Uranium Energy Corp Reports Fiscal 2013 Q1 Production Results and Provides Operations Update
NYSE MKT Equities Exchange Symbol – UEC
CORPUS CHRISTI, TX, Dec. 10, 2012 /PRNewswire/ – Uranium Energy Corp (NYSE MKT:
UEC, the “Company”) is pleased to report financial and production
results for the first quarter ended October 31, 2012. Major first
quarter highlights and subsequent events include the following:
-- The Goliad ISR Project is Fully Permitted for Production: The
Company has received all of the required authorizations from
the Texas Commission on Environmental Quality, including an
Aquifer Exemption which has also now received concurrence from
EPA Region 6. Goliad production will greatly increase
throughput of U3O8 at the Hobson plant;
-- Additional Production Areas at Palangana: Production Area-3
development was completed and production has now commenced,
with development and permitting activities continuing on
Production Areas-4 and 5;
-- Sale of 50,000 Pounds U3O8 Generated Revenues of $2.2 Million:
During the quarter, the Company sold 50,000 pounds of U3O8 at
$43 per pound for gross proceeds of $2.2 million, with a cash
cost per pound sold of $26 excluding royalties. Cash cost per
pound increased this quarter due primarily to lower production
volume;
-- Cumulative Sales to Date: Cumulative sales of U3O8 since
commencement of production to October 31, 2012 total 320,000
pounds at a cash cost per pound sold of $20 excluding
royalties;
-- Exploration Drilling on South Texas Projects Continues: The
Company completed extensive drilling campaigns on the Burke
Hollow and Channen Projects. Both projects are located within
50 miles of the Hobson plant; and
-- The Company's Balance Sheet Remains Strong: As of October 31,
2012, the Company had $17.2 million of cash in the treasury and
34,000 pounds of U3O8 available for sale in inventory with a
market value of approximately $1.4 million. The Company is a
debt-free, 100%-unhedged producer.
Palangana Mine – Production Update
During the three months ended October 31, 2012, the Palangana Mine
produced 29,000 pounds of U(3)O(8) from Production Areas-1 and 2, and the Hobson processing facility
processed 31,000 pounds of U(3)O(8). At October 31, 2012, the Company had 34,000 pounds of U(3)O(8) available for sale in inventory, with a market value of approximately
$1.4 million.
In early December 2012, with wellfields and well control facilities
already constructed, operations at Production Area-3 have commenced.
Initial core leach studies indicate encouraging recovery yields, and
the Company anticipates it will help to realize a higher level of
production at Palangana without recurrent fluctuations.
Development of additional Palangana production areas is well under way
as described below.
Palangana Mine – Development Update
At Production Areas-4 and 5, the Company has completed the acquisition
of environmental data to enlarge its mine area boundary, aquifer
exemption boundary and its radioactive material license area.
Applications to expand the boundaries are planned for January 2013.
Production Area-4 monitor well drilling is near completion. Baseline
sampling of monitor wells is expected in January 2013 followed by a
pump test to satisfy regulatory requirements.
Goliad ISR Project
On December 5, 2012, the Company announced that the final authorization
has been granted for production at its Goliad ISR Project in South
Texas. As announced in previous press releases, the Company received
all of the required authorizations from the Texas Commission on
Environmental Quality, including an Aquifer Exemption, and has now been
granted concurrence from EPA Region 6.
Construction at the Goliad ISR project is now accelerating. Once
production is achieved, throughput of U(3)O(8 )to the Hobson plant will significantly increase.
Burke Hollow Project Exploration Update
From May to October 2012, a total of 266 exploration and offset
delineation holes were drilled at the Burke Hollow Project totaling
109,830 feet. To date, the Company has explored approximately 25% of
the 17,510-acre project, and five uranium trends have been discovered.
The completion of an initial independently qualified resource statement
is underway. In addition, further delineation and exploration drilling
to define extensions of known trends is planned.
Environmental data collection has commenced and will continue throughout
2013. A drainage and ecology study is planned for the proposed mine
area during the spring of 2013 to initiate the permitting process.
Regional baseline wells to establish groundwater quality in the mine
area are also planned shortly after the New Year.
South Texas Exploration and Development Update
Salvo ISR Project
Additional exploration and delineation drilling is planned for the
proposed PAA-1 area in the future.
Channen Project
Forty-three exploration holes were drilled at the Channen Project during
the three months ended October 31, 2012, totaling 39,340 feet. Three
Lower Goliad mineralized horizons located between 700 and 820 feet in
depth have been encountered along an oxidation-reduction interface with
a length of over one mile to date.
Additional exploration drilling will be required in order to delineate
these fronts, with approximately 60% of the lease remaining unexplored.
