 were $36.6 million, an increase of
11% over Q2 2008 earnings from mine operations of $32.9 million.
The Company wrote down mineral interests, plant and equipment by $2.8 billion in
Q3 2008, consisting of $1.8 billion on Dominion, $0.7 billion on United States
exploration properties, $0.2 billion on Honeymoon and Australian exploration,
and $0.1 billion on Hobson, La Palangana and the Shootaring Canyon mill.
The net loss from continuing operations for Q3 2008 was $2.0 billion, or $4.30
per basic and diluted share, compared to a net loss from continuing operations
in Q2 2008 of $68.2 million, or $0.15 per basic and diluted share.
Adjusted net earnings(2) for Q3 2008 were $4.3 million, or $0.01 per basic and
diluted share compared to an adjusted net loss during Q3 2007 of $15.0 million,
or $0.04 per basic and diluted share.
Consolidated cash and cash equivalents were $98.9 million as at September 30,
2008 compared to $133.2 million at June 30, 2008. Subsequent to the end of the
third quarter, the Company drew $65 million under its credit facility as an
additional internal cash reserve.
Operations Review
Akdala Uranium Mine (70%), Kazakhstan
In line with the production plan for 2008, Akdala produced 689,300 pounds of
U3O8, of which 482,400 pounds is attributable to Uranium One. The average cash
operating cost per pound of U3O8 sold was $14 during the quarter. Two new
production blocks were acidified and commissioned by the end Q3 2008 and the
well installation program for 2008 was completed with 29 wells installed during
the quarter.
The full year production estimate for Akdala attributable to Uranium One remains
1.8 million pounds U3O8 for 2008 and is expected to be unchanged at 1.8 million
pounds for 2009.
Projects Review
South Inkai Uranium Project (70%), Kazakhstan
Pre-commercial U3O8 production from South Inkai during Q3 2008 totalled 209,100
pounds, of which 146,400 pounds is attributable to Uranium One. Pre-commercial
production was lower during Q3 2008 compared to Q2 2008 due to lower than
anticipated sulphuric acid deliveries resulting from ongoing transportation and
logistics constraints in Kazakhstan.
These constraints are also expected to impact production levels in Q4 2008 and
the first half of 2009. Pre-commercial production for 2008 is now expected to
be 1,095,000 pounds of U3O8, of which 766,500 pounds of U3O8 will be
attributable to the Corporation. Production from South Inkai during 2009 is
estimated to be 2.1 million pounds of U3O8, of which 1.5 million pounds of U3O8
will be attributable to the Corporation.
Formal government approvals for industrial production at South Inkai continue to
be expected before year end, which will allow the commencement of ramp-up to
full production capacity of 5.2 million pounds of U3O8 per year.
Kharasan Uranium Project (30%), Kazakhstan
During the third quarter, pilot mining commenced at Kharasan with production
fluids from the first test production block and some of the wells in the second
production block being delivered to the processing plant. Acidification of an
additional two production blocks commenced during the quarter.
The ion exchange and desorption circuits were completed and became operational
during the third quarter. A precipitation and filtration circuit is expected to
be completed during Q4 2008.
Due to the slower than anticipated ramp-up of pilot production at Kharasan, as
well as shortages of sulphuric acid which have caused delays in acidifying new
production blocks, the Corporation now expects pre-commercial production to be
26,000 pounds of U3O8 during 2008, of which 7,800 pounds will be attributable to
Uranium One. Production from Kharasan in 2009 is estimated to be 650,000 pounds
of U3O8, of which 195,000 pounds of U3O8 will be attributable to the
Corporation.
The Kyzylkum joint venture will make an interim application for permission to
move to industrial production based on the results of an ISR operation in close
proximity to Kharasan. It is anticipated that this application process will
commence before the end of 2008 and the application should be completed during
2009. Uranium One now expects Kharasan to achieve industrial production in
2010.
United States Projects
The Corporation is continuing to advance through the permitting process for the
Moore Ranch, Antelope and JAB projects.
At Moore Ranch in the Powder River Basin of Wyoming, the NRC and WDEQ technical
reviews of the Corporation`s application to build and operate an in situ uranium
recovery facility are continuing. Uranium One continues to expect to receive
the necessary licences and permits during 2009, with production from Moore Ranch
anticipated to commence during 2010.
Delineation drilling and environmental data collection for permitting purposes
is ongoing at the Ludeman, Allemand-Ross and Peterson projects in the Powder
River Basin of Wyoming.
In the Great Divide Basin of Wyoming, the Company`s principal properties are the
Antelope and JAB projects. During Q3 2008, the Corporation submitted
applications to the NRC and the WDEQ for the licence and permits to construct
and operate an ISR facility for Antelope and JAB.
A drill program recommenced at the Antelope project during Q3 2008 with 115
holes drilled so far and a further 100 holes planned for the remainder of 2008.
In Texas, Uranium One will continue to advance its permit applications for the
La Palangana project, while proceeding to identify, explore and acquire
additional development areas to provide feedstock for the Hobson facility.
Pending receipt of all necessary permits and the identification of additional
development areas, the Corporation has decided to defer further capital
expenditure and related expenses for La Palangana.
Dominion Uranium Project (100%), South Africa
In accordance with the requirements of applicable South African legislation,
Uranium One has initiated consultations with the National Union of Mineworkers
and employees. The Company is exploring strategic alternatives available to it
regarding Dominion, including a sale or other disposition of its interest in the
project and, absent any improvement in project economics, the potential closure
of the project.
The costs associated with the suspension of operations are expected to be
approximately $32 million, with care and maintenance costs of approximately $12
million per year thereafter.
Conference Call Details
Uranium One will be hosting a conference call and webcast to discuss the third
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 1-416-915-5761 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 21288394. A replay of the
webcast will be available through a link on our website at www.uranium1.com
About Uranium One
Uranium One is one of the world`s largest publicly traded uranium producers with
a globally diversified portfolio of assets located in Kazakhstan, the United
States, South Africa and Australia.
(1) Consists 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: +1 604 601 5642
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.
For further information about Uranium One, please visit uranium1.com.
Date: 14/11/2008 14:01:01 Produced by the JSE SENS Department.
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