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Uranium One plunges into deep Q1 loss
Allan Seccombe
Posted: Thu, 15 May 2008
[miningmx.com] -- URANIUM One posted a dramatic downturn in fortunes during the three months to end-March as sales of U3O8 fell sharply. A higher received price soothed some of the sting of that reverse.
Uranium One’s production of U3O8 increased by nearly a third in the quarter to 618,900 pounds compared to the same period a year ago.
Sales, however, did not match that performance. Uranium One sold 283,300 lb of U3O8 at an average price of $79/lb. For the same period a year ago, 605,200 lb were sold for an average of $69/lb.
There was no immediate explanation for the drop off in sales.
"They are still struggling. They point out things will get better as the year progresses, but we still hold a wait-and-see approach before we'll consider recommending it to clients," said Gareth Tredway from Johannesburg-based stockbrokers Vestact.
"When Uranium One makes profits over a consistent period then we'll be happy to purchase it. We like the sector, just not this company right now. It's not a favourable entry into the sector because of the production difficulties they face," he said.
The total net loss was $115m against an $8m profit a year ago.
The company did not give a forecast of the next quarter or for the
year.
Uranium One had a 137,600 lb stockpile of saleable U3O8 at the end of March, which could be sold during the current quarter.
Uranium One could also sell its Honeymoon project in Australia, where development activities have been suspended, acting CEO Jean Nortier said.
"It's a matter of focusing management time on real assets in the group," Nortier said on a conference call, adding best value could be extracted from the asset through "corporate activity." The results of this process would be known in the next two quarters.
Neal Froneman, the chief executive of Uranium One, the company he founded, resigned in February with immediate effect because of rising tensions in the company due to missed production targets and the long hours it's taken to build the company.
The company is now led by acting CEO Jean Nortier.
“During the first quarter of 2008, Akdala Uranium Mine remained a steady, low cost operation for the Company
and South Inkai continued to exceed our production expectations," Nortier said.
"At our Dominion Project in South Africa we continued to make progress with new mining areas becoming available, which will pave the way for improved grades and higher production of underground ore as the year progresses. We are looking forward to initial production from our Kharasan project in Kazakhstan.”
In October 2007, Uranium One shares took a thorough beating from investors when it revised its production targets down by 37% for 2008 to 4.6 million lb because of problems in Kazakhstan and South Africa.
Uranium One is also selling its stake in Aflease Gold. It has sold a 43% stake in the gold company for $41m in April and an option by the buyers to acquire the remaining 38% as lapsed. The two parties are continuing talks about the sale of those shares.
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