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UUU - Uranium One Inc - Interim Consolidated Financial Statements For The
Three And Nine Months Ended September 30, 2009 (Unaudited)
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
Interim Consolidated Financial Statements for the three and nine months
ended September 30, 2009 (Unaudited)
Uranium One Inc.
Interim Consolidated Balance Sheets - Unaudited
As at September 30, 2009 and December 31, 2008
(in United States dollars)
Sep 30, Dec 31,
2009 2008
Notes $`000 $`000
ASSETS
Current assets
Cash and cash equivalents 13 170,713 176,225
Accounts and other receivables 32,724 39,926
Current portion of loans to joint 4.2 - 19,158
ventures
Inventories 5 57,009 17,390
Other assets 7 21,967 12,043
282,413 264,742
Non-current assets
Mineral interests, plant and equipment 6 1,226,804 1,285,415
Loans to joint ventures 4.2 26,327 14,000
Other assets 7 29,885 62,976
Assets held for sale 3.3 60,099 -
1,343,115 1,362,391
Total assets 1,625,528 1,627,133
LIABILITIES
Current liabilities
Accounts payable and accrued 26,947 47,423
liabilities
Uranium concentrates loans 7 20,221 -
Income taxes payable 7,298 12,639
Current portion of long term debt 8 62,880 -
117,346 60,062
Non-current liabilities
Long term debt 8 - 61,275
Convertible debentures 136,802 118,042
Asset retirement obligations 7,112 12,999
Future income tax liabilities 291,908 375,293
Other long term liabilities 50,895 48,924
Assets held for sale 3.3 13,901 -
500,618 616,533
SHAREHOLDERS` EQUITY
Share capital 9 3,525,161 3,522,824
Contributed surplus 10 135,170 131,602
Equity component of convertible 46,480 46,480
debentures
Accumulated other comprehensive income 19,101 (247,708)
/ (loss)
Deficit (2,718,348) (2,502,660)
1,007,564 950,538
Total shareholders` equity and 1,625,528 1,627,133
liabilities
Basis of presentation and principles of consolidation (note 2.1),
commitments (note 3.1 and 3.2) and contingencies (note 3.1 and 3.2)
The accompanying notes form an integral part of these Interim Consolidated
Financial Statements
Uranium One Inc.
Interim Consolidated Statements of Operations - Unaudited
For the three and nine months ended September 30, 2009 and September 30,
2008
(in United States dollars)
Three months ended Nine months ended
Sep 30, Sep 30, 2008 Sep 30, 2009 Sep 30, 2008
2009
Notes $`000 $`000 $`000 $`000
Revenues 21,333 56,723 82,859 128,630
Operating (6,331) (11,793) (28,067) (24,572)
expenses
Depreciation (5,576) (8,305) (22,858) (18,196)
and depletion
Earnings from 9,426 36,625 31,934 85,862
mine operations
General and (9,013) (10,592) (27,163) (39,821)
administrative
(1)
Exploration (2,292) (5,388) (6,762) (12,103)
expense
Impairment of 3.3 (8,969) (2,830,978) (260,033) (2,936,067)
mineral
interests,
plant and
equipment
Care and (4,059) - (11,653) -
maintenance
Operating loss (14,907) (2,810,333) (273,677) (2,902,129)
Interest and 11 (2,165) (2,483) (5,859) (4,305)
other
Gain on sale of 134 - 126 7,467
available for
sale securities
Foreign 12 (6,442) (2,809) 62,749 (2,995)
exchange (loss)
/ gain
Other 1,596 (835) 1,400 809
Loss from (21,784) (2,816,460) (215,261) (2,901,153)
continuing
operations
before income
taxes
Current income (3,836) (16,023) (18,683) (39,934)
tax expense
Future income 10,311 818,799 16,265 848,895
tax recovery
Loss from (15,309) (2,013,684) (217,679) (2,092,192)
continuing
operations
Earnings / 7 3,408 (567) 1,991 (104,849)
(loss) from
discontinued
operations
Net loss (11,901) (2,014,251) (215,688) (2,197,041)
(1) Stock 10 1,926 2,963 5,690 13,560
option and
restricted
share expense
(non-cash)
included in
general and
administrative
Loss per share
from continuing
operations
Basic and (0.03) (4.30) (0.46) (4.47)
diluted
Earnings /
(loss) per
share from
discontinued
operations
Basic and 0.01 (0.00) 0.00 (0.22)
diluted
Net loss per
share
Basic and (0.03) (4.30) (0.46) (4.69)
diluted
Weighted
average number
of shares (in
thousands)
Basic and 14 469,799 468,518 469,702 468,047
diluted
The accompanying notes form an integral part of these Interim Consolidated
Financial Statements
Uranium One Inc.
Interim Consolidated Statements of Changes in Equity - Unaudited
As at September 30, 2009 and December 31, 2008
(in United States dollars)
Share capital Contributed Equity component
$`000 surplus of convertible
$`000 debentures
$`000
Balance as at January 3,496,884 134,387 46,480
1, 2008
Net loss for the year - - -
Stock options and - 15,423 -
restricted shares
vested
Exercise of warrants 15,791 (11,460) -
Exercise of stock 10,149 (6,748) -
options and
restricted shares
Unrealized loss - - -
recognized on
translation of self-
sustaining foreign
operations
Unrealized loss - - -
recognized on
translation of self-
sustaining foreign
discontinued
operations
Realized loss on sale - - -
of Gold One1
Fair value - - -
adjustments on
available for sale
securities and
realized loss on sale
Balance as at 3,522,824 131,602 46,480
December 31, 2008
Net loss for the - - -
period
Stock options and - 5,690 -
restricted shares
vested
Exercise of stock 2,337 (2,122) -
options and
restricted shares
Unrealized gain - - -
recognized on
translation of self-
sustaining foreign
operations
Realized loss on sale - - -
of Gold One1
Fair value - - -
adjustments on
available for sale
securities and
realized gain on sale
Realized loss on sale - - -
of Uranium One Africa
(note 3.3)
Balance as at 3,525,161 135,170 46,480
September 30, 2009
Accumulated Deficit Total
other comprehen-$`000 $`000
sive income /
(loss)
$`000
Balance as at January 1, 51,967 (46,813) 3,682,905
2008
Net loss for the year - (2,455,847) (2,455,847)
Stock options and - - 15,423
restricted shares vested
Exercise of warrants - - 4,331
Exercise of stock options - - 3,401
and restricted shares
Unrealized loss recognized (282,170) - (282,170)
on translation of self-
sustaining foreign
operations
Unrealized loss recognized (27,480) - (27,480)
on translation of self-
sustaining foreign
discontinued operations
Realized loss on sale of 10,163 - 10,163
Gold One1
Fair value adjustments on (188) - (188)
available for sale
securities and realized
loss on sale
Balance as at December 31, (247,708) (2,502,660) 950,538
2008
Net loss for the period - (215,688) (215,688)
Stock options and - - 5,690
restricted shares vested
Exercise of stock options - 215
and restricted shares
Unrealized gain recognized 19,198 - 19,198
on translation of self-
sustaining foreign
operations
Realized loss on sale of 13,073 - 13,073
Gold One1
Fair value adjustments on 25 - 25
available for sale
securities and realized
gain on sale
Realized loss on sale of 234,513 - 234,513
Uranium One Africa (note
3.3)
Balance as at September 30, 19,101 (2,718,348) 1,007,564
2009
The accompanying notes form an integral part of these Interim Consolidated
Financial Statements
(1) Gold One International Limited (formerly Aflease Gold)
Uranium One Inc.
