Uranium One Reports Increase in Quarterly Net Earnings
to $29.7 Million and Average Cash Cost per Pound Sold of $15 for Q2 2011
TORONTO, Canada and
JOHANNESBURG, South Africa, Aug. 8, 2011 /CNW/ - Uranium One Inc.
("Uranium One") today reported quarterly revenue of $112.9 million
for Q2 2011 based on sales of 2.0 million pounds at an average realized sales
price of $58 per pound at a total cash cost per pound sold of $15. Quarterly
production was 2.4 million pounds. Net earnings during Q2 2011 were $29.7
million, or $0.03 per share.
Q2 2011 Highlights
Operational
- Total
attributable production during Q2 2011 was 2.4 million pounds, 33% higher
than total attributable production of 1.8 million pounds during Q2
2010.
- The
average total cash cost per pound sold was $15 during Q2 2011, similar to
the average cash cost per pound sold during Q2 2010.
Financial
- Attributable
sales volumes during Q2 2011 were 2.0 million pounds, 33% higher than 1.5
million pounds sold during Q2 2010.
- Revenue
was $112.9 million in Q2 2011, 71% higher than $66.0 million in Q2 2010.
- The
average realized sales price during Q2 2011 was $58 per pound compared to
$43 per pound in Q2 2010. The average spot price in Q2 2011 was $56 per
pound.
- Earnings
from mine operations were $61.7 million during Q2 2011, a 151% increase
from earnings from mine operations of $24.6 million in Q2 2010 due to
increased sales volumes and an increase in the realized sales price and
similar operating expenses.
- Net
earnings during Q2 2011 increased by 450% to $29.7 million, or $0.03 per
share compared to net earnings of $5.4 million, or $0.01 per share Q2
2010.
- Adjusted
net earnings during Q2 2011 increased by 252% to $27.1 million, or $0.03
per share compared to adjusted net earnings of $7.7 million, or $0.01 per
share in Q2 2010.
Corporate
- On
June 7, 2011, Uranium One announced that its 51% shareholder, ARMZ, had
completed the acquisition of Mantra Resources Ltd. Uranium One became the operator of Mantra's Mkuju
River Project in Tanzania pursuant to agreements entered into with ARMZ in
connection with the closing.
Chris Sattler, Chief
Executive Officer of Uranium One, commented:
"The Uranium One team
continues to post strong operational and financial results in 2011. This
quarter saw a continued low cash cost with a higher than market average sales
price. Following the close of ARMZ's Mantra Resources acquisition, Uranium One
became the operator of the Mkuju River Project and we
continue to focus on integrating Mantra Resources and updating the Mkuju River Definitive Feasibility Study."
Outlook
The serious incident at
Fukushima will have near-term impacts on uranium demand due to loss of
capacity, program delays and extended outages due to inspections and upgrades;
however, broader growth rates for nuclear power remain robust on the strength
of the emerging markets of China, India, Russia and the Middle East. The
Corporation believes that market conditions will continue to be favourable for lower cost, diversified producers like
Uranium One.
Uranium One's total
attributable production guidance for 2011 remains at 10.5 million pounds and
12.5 million pounds in 2012.
Uranium One's attributable sales estimate for 2011 continues to be
approximately 9.5 million pounds and 12.0 million pounds in 2012.
Excluding optional
quantities under off-take agreements negotiated with ARMZ and the JUMI
consortium, the Corporation currently has contracts for the sale of an
aggregate of 21 million attributable pounds to utility customers, including 5
million pounds which will be sold at an average fixed price of $67 per pound
(subject to escalation) and 11 million pounds which has been contracted with weighted
average floor prices of approximately $47 per pound. The remainder
of contracted attributable sales are not subject to floors or ceilings
and such sales are related to the market price of U3O8 at
the time of delivery.
The Corporation reduced its
attributable capital expenditures estimate for 2011 to
$215 million from $234 million. The new estimate includes $71 million for wellfield development, $21 million for resource definition
drilling and $123 million for plant and equipment. The reduction was due to the
deferral of the Moore Ranch project, offset partially by the expansion of the
Willow Creek satellite facility and increased wellfield
development.
In 2011, general and
administrative expenses excluding non-cash items are expected to be approximately
$37 million, restructuring and other non-recurring costs are expected to be $7
million, and exploration expenses remain estimated at $7 million.
Q2 2011 Operations and
Projects
During Q2 2011, Uranium One
achieved attributable production of 2.4 million
pounds, an increase of 33% over attributable production of 1.8 million pounds
Q2 2010.
Operational results for
Uranium One's assets during Q2 2011 were:
Asset
|
Q2 Attributable
Production
(lbs U3O8)
|
Q2 Total Cash Costs
(per lb sold U3O8)
|
Akdala
|
480,100
|
$14
|
South
Inkai
|
620,700
|
$17
|
Karatau
|
568,800
|
$8
|
Akbastau
|
325,000
|
$11
|
Zarechnoye
|
246,300
|
$20
|
Kharasan
|
78,700
|
N/A(1)
|
Willow Creek
|
42,800
|
N/A(2)
|
Notes:
(1) The
Kharasan Uranium Project has commenced production but is in the commissioning
stage. Commissioning will be completed when a pre-defined operating level,
based on the design of the plant, is maintained and the Kazakhstan Government
has issued an operating license.
