U miners ride rollercoaster as recession bites

17 March 2009

The world's uranium miners continue to see ups and downs in their fortunes. Vancouver-based Uranium One remains bullish about 2009 prospects despite a $2.4 billion writedown in its assets, while other miners and would-be producers report varying experiences.

Uranium One's newly announced 2008 results reflect a year in which lower uranium prices saw earnings from mine operations fall by 5% despite increases in production and sales of 41% and 37% respectively. The company also wrote down $3.3 billion on its mineral interests, plant and equipment, although it expects income tax recoveries to make the net writedown $2.4 billion. Gross of tax recovery, the writedown was made up of $1.8 billion on the Dominion mine in South Africa, $0.9 billion on US exploration properties, $0.2 billion on the Honeymoon ISL project and Australian exploration, $0.1 billion each on US conventional mining properties and a further $0.1 billion on the Hobson and La Palangana ISL projects in the USA.

Nevertheless, Uranium One CEO Jean Nortier remained upbeat about the outlook for 2009, describing the company's balance sheet as one of the strongest in the uranium industry. "We expect that we will be able to take advantage of opportunities today that will enhance our position in what we continue to believe will be a bright future for the nuclear industry tomorrow," he said.

Nortier confirmed that the company would consider selling further non-core assets "to a limited extent", with due diligence already being carried out for a possible sale of the Dominion mine. Dominion was placed on care and maintenance in October 2008 following start-up troubles and cost increases as the uranium price fell. Uranium One forecasts that it will cost $12 million to keep the mine on care-and-maintenance in 2009, the same as the company's planned exploration expenditure for the year.

Nonetheless, the company is expecting around 3.5 million pounds U3O8 (1346 tU) of attributable production from its Kazakh interests in 2009 and anticipates an increase in its inventory levels from 1.2 million pounds U3O8 (462 tU) at the end of 2008 to 1.8 million pounds (692 tU) by the end of 2009.

Bluerock pulls out of Denison agreement

Bluerock Resources has pulled out of a toll milling and ore purchase agreement with Denison Mines saying that it is unable to meet its obligations under the agreement due to current market conditions. The agreement was signed by Bluerock and Denison for toll milling at Denison's White Mesa mill in January 2008. Under the agreement, Bluerock was to deliver 25,000 tonnes of ore per year into Denison's ore purchase program. Subsequent ore deliveries were to be stockpiled at the White Mesa mill and processed under a toll milling agreement.

Now, Vancouver-based Bluerock says that it will attempt to restructure its business interests in the light of "continuing negative economic and market conditions," and says it intends to continue operating as a mineral exploration company.

Denison's White Mesa mill is currently the only conventional uranium mill operating in the USA.

Rio out of Mulofwe

Meanwhile, Zambezi Resources has announced that Rio Tinto Mining and Exploration has withdrawn from the Mulofwe Uranium Joint Venture. According to Zambezi, Rio's withdrawal from the Zambian project as it changes its focus onto a "a few core projects" due to budget cuts across the company. As of 16 March, Zambezi Resources had suspended its securities from official quotation pending a company announcement.