Interim Consolidated Statements of Comprehensive Income / (Loss) - Unaudited
For the three and nine months ended September 30, 2009 and September 30,
2008
(in United States dollars)
Three months ended Nine months ended
Notes Sep 30, 2009 Sep 30, 2008 Sep 30, Sep 30, 2008
2009
$`000 $`000 $`000 $`000
Net loss (11,901) (2,014,251) (215,688) (2,197,041)
Unrealized gain / 6,307 (121,005) 19,198 (285,645)
(loss) recognized
on translation of
self-sustaining
foreign operations
Unrealized loss - (1,899) - (27,969)
recognized on
translation of
self-sustaining
foreign
discontinued
operations
Realized loss on 1,690 - 13,073 9,920
sale of Gold One
Realized loss on 3.3 - - 234,513 -
sale of Uranium
One Africa
Fair value (282) (1,272) 25 (2,401)
adjustments on and
realized loss on
sale of available
for sale
securities, net of
tax
Comprehensive (4,186) (2,138,427) 51,121 (2,503,136)
(loss) / income
Interim Consolidated Statements of Accumulated Other Income / (Loss) -
Unaudited
As at September 30, 2009 and December 31, 2008
(in United States dollars)
Sep 30, Dec 31,
2009 2008
$`000 $`000
Accumulated other comprehensive (loss) / (247,708) 51,967
income at January 1
Other comprehensive income / (loss) for 266,809 (299,675)
the period
19,101 (247,708)
Components of accumulated other
comprehensive loss at the end of the
period:
Unrealized foreign exchange adjustment - 19,076 (234,634)
continuing operations
Unrealized foreign exchange adjustment - - (13,074)
discontinued operations
Available for sale marketable securities 25 -
and investments
19,101 (247,708)
The accompanying notes form an integral part of these Interim Consolidated
Financial Statements
Uranium One Inc.
Interim Consolidated Statements of Cash Flows - Unaudited
For the three and nine months ended September 30, 2009 and September 30,
2008
(in United States dollars)
Three months ended Nine months ended
Sep 30, Sep 30, 2008 Sep 30, Sep 30, 2008
2009 2009
Notes $`000 $`000 $`000 $`000
Net earnings / (15,309) (2,013,684) (217,679) (2,092,192)
(loss) from
continuing
operations
Items not
affecting cash:
- Depreciation and 5,576 8,305 22,858 18,196
depletion
- Impairment of 8,969 2,830,978 260,033 2,936,067
mineral interests,
plant and
equipment
- Stock option and 10 1,926 2,963 5,690 13,560
restricted share
expense
- Interest accrued 2,722 4,438 6,401 8,788
on loans and
debentures
- Unrealized 12 7,561 1,737 (60,560) (1,907)
foreign exchange
loss / (gain)
- Future income (10,311) (818,799) (16,265) (848,895)
tax recovery
- Gain on sale of (134) - (126) (7,467)
available for sale
securities
- Other 240 1,540 1,769 1,735
Movement in non- 13 6,880 8,993 (120) 4,415
cash working
capital
Cash flows from 8,120 26,471 2,001 32,300
operating
activities
Acquisition of (22,737) (63,833) (50,443) (186,270)
mineral interests,
plant and
equipment
Advance cash (360) - (3,526) -
payment for other
assets
Cash advance for - - (5,385) -
sulphuric acid
plant investment
Cash received in 4.1 1,290 - 1,290 -
acquisition of SKZ-
U LLP
Acquisition of 3.2 (8,750) - (8,750) -
Christenson Ranch
and Irigaray
Proceeds on sale 7 6,274 - 20,972 -
of Gold One
Proceeds on sale - - 5,172 -
of mineral
interests, plant
and equipment
Uranium - - 5,954 -
transactions
Proceeds on sale 283 - 283 24,927
of available for
sale securities
Cash proceeds from - 4,667 8,167 19,101
joint ventures
Other - (810) - (1,763)
Cash flows (used (24,000) (59,976) (26,266) (144,005)
in) / from
investing
activities
Cash flows from - - - 43,456
investing
activities of
discontinued
operations
Common shares 25 3,486 215 8,274
issued, net of
issue costs
Financing fees - - - (5,666)
Loans received by 4.1 - - 12,000 12,000
Kyzylkum
UPC loan received - - 1,094 -
Cash flows from / 25 3,486 13,309 14,608
(used in)
financing
activities
Effects of 2,634 (4,198) 5,444 (7,020)
exchange rate
changes on cash
and cash
equivalents
Net decrease in (13,221) (34,217) (5,512) (60,661)
cash and cash
equivalents from
continuing
operations
Cash and cash 183,934 133,148 176,225 159,592
equivalents at the
beginning of the
period
Cash and cash 170,713 98,931 170,713 98,931
equivalents at the
end of the period
Cash flows of discontinued operations
Cash flows from operating - - - (685)
activities
Cash flows used in - - - 44,141
investing activities
Cash flows used in - - - -
financing activities
Supplemental cash flow information (note 13)
The accompanying notes form an integral part of these Interim Consolidated
Financial Statements
Uranium One Inc.
Notes to the Interim Consolidated Financial Statements - Unaudited
As at September 30, 2009 and December 31, 2008
(in United States dollars)
1 NATURE OF OPERATIONS
Uranium One Inc. ("Uranium One"), its subsidiaries and joint ventures
(collectively, the "Corporation") is a Canadian Corporation engaged
through subsidiaries and joint ventures in the mining and production of
uranium, and in the acquisition, exploration and development of
properties for the production of uranium in Kazakhstan, the United
States, Australia and South Africa.
Through the Betpak Dala joint venture, Uranium One owns a 70% interest
in the Akdala and South Inkai uranium mines in Kazakhstan. The
Corporation holds a 30% interest in the Kyzylkum joint venture, which
owns the Kharasan Project in Kazakhstan. In the United States, the
Corporation owns projects in the Powder River and Great Divide basins
in Wyoming. The Corporation owns a 51% interest in the Honeymoon
Uranium Project in Australia. The Corporation owns, either directly or
through joint ventures, a large portfolio of uranium exploration
properties in the western United States, South Australia, South Africa,
and Canada.
2 SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of presentation and principles of consolidation
These interim unaudited consolidated financial statements have
been prepared in accordance with Canadian generally accepted
accounting principles for interim financial information, they
follow the same accounting policies, and methods of application as
the audited consolidated financial statements of the Corporation
for the year ended December 31, 2008, except as discussed in note
2.2. These interim unaudited consolidated financial statements do
not include all the information and note disclosure required by
the generally accepted accounting principles for annual financial
statements and therefore should be read in conjunction with the
most recent annual audited consolidated financial statements.
The consolidated financial statements include the accounts of
Uranium One, its subsidiaries and the proportionate share of its
interests in joint ventures. All intercompany balances and
transactions have been eliminated.
