| Tue 10 Aug 2010, 10:05 | | UUU - Uranium One Inc - Uranium One Increases 2010 Production Guidance to 7.0 |
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UUU - Uranium One Inc - Uranium One Increases 2010 Production Guidance to 7.0
Million Pounds Due to Record Production
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
August 9, 2010
Uranium One Increases 2010 Production Guidance to 7.0 Million Pounds Due to
Record Production
Vancouver, British Columbia and Johannesburg, South Africa - Uranium One Inc.
("Uranium One") today reported record quarterly production of 1.8 million
pounds and a decrease in total cash costs at its operations to $15 per pound
sold during the second quarter of 2010. Uranium One`s 2010 production
guidance has been increased from 6.8 million pounds to 7.0 million pounds as
a result of better than expected performance from the Company`s South Inkai
Uranium Mine.
Q2 2010 Highlights
Operational Results
- Record quarterly attributable production of 1.8 million pounds during Q2
2010, 119% higher than Q2 2009 and 4% higher than Q1 2010.
- Average total cash cost per pound sold decreased to $15 per pound during
Q2 2010, 12% lower than Q2 2009 costs of $17 per pound and 21% lower
than Q1 2010 costs of $19 per pound.
- Initial results from the new test blocks at Kharasan have been positive;
production is expected to commence from these new blocks by the end of
2010.
- Received Ministry of Industry and New Technologies (MINT) approval for
dryers at Karatau allowing shipment of Karatau inventory.
- No further reliance on processing facilities in Kyrgyzstan due to the
commissioning of dryers at South Inkai and the approval of the dryers at
Karatau.
- The U.S. NRC issued a draft Materials License for the Moore Ranch
Project in June. This is the first new license granted by the NRC for a
U.S. ISR operation in almost 20 years.
Financial Results
- Attributable sales volumes were 1,517,500 pounds during Q2 2010, a 294%
increase compared to sales of 385,100 pounds in Q2 2009; attributable
sales volumes during July were 1,201,100 pounds.
- Revenue increased by 256% to $66.0 million in Q2 2010, compared to $18.6
million in Q2 2009. The average realized sales price during Q2 2010 was
$43 per pound compared to $48 per pound during Q2 2009. The average
spot price was $41 per pound during Q2 2010.
- Earnings from mine operations increased by 270% to $24.4 million during
Q2 2010, compared to earnings from mine operations of $6.6 million
during Q2 2009.
- Attributable inventory was 3.3 million pounds at June 30, 2010 compared
to 3.0 million pounds at March 31, 2010.
- Uranium One did not pay or accrue any Excess Profits Tax ("EPT") in 2009
and does not expect to pay or accrue any EPT going forward.
Corporate
- Announced the acquisition of a 50% joint venture interest in the
Akbastau Uranium Mine and a 49.67% joint venture interest in the
Zarechnoye Uranium Mine from ARMZ. ARMZ will also contribute $610
million in cash to Uranium One. ARMZ will be issued 356 million new
common shares of Uranium One, resulting in an increase in its equity
ownership interest in the Company to approximately 51%; following
initial closing, Uranium One will pay a special cash dividend of US$1.06
per share to shareholders (other than ARMZ), representing a change of
control premium.
- JUMI has elected to have their debenture repaid, subject to the
completion of the ARMZ transaction.
Jean Nortier, President and CEO of Uranium One commented:
"This was an excellent quarter for Uranium One in terms of sales, production
and operating costs. In light of the strong performance from South Inkai, we
are pleased to be in a position to increase our production guidance for 2010
to 7.0 million pounds attributable to the Company. We are also looking
forward to completing our transaction with ARMZ later this year."
Outlook
Uranium One`s attributable production estimate for 2010 has been increased to
7.0 million pounds from 6.8 million pounds due to better than expected
performance at South Inkai. For 2011, the attributable production estimate
remains unchanged at 8.0 million pounds, including initial production from
the Powder River Basin in Wyoming. Production guidance for 2010 and 2011
does not include any potential contribution from Akbastau and Zarechnoye.
During 2010, the average cash cost per pound sold is expected to be
approximately $14 at Akdala and Karatau, and approximately $20 at South
Inkai.
Uranium One`s attributable sales estimate for 2010 continues to be
approximately 6 million pounds.
Attributable capital expenditures for the full year 2010 are estimated to be
$148 million, including approximately $87 million for the Company`s mines and
development projects in Kazakhstan, and $61 million for its development
projects in Australia and the United States.
Other 2010 expenditures remain unchanged and are estimated to be $29 million
for general and administrative expenses (excluding non-cash items), $7
million for exploration, and $1 million for care and maintenance expenses.
Q2 2010 Operations and Projects
During the second quarter of 2010, Uranium One achieved record attributable
production of 1,823,600 pounds, 119% higher than the 833,800 pounds produced
during Q2 2009 and 4% higher than production during Q1 2010 of 1,753,700
pounds. The increase is primarily due to the inclusion of production from
the recently acquired 50% interest in the Karatau Uranium Mine, as well as
from the continued ramp up at South Inkai.
