Uranium One Inc. ("Uranium One") today 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."
Uranium One will be hosting a conference call and webcast to discuss the situation at Dominion at 10:00 a.m. (Eastern Time) on Wednesday, October 22, 2008. Participants may join the call by dialing toll free 1-800-590-1817 or 1-416-644-3417 for local calls or calls from outside Canada and the United States. A live webcast of the call will be available through CNW Group's website at: www.newswire.ca/webcast
A recording of the conference call will be available for replay for a two week period beginning at approximately 12:00 p.m. today by dialing toll free 1-877-289-8525 or 1-416-640-1917 for local calls or calls from outside Canada and the United States. The passcode for the replay is 21286933. A replay of the webcast will be available on our website at www.uranium1.com.
<< Cautionary Statement No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. >>
Forward-looking statements: This press release contains certain forward-looking statements. Forward-looking statements include but are not limited to those with respect to the price of uranium, the estimation of mineral resources and reserves, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new deposits, success of exploration activities, permitting time lines, currency fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage and the timing and possible outcome of pending litigation. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes" or variations of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Uranium One to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, the actual results of current exploration activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, possible variations in grade and ore densities or recovery rates, failure of plant, equipment or processes to operate as anticipated, accidents, labour disputes or other risks of the mining industry, delays in obtaining government approvals or financing or in completion of development or construction activities, risks relating to the integration of acquisitions, to international operations, to prices of uranium and gold as well as those factors referred to in the section entitled "Risk factors" in Uranium One's Annual Information Form for the year ended December 31, 2007, which is available on SEDAR at www.sedar.com, and which should be reviewed in conjunction with this document. Although Uranium One has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Uranium One expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws.
%SEDAR: 00005203E
SOURCE: Uranium One Inc.
Jean Nortier, Chief Executive Officer, Tel: (604) 601-5642; Chris Sattler, Senior Vice President, Corporate Development and Investor Relations, Tel: (416) 350-3657; For further information about Uranium One, please visit uranium1.com