The following are the Corporation`s principal mineral properties
as at September 30, 2009:
Operating mine:
Entity Mineral Location Ownership Status
property/Operatio
n
Betpak Akdala Mine Kazakhstan 70% Proportionately
Dala LLP consolidated
Betpak South Inkai Kazakhstan 70% Proportionately
Dala LLP Mine(1) consolidated
Advanced development projects:
Entity Mineral Location Ownership Status
property/Operation
Kyzylkum Kharasan Project Kazakhstan 30% Proportionately
LLP consolidated
The Corporation is also developing the following mineral properties:
Entity Mineral Location Ownership Status
property/Operation
Energy United States United 100% Consolidated
Metals Corp development States
(US) projects
Honeymoon Honeymoon Project Australia 51% Proportionately
Uranium consolidated
Project
Joint
Venture
The Corporation owns a 19% interest in the SKZ-U joint venture, which is
constructing a sulphuric acid plant in Kazakhstan (note 4.1).
(1) South Inkai commenced commercial operations on January 1, 2009
2.2 Adoption of new standards and recent accounting pronouncements
Goodwill and intangible assets
Effective January 1, 2009, the Corporation adopted the new
Canadian Institute of Chartered Accountants ("CICA") Section 3064
- "Goodwill and Intangible Assets", which aligns Canadian GAAP for
goodwill and intangible assets with IFRS. The new standard
provides more comprehensive guidance on intangible assets, in
particular for internally developed intangible assets. CICA
Standards concerning goodwill are unchanged from the standards
included in CICA Section 3062. On adoption of CICA Section 3064,
Emerging Issues Committee Abstract 27 - "Revenues and expenditures
during the pre-operating period" no longer applies to the
Corporation. The adoption of this standard did not have a
material impact on the Corporation`s consolidated financial
statements.
International Financial Reporting Standards (IFRS)
In February 2008, the Canadian Accounting Standards Board
confirmed that publicly accountable enterprises will be required
to adopt IFRS for fiscal years beginning on or after January 1,
2011, with earlier adoption permitted. Accordingly, the
conversion to IFRS will be applicable to the Corporation`s
reporting no later than in the first quarter of 2011, with
restatement of comparative information presented. The conversion
to IFRS will impact the Corporation`s accounting policies,
information technology and data systems, internal control over
financial reporting, and disclosure controls and procedures. The
transition may also impact business activities, such as foreign
currency, certain contractual arrangements, debt covenants and
capital requirements. The Corporation is currently evaluating the
future impact of IFRS on its financial statements and will
continue to invest in training and additional resources to ensure
a successful conversion.
Business combinations
CICA Section 1582 - "Business Combinations", which replaces CICA
Section 1581 - "Business Combinations", establishes standards for
the accounting for a business combination. It is the Canadian
GAAP equivalent to International Financial Reporting Standard IFRS
3, Business Combinations. This standard is effective for the
Corporation for interim and annual financial statements beginning
on January 1, 2011. Early adoption is permitted. The Corporation
has not yet determined the impact of the adoption of this standard
on its consolidated financial statements.
Consolidated financial statements and non-controlling interests
CICA Section 1601 - "Consolidated Financial Statements" and
Section 1602 - "Non-controlling Interests" replaces CICA Section
1600. CICA Section 1601 establishes standards for the preparation
of consolidated financial statements. CICA Section 1602
establishes standards for accounting for a non-controlling
interest in a subsidiary in consolidated financial statements
subsequent to a business combination. CICA Section 1602 is
equivalent to the corresponding provisions of International
Financial Reporting Standard IAS 27, Consolidated and Separate
Financial Statements. These standards are effective for the
Corporation for interim and annual financial statements beginning
on January 1, 2011. Early adoption is permitted. The Corporation
has not yet determined the impact of the adoption of these
standards on its consolidated financial statements.
Credit risk and fair value of financial assets and financial
liabilities
In January 2009, the CICA issued Emerging Issues ("EIC") Abstract
173 - "Credit Risk and the Fair Value of Financial Assets and
Financial Liabilities" ("EIC-173"). EIC-173 provides guidance on
how to take into account credit risk of an entity and counterparty
when determining the fair value of financial assets and financial
liabilities, including derivative instruments. EIC-173 is
applicable for the Corporation`s interim and annual consolidated
financial statements for its fiscal year ending December 31, 2009,
with retrospective application. The adoption of EIC-173 did not
result in a material impact on the Corporation`s consolidated
financial statements.
Mining exploration costs
In March 2009, the CICA issued EIC Abstract 174 - "Mining
Exploration Costs" ("EIC-174") which supersedes EIC Abstract 126 -
Accounting by Mining Enterprises for Exploration Costs ("EIC-
126"), to provide additional guidance for mining exploration
enterprises on the accounting for capitalization of exploration
costs and when an impairment test of these costs is required. EIC-
174 is applicable for the Corporation`s interim and annual
consolidated financial statements for its fiscal year ending
December 31, 2009, with retrospective application. The adoption
of EIC-174 did not result in a material impact on the
Corporation`s consolidated financial statements.
3 ACQUISITIONS AND DISPOSALS
3.1 Acquisition of Karatau Uranium Mine
Uranium One announced on June 15, 2009 the signing of a definitive
purchase agreement to acquire a 50% joint venture interest in the
Karatau Uranium Mine ("Karatau") in Kazakhstan from JSC
Atomredmetzoloto ("ARMZ"), the Russian state-owned uranium mining
company. The other 50% joint venture interest in Karatau is held
by JSC NAC Kazatomprom, the Kazakh-stated owned uranium mining
company.
The purchase price will be paid by way of the issuance of 117
million common shares of Uranium One and a cash payment of $90
million (or equivalent promissory note). The purchase agreement
also provides for contingent payments to ARMZ of up to $60
million, payable in three equal tranches over the period between
2010 and 2012 subject to certain post-closing tax related
adjustments.
Upon closing of the Karatau acquisition (after giving effect to
the C$270 million investment of the Japanese consortium), ARMZ
will hold an indirect 16.6% interest in Uranium One. ARMZ has
agreed to a standstill covenant under which it may not (subject to
certain exceptions), without Uranium One`s prior consent, for a
period of at least five years from closing acquire more than
19.95% of Uranium One`s outstanding common shares.
The acquisition is subject to completion of a legal due diligence
review by ARMZ. The acquisition is not subject to technical or
financial due diligence conditions. Closing is also subject to
the approval of the Kazakh regulatory authorities and to certain
other regulatory and stock exchange regulatory approvals, as well
as other usual and customary closing conditions. Uranium One
expects to close the acquisition by the end of Q4, 2009.
3.2 Acquisition of Christensen Ranch and Irigaray
The Corporation entered into a definitive agreement on August 7,
2009 to acquire 100% of the MALCO Joint Venture ("MALCO") from
wholly-owned subsidiaries of AREVA and ?lectricit? de France for
$35 million in cash. The assets of MALCO include the licensed and
permitted Irigaray ISR central processing plant, the Christensen
Ranch satellite ISR facility and associated U3O8 resources located
in the Powder River Basin of Wyoming.
Pursuant to the acquisition agreement, the Corporation placed a
deposit of $8.8 million in escrow, which is refundable if the
transaction does not close under certain circumstances. The
Committee on Foreign Investments in the United States approved the
transaction early in November 2009. The acquisition is subject to
regulatory approvals including U.S. Nuclear Regulatory Commission,
Wyoming Department of Environmental Quality and Texas Commission
on Environmental Quality. Closing is also subject to a financing
condition which the Corporation expects will be satisfied by the
completion of the private placement to the Japanese consortium.
3.3 Assets held for sale
Uranium One Africa
In May 2009, the Corporation committed to a plan to sell Uranium
One Africa Limited, ("Uranium One Africa"), a wholly owned
subsidiary of the Corporation. Uranium One Africa owns the
Dominion Uranium Project, which the Corporation has placed on care
and maintenance during the third quarter of 2008.
