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Uranium One Announces 23% Increase in Q3 2012 Production to 3.1 Million Pounds; Average Total Cash Costs of $16 per
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 5, 2012
Uranium One Announces 23% Increase in Q3 2012 Production to 3.1 Million
Pounds; Average Total Cash Costs of $16 per Pound Sold and Attributable
Sales of 2.9 Million Pounds
Toronto, Ontario – Uranium One Inc. (“Uranium One”) today reported quarterly revenue
of $142.6 million for Q3 2012 at an average total cash cost per pound sold of $16 based
on sales of 2.9 million pounds at an average realized sales price of $49 per pound.
Attributable production for the quarter was 3.1 million pounds.
Q3 2012 Highlights
Operational
Total attributable production during Q3 2012 was 3.1 million pounds, 23% higher
than total attributable production of 2.5 million pounds during Q3 2011.
The average total cash cost per pound sold was $16 per pound during Q3 2012
compared to $14 per pound during Q3 2011.
The Kharasan Mine was successfully commissioned and reached commercial
production during Q3 2012.
Production of sulphuric acid commenced in July 2012 at the Corporation’s SKZ-
U joint venture.
Financial
Attributable sales volumes for Q3 2012 were 2.9 million pounds, compared to
3.1 million pounds sold during Q3 2011.
Revenue was $142.6 million in Q3 2012, compared to $157.7 million in Q3 2011.
The average realized sales price during Q3 2012 was $49 per pound compared to
$51 per pound in Q3 2011. The average spot price in Q3 2012 was $49 per pound.
Earnings from mine operations were $58.8 million during Q3 2012, compared to
earnings from mine operations of $73.7 million in Q3 2011.
The net loss for Q3 2012 was $61.6 million or $0.06 per share, compared to net
earnings of $45.8 million or $0.05 per share for Q3 2011.
The adjusted net earnings for Q3 2012 were $7.6 million or $0.01 per share,
compared to adjusted net earnings of $46.4 million or $0.05 per share for
Q3 2011.
The Corporation determined that it would not be economical to mine the South
Zarechnoye deposit due to the decrease in uranium prices since the Fukushima
incident, together with a decrease in the South Zarechnoye resource base resulting
from recent exploration results and the completion of an economic assessment.
The carrying value of the Zarechnoye Mine was therefore written down by $79.1
million, net of deferred taxes of $11.1 million.
Corporate
The Corporation now owns 100% of the Honeymoon project after receiving all
regulatory approvals for the withdrawal of Mitsui from the joint venture. The
Corporation recognized a gain of $17.2 million as a result of the transaction.
The United Arab Emirates announced the award of $3 billion worth of fuel supply
contracts to six global suppliers, including Uranium One. This long term contract
will meet a portion of the uranium requirements of the Barakah Nuclear Power
Station scheduled to start up by 2017.
Uranium One also concluded its first Chinese contract during Q3 2012, which
calls for the supply of uranium to China Guangdong Nuclear Power Corporation
in 2012 and 2013.
On October 15, 2012, the Tanzanian government issued an environmental impact
assessment certificate to Mantra Tanzania in respect of the Mkuju River
Project. Issuance of the certificate completes Mantra’s application for a Special
Mining License for the Project and represents a significant permitting milestone.
Chris Sattler, Chief Executive Officer of Uranium One, commented:
“Despite volatility in the uranium price over the last several weeks, our view of the
positive long-term fundamentals for our industry has not changed. We remain focused on
achieving our production, cost and sales targets for our operations. We are well-
positioned to take advantage of projected higher uranium prices with our diversified and
low cost production portfolio and our strategy of remaining an unhedged producer.”
Outlook
Market prices for Q3 2012 ranged between $46.50 and $49.50 per pound U3O8 (month-
end UxC spot). After trading at or above $50 per pound for the better part of one year,
the uranium market broke through that level as a result of ample spot supplies meeting
demand of a more discretionary nature. This became even more pronounced in the early
part of Q4 2012 with the price currently residing at around $41. Selling activity has been
dominated by producers closing sales for year-end cash flow, and by traders unwinding
long positions or engaged in short-selling. Fundamentals for the medium and long term,
however, remain positive, especially following the announced deferrals of a number of
large, high profile uranium mining projects.
The Corporation’s total attributable production guidance for 2012 remains at 11.6 million
pounds. Total attributable production for 2013 is estimated to be 12.5 million pounds as
shown below.
