Uranium One to Place Dominion Operations on Care and Maintenance
Uranium One Inc. announced that its board of directors has decided to place the Dominion Uranium Project on care and maintenance.
The decision to place Dominion on care and maintenance reflects the significant deterioration in the Project’s economics associated with the continuing decline in uranium prices over the last year and significant inflation-related increases in Project costs, together with a slower than expected ramp-up in development and production.
The decision follows the completion of the Company’s detailed life of mine planning process and budget for the Project, which has shown that the Project would require a sustained recovery in uranium prices, as well as significant additional capital investment, in order to become economically viable. While the longer term fundamentals of the uranium market remain attractive, Uranium One is not able, in light of current credit and general market conditions, to incur the required additional capital investment at this time.
In accordance with the requirements of applicable South African legislation, Uranium One has initiated consultations with the National Union of Mineworkers and Uranium One’s joint venture partners with regard to today’s decision and will be providing notification thereafter to the South African regulatory authorities. In the meantime, Uranium One will be exploring strategic alternatives available to it at Dominion, including a sale or other disposition of its interest in the Project and, absent any improvement in Project economics, the potential closure of the Project.
Uranium One expected to produce 1.1 million pounds U(3)O(8) from Dominion in 2009; revised production guidance for the Uranium One group will be provided with the Company’s third quarter financial results in mid-November 2008. Uranium One is in the process of assessing the values at which the Dominion assets are carried in its financial statements.
Uranium One’s consolidated cash balance as at September 30, 2008 of US$99 million, together with the US$65 million subsequently drawn under Uranium One’s Canadian credit facility, will provide Uranium One with sufficient cash resources to permit it to continue with planned operational and capital expenditures in Kazakhstan and the United States, after providing for estimated suspension costs at Dominion.
Jean Nortier, Chief Executive Officer of Uranium One said, “While today’s decision is unfortunately the only course of action open to us in the current economic climate, we will be working with our joint venture partners and other Project stakeholders, with a view to identifying and evaluating all options potentially available for Dominion. At this time, I would like to express my sincere thanks to the management team and the workforce at Dominion – their dedication, hard work and support over the past several years have been greatly appreciated.”
Website : www.uranium1.com.