The Corporation estimates it will receive cash proceeds of $38.5
million, net of costs on the sale. The net carrying value of the
investment of $45.0 million was impaired to the estimated proceeds
of $38.5 million, resulting in an impairment of $6.5 million. The
Corporation had an accumulated unrealized translation loss
relating to Uranium One Africa of $234.5 million, which has been
recorded within OCI, which has been released through the statement
of operations as a result of the reclassification of the
Corporation`s investment in Uranium One Africa to assets held for
sale.
Other properties
The Corporation committed to a plan to sell some of its non-
producing properties and have classified them as held for sale.
The fair value of these assets was determined to be $7.7 million
and an impairment of $19.1 million was recognized.
September 30, 2009 Dominion Other Total
propertie
s
$`000 $`000 $`000
Total assets 51,096 9,003 60,099
Total liabilities (12,647) (1,254) (13,901)
Net carrying value 38,449 7,749 46,198
Net carrying value before 44,907 26,811 71,718
impairment
Accumulated translation 234,513 - 234,513
losses
Carrying value as at 279,420 26,811 306,231
September 30, 2009
Impairment (240,971) (19,062) (260,033)
Estimated recoverable 38,449 7,749 46,198
amount, net of costs
4 JOINT VENTURES
4.1 Proportionate interests in joint ventures
The Corporation owns the following interests in joint ventures:
Betpak Dala 70%
Kyzylkum 30%
SKZ-U LLP 19%
Honeymoon 51%
Australia Exploration 51%
The Corporation acquired a 19% joint control interest in SKZ-U LLP
("SKZ-U") to ensure long term sulphuric acid supply to Kyzylkum
and other projects in the region. The SKZ-U joint venture was
established to construct a sulphuric acid plant near Kharasan at
Zhanakorgan.
The Corporation`s proportionate share of the assets and liabilities of
the joint ventures are as follows:
As at Betpak Dala Kyzylkum SKZ-U Honeymoon & Total
September 30, Australia
2009 exploration
$`000 $`000 $`000 $`000 $`000
Cash 13,540 127 1,290 4,732 19,689
Other current 75,031 334 164 1,194 76,723
assets
Mineral 662,097 206,190 2,272 65,083 935,642
interests,
plant and
equipment
Other assets 1,427 1,091 6,428 - 8,946
Current (25,128) (5,431) (31) (3,671) (34,261)
liabilities
Other (1,584) (48,889) (271) (9) (50,753)
liabilities
(1)
Future income (212,859) (57,620) - (2,913) (273,392)
tax
liabilities
Asset (3,764) (105) - (300) (4,169)
retirement
obligation
Net Assets 508,760 95,697 9,852 64,116 678,425
(1) In addition to the $35 million loan (note 4.2) from the
Corporation, Kyzylkum negotiated unsecured bank loan facilities
totaling $160 million in prior periods. One facility, in the
amount of $70 million, was obtained from the Japan Bank for
International Cooperation ("JBIC") and the other facility, in the
amount of $90 million, was obtained from Citibank. These
facilities were fully drawn down as at September 30, 2009, and the
Corporation`s share of these facilities is $48 million.
As at December Betpak Dala Kyzylkum Honeymoon & Total
31, 2008 Australia
exploration
$`000 $`000 $`000 $`000
Cash 725 92 - 817
Other current 8,641 656 16 9,313
assets
Mineral 700,006 193,018 38,620 931,644
interests,
plant and
equipment
Other assets 703 4,005 - 4,708
Current (18,098) (3,084) (653) (21,835)
liabilities
Other (1,636) (36,009) (11) (37,656)
liabilities (1)
Future income (270,411) (72,019) (3,271) (345,701)
tax liabilities
Asset (4,609) (117) (223) (4,949)
retirement
obligation
Net Assets 415,321 86,542 34,478 536,341
(1) In addition to the $46.7 million loan (note 4.2) from the
Corporation, Kyzylkum negotiated unsecured bank loan facilities
totaling $100 million in 2007 and another $60 million in 2008.
One facility, in the amount of $70 million, was obtained from the
Japan Bank for International Cooperation ("JBIC") and the other
facility, in the amount of $90 million, was obtained from
Citibank. Total draw downs against these facilities amounted to
$120 million as at December 31, 2008, of which the Corporation`s
share was $36 million.
The Corporation`s proportionate share of revenue, expenses, net
earnings / (loss) and cash flows for the periods ended September 30,
2009 and 2008 are as follows:
Three months ended
September 30, 2009
Betpak Kyzylku SKZ-U Honeymoo Total
Dala m n &
Australi
a
explorat
ion
$`000 $`000 $`000 $`000 $`000
Revenue 20,514 - - - 20,514
Expenses and (10,168) (589) - (121) (10,878)
other income
Foreign 4,649 165 (183) - 4,631
exchange gain
/ (loss)
Earnings / 14,995 (424) (183) (121) 14,267
(loss) before
income taxes
Current (3,846) - - - (3,846)
income tax
(expense) /
recovery
Future income 1,513 - - - 1,513
tax recovery
Earnings / 12,662 (424) (183) (121) 11,934
(loss)
Cash flows 13,070 342 - (604) 12,808
(used in) /
from
operating
activities
Cash flows (6,689) (1,544) - (9,917) (18,150)
used in
investing
activities
Cash flows - - - 17,881 17,881
from
financing
activities
Net increase 6,381 (1,202) - 7,360 12,539
/ (decrease)
in cash
Three months ended September 30, 2008
Betpak Kyzylkum Total
Dala
$`000 $`000 $`000
Revenue 56,723 - 56,723
Expenses and other income (18,856) 325 (18,531)
Foreign exchange (loss) / (1,934) 3,960 2,026
gain
Earnings / (loss) before 35,933 4,285 40,218
income taxes
Current income tax expense (16,023) - (16,023)
Future income tax recovery 3,143 - 3,143
Earnings / (loss) 23,053 4,285 27,338
Cash flows from / (used 27,129 (554) 26,575
in) operating activities
Cash flows used in (13,380) (3,377) (16,757)
investing activities
Cash flows (used in) / 99 (2,325) (2,226)
from financing activities
Net increase / (decrease) 13,848 (6,256) 7,592
in cash
Nine months ended
September 30, 2009
Betpak Kyzylkum SKZ-U Honeymoon Total
Dala &
Australia
explorati
on
$`000 $`000 $`000 $`000 $`000
Revenue 82,039 - - - 82,039
Expenses and (48,781) (608) - (572) (49,961)
other income
Foreign 61,605 12,700 (183) - 74,122
exchange gain
/ (loss)
Earnings / 94,863 12,092 (183) (572) 106,200
(loss) before
income taxes
Current (16,571) - - - (16,571)
income tax
expense
Future income 4,517 - - - 4,517
tax recovery
Earnings / 82,809 12,092 (183) (572) 94,146
(loss)
Cash flows 25,059 716 - (630) 25,145
from / (used
in) operating
activities
Cash flows (12,323) (13,148) - (12,519) (37,990)
used in
investing
activities
Cash flows - 12,000 - 17,881 29,881
from
financing
activities
Net increase 12,736 (432) - 4,732 17,036
/ (decrease)
in cash
Nine months ended
September 30, 2008
Betpak Dala Kyzylkum Total
$`000 $`000 $`000
Revenue 128,630 - 128,630
Expenses and (40,682) 336 (40,346)
other income
Foreign (2,055) 3,949 1,894
exchange
(loss) / gain
Earnings / 85,893 4,285 90,178
(loss) before
income taxes
Current income (37,595) (44) (37,639)
tax expense
Future income 6,792 - 6,792
tax recovery
Earnings / 55,090 4,241 59,331
(loss)
Cash flows 74,022 (619) 73,403
from / (used
in) operating
activities
Cash flows (40,169) (7,683) (47,852)
used in
investing
activities
Cash flows (11,726) 5,827 (5,899)
(used in) /
from financing
activities
Net increase / 22,127 (2,475) 19,652
(decrease) in
cash
4.2 Loans to joint ventures
Sep 30, Dec 31,
2009 2008
$`000 $`000
SKZ-U
Long term portion 1,061 -
Kyzylkum
Current portion - 19,158
Long term portion 25,266 14,000
Total 26,327 33,158
Kyzylkum loan
The Corporation made loans to Kyzylkum pursuant to its obligation to
provide project financing for construction and commissioning of the
Kharasan Project in the amount of $80 million. The loans bear interest
at LIBOR plus 1.5% per annum, with interest payable on a semi-annual
basis, commencing within two years of initial funding.
