Jean Nortier, Uranium One CEO
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» Improvements seen at Uranium One -- Jean Nortier, acting CEO
» Uranium prices softer in short term
» Uranium One plunges into deep Q1 loss
» SA uranium players ponder tie-ups

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Uranium One Q2 sales leap, secures $100m loan
Allan Seccombe
Posted: Wed, 02 Jul 2008

[miningmx.com] -- URANIUM One’s sales of U3O8 leapt higher in the second quarter during which it secured a $100m credit facility from two Canadian banks.

Uranium One reported in the first quarter of 2008 that it had a stockpile of 137,600 pounds (lb) of U3O8 and sold just 283,300 lb. In the quarter to end-June sales bounced to 685,000 lb, a 142% increase over the first quarter.

All of Uranium One's production for 2008 will be sold into contracts, which vary in size from quarter to quarter.
a marginally bullish overture starting to creep in
Acting CEO Jean Nortier sounded a cautiously bullish note on the state of the uranium market, which has seen prices come off sharply in recent months from near $95/lb to $59, according to the Ux Consulting Company website.

"The market has been soft, but there appears to be a marginally bullish overture starting to creep in," he told Miningmx. During the quarter the Bank of Montreal and the Bank of Nova Scotia agreed to extend a loan facility of $100m to Uranium One, which could use the money towards working capital as well as funding capital expenditure and acquisitions.

Combined with the cash the company already has, Uranium One has funds of $145m.

"At this point in our two-year plan we don't see anything we need to draw down on this loan for," Nortier said.

Being granted the loan showed there were large financial institutions that believed in the future of the company, he said.

A review of the mines' performances would be released by 15 August, he said.

The South Inkai mine in Kazakhstan turned in pre-commercial production of 479,500 lb of U3O8 in the five months to end-May this year, of which 335,600 lb was attributable to Uranium One.

Subject to approval of reserves by the State Committee for Geology, the Kazakhstan Ministry of Energy and Mineral Resources has approved the increase of production at South Inkai to 5.2 million lb/year from 780,000 lb. Uranium One’s attributable portion of that will be 3.6 million lb.

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This change was only expected in the first half of 2009 and is now expected to become effective in the second half of 2008.

The sulphuric acid shortage, which caused Uranium One, then under the leadership of Neal Froneman, to downgrade its 2008 production forecast in October 2007 by nearly three million lb to 4.6 million lb, appear to have eased.

Froneman said at the time the ramp up of South Inkai and the Kharasan mines in Kazakhstan was expected to be delayed because of a sulphuric acid shortage due to the delays in the completion of a local Kazakhstan copper smelter.

The 1.2 million tonne Kazakhmys Balkhash sulphuric acid plant began production in June. The plant will supply Uranium One’s subsidiaries in Kazakhstan will acid.

“While production levels at the Company’s operations in Kazakhstan have not to date been constrained by acid supply, the commissioning of the Balkhash plant is expected to ensure that this will continue to be the case,” the company said.

In South Africa, Uranium One has been given the go-ahead by the National Nuclear Regulator to start exploration drilling of shallow extensions of the Dominion mine from the start of July.

Uranium One expects to report on a stronger second quarter than the first, but there will still be accounting impairments to adjust for assets that were acquired at higher share prices, Nortier said.

The build up of production at Dominion remains slow. The mine will reach full production in 2010, but Nortier said the market would be able to look back from the fourth quarter of this year and "see positive improvements."