Johannesburg - Uranium One hopes to draw a line under its operational woes from November when it would disclose fresh capital expenditure plans as well as an update on the development of its Dominion mine, said newly appointed CEO, Jean Nortier.
"We've not disclosed our capital planning because we don't want to disappoint the market," Nortier said. "We hope to have more details by the end of the fourth quarter, certainly before November 5."
Uranium One missed several production targets at its South African mine, Dominion which ultimately resulted in the resignation of company founder, Neal Froneman.
During that time, Uranium One's share price was in free-fall. Its shares are now about 70% off its 52-week high of R91.80 per share. Nortier said the company's shares had performed the worst of its peer group. It was last trading at R27.11 per share.
Forecast production from Dominion has now been dropped to 320 000 pounds of uranium oxide (lb of U3O8) from the previous estimate of 590 000 lbs in March.
This, in turn, was an adjustment from the original production estimate of 2 million lbs for 2008. Total group production has been kept at about 3.1 million lbs for 2008.
"The numbers on Dominion were credible," Nortier said of the missed production figures. "It was an honest and genuine plan to bring Dominion into production."
He blamed production failure on "ramp up issues" which were complicated by power interruptions, unskilled labour problems and below par development rates at Dominon's underground mine.
Our annual target is do-able," said Nortier of the 320 000 lbs planned from the mine. However, other company prospects could be sold as the company attempts to conserve available cash, estimated to last it another 12 months.
This could include either the separate listing of its Honeymoon prospect in western Australia, or the sale of a stake in the mine to a partner. The latter solution was preferred, said Nortier. "We don't want to go back to the market," said Nortier. In June, Uranium One raised $100m in a revolving credit facility.
Meanwhile, Nortier could not rule out further write-downs of assets. "I don't see any on the horizon now, but you can't tell."
Uranium One announced a $105.1m write-down on assets in its second quarter results presentation. It also said it would sell certain North American assets.
Nortier conceded the company's highly active merger and acquisition activity at the top of the uranium market was coming home to roost. "Sure, you will take some non-cash impairments when this happens.
"But these are non-cash items and they don't affect our true bottom-line profitability which has improved quarter-on-quarter," he said. "We know there have been problems but we're confident in our future."
One major change from Froneman's tenure as CEO is the appointment of a chief operating officer. Plans to appoint to this position were far down the line, Nortier said.
Nortier said he was confident in the future of the uranium market where spot prices for the metal had increased from $20/lb in 2003 to more than $100/lb four years later. However, the company was entering into long-term contracts which were currently averaging about $80 to $90/lb.
"When you see we are producing uranium oxide from operations at about $14/lb, you've got to think that's not a bad margin," he said.
- Fin24.com