Uranium One revised its uranium resources, production estimates and senior management in a major announcement. The simultaneous 32% reduction in 2008 production and departure of CEO Neal Froneman saw stock prices drop over 20%.
|Dominion (Image: Uranium One)
The 32% drop in uranium oxide (U3
) production forecast for 2008 equates to over 1.4 million pounds of U3
. Production estimates for 2009 have also been downwardly revised by 15%.
The company mainly put the disappointing news down to slower-than-expected underground development at the new Dominion uranium mine in South Africa, partly due to the country's power shortages and equipment failures. Uranium One said it was investing in diesel generators for those times when South African power supplier Eskom asks major power users to cut back.
Other factors in the production slump are problems at two of Uranium One's three uranium mines in Kazakhstan. Akadala appears to be on target, but South Inkai has had its 2008 forecast reduced due to a shortage of the sulfuric acid used to leach uranium from sandy soils. Another Kazakh mine which Uranium One has a stake in, Kharasan, is due to start up in 2008.
The poor production figures were compounded in the eyes of investors by the departure of CEO Neal Froneman, and Uranium One stock fell by around 20% on the Toronto Stock Exchange. Jean Nortier, who currently serves as executive vice president, will act as interim CEO; David Hodgson will become chief operating officer.
Resources firming up
Aside from production problems, Uranium One also announced a substantial increase of 73% in the 'indicated resources' at Dominion, to 51,000 tonnes of U3O8. About two thirds of this represents reclassification from the less-firm category of 'inferred resources'.
Production from Dominion in 2007 - its first year - was 78 tonnes of U3O8, and that expected in 2008 is 270 tonnes. Full production of 1730 tonnes U3O8 was earlier anticipated by 2011.