Operation 2013 Attributable
Production Estimate (M lbs)
Akdala 1.8
South Inkai 3.3
Karatau 2.6
Akbastau 1.9
Zarechnoye 1.1
Kharasan 0.5
Willow Creek 0.8
Honeymoon 0.5
Total 12.5
Attributable production for 2014 is estimated to be 13.0 million pounds.
During 2013, the average cash cost per pound sold is expected to be approximately $19
per pound, in line with our guidance of $19 per pound for 2012.
Operation 2013 Total Cash Cost
per Pound Sold ($/lb)
Akdala $15
South Inkai $19
Karatau $13
Akbastau $13
Zarechnoye $26
Kharasan $30
Willow Creek $27
Honeymoon $37
Weighted Average $19
Sales volumes for 2012 are heavily weighted towards the last quarter of the year, and the
Corporation expects to achieve guidance for sales of 11 million pounds in 2012. The
Corporation expects attributable sales to be approximately 12.5 million and 13.0 million
pounds in 2013 and 2014, respectively.
The Corporation expects to incur attributable capital expenditures in 2013 of
$107 million for wellfield development and $66 million for plant and equipment,
totalling $173 million for its assets in Kazakhstan, the United States and Australia.
2013 - ESTIMATED CAPITAL EXPENDITURE IN $
MILLIONS
PLANT AND
MINE / PROJECT WELLFIELD
EQUIPMENT TOTAL OWNERSHIP TOTAL
DEVELOPMENT
AND OTHER %
100% ATTRIBUTABLE
Kazakhstan
Akdala 11 21 32 70% 22
South Inkai 31 25 56 70% 39
Karatau 30 22 52 50% 26
Akbastau 25 16 41 50% 21
Zarechnoye 32 4 36 49.67% 18
Kharasan 30 4 34 30% 10
SKZ-U - 4 4 19% 1
Subtotal – Kazakhstan 159 96 255 137
Australia and United States
Honeymoon 5 3 8 100% 8
Willow Creek and the Powder River Basin 20 6 26 100% 26
Other - 2 2 2
Subtotal – Australia and United States 25 11 36 36
Total 184 107 291 173
In 2013, general and administrative expenses, excluding non-cash items, are expected to
be approximately $40 million and exploration expenses are expected to be $8 million.
Q3 2012 Operations and Projects
During Q3 2012, Uranium One achieved attributable production of 3.1 million pounds,
an increase of 23% over attributable production of 2.5 million pounds for the comparable
period in 2011.
Operational results for Uranium One’s assets during Q3 2012 were:
Asset Q3 Attributable Production Q3 Total Cash Costs
(lbs U3O8) (per lb sold U3O8)
Akdala 494,400 $13
South Inkai 903,400 $18
Karatau 722,300 $11
Akbastau 345,400 $11
Zarechnoye 312,300 $24
Kharasan (1) 117,100 $28
Willow Creek(1) 186,4 -
Honeymoon 11,200 N/A
(1) Attributable production and sales are from assets owned and in commercial production during the period. Willow Creek and Kharasan
reached commercial production levels effective from May 1, 2012 and July 1, 2012, respectively and sales and production results for
these mines are included in the operating results for the periods after these dates.
Q3 2012 Financial Review
Revenue was $142.6 million in Q3 2012, compared to $157.7 million in Q3 2011. The
average realized sales price during Q3 2012 was $49 per pound compared to $51 per
pound in Q3 2011. The average spot price in Q3 2012 was $49 per pound.
Operating expenses per pound sold were $16 for Q3 2012 compared to $14 in Q3 2011.
Earnings from mine operations were $58.8 million during Q3 2012, compared to earnings
from mine operations of $73.7 million in Q3 2011.
Attributable inventory as at September 30, 2012 was 5.6 million pounds, which includes
work in progress as well as finished product. Finished product at conversion facilities
awaiting pre-scheduled deliveries into sales contracts was 0.9 million pounds at
September 30, 2012.
The net loss for Q3 2012 was $61.6 million or $0.06 per share, compared to net earnings
of $45.8 million or $0.05 per share for Q3 2011.
The adjusted net earnings for Q3 2012 were $7.6 million or $0.01 per share, compared to
adjusted net earnings of $46.4 million or $0.05 per share for Q3 2011.
Consolidated cash and cash equivalents were $442.3 million as at September 30, 2012
compared to $619.0 million at December 31, 2011. Working capital was $628.7 million
at September 30, 2012.