Kazakhstan
Operational results for Uranium One`s operations in Kazakhstan during Q2 2010
were:
- Akdala Uranium Mine - attributable production was 489,200 pounds; total
cash costs were $12 per pound sold.
- South Inkai Uranium Mine - attributable production was 769,700 pounds;
total cash costs were $20 per pound sold.
- Karatau Uranium Mine - attributable production was 521,100 pounds; total
cash costs were $7 per pound sold, which was lower than expected due to
deferred operational expenditure.
- Kharasan Uranium Project - attributable production during commissioning
was 43,600 pounds.
United States
The U.S. Nuclear Regulatory Commission ("NRC") issued a draft Materials
License for the Moore Ranch project in June 2010. This is the first new
license granted by the NRC for a U.S. ISR operation in almost 20 years. The
final Moore Ranch license is expected to be issued after the NRC has issued
its Supplemental Environmental Impact Statement, followed by a 30 day public
notice period.
Q2 2010 Financial Review
Revenue of $66.0 million was recorded in Q2 2010, 256% higher compared to
revenue of $18.6 million in Q2 2009 due to an increase in the volume sold,
somewhat offset by a lower realized sales price.
Operating expenses per pound sold decreased by 12% from $17 per pound in Q2
2009 to $15 per pound in Q2 2010, mainly due to lower operating costs at
South Inkai and the inclusion of Karatau in the most recent financial period.
The decrease in total average operating expenses, combined with the increased
revenue, resulted in a 270% increase in earnings from mine operations to
$24.4 million in Q2 2010 from $6.6 million in Q2 2009.
Attributable inventory as at June 30, 2010, which includes work in progress
as well as finished product ready to be shipped or in transit, was 3.3
million pounds compared to 3.0 million pounds as at March 31, 2010.
The adjusted net loss for Q2 2010 was $1.3 million, or nil per share,
compared to an adjusted net loss for Q2 2009 of $12.9 million, or $(0.03) per
basic share.
Consolidated cash and cash equivalents were $394.3 million as at June 30,
2010 compared to $148.5 million at December 31, 2009. Working capital was
$466.8 million at June 30, 2010.
Kazakhstan introduced a new tax code effective January 1, 2009 which amended
the basis for determining Excess Profits Tax ("EPT") charged on subsoil users
in the country. The Corporation has analyzed the EPT provisions in the new
tax code and consulted with its tax advisors and, in line with other
Kazakhstan uranium producers, has determined that EPT is currently not
payable on its uranium mining operations in Kazakhstan. In light of this
determination, Uranium One did not pay or accrue any EPT during 2009 and does
not expect to do so in the future.
The following table provides a summary of key financial results:
FINANCIAL Q2 2010 Q2 2009 YTD 2010 YTD 2009
SUMMARY
Attributable 1,780,000 815,500 3,500,200 1,516,400
production
(lbs) (1)
Attributable 1,517,500 385,100 2,281,900 1,265,700
sales (lbs)
(1)
Average 43 48 44 49
realized sales
price ($ per
lb) (2)
Average cash 15 17 16 17
cost of
production
sold ($ per
lb)(2)
Revenues ($ 66.0 18.6 101.5 61.5
millions)
Earnings from 24.4 6.6 33.3 22.5
mine
operations ($
millions)
Net loss from (9.7) (265.7) (31.2) (202.4)
continuing
operations ($
millions)
Loss per share (0.02) (0.57) (0.05) (0.43)
from
continuing
operations -
basic and
diluted ($ per
share)
Earnings / - 0.8 - (1.4)
(Loss) from
discontinued
operations ($
millions)
Earnings / - 0.00 - (0.00)
(Loss) per
share from
discontinued
operations -
basic and
diluted ($ per
share)
Net loss ($ (9.7) (264.9) (31.2) (203.8)
millions)
Net loss per (0.02) (0.56) (0.05) (0.43)
share - basic
and diluted ($
per share)
Adjusted net (1.3) (12.9) (20.5) (18.4)
loss ($
millions)(2)
Adjusted net (0.00) (0.03) (0.03) (0.04)
loss per share
- basic ($ per
share)(2)
Notes:
1. Attributable production and sales are from assets owned and in
commercial production during the period (for 2010: Akdala, South Inkai
and Karatau; for 2009: Akdala and South Inkai only).
2. The Corporation has included non-GAAP performance measures: average
realized sales price per pound, cash cost per pound sold, adjusted net
earnings/(loss) and adjusted net earnings/(loss) per share. 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.
