Uranium One Announces a 5% Increase in Q3 2013 Production to 3.2 Million Pounds at an Average Total Cash Cost of $16 per Pound Sold

TORONTO, Nov. 5, 2013 /CNW/ - Uranium One Inc. ("Uranium One") today reported quarterly revenue of $220.8 million for Q3 2013, including joint venture revenue, based on sales of 6.0 million pounds at an average realized sales price of $37 per pound at an average total cash cost per pound sold of $16.

Uranium One also announced today an update of the existing mineral resource and reserve estimates for its operations in Kazakhstan, the United States, Australia and Tanzania, including new and significantly increased mineral resource and reserve estimates for its Akbastau and Karatau uranium mines.

Q3 2013 Highlights

Operational

• Total attributable production during Q3 2013 was 3.2 million pounds, 5% higher than total attributable production of 3.1 million pounds during Q3 2012.
• The average total cash cost per pound sold was $16 per pound for Q3 2013, compared to $16 per pound for Q3 2012.

Financial

• Attributable sales volumes for Q3 2013 were 6.0 million pounds sold from the Corporation's operations and joint ventures compared to 2.9 million pounds sold during Q3 2012.
• Revenue was $41.0 million in Q3 2013, compared to $8.5 million in Q3 2012.
• Joint venture revenue in Q3 2013 was $179.8 million, compared to $134.1 million in Q3 2012.
• The average realized sales price during Q3 2013 was $37 per pound, compared to $49 per pound in Q3 2012. The average spot price in Q3 2013 was $35 per pound compared to $49 per pound in Q3 2012.
• Earnings from mine operations were $10.4 million in Q3 2013, compared to $5.4 million in Q3 2012.
• Earnings from mine operations, including earnings from joint ventures, were $49.6 million in Q3 2013, a 15.7% decrease compared to earnings from mine operations, including joint ventures, of $58.8 million in Q3 2012.
• The net losses for Q3 2013 were $63.6 million or $0.07 per share, compared to net losses of $61.6 million or $0.06 per share for Q3 2012.
• The adjusted net earnings for Q3 2013 were $30.1 million or $0.03 per share, compared to adjusted net earnings of $7.3 million or $0.01 per share for Q3 2012.
• The Corporation impaired the Honeymoon project due to continuing difficulties in the production process and issues in attaining design capacity combined with high mine operation costs. The carrying value of Honeymoon was therefore written down by $67.8 million.

Corporate

• On January 13, 2013, the Corporation entered into a definitive agreement with ARMZ under which the Corporation would be taken private pursuant to a Plan of Arrangement. On March 7, 2013, the Corporation received security holder approval for the proposed Plan of Arrangement. The transaction was completed on October 18, 2013. ARMZ and its affiliates, which owned 51.4% of the Corporation's outstanding common shares and under the agreement, acquired all of the remaining publicly held Common Shares for a cash consideration of CDN$2.86 per share.
• On August 23, 2013, the Corporation made an offer to the holders of its Series 1 Ruble Bonds and redeemed RUB 11.8 billion (US$382.5 million) of the Series 1 Ruble Bonds. The Corporation also issued Series 2 Ruble Bonds for RUB 12.5 billion (US$380.7 million). There remains RUB 2.5 billion (US$81.0 million) of Series 1 Ruble Bonds in issue. The Corporation entered into six derivatives in September 2013 to economically hedge the Series 2 Ruble Bonds.

Outlook

The Corporation's total attributable production guidance for 2013 remains at 12.5 million pounds. Total attributable production for 2014 is expected to be 12.4 million pounds as shown below.

During 2014, the average cash cost per pound sold is expected to be approximately $18 per pound.

The Corporation expects attributable sales to be approximately 12.4 million  pounds in  2014.

The Corporation expects to incur attributable capital expenditures in 2014 of $65 million for wellfield development and $8 million for plant and equipment, totalling $73 million for its assets in Kazakhstan and the United States.

In 2014, general and administrative expenses, excluding non-cash items, are expected to be approximately $32 million and exploration expenses are expected to be $1 million.

Q3 2013 Operations and Projects

During Q3 2013, Uranium One achieved attributable production of 3.2 million pounds, an increase of 5% over attributable production of 3.1 million pounds for the comparable period in 2012.

Operational results for Uranium One's assets during Q3 2013 were:

Q3 2013 Financial Review

Revenue was $41.0 million in Q3 2013, compared to $8.5 million in Q3 2012. Joint venture revenue in Q3 2013 was $179.8 million, compared to $134.1 million in Q3 2012.

Operating expenses per pound sold were $16 for Q3 2013 compared to $16 in Q3 2012.

Earnings from mine operations were $10.4 million in Q3 2013, compared to $5.4 million in Q3 2012.

