Charlotte Mathews
17 November 2008
Johannesburg — URANIUM One, which recently put its Dominion mine near Klerksdorp on care and maintenance with the loss of about 1000 jobs, has written down its assets by a net $2bn because of weak market conditions.
It said on Friday it had taken other steps, apart from suspending operations at Dominion, to postpone capital expenditure, including deferring spending at the Hobson mine in the US, securing Mitsui as a partner to help fund the development of its Honeymoon project in Australia, and cutting exploration and corporate costs.
CE Jean Nortier said Uranium One had enough cash to develop its priority projects in Kazakhstan and the US. The company held $98,9m in cash at the end of September, and had since drawn down $65m from its credit facilities.
The company's share price, hit hard by production disappointments in the past year and the falling uranium price, gained 12% to 968c on the JSE, but had shed 1,8% to C$1,11 on the Toronto Stock Exchange by late afternoon. Despite the write-downs, the company reported higher sales and profit in the third quarter as well as unchanged costs. Revenue rose to $56,7m in the September quarter compared with $49,4m in the June quarter as Uranium One's attributable sales climbed 24% to 848100 pounds. It realised an average selling price of $67/lb compared with cash costs of $14/lb, unchanged from the June quarter.
The company again cut its forecast production for this year and next year. Earlier this year, Uranium One cut its production forecast for this year by a third to 3,15-million pounds and for next year by 15% to 6,8-million pounds, because of slower than expected underground development at Dominion.
Last month it said it had stopped work at Dominion as the project was no longer economic at today's uranium prices and as a result of rising cost pressures. It expected to incur $32m in closure costs and spend about $12m a year on care and maintenance.
It said it expected to produce only 2,8-million pounds of U308 this year.
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