Sep 30, Dec 31,
2009 2008
$`000 $`000
Balance at January 1 46,666 73,333
Repaid during the period (11,666) (26,667)
35,000 46,666
Interest accrued 1,094 702
36,094 47,368
Less: elimination of proportionate (10,828) (14,210)
share - 30%
25,266 33,158
Less: current portion - (19,158)
Long term portion 25,266 14,000
The loans to Kyzylkum are unsecured.
Kyzylkum has suspended scheduled payments of principal and interest to
the Corporation pending receipt of additional finance currently being
arranged by the Corporation and its partners in the Kyzylkum joint
venture. The repayments of the $35 million due from Kyzylkum are likely
to be deferred as part of the financing of Kyzylkum`s activities. The
Corporation therefore classified the amount outstanding on the loan to
Kyzylkum as non-current.
5 INVENTORIES
Sep 30, Dec 31,
2009 2008
$`000 $`000
Finished uranium concentrates 38,929 5,401
Solutions and concentrates in 12,052 2,584
process
Product inventory 50,981 7,985
Materials and supplies 6,028 9,405
57,009 17,390
All operating expenses and depreciation and depletion are processed to
inventory and expensed when the product is sold.
6 MINERAL INTERESTS, PLANT AND EQUIPMENT
September 30, 2009 Accumulated Net
carrying
Cost amortization amount
$`000 $`000 $`000
Mineral interests 1,031,3 (73,209) 958,146
55
Plant and equipment 293,912 (25,254) 268,658
1,325,2 (98,463) 1,226,804
67
December 31, 2008 Accumulated Net
carrying
Cost amortization amount
$`000 $`000 $`000
Mineral interests 1,035,043 (46,850) 988,193
Plant and equipment 312,360 (15,138) 297,222
1,347,403 (61,988) 1,285,415
A summary by property of the net book value is as follows:
September Mineral interests
30, 2009
Non- Plant and Total
depletable equipment
Depleta Total
ble
Country $`000 $`000 $`000 $`000 $`000
Akdala Mine Kazakhstan 81,455 74,358 155,813 27,045 182,858
South Inkai Kazakhstan 199,491 181,068 380,559 98,300 478,859
Mine
Kharasan Kazakhstan - 140,078 140,078 68,384 208,462
Project
United United - 94,534 94,534 24,827 119,361
States States
development
projects
United United - 115,694 115,694 489 116,183
States States
exploration
projects
United United - 38,896 38,896 1,045 39,941
States States
conventional
mining
projects
Honeymoon Australia - 31,110 31,110 33,973 65,083
Project
Corporate - 1,462 1,462 14,595 16,057
and other
Total 280,946 677,200 958,146 268,658 1,226,804
December 31, 2008 Mineral interests
Non- Plant and Total
equipment
Depletable depletable Total
Country $`000 $`000 $`000 $`000 $`000
Akdala Mine Kazakhstan 92,739 74,358 167,097 28,622 195,719
South Inkai Kazakhstan - 396,963 396,963 107,017 503,980
Mine
Kharasan Kazakhstan - 144,722 144,722 48,296 193,018
Project
Dominion South - - - 44,586 44,586
Project Africa
United United - 90,255 90,255 15,589 105,844
States States
development
projects
United United - 122,586 122,586 - 122,586
States States
exploration
projects
Hobson United - - - 22,026 22,026
Facility and States
La Palangana
Project
United United - 39,215 39,215 1,497 40,712
States States
conventional
mining
projects
Honeymoon Australia - 25,652 25,652 12,968 38,620
Project
Corporate - 1,703 1,703 16,621 18,324
and other
Total 92,739 895,454 988,193 297,222 1,285,415
7 OTHER ASSETS
Sep 30, 2009 Dec 31,
2008
$`000 $`000
Current
Purchased uranium concentrates 1,997 9,743
Borrowed uranium concentrates 9,747 -
Deposit for acquisition of 8,750 -
Christenson Ranch and Irigaray (note
3.2)
Future income tax assets 1,473 1,206
Reclamation bond payment on behalf - 1,094
of UPC joint venture
21,967 12,043
Non-current
Asset retirement fund 13,725 19,939
Advances for future services - 10,054
Borrowed uranium concentrates - 8,621
Advances for investment in sulphuric - 5,959
acid plant
Advances for plant and equipment 6,543 3,938
Long term deposits and guarantees 337 2,489
Available for sale securities 755 593
Discontinued operations - 9,024
Deferred business development 6,665 503
expenditure
Other 1,860 1,856
29,885 62,976
Uranium concentrates loans
The Corporation entered into a uranium concentrates borrowing agreement
to mitigate the risk of delivery delays, enabling the Corporation to
meet its contractual obligations in terms of current uranium sales
contracts. The asset represents the borrowed uranium concentrates,
which are held at a conversion facility in the Corporation`s account.
The asset is recorded at its fair value. The corresponding financial
liability of $8.5 million, which was classified as held for trading, is
also carried at fair value and is included in uranium concentrates
loans in current liabilities.
The Corporation entered into a short term borrowing agreement during
the three months ended September 30, 2009, to simplify logistical
arrangements. The corresponding liability of $11.7 million, carried at
fair value, related to this agreement is included in uranium
concentrates loans in current liabilities.
Purchased uranium concentrates
The Corporation entered into uranium concentrates purchasing agreements
to ensure that it could meet its short-term contractual obligations in
terms of uranium sales contracts for Dominion. The asset represents
the balance of the purchased uranium concentrates, which are held at a
conversion facility in the Corporation`s account. The asset is
recorded at its fair value.
Discontinued operations
The Corporation disposed of its remaining shareholding in Gold One
during the 3 months ended September 30, 2009, realizing a gain of $3.4
million from the sale of 24.2 million shares for proceeds of $6.3
million. The gain for the nine months ended September 30, 2009 was
$2.0 million from the sale of 186.8 million shares for proceeds of
$21.0 million.