Paraguay ISR Projects
On October 10, 2012, the Company published an NI 43-101 Exploration
Target at its Oviedo Project of 23-56 million pounds of U(3)O(8) covering a grade range of 0.040% to 0.052% U(3)O(8). The report was created from results of the Company’s 10,000-meter
drilling program, and the compilation of historical and other geologic
data. The complete report was filed October 15, 2012 on SEDAR((1)), and is also available on the Company’s website. Currently, company
geologists are performing detailed radon surveys over anomalous targets
developed through synthesis of historic and current exploration work.
The Company sees its Paraguay holdings – approximately one million acres
covered across the Yuty and Oviedo Projects – as a large-scale
ISR-amenable uranium district with geology that is very similar to that
of South Texas.
Financial Review
The following is a financial review of the Company for the three months
ended October 31, 2012, and should be read in conjunction with the
condensed consolidated financial statements and management’s discussion
and analysis as contained in the Company’s Form 10-Q filing available
at the Company’s website at www.uraniumenergy.com or on EDGAR at www.sec.gov.
Results of Operations
During the three months ended October 31, 2012, the Company recorded
revenue of $2.2 million resulting from the sale of 50,000 pounds of U(3)O(8) at an average sales price of $43 per pound. Cost of sales including
royalties of $0.3 million totaled $1.9 million, or an average $37 per
pound sold (comprised of cash cost excluding royalties of $26,
royalties of $5 and non-cash cost of $6), resulting in a gross profit
of $0.3 million.
During the three months ended October 31, 2012, the Company recorded a
net loss of $7.3 million or $0.09 per share (2012 Q1: $5.6 million or
$0.07 per share). Expenses totaled $7.6 million (2012 Q1: $6.9
million) and include $4.4 million (2012 Q1: $2.7 million) for mineral
property expenditures largely comprised of costs to complete PA-3
construction and exploration of the Burke Hollow and Channen Projects,
$2.7 million (2012 Q1: $3.9 million) for general and administrative and
$0.5 million (2012 Q1: $0.3 million) for depreciation, amortization and
accretion.
Liquidity
Net cash used in operating activities for the three months ended October
31, 2012 was $7.7 million (2012 Q1: $4.8 million). Net cash provided by
financing activities for the three months ended October 31, 2012 was
$0.0 million (2012 Q1: Net cash used in financing activities of $1.0
million). Net cash used in investing activities for the three months
ended October 31, 2012 was $0.1 million (2012 Q1: $1.3 million). At
October 31, 2012, the Company had cash and cash equivalents of $17.2
million and working capital of $16.2 million.
Uranium Market Update
On October 31, 2012, the spot price of uranium according to Ux
Consulting Company (“Broker Average Price”) was $40.63 per pound, down
$8.87 for the quarter. The spot price has since rebounded to $42.50 as
of December 3, 2012. The uranium spot price has again found support in
the low $40 range, rebounding from prior price lows established in 2009
and 2010. Meanwhile, the long-term uranium contract price maintained
stability and was quoted at $60.00 per pound in Ux Consulting Company’s
last report of the quarter on October 29, 2012.
The challenges to expand uranium supply will be compounded next year as
the Highly Enriched Uranium or HEU agreement between the U.S. and
Russia expires at the end of 2013. This will reduce secondary supply to
the global uranium market by 24 million pounds per year. The reduction
is anticipated to be significant given the current worldwide supply
imbalance to meet operating reactor requirements – 180 million pounds
of annual worldwide demand versus 140 million pounds of mined supply.
In the U.S., the supply demand imbalance is even more pronounced with
104 operating reactors consuming 55 million pounds of uranium annually
contrasted with domestic production of only 4 million pounds.
Current spot prices are significantly below levels needed to provide
enough economic incentive for new conventional mine development.
Analysts have stated prices need to be in excess of $80.00 per pound to
motivate producers to develop new projects. The current low spot price
has had the opposite effect, with several large scale projects
cancelled or postponed.
On the demand side, the worldwide nuclear build-out continues to be
strong, with the number of reactors currently under construction
totaling 65 in 13 countries. The emerging markets led by China, India,
Russia and South Korea are committed to nuclear energy, and continue to
lead the global expansion of new nuclear power plants being planned and
built.
About Uranium Energy Corp
Uranium Energy Corp is a U.S.-based uranium production, development and
exploration company operating North America’s newest emerging uranium
mine. The Company’s fully licensed and permitted Hobson processing
facility is central to all of its projects in South Texas, including
the Palangana in-situ recovery project, which is ramping up initial
production, and the Goliad in-situ recovery project which is now fully
permitted and under construction. The Company’s operations are managed
by professionals with a recognized profile for excellence in their
industry, a profile based on many decades of hands-on experience in the
key facets of uranium exploration, development and mining.
