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Froneman calms U shortfall, license fears Posted: Thu, 15 Nov 2007 [miningmx.com] -- URANIUM One president and CEO, Neal Froneman, said the quality of the group's assets were unchanged even though uranium oxide production targets for 2007 and 2008 had been lowered. "There is absolutely no change in the quality of assets; there are no fundamental flaws," he said to analysts and press on a conference call. Uranium One's stock has traded steadily down since January and is about 48% lower; but the share's fastest decline was in the days after Uranium One announced on October 31 that 2008 production would be 37% lower owing to commissioning problems at its operations in South Africa and Kazakhstan. "We don't underestimate the challenges of commissioning, but we have the capacity, the experience and the right people in place to do it," he said. Froneman was speaking at the presentation of the group's operating and financial results for the nine months to September. The share was 3.7% lower on the JSE on Thursday closing at R56.28/share. On January 2, the stock was quoted at R96.39/share. There was also uncertainty regarding legislation passed in Kazakhstan, where Uranium One has uranium oxide producing assets and exploration prospects, which restated subsoil agreements. In terms of the law, certain contracts are to be revised in order to "restore the economic interets of Kazakhstan", according to a parliament statement on September 12. Froneman said these contract revisions did not apply to the uranium industry. "The potential changes are not designed for the uranium industry. We do not expect it to have any impact," he said. Uranium One reported a net loss of $23m for the nine months ended September compared to a net loss of $18.3m for the nine months ended October in 2006. The company's key South African asset, Uranium One had not yet declared commercial production but would do so in the first half of 2008, Froneman said. Froneman said Uranium One would not be required to buy uranium oxide from the spot market to cover contract obligations in 2008 following the production shortfall. "We were prudent," he said. Uranium One also had about 200,000 pounds of uranium oxide - equal to a full quarter's production - stored in inventories at its Dominion Reefs project which was "ample coverage for the sales contract," he said. Analysts, however, were clearly concerned about the reliability of production targets and asked for further disclosure on uranium oxide output levels. This was after Froneman said guidance would be provided annually. Click Here to subscribe to our daily newsletter
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