8 LONG TERM DEBT
Credit facility Sep 30, Dec 31,
2009 2008
$`000 $`000
Opening balance 61,275 -
Drawn down during the period - 65,000
Financing fees deferred - (5,151)
Financing fees amortized 1,706 1,275
Interest paid (931) (386)
Interest accrued 830 537
Closing balance 62,880 61,275
Current portion 62,880 -
Long term portion - 61,275
62,880 61,275
The debt can be repaid any time before June 27, 2010. The outstanding
amount under the credit facility is repayable on June 27, 2010, and the
repayment date may be extended, if needed, to June 27, 2011, with
lenders` consent. Letters of credit in the amount of $11.1 million
have been issued under the credit facility.
9 SHARE CAPITAL
Number of Value of
Issued and outstanding common shares shares
shares
$`000
Common shares on January 1, 2008 467,173,423 3,496,884
Exercise of warrants 1,190,000 15,791
Exercise of stock options 1,043,016 7,358
Exercise of restricted shares 206,517 2,791
Common shares on December 31, 2008 469,612,956 3,522,824
Exercise of stock options 166,074 2,160
Exercise of restricted shares 30,908 177
Exercise of contingent share 165,600 -
rights
Issued and outstanding common 469,975,538 3,525,161
shares at September 30, 2009
On February 9, 2009, Uranium One entered into a subscription agreement
with a corporation formed by The Tokyo Electric Power Company,
Incorporated ("TEPCO"), Toshiba Corporation, and The Japan Bank for
International Cooperation ("JBIC") providing for the private placement
of an aggregate of 117,000,000 common shares of Uranium One, for gross
proceeds of approximately C$270 million.
The private placement issue price of C$2.30 per share represented a 15%
premium to the 20-day volume weighted average price of Uranium One
common shares on the Toronto Stock Exchange prior to the announcement
of the transaction.
Pursuant to the acquisition of the Karatau Uranium Mine from ARMZ (note
3.1), 117 million common shares of Uranium One will be issued as part
of the purchase price.
Upon closing of the Karatau Uranium Mine acquisition and the private
placement, both ARMZ and the Japanese consortium will have a 16.6%
interest in Uranium One.
10 CONTRIBUTED SURPLUS
The following table details the movement of contributed surplus during
the period:
Restricted
Warrants shares Options Total
$`000 $`000 $`000 $`000
As at December 31, 25,372 3,119 105,896 134,387
2007
Stock options issued - - 14,145 14,145
and vested
Stock options - - (3,957) (3,957)
exercised
Restricted shares - 1,278 - 1,278
issued and vested
Restricted shares - (2,791) - (2,791)
exercised
Warrants exercised (11,460) - - (11,460)
As at December 31, 13,912 1,606 116,084 131,602
2008
Stock options - - 5,289 5,289
issued and vested
Stock options - - (1,945) (1,945)
exercised
Restricted shares - 401 - 401
issued and vested
Restricted shares - (177) - (177)
exercised
As at September 30, 13,912 1,830 119,428 135,170
2009
Assumptions
The fair value of stock options and restricted shares used to calculate
the compensation expense was estimated using the Black-Scholes option-
pricing model with the following assumptions:
Sep 30, Dec 31,
2009 2008
Risk free interest rate 1.7% - 2.52% -
2.64% 3.60%
Expected dividend yield 0% 0%
Expected volatility of the Uranium 98% - 103% 66% - 120%
One`s share price
Expected life 5 years 5 years
Stock options
The following is a summary of options granted under the stock-based
compensation plan:
Weighted
Number of average
options exercise
price
Cdn $
Outstanding options as at 20,824,788 8.55
January 1, 2008
Granted options 2,559,948 3.56
Exercised options (1,043,016) 3.74
Forfeitures of stock options (6,483,203) 9.12
Outstanding options as at 15,858,517 7.82
December 31, 2008
Granted options 6,263,551 2.23
Exercised options (166,074) 1.67
Forfeitures of stock options (2,847,450) 7.09
Outstanding options as at 19,108,544 6.15
September 30, 2009
The stock option compensation expense for the three and nine month
periods ended September 30, 2009 was $1.7 million and $5.3 million
respectively, and for the three and nine month periods ended September
30, 2008 it was $2.7 million and $12.5 million. As at September 30,
2009, the aggregate unexpensed fair value of unvested stock options
granted amounted to $6.9 million. The fair value of options granted
during the nine month period amounts to $8.2 million ($1.30 per
option).
The following table summarizes stock options outstanding at September
30, 2009:
Options outstanding
Range of Number outstanding Weighted Weighted average
exercise as at September average exercise price
prices 30, 2009 remaining
life
Cdn $ (years) Cdn $
0.78 to 2.74 6,594,826 3.99 2.20
2.75 to 4.76 3,836,555 3.27 3.86
4.77 to 7.79 2,161,319 2.69 6.96
7.80 to 9.90 3,067,284 5.88 8.44
9.91 to 12.93 1,827,175 2.85 12.13
12.94 to 15.63 614,135 2.47 13.90
15.64 to 16.59 1,007,250 2.47 16.52
19,108,544 3.76 6.15
Options exercisable
Range of Number Weighted Weighted average
exercise exercisabl average exercise price
prices e as at remaining
September life
30, 2009
Cdn $ (years) Cdn $
0.78 to 2.74 639,811 0.51 2.21
2.75 to 4.76 2,701,612 3.24 3.93
4.77 to 7.79 2,097,715 2.67 7.02
7.80 to 9.90 3,030,786 5.92 8.44
9.91 to 12.93 1,738,202 2.85 12.12
12.94 to 15.63 436,573 2.57 13.90
15.64 to 16.59 675,152 2.47 16.51
11,319,851 3.56 8.01
Restricted share rights
The following is a summary of Uranium One`s restricted share rights
issued under the Restricted Share Plan:
Number of
restricted
shares
Balance at January 1, 2008 295,532
Granted 609,000
Exercised during the year (206,517)
Expired (74,520)
Balance at December 31, 2008 623,495
Exercised during the period (30,908)
Expired (104,000)
Balance at September 30, 2009 488,587
Restricted share rights will not expire while the rights holder is an
employee of the Corporation.
The restricted share rights expense for the three and nine month
periods ended September 30, 2009 was $0.2 million and $0.4 million
respectively, and for the three and nine month periods ended September
30, 2008 was $0.3 million and $1.1 million. As at September 30, 2009
the aggregate unexpensed fair value of restricted share rights granted
amounted to $0.8 million.
Contingently issuable shares
The Corporation assumed all of the obligations of Energy Metals
Corporation Inc. and its subsidiaries arising under certain option and
joint venture agreements with third parties. Uranium One has reserved
a total of 149,500 common shares for issuance pursuant to the assumed
obligations under contingent share rights agreements. 165,600
contingent shares were issued during the period due to the performance
conditions being met. 92,000 contingent issuable shares have lapsed
during the period.
