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Press release from CNW Group

Uranium One Reports Increase in Quarterly Net Earnings to $29.7 Million and Average Cash Cost per Pound Sold of $15 for Q2 2011

Monday, August 08, 2011

Uranium One Reports Increase in Quarterly Net Earnings to $29.7 Million and Average Cash Cost per Pound Sold of $15 for Q2 201117:01 EDT Monday, August 08, 2011TORONTO, 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 HighlightsOperationalTotal 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.FinancialAttributable 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.CorporateOn 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."OutlookThe 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 ProjectsDuring 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:AssetQ2 Attributable Production(lbs U3O8)Q2 Total Cash Costs (per lb sold U3O8)Akdala480,100$14South Inkai620,700$17Karatau568,800$8Akbastau325,000$11Zarechnoye246,300$20Kharasan78,700N/A(1)Willow Creek42,800N/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 ReviewRevenue 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 $233.3 million at June 30, 2011.The following table provides a summary of key financial results:FINANCIALQ2 2011Q2 2010YTD 2011YTD 2010Attributable production (lbs) (1)2,240,9001,780,0004,549,1003,500,200Attributable sales (lbs) (1)1,952,1001,517,5003,633,7002,281,900     Average realized sales price ($ per lb) (2)58435944Average cash cost of production sold($ per lb)(2)15151516Revenues ($ millions)112.966.0214.8101.5Earnings from mine operations ($ millions)61.724.6112.934.3Net earnings ($ millions)29.75.443.74.0Net earnings per share - basic and diluted ($ per share)0.030.010.050.01     Adjusted net earnings / (loss)  ($ millions)(2)27.17.741.8(2.8)Adjusted net earnings / (loss)  per share - basic and diluted ($ per share)(2)0.030.010.04(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 $'millionsJun 30, 2010$'millionsJun 30, 2011 $'millionsJun 30, 2010$'millionsNet earnings29.75.443.74.0Fair value adjustments(3.4)(6.7)(3.4)(17.1)Impairment of mineral interest, plant and equipment and closure costs-0.7-1.9Corporate development expenditure0.2-0.9-Restructuring costs0.6-0.6-Gain on sale of available for sale securities-8.3-8.4Adjusted net earnings / (loss)27.17.741.8(2.8)     Adjusted net earnings / (loss) per share - basic ($)0.030.010.04(0.00)Adjusted net earnings / (loss) per share - diluted ($) (1)0.030.010.04(0.00)     Weighted average number of shares (millions) - basic957.2587.5957.2587.5Weighted average number of shares (millions) - diluted1,049.7680.31,049.7680.3     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 DetailsUranium 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/webcastA 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.comAbout Uranium OneUranium 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 StatementNo 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. For further information: Chris Sattler Chief Executive Officer Tel: + 1 647 788 8500 Anton Jivov Manager, Corporate Development and Investor Relations Tel: +1 647 788 8461