Uranium One profit falls on lower uranium price

Canada's No.2 uranium producer's profit was $4.5 million, in the quarter ended March 31. That compared with $14 million or 1 cent a share, in the year previous period. Adjusted to eliminate one-time items, profit was $15.1 million, or 2 cents a share, compared with $15 million, or 2 cents a share, in the first quarter of 2011.

Revenue fell 6 percent to $95.9 million as the average realized cost per pound of uranium dropped to $53 from $61. The company's regular cash cost per pound sold in the quarter was steady at $14.The spot price for uranium fell in March of last year following the Fukushima nuclear disaster led to reactor shutdowns in Japan and Germany. Despite the near term uncertainty, longer term insist remains strong as China, India, Russia and South Korea progress ahead with plans to ramp up atomic output.

Uranium One's sales volumes in the quarter rose 8 percent to 1.8 million pounds, even as production was 18 percent higher at 2.8 million pounds. The company expects to make 11.6 million pounds of uranium this year and 12.5 million pounds in 2013.

2011 Uranium Market Trends

In 2011, the uranium mining industry experienced a number of important events which had an impact on uranium prices and equity market volatility.

Germany, Italy and Switzerland have made policy decisions concerning nuclear energy which are not positive for the industry; however, these three countries joint represent a relatively small proportion of global demand for uranium totaling just about 5.8 percent of annual requirements. Following up with key points on the stipulate and supply arguments Mr. Khaliqi underscored “Germany’s stance to decommission all nuclear plants has also prompted other European nations to evaluation their policies. On the supply side, the biggest news story or catalyst in my view which will have substance impact on medium to long term prices is BHP’s (NYSE:BHP) planned expansion of Olympic dam. The expansion at Olympic Dam will considerably lift the mine’s annual production of uranium from 4ktpa to 19ktpa, adding major amounts of uranium to global supply.

Another key increase this year was the feasibility study of the Husab uranium project, a $1.7 billion uranium undertaking on the western coast of Namibia. Earlier in this month, Extract Resources Limited (ASX:EXT) was offered $2.2 billion by China Guangdong Nuclear Power Corp (CGNPC) designed for its Husab uranium project. This is of importance as the Husab project is the largest in-situ, and maximum grade, granite-hosted uranium deposit in Namibia. It is as well the fifth-largest uranium-only deposit in the world.

The Australian uranium exploration and mining companies may have seen enhanced regulatory conditions, as Australian prime minister, Julia Gillard, appeared intent to vary the current policy which did not allow uranium sales to India. India’s new rules to provide liability limitations for uranium producers and equipment suppliers in the case of a grave accident at Indian nuclear power plants saw a positive ending for all uranium producers.Earlier this month, the Nunatsiavut Assembly in Eastern Canada, lifted a suspension on uranium mining on Inuit land in Labrador after three years.