11 INTEREST AND OTHER
3 months ended 9 months ended
Sep 30, Sep 30, Sep 30, Sep 30,
2009 2008 2009 2008
$`000 $`000 $`000 $`000
Interest income 1,331 2,650 3,957 8,539
Interest paid (397) (262) (1,090) (262)
Convertible (2,271) (3,965) (6,337) (11,676)
debenture interest
Credit facility (718) (906) (2,114) (906)
charges
Interest and costs (110) - (275) -
incurred on
uranium
concentrates loan
(2,165) (2,483) (5,859) (4,305)
12 FOREIGN EXCHANGE (LOSS) / GAIN
A summary of the foreign exchange (loss) / gain by item is as follows:
3 months ended 9 months ended
Sep 30, Sep 30, Sep 30, Sep 30,
2009 2008 2009 2008
$`000 $`000 $`000 $`000
Unrealized foreign 1,326 (2,725) 68,449 (1,416)
exchange gain /
(loss) on future
income tax
liabilities
Unrealized foreign (8,887) 988 (7,889) 3,323
exchange (loss) /
gain on other
items
Foreign exchange 1,119 (1,072) 2,189 (4,902)
gain / (loss) on
cash and other
items
(6,442) (2,809) 62,749 (2,995)
The National bank of Kazakhstan announced on February 4, 2009 that it
has ceased to maintain the Kazakhstan tenge ("tenge") within the
previous range of 117-123 tenge to the US dollar and suggested the rate
be set within a range of 145-155 tenge to the US dollar. The tenge
closed at 150.95 tenge to the US dollar on September 30, 2009. The
resulting devaluation affected the translated values of monetary assets
and liabilities, including the $68.4 million gain on future income tax
liabilities.
13 CASH FLOW INFORMATION
3 months ended 9 months ended
Sep 30, Sep 30, Sep 30, Sep 30,
2009 2008 2009 2008
$`000 $`000 $`000 $`000
Changes in non-
cash working
capital excluding
business
combinations:
Decrease in 10,487 3,290 29,881 5,091
accounts and other
receivables
Decrease / 991 (603) 991 16,810
(increase) in
prepaid expenses
and other
Increase in (6,920) (924) (16,262 (5,300)
inventories )
Increase / 1,633 1,654 (11,184 (20,542
(decrease) in ) )
accounts payable
and accrued
liabilities
Increase / 689 5,576 (3,546) 8,356
(decrease) in
income taxes
payable
6,880 8,993 (120) 4,415
Supplemental cash
flow information
Cash interest paid 397 - 3,897 3,267
Cash tax paid 6,674 10,447 25,756 28,660
Cash equivalents 114,352 29,118 114,352 29,118
Money market
instruments,
including cashable
guaranteed
investment
certificates,
bearer deposit
notes and
commercial paper
14 BASIC AND DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING
3 months ended 9 months ended
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
`000 `000 `000 `000
Basic weighted- 469,799 468,518 469,702 468,047
average number of
shares outstanding
Effect of dilutive
securities:
-stock options - - - -
-warrants - - - -
Diluted weighted- 469,799 468,518 469,702 468,047
average number of
shares outstanding
For the three and nine months ended September 30, 2009 and the three
and nine months ended September 30, 2008, convertible debentures, stock
options, warrants and restricted shares were not included in the
dilutive weighted average number of shares outstanding as they were
anti-dilutive.
15 FINANCIAL INSTRUMENTS
The Corporation`s activities expose it to a variety of financial risks,
including the effects of changes in debt and prices of equity
instruments held, foreign currency exchange rates, interest rates, and
commodity prices.
The Corporation continuously monitors its exposure to risk. The risk
management carried out by the Corporation is approved by the Board of
Directors. The following section describes the type of significant
risks that the Corporation is exposed to and its objectives and
policies for managing those risk exposures.
(i) Foreign exchange risk
The foreign exchange risk relates to the risk that the value of
financial commitments, recognized assets or liabilities will
fluctuate due to changes in foreign currency rates.
The Corporation is primarily exposed to foreign currency risk
through the following assets and liabilities denominated in
currencies other than US dollars:
Financial assets and liabilities Non-financial
assets
and liabilities
Cash and Accounts Accounts Convertib Mineral Future
cash receivabl payable le interest income
equivalents e and debenture s plant tax
accrued s and liabiliti
liabilitie equipmen es
s t
(1)
September
30, 2009
$`000 $`000 $`000 $`000 $`000 $`000
Canadian 1,543 1,944 3,049 136,802 - -
dollar
Kazakhsta 11,819 20,127 9,337 - - 270,479
n tenge
Australia 33,555 1,559 5,521 - 65,083 2,913
n dollar
Euro 66 - 70 - - -
46,983 23,630 17,977 136,802 65,083 273,392
Financial assets and liabilities Non-financial assets
and liabilities
December Cash and Account Accounts Convertible Mineral Future
31, 2008 cash s payable and debentures interest income tax
equivale receiva accrued plant and liabilities
nts ble liabilities equipment
$`000 (1)
$`000 $`000 $`000 $`000 $`000
Canadian 438 2,436 3,477 118,042 - -
dollar
South 5,227 4,821 17,506 - 44,586 -
African
rand
Kazakhstan 1,251 5,978 11,515 - - 342,430
tenge
Australian 44,597 1,212 7,558 - 38,619 3,271
dollar
51,513 14,447 40,056 118,042 83,205 345,701
(1) Only includes mineral interests, plant and equipment of self-sustaining
operations.
The following table shows the effect on earnings and other
comprehensive income after tax as at September 30, 2009 of a 10%
appreciation or depreciation in the foreign currencies against the US
dollar on the above-mentioned financial and non-financial assets and
liabilities of the Corporation.
Other
comprehensive Net
income earnings
$`000 $`000
Gain / (loss) from a 10% 3,292 (27,536)
appreciation in all foreign
currencies against the US dollar,
with all other variables held
constant.
A 10% depreciation in exchange rates would have the exact opposite
effect on other comprehensive income and net earnings.
(ii) Interest rate risk
The Corporation is exposed to interest rate risk on its outstanding
borrowings and short-term investments. The only outstanding interest-
bearing borrowings as at September 30, 2009 are the loan facility
obtained by Kyzylkum (note 4.1) which bears interest at floating rates,
the drawn-down amount on the credit facility which bears interest at
floating rates (note 8), and the convertible debentures, with a fixed
interest rate.
A 100 basis point change in the interest rate would impact the
Corporation`s net earnings as follows:
Sep 30, Dec 31,
2009 2008
$`000 $`000
Gain from a 100 basis point
appreciation in interest rates,
with all other variables held
constant.
1,538 811
A 100 basis point depreciation in the interest rate would have the
exact opposite effect on net earnings.
(iii) Commodity price risk
The Corporation is exposed to price risk with respect to commodity
prices. The Corporation does not hedge its exposure to price
risk, other than having market related pricing structures in the
long-term sales contracts, which the Corporation has entered into.
Increases in uranium prices would have a positive impact on
profitability given that the majority of the Corporation`s sales
contracts are priced based on market values for uranium.
The Corporation is exposed to liquidity risk from fluctuating
commodity prices with respect to outstanding uranium concentrates
loans if the borrowed uranium has been utilized to make a
delivery. As the market value of the liability to deliver the
uranium concentrates fluctuates, based on commodity prices, so
will the market value of the uranium concentrates borrowed by the
Corporation. The effect that market fluctuations in the uranium
price have on the borrowed uranium asset and uranium concentrates
liability will offset, except in circumstances where the borrowed
uranium has been utilized to make a delivery into a contract. In
these circumstances, the Corporation will recognize a net fair
market value adjustment in the statement of operations. As at
September 30, 2009, the Corporation has utilized 245,000 pounds of
the borrowed material and is thus exposed to the uranium market
price (note 7).
A 10% change in commodity prices would impact the Corporation`s
net earnings as follows:
9 months Year
ended ended
Sep 30, Dec 31,
2009 2008
$`000 $`000
Gain in revenue from a 10%
appreciation in commodity prices,
with all other variables held
constant
Loss in other earnings from a 10%
appreciation in commodity prices,
with all other variables held
constant
8,286 14,978
Gain from a 10% appreciation in
commodity prices, with all other
variables held constant
(1,047) (198)
A 10% depreciation in commodity prices would have the exact
opposite effect on net earnings.