Earnings from mine operations, including earnings from joint ventures, were $49.6 million in Q3 2013, a 15.7% decrease compared to earnings from mine operations, including joint ventures, of $58.8 million in Q3 2012.

Attributable inventory as at September 30, 2013 was 0.7 million pounds, which includes work in progress as well as finished product. Finished product at conversion facilities awaiting pre-scheduled deliveries into sales contracts was 0.5 million pounds at September 30, 2013.

The net losses for Q3 2013 were $63.6 million or $0.07 per share, compared to net losses of $61.6 million or $0.06 per share for Q3 2012.

The adjusted net earnings for Q3 2013 were $30.1 million or $0.03 per share, compared to adjusted net earnings of $7.3 million or $0.01 per share for Q3 2012.

Consolidated cash and cash equivalents, including restricted cash of $1,932.8 million as at September 30, 2013 compared to $442.0 million at December 31, 2012. Working capital was $566.7 million at September 30, 2013.

The following table provides a summary of key financial results:

The following table provides a reconciliation of adjusted net earnings / (loss) to the consolidated financial statements:

The financial statements, as well as the accompanying management's discussion and analysis were prepared in accordance with International Financial Reporting (IFRS) and are available for review at www.uranium1.com and should be read in conjunction with this news release. Any reference to information including joint venture balances should be read as a non-IFRS measure used to compare our financial performance to prior periods. All figures are in U.S. dollars unless otherwise indicated.  All references to pounds sold or pounds produced are to pounds of U₃O₈.

Update of Existing Mineral Resource and Reserve Estimates

As at June 30, 2013 the total attributable proven and probable reserves at the Company's operations in Kazakhstan, the United States, Australia and Tanzania increased by 139% compared to previous estimates, from 61.005 million lbs U₃O₈ (23,465 tonnes U) to 145.924 million lbs U₃O₈ (56,129 tonnes U), while the total attributable measured and indicated resources increased by 98%, from 111.641 million lbs U₃O₈ (42,942 tonnes U) to 221.079 million lbs U₃O₈ (85,038 tonnes U).

The update includes new resource and reserve estimates for Akbastau and Karatau, showing significant increases in the attributable reserves and resources at both mines:

• at Akbastau, the Company's attributable share of proven and probable reserves increased by 354%, from 9.047 million lbs U₃O₈ (3,480 t U) to 41.075 million lbs U₃O₈ (15,799 t U), while the Company's attributable share of measured and indicated resources increased by 286%, from 15.919 million lbs U₃O₈ (6,125 t U) to 61.476 million lbs U₃O₈ (23,647 t U)
  
  
• at Karatau, the Company's attributable share of  proven and probable reserves increased by 674%, from 8.730 million lbs U₃O₈ (3,358 t U) to 67.543 million lbs U₃O₈ (25,980 t U), while the Company's attributable share of measured and indicated resources increased by 586%, from 12.102 million lbs U₃O₈ (4,661 t U) to 82.984 million lbs U₃O₈ (31,920 t U)

The new estimates, finalized in late October 2013 following review and verification by the Company's Qualified Person, result from the application of 3D modeling techniques to an extensive database of Kazakh Government drilling information which was made available to the Company for the first time. The new estimate does not include any resources for Zarechnoye South as the Company has determined that the mineral resources on this property are insufficient to support development.

Further information, including a breakdown of mineral resource and reserve estimates on a mine by mine basis, is attached as Appendix A to this news release.

About Uranium One

Uranium One is one of the world's largest uranium producers with a globally diversified portfolio of assets located in Kazakhstan, the United States, Australia and Tanzania.

Notes

Cautionary Statements

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

Scientific and technical information contained herein has been reviewed on behalf of the Corporation by Mr. M.H.G. Heyns, Pr.Sci.Nat. (SACNASP), MSAIMM, MGSSA, Senior Vice President New Business and Technical Services of the Corporation, a qualified person for the purposes of NI 43-101.

Investors are advised to refer to independent technical reports containing detailed information with respect to the material properties of Uranium One. These technical reports are available under the profile of Uranium One Inc. at www.sedar.com. Those technical reports provide the date of each resource or reserve estimate, details of the key assumptions, methods and parameters used in the estimates, details of quantity and grade or quality of each resource or reserve and a general discussion of the extent to which the estimate may be materially affected by any known environmental, permitting, legal, taxation, socio-political, marketing, or other relevant issues. The technical reports also provide information with respect to data verification in the estimation.

Forward-looking statements: This news 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 mineral 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, the timing and potential effects of proposed transactions, title disputes or claims, 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 completion of the transactions described in this press release, the future steady state production and cash costs of Uranium One, 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 and the realization of synergies relating thereto, to international operations, to prices of uranium 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, 2012, which is available under Uranium One's profile 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.