The following table provides a reconciliation of adjusted net earnings /
(loss) to the consolidated financial statements:
3 months ended 6 months ended
Jun 30, Jun 30, Jun 30, Jun 30,
2010 2009 2010 2009
$(000`s) $(000`s) $(000`s) $(000`s)
Net loss from continuing (9,741) (265,726) (31,247) (202,370)
operations
Unrealized foreign exchange (513) 1,776 641 (67,123)
(gain) / loss on future
income tax liabilities
Impairment of mineral 670 251,064 1,886 251,064
interest, plant and equipment
and closure costs
Loss on sale of available for 8,259 8 8,218 8
sale securities
Adjusted net loss (1,325) (12,878) (20,502) (18,421)
Adjusted net loss per share - (0.00) (0.03) (0.03) (0.04)
basic ($)
Weighted average number of 587,495 469,690 587,466 469,652
shares (thousands) - basic
The quarterly 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
U.S. dollars unless otherwise indicated. All references to pounds sold or
pounds produced are to pounds of U3O8.
Update on Transaction with ARMZ
A notice of special meeting of shareholders and the management information
circular dated August 3, 2010 concerning the ARMZ transaction has been mailed
to shareholders of record as at July 29, 2010 and filed on SEDAR. As
previously announced, the Board of Directors has unanimously recommended that
shareholders vote in favour of the transaction at the special meeting of
Uranium One shareholders to be held in Vancouver, British Columbia on August
31, 2010.
The recommendation of the Board was made after considering, among other
factors, a report and recommendation to vote in favour of the transaction
from an Independent Committee of the Board, a favourable valuation and
fairness opinion from CIBC World Markets Inc. (financial adviser to the
Independent Committee), and a fairness opinion from BMO Capital Markets
(financial adviser to Uranium One). Further details regarding the valuation
and fairness opinions are contained in the Circular.
Japan Uranium Management Inc.
On and subject to closing of the ARMZ transaction, Japan Uranium Management
Inc. ("JUMI") has agreed to sell its convertible debentures to Uranium One
for a cash amount equal to 101% of the $269,100,000 principal amount thereof,
plus accrued and unpaid interest, pursuant to the change of control
provisions of the debentures.
As a result, the special dividend to be paid to Uranium One shareholders
(other than ARMZ) in connection with the closing of the ARMZ transaction has
now been fixed at US$1.06 per share.
Uranium One has also entered into an amended and restated offtake agreement
with JUMI, effective upon closing of the ARMZ transaction, providing the
members of the JUMI consortium, in lieu of JUMI`s previous offtake right,
with the option to purchase up to 2.5 million pounds of U3O8 per year from
Uranium One from 2014 to 2025, at a market-related price at the time of
delivery. The strategic relationship agreement between Uranium One and the
JUMI parties will also terminate upon the closing of the ARMZ transaction and
repayment of the JUMI debentures.
Conference Call Details
Uranium One will be hosting a conference call and webcast to discuss the
second quarter 2010 results on Monday, August 9, 2010 starting at 10:00 a.m.
(Eastern Time). Participants may join the call by dialling toll free 1-888-
231-8191 or 1-647-427-7450 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/en/webcast
A recording of the conference call will be available for replay for a two
week period beginning at approximately 12:00 p.m. (Eastern Time) on August 9,
2010 by dialling toll free 1-800-642-1687 or 1-416-849-0833 for local calls
or calls from outside Canada and the United States. The pass code for the
replay is 89639121. 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, and Australia.
For further information, please contact:
Jean Nortier
Chief Executive Officer
Tel: +1 604 601 5642
Chris Sattler
Executive 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.
Investors are advised to refer to independent technical reports containing
detailed information with respect to the material properties of Uranium One.
These technical reports are available under the profiles of Uranium One Inc
and UrAsia Energy Ltd. at www.sedar.com. Those technical reports provide the
date of each resource or reserve estimate, details of the key assumptions,
methods and parameters used in the estimates, details of quality and grade or
quality of each resource or reserve and a general discussion of the extent to
which the estimate may be materially affected by any known environmental,
permitting, legal, taxation, socio-political, marketing, or other relevant
issues. The technical reports also provide information with respect to data
verification in the estimation.
Scientific and technical information contained herein was prepared under the
supervision of and has been reviewed on behalf of the Corporation by Mr.
M.H.G. Heyns, Pr.Sci.Nat. (SACNASP), MSAIMM, MGSSA, Senior Vice President
Technical Services of the Corporation, a Qualified Person for the purposes of
NI 43-101.
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, 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 completion of the transaction described in this press release,
changes in market conditions, the actual results of current exploration
activities, conclusions of economic evaluations, changes in project
parameters as plans continue to be refined, project cost overruns or
unanticipated costs or expenses, 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, exchange rate and uranium price fluctuations, delays in
obtaining government approvals or financing or in completion of development
or construction activities, changes in, and the effect of government
policy,risks relating to the integration of acquisitions, to international
operations, to the price of uranium 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, 2009, 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 www.uranium1.com.
Sponsor
Nedbank Capital
Date: 10/08/2010 10:05:02 Produced by the JSE SENS Department.
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