16 SEGMENTED INFORMATION
The Corporation`s reportable operating segments are summarized in the
table below:
For the three months ended September 30, 2009: (in $`000)
Country Revenues Operating Depreciat
expenses ionand
depletion
$`000 $`000 $`000
Akdala Mine Kazakhstan 12,936 (3,047) (2,863)
South Inkai Mine Kazakhstan 8,397 (3,284) (2,713)
Kharasan Project Kazakhstan - - -
United States United States - - -
development
projects
United States United States - - -
exploration
projects
United States United States - - -
conventional
mining projects
Honeymoon Australia - - -
Project
Corporate and - - -
other
Total 21,333 (6,331) (5,576)
Country Exploration Net earnings/ Capital
expense (loss) from expenditu
continuing re
operations
$`000 $`000 $`000
Akdala Mine Kazakhstan - 1,592 635
South Inkai Mine Kazakhstan - 5,413 8,871
Kharasan Project Kazakhstan - (517) 1,691
United States United States - 1,318 2,767
development
projects
United States United States (1,905) (4,255) -
exploration
projects
United States United States - 50 70
conventional
mining projects
Honeymoon Australia (188) 557 8,387
Project
Corporate and (199) (19,467) 316
other
Total (2,292) (15,309) 22,737
For the nine months ended September 30, 2009: (in $`000)
Country Revenues Operating Depreciat
expenses ionand
depletion
$`000 $`000 $`000
Akdala Mine Kazakhstan 41,331 (10,492) (9,506)
South Inkai Mine Kazakhstan 41,528 (17,575) (13,352)
Kharasan Project Kazakhstan - - -
United States United States - - -
development
projects
United States United States - - -
exploration
projects
United States United States - - -
conventional
mining projects
Honeymoon Australia - - -
Project
Corporate and - - -
other
Total 82,859 (28,067) (22,858)
Country Explorati Net earnings / Capital
on (loss) from expenditure
expense continuing
operations
$`000 $`000 $`000
Akdala Mine Kazakhstan - 19,142 2,596
South Inkai Kazakhstan - 60,578 14,648
Mine
Kharasan Kazakhstan - 11,999 9,289
Project
United States United - 1,306 9,775
development States
projects
United States United (5,094) (5,216) -
exploration States
projects
United States United - (642) 114
conventional States
mining
projects
Honeymoon Australia (672) 106 13,456
Project
Corporate and (996) (304,952) 565
other
Total (6,762) (217,679) 50,443
For the three months ended September 30, 2008: (in $`000)
Country Revenues Operating Deprecia
expenses tion and
depletio
n
$`000 $`000 $`000
Akdala Mine Kazakhstan 56,723 (11,793) (8,305)
South Inkai Mine Kazakhstan - - -
Kharasan Project Kazakhstan - - -
Dominion Project South Africa - - -
United States United States - - -
development
projects
United States United States - - -
exploration
projects
Hobson Facility and United States - - -
La Palangana
Project
United States United States - - -
conventional mining
projects (1)
Honeymoon Project Australia - - -
Corporate and other - - -
Total 56,723 (11,793) (8,305)
Country Exploration Net earnings/ Capital
expense (loss) from expenditure
continuing
operations
$`000 $`000 $`000
Akdala Mine Kazakhstan - 23,707 1,279
South Inkai Mine Kazakhstan - (768) 9,273
Kharasan Project Kazakhstan - 4,285 4,204
Dominion Project South Africa (433) (1,313,549) 39,128
United States United States - - 1,938
development
projects
United States United States (3,183) (445,582) 446
exploration
projects
Hobson Facility United States - (64,359) 5,319
and La Palangana
Project
United States United States - (49,071) 662
conventional
mining projects
(1)
Honeymoon Australia (701) (136,447) 1,471
Project
Corporate and (1,071) (31,900) 113
other
Total (5,388) (2,013,684) 63,833
For the nine months ended September 30, 2008: (in $`000)
Country Revenues Operating Depreciation
expenses and depletion
$`000 $`000 $`000
Akdala Mine Kazakhstan 128,630 (24,572) (18,196)
South Inkai Mine Kazakhstan - - -
Kharasan Project Kazakhstan - - -
Dominion Project South Africa - - -
United States United States - - -
development
projects
United States United States - - -
exploration
projects
Hobson Facility United States - - -
and La Palangana
Project
United States United States - - -
conventional
mining projects
(1)
Honeymoon Australia - - -
Project
Corporate and - - -
other
Total 128,630 (24,572) (18,196)
Country Exploration Net earnings/ Capital
expense (loss) from expenditure
continuing
operations
$`000 $`000 $`000
Akdala Mine Kazakhstan - 50,124 6,839
South Inkai Kazakhstan - 391 28,175
Mine
Kharasan Kazakhstan - 5,213 16,204
Project
Dominion South Africa (973) (1,315,363) 95,033
Project
United States United States - (57) 7,581
development
projects
United States United States (4,997) (447,467) 669
exploration
projects
Hobson United States - (64,365) 13,375
Facility and
La Palangana
Project
United States United States (11) (49,379) 3,511
conventional
mining
projects (1)
Honeymoon Australia (2,229) (139,375) 12,651
Project
Corporate and (3,893) (131,914) 2,232
other
Total (12,103) (2,092,192) 186,270
Previously Shootaring Canyon Mill
As at September 30, 2009: (in $`000)
Mineral interest
plant and
Country equipment
$`000
Akdala Mine Kazakhstan 182,858
South Inkai Mine Kazakhstan 478,859
Kharasan Project Kazakhstan 208,462
United States United States 119,361
development
projects
United States United States 116,183
exploration
projects
United States United States 39,941
conventional
mining projects
Honeymoon Project Australia 65,083
Corporate and 16,057
other
Total 1,226,804
Future
Total income Total
tax
assets liabiliti liabilities
es
$`000 $`000 $`000
Akdala Mine 216,547 51,880 65,471
South Inkai Mine 520,853 160,979 177,224
Kharasan Project 217,894 57,620 112,098
United States 119,875 - 181
development projects
United States 116,815 12,573 12,609
exploration projects
United States 47,352 5,198 8,148
conventional mining
projects
Honeymoon Project 71,260 2,913 6,920
Corporate and other 254,833 745 221,412
Total 1,565,429 291,908 604,063
As at December 31, 2008: (in $`000)
Mineral Future
interest
plant and Total income tax Total
Country Equipment assets liabilities liabilities
$`000 $`000 $`000 $`000
Akdala Mine Kazakhstan 195,719 200,497 66,156 81,385
South Inkai Kazakhstan 503,980 506,648 204,255 212,082
Mine
Kharasan Kazakhstan 193,018 197,561 72,019 111,230
Project
Dominion South 44,586 69,253 - 28,629
Project Africa
United States United 105,844 107,538 - 724
development States
projects
United States United 122,586 123,532 24,182 24,418
exploration States
projects
Hobson United 22,026 24,064 - 1,506
Facility and States
La Palangana
Project
United States United 40,712 55,098 5,410 8,282
conventional States
mining
projects
Honeymoon Australia 38,620 38,858 3,271 4,158
Project
Corporate and 18,324 295,060 - 204,181
other
Total 1,285,415 1,618,109 375,293 676,595
Date: 13/11/2009 14:01:01 Produced by the JSE SENS Department.
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