The following table provides a summary of key financial results:
YTD YTD
FINANCIAL Q3 2012 Q3 2011 2012 2011
Attributable production (lbs)(1) 3,081,300 2,351,900 8,452,600 6,901,000
Attributable sales (lbs)(1) 2,865,800 3,086,500 6,558,800 6,720,200
Average realized sales price ($ per lb) (2) 49 51 51 56
Average total cash cost per pound sold ($ per lb)(2) 16 14 15 14
Revenues ($’millions) 142.6 157.7 335.3 372.5
Earnings from mine operations ($’millions) 58.8 73.7 148.2 186.6
Net (loss) /earnings ($’millions) (61.6) 45.8 (27.9) 89.5
Net (loss) / earnings per share – basic and diluted ($ per share) (0.06) 0.05 (0.03) 0.09
Adjusted net earnings ($’millions)(2) 7.6 46.4 33.3 86.8
Adjusted net earnings per share – basic ($ per share)(2) 0.01 0.05 0.03 0.09
(1) Attributable production and sales are from assets owned and in commercial production during the period. Willow Creek and Kharasan
reached commercial production levels effective from May 1, 2012 and July 1, 2012, respectively and sales and production results for
these mines are included in the operating results for the periods after these dates.
(2) The Corporation has included non-GAAP performance measures: average realized sales price per pound, cash cost per pound sold,
adjusted net earnings and adjusted net earnings 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. See “Non-GAAP Measures”.
The following table provides a reconciliation of adjusted net earnings / (loss) to the
consolidated financial statements:
(US DOLLARS IN MILLIONS EXCEPT PER SHARE 3 MONTHS ENDED 9 MONTHS ENDED
AMOUNTS) SEP 30, 2012 SEP 30, 2011 SEP 30, 2012 SEP 30, 2011
$’MILLIONS $’MILLIONS $’MILLIONS $’MILLIONS
Net (loss) / earnings (61.6) 45.8 (27.9) 89.5
Fair value adjustments - (1.3) 0.3 (6.8)
Impairment charges (net of deferred taxes of $11.1 million) 79.1 - 79.1 -
Gain on business combination (17.2) - (17.2) -
Care and maintenance costs 0.3 0.2 1.2 0.9
Corporate development expenditure 0.2 0.1 2.6 1.0
Restructuring costs 1.5 1.6 1.5 2.2
Ruble bond hedge accounting adjustments 5.3 - 4.1 -
Non-recurring income tax adjustment - - (10.4) -
Adjusted net earnings 7.6 46.4 33.3 86.8
Adjusted net earnings per share – basic ($) 0.01 0.05 0.03 0.09
Adjusted net earnings per share – diluted ($) 0.01 0.05 0.03 0.09
Weighted average number of shares (millions) – basic 957.2 957.2 957.2 957.2
Weighted average number of shares (millions) – diluted 957.2 957.2 957.2 957.2
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 U.S. dollars unless otherwise
indicated. All references to pounds sold or pounds produced are to pounds of U3O8.
Conference Call Details
Uranium One will be hosting a conference call and webcast to discuss the third quarter
2012 results on Tuesday, November 6, 2012 starting at 10:00 a.m. (Eastern Time).
Participants may join the call by dialing 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 or at Uranium
One’s website at www.uranium1.com.
A recording of the conference call will be available for replay for a two week period
beginning at approximately 11:30 p.m. (Eastern Time) on November 6, 2012 by dialing
toll free 1-855-859-2056 or 1-416-849-0833 for local calls or calls from outside Canada
and the United States. The pass code for the replay is 55321879. 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, Australia and Tanzania.
For further information, please contact:
Chris Sattler
Chief Executive Officer
Tel: +1 647 788 8500
Anton Jivov
Vice President, Corporate Affairs
Tel: +1 647 788 8461
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 profile of Uranium One Inc. 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 quantity 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.
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, the timing of uranium processing facilities being
fully operational, costs of production, capital expenditures, costs and timing of the development of new deposits, success of
exploration activities, permitting time lines, currency fluctuations, market conditions, corporate plans, objectives and goals,
requirements for additional capital, government regulation of mining operations, the estimation of mineral resources and reserves,
the realization of resource and reserve estimates, environmental risks, unanticipated reclamation expenses, the timing and potential
effects of proposed acquisitions, 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 projects described in this press release, the future steady state production and cash costs of Uranium
One, 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, possible shortages of sulphuric acid in Kazakhstan, possible changes to the tax code in Kazakhstan, 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 and the realization of synergies relating
thereto, to international operations, to prices 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, 2011, 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
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