(2) Commissioning
at the Willow Creek Project commenced on December 20, 2010 with operation of
the initial well field at Christensen Ranch. Commissioning will be completed
when a pre-defined operating level, based on the design of the plant, is
maintained.
Q2 2011 Financial Review
Revenue of $112.9 million
was recorded in Q2 2011, 71% higher compared to revenue of $66 million in Q2
2010 due to an increase in both sales volumes and the average realized sales
price and similar operating expenses.
Earnings from mine
operations increased by 151% to $61.7 million in Q2 2011, compared to $24.6
million in Q2 2010.
Attributable inventory as
at June 30, 2011 was 3.9 million pounds, which includes work in progress as
well as finished product ready to be shipped or in transit.
Net earnings during Q2 2011
was $29.7 million, or $0.03 per share compared to $5.4 million or $0.01 per
share during Q2 2010.
The adjusted net earnings
for Q2 2011 was $27.1 million, or $0.03 per share compared to $7.7 million or
$0.01 per share in Q2 2010.
Consolidated cash and cash
equivalents were $318.4 million as at June 30, 2011 compared to $324.4 million
at December 31, 2010. Working capital was $233.3 million at June 30,
2011.
The following table
provides a summary of key financial results:
FINANCIAL
|
Q2 2011
|
Q2 2010
|
YTD 2011
|
YTD 2010
|
Attributable production (lbs) (1)
|
2,240,900
|
1,780,000
|
4,549,100
|
3,500,200
|
Attributable sales (lbs) (1)
|
1,952,100
|
1,517,500
|
3,633,700
|
2,281,900
|
|
|
|
|
|
Average realized sales price ($ per lb) (2)
|
58
|
43
|
59
|
44
|
Average cash cost of production sold ($
per lb)(2)
|
15
|
15
|
15
|
16
|
Revenues
($ millions)
|
112.9
|
66.0
|
214.8
|
101.5
|
Earnings from mine operations ($ millions)
|
61.7
|
24.6
|
112.9
|
34.3
|
Net
earnings ($ millions)
|
29.7
|
5.4
|
43.7
|
4.0
|
Net earnings per share - basic and diluted ($ per
share)
|
0.03
|
0.01
|
0.05
|
0.01
|
|
|
|
|
|
Adjusted net earnings / (loss) ($ millions)(2)
|
27.1
|
7.7
|
41.8
|
(2.8)
|
Adjusted net earnings / (loss) per share -
basic and diluted ($ per share)(2)
|
0.03
|
0.01
|
0.04
|
(0.00)
|
Notes:
(1) Attributable
production and sales are from assets owned and in commercial production during
the period (For Q2 2011: Akdala, South Inkai, Karatau, Akbastau and Zarechnoye;
for Q2 2010: Akdala, South Inkai and Karatau only).
(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:
|
Jun 30, 2011
$'millions
|
Jun 30, 2010
$'millions
|
Jun 30, 2011
$'millions
|
Jun 30, 2010
$'millions
|
Net
earnings
|
29.7
|
5.4
|
43.7
|
4.0
|
Fair value adjustments
|
(3.4)
|
(6.7)
|
(3.4)
|
(17.1)
|
Impairment of mineral interest, plant and equipment
and closure costs
|
-
|
0.7
|
-
|
1.9
|
Corporate development expenditure
|
0.2
|
-
|
0.9
|
-
|
Restructuring costs
|
0.6
|
-
|
0.6
|
-
|
Gain on sale of available for sale securities
|
-
|
8.3
|
-
|
8.4
|
Adjusted net earnings / (loss)
|
27.1
|
7.7
|
41.8
|
(2.8)
|
|
|
|
|
|
Adjusted net earnings / (loss) per share - basic ($)
|
0.03
|
0.01
|
0.04
|
(0.00)
|
Adjusted net earnings / (loss) per share - diluted
($) (1)
|
0.03
|
0.01
|
0.04
|
(0.00)
|
|
|
|
|
|
Weighted average number of shares (millions) - basic
|
957.2
|
587.5
|
957.2
|
587.5
|
Weighted average number of shares (millions) -
diluted
|
1,049.7
|
680.3
|
1,049.7
|
680.3
|
|
|
|
|
|
Notes:
(1) The
diluted earnings per share includes an adjustment increasing earnings and the
weighted average number of shares.
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 second quarter 2011 results on
Tuesday, August 9, 2011 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/en/webcast
A recording of the
conference call will be available for replay for a two week period beginning at
approximately 1:00 p.m. (Eastern Time) on August 9, 2011 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 85750202. 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.
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.
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 transactions 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, 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, 2010 and
Management Information Circular dated August 3, 2010, each of 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.
%SEDAR: 00005203E
.