Jean Nortier, Uranium One CEO
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Uranium One suspends Dominion mine

Posted: Mon, 13 Oct 2008

[] -- URANIUM ONE, which has seen its share price tank in the past week, said it had temporarily suspended operations at its Dominion mine in South Africa because of labour issues. Three weeks of production could be lost, said CEO Jean Nortier.

"This action follows labour disruptions last week at the Project, which culminated in a general illegal strike," Uranium One CEO Jean Nortier said in a statement.

Nortier later told Miningmx another week or two of production would be lost on top of last week's lost output because Uranium One now has to replace more than half of its 2,200 workers at Dominion.

"We are not producing at the moment and during the next week or two we will not be producing either. We don't have the workers," Nortier said, explaining more than 1,000 workers in the mining and metallurgical divisions at the mine had been fired for embarking on an illegal strike.

"Not only do we lose about a month's production but it also pushes back the time we have higher production by a month," he said.

The 2008 production target for Dominion has been cut nearly in half to 320,000 lb of U3O8 from 590,000 lb. The chances of the company hitting that revised target are slim at best.

Dominion is in ramp-up mode and had pre-commercial production of 74,700 lb of U3O8 in the second quarter of 2008. Pre-commercial production in July was about 23,800 lb. Assuming similar levels in October, Uranium One is losing production of around 6,000 lb a week from Dominion.

Nortier declined to make any comment on production losses.

Asked if Dominion would be back in production in two weeks' time, Nortier said: "It's not possible to answer that question. We are working through all the issues at the moment and the options open to us. We'll give better guidance in a week or two."

Workers have ignored a ruling from the Labour Court ruling the strike illegal and have refused to return to work, he said.

Uranium One's share price has been in freefall since 26 September when it closed at R25.65. It closed on Friday at R7.47, nearly halving since the start of the strike on 6 October when it closed at R14.17.

Nortier said the fall in the share price was a result of hedge funds liquidating their positions not only in shares but also uranium metal, which is now at $49/lb.

"It's largely hedge fund liquidation. We have a very liquid stock compared to many companies in the same sector as us. Hedge funds have been liquidating everything they can. There's a dire need for liquidity and people are selling whatever they can sell," he said. "I don't think Dominion has anything to do with our share price performance."

An official from the National Union of Mineworkers said workers at the mine had been convinced and intimidated into staying away by a group called the Crisis Committee comprising eight people dismissed from Dominion, and who want to be re-instated.

The Committee had bolstered its numbers by calling on unemployed people in the nearby township to join them, giving them the numbers to intimidate workers and prevent them returning to the mine, the official said.

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"We have been calling on our members to return to work, but it's had little effect because people have been intimidated," he said. "We are dealing with thugs here who are holding workers to ransom."

The labour stoppage started on Monday and has lasted the entire week, he said.