Uranium One reports first quarter losses

Uranium One Inc. (U1, TSE:UUU) reported losses for the first quarter of 2013 and received $1.45 billion from its Russia-based major owner for initiatives aimed at business development.

Total Uranium One attributable production in the first three months of the year was 3.1 million pounds of U3O8 — 10% higher than its total attributable production of 2.8 million pounds in Q1 2012, and 7% lower than Q4 2012 production (see figure).

Compared to its first quarter figures for last year, U1 output at its Kazakhstan mines in the first quarter for 2013 increased only 4% while yellowcake production at its American and Australian facilities jumped by 113%.

Basov Uranium One chart

U1 attributable production dynamics by production facilities, pounds of U3O8


Revenue, including the revenue of joint ventures, of $62.6 million in Q1 2013 decreased by 34.7% compared to the $95.9 million in 2012, due to slumped sales volumes and a decline in the average realized sales price from $53 per pound to $47 per pound.

U1 attributable sales volume decreased on 22%, from 1.8 million pounds of U3O8 in Q1 2012 to 1.4 million pounds in Q1 2013.

The average total cash cost per pound sold was $17 per pound for Q1 2013, compared to $14 per pound for Q1 2012.

The net loss for Q1 2013 was $9.5 million or $0.01 per share, compared to net earnings of $4.5 million or $0.00 per share for Q1 2012.

The adjusted net loss for Q1 2013 was $4.3 million or $0.00 per share, compared to adjusted net earnings of $15.1 million or $0.02 per share for Q1 2012.

On March 25, 2013, U1 entered into a three year, unsecured revolving credit facility with its major owner, ARMZ Uranium Holding, for $1.45 billion. Drawn amounts bear interest at 3.3% per annum. The proceeds of the loan will be used for initiatives currently being evaluated by U1 to expand its business.

Thus, Q1 2013 production and financial results were quite controversial for one of the world’s biggest uranium producers. The aftermath of the Fukushima nuclear catastrophe still adversely affect global uranium market with declined demand and reduced spot prices.

On the other hand, long-term development indicators for the nuclear power industry remain strong and most analysts see potential rebound in uranium prices at the end of 2013 or early in 2014.

In this light, ARMZ’s $1.45 billion injection into U1 could be considered as another good signal of confidence for the weakened uranium market.

Image courtesy Uranium One