For further information about Uranium One, please visit www.uranium1.com.

For further information:

Chris Sattler
Chief Executive Officer
Tel: +1 647 788 8500

Anton Jivov
Vice President, Corporate Affairs
Tel: +1 647 788 8461

Resource and Reserve Estimation Methodology

In July 2013, Roscoe Postle Associates Inc. ("RPA") was engaged by Uranium One to undertake a review of existing mineral resource and reserve estimates for the Company's operations in Kazakhstan, the United States, Australia and Tanzania (other than Akbastau and Karatau, in respect of which new estimates prepared for the Company by CSA Global Pty Ltd. ("CSA") were considered) and to deplete those estimates for production based on production figures as at June 30, 2013. The final draft report was delivered to the Company on September 30, 2013; the process of review and verification of the draft report was completed by the Company's Qualified Person in late October 2013.

Depletion Methodology

Reserve estimates include dilution, an estimate for extraction, and are stated as "delivered to the plant". Mining depletion has in all cases been based on production data provided by Uranium One as at June 30, 2013. Resources were depleted on the basis of tonnes of uranium extracted divided by the planned extraction. Where production to date has exceeded the resource estimate for a given production block, the block was only depleted to the extent of the pre-existing resource estimate and any additional production was considered to be "production in addition to the resource/reserve estimate".

In some cases, depleted resource estimates were generated from the remaining reserve estimates, as the level of review did not include the re-estimation of resources where measured and indicated resources had been converted to reserves.  In cases where the changes could not be readily identified, RPA first depleted measured and then indicated resources.  In support of its reserve estimate for each property, RPA also reviewed production to date and the performance of the leach fields at the operations, in terms of extraction versus time and extraction versus pore volume exchanges.

Mineral Resource and Reserve Estimates for Akbastau and Karatau

CSA was engaged by Uranium One in November 2012 to prepare new resource and reserve estimates for Akbastau and Karatau following the provision by the Government of Kazakhstan for the first time of an extensive database of previously unavailable drilling data. Previously, estimates for the Company's mines in Kazakhstan were prepared in accordance with the Russian resource classification system (using a 2D polygonal geological modeling and estimation process) and then converted to the CIM resource classification system.  Direct access to the raw drilling data enabled the preparation for the first time of resource and reserve estimates at Akbastau and Karatau using the application of internationally recognized and more exhaustive 3D modeling techniques.

The resource estimates for Akbastau and Karatau were prepared by CSA and reviewed by RPA, and RPA also prepared the reserve estimates under contract to CSA starting in July 2013. RPA used CSA's Akbastau and Karatau resource block models to prepare the reserve estimates.  CSA re-estimated the global mineral resources for both deposits, using new wireframe models and interpolation of grades into block models based on the existing drilling data collected to date.  RPA applied a 90% extraction rate, the same rate as used in previous estimates, because it is supported by the extraction curves from the site.  In addition, RPA deducted a further 10% of the resources outside of the technological blocks to account for thin zones and other potential losses.  RPA recommends further review of the resource model and the location of potential surface interference to better define this value.  Where production from the technological blocks exceeded the planned extraction of 90%, RPA depleted the resource and reserve rock tonnages and uranium tonnage from the total estimate and considered any additional production to be "production in addition to the resource/reserve estimate".

The updated reserve estimates for Akbastau and Karatau are based on a cut-off of 0.01% U, 4 m thickness, and using an average long-term uranium price of US$65 per pound U₃O₈ (US$169/kg U).

RPA did not convert any of the resources at the Akbastau No. 4 deposit to reserves as the mining in this area is at the test production stage.

Qualified Persons

Except as otherwise noted, Mr. M.H.G. Heyns, Pr.Sci.Nat. (SACNASP), MSAIMM, MGSSA, CIM, Senior Vice-President of Uranium One, is the Qualified Person who prepared or supervised the preparation of the information that forms the basis of the scientific and technical disclosure on the Company's mineral properties contained in this press release, and all of the estimates set out herein, with the exception of those relating to the Mkuju River Project, have been reviewed by Roscoe Postle Associates Inc. under the supervision of its Qualified Person, Mr. Dennis Bergen, P. Eng., Associate Principal Mining Engineer.  The resource estimates for the Karatau and Akbastau mines were prepared for the Company by independent consultants CSA Global Pty Ltd., under the supervision of its Qualified Person, Dr. Maxim Seredkin, Senior Resource Geologist, and the reserve estimates were prepared by RPA, under the supervision of its Qualified Person, Mr. Denis Bergen. 

SOURCE Uranium One Inc.