Stock Exchange Information:
NYSE MKT: UEC
Frankfurt Stock Exchange Symbol: U6Z
WKN: AØJDRR
ISN: US916896103
Notice to U.S. Investors
The mineral resources referred to herein have been estimated in
accordance with the definition standards on mineral resources of the
Canadian Institute of Mining, Metallurgy and Petroleum referred to in
NI 43-101 and are not compliant with U.S. Securities and Exchange
Commission (the “SEC”) Industry Guide 7 guidelines. In addition,
measured mineral resources, indicated mineral resources and inferred
mineral resources, while recognized and required by Canadian
regulations, are not defined terms under SEC Industry Guide 7 and are
normally not permitted to be used in reports and registration
statements filed with the SEC. Accordingly, we have not reported them
in the United States. Investors are cautioned not to assume that any
part or all of the mineral resources in these categories will ever be
converted into mineral reserves. These terms have a great amount of
uncertainty as to their existence, and great uncertainty as to their
economic and legal feasibility. In particular, it should be noted that
mineral resources which are not mineral reserves do not have
demonstrated economic viability. It cannot be assumed that all or any
part of measured mineral resources, indicated mineral resources or
inferred mineral resources will ever be upgraded to a higher category.
In accordance with Canadian rules, estimates of inferred mineral
resources cannot form the basis of feasibility or other economic
studies. Investors are cautioned not to assume that any part of the
reported measured mineral resources, indicated mineral resources or
inferred mineral resources referred to in this news release are
economically or legally mineable.
(1) In the Company’s subject technical report all tonnages, grade, and
contained pounds of uranium should not be construed to reflect a
calculated mineral resource (inferred, indicated, or measured). The
potential quantities and grades, as stated in the technical report, are
conceptual in nature and there has been insufficient work to date to
define a NI 43-101 compliant resource. Furthermore, it is uncertain if
additional exploration will result in the discovery of an economic
mineral resource on the project.
Safe Harbor Statement
Except for the statements of historical fact contained herein, the
information presented in this news release constitutes “forward-looking
statements” as such term is used in applicable United States and
Canadian laws. These statements relate to analyses and other
information that are based on forecasts of future results, estimates of
amounts not yet determinable and assumptions of management. Any other
statements that express or involve discussions with respect to
predictions, expectations, beliefs, plans, projections, objectives,
assumptions or future events or performance (often, but not always,
using words or phrases such as “expects” or “does not expect”, “is
expected”, “anticipates” or “does not anticipate”, “plans, “estimates”
or “intends”, or stating that certain actions, events or results “may”,
“could”, “would”, “might” or “will” be taken, occur or be achieved) are
not statements of historical fact and should be viewed as
“forward-looking statements”. Such forward looking statements involve
known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the Company to
be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements.
Such risks and other factors include, among others, the actual results
of exploration activities, variations in the underlying assumptions
associated with the estimation or realization of mineral resources, the
availability of capital to fund programs and the resulting dilution
caused by the raising of capital through the sale of shares, accidents,
labor disputes and other risks of the mining industry including,
without limitation, those associated with the environment, delays in
obtaining governmental approvals, permits or financing or in the
completion of development or construction activities, title disputes or
claims limitations on insurance coverage. Although the Company 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 such 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 contained in
this news release and in any document referred to in this news release.
Certain matters discussed in this news release and oral statements made
from time to time by representatives of the Company may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 and the Federal securities laws. Although
the Company believes that the expectations reflected in such
forward-looking statements are based upon reasonable assumptions, it
can give no assurance that its expectations will be achieved.
Forward-looking information is subject to certain risks, trends and
uncertainties that could cause actual results to differ materially from
those projected. Many of these factors are beyond the Company’s ability
to control or predict. Important factors that may cause actual results
to differ materially and that could impact the Company and the
statements contained in this news release can be found in the Company’s
filings with the Securities and Exchange Commission. For
forward-looking statements in this news release, the Company claims the
protection of the safe harbor for forward-looking statements contained
in the Private Securities Litigation Reform Act of 1995. The Company
assumes no obligation to update or supplement any forward-looking
statements whether as a result of new information, future events or
otherwise. This press release shall not constitute an offer to sell or
the solicitation of an offer to buy securities.
Contact Uranium Energy Corp Investor Relations at:
Toll Free: (866) 748-1030
Fax: (361) 888-5041
E-mail: info@uraniumenergy.com
SOURCE Uranium Energy Corp
