For Uranium One, the Honeymoon’s over (August 14, 2008)

Vancouver – Uranium One‘s (UUU-T) decision to sell some of its earlier stage uranium properties this spring has hit it with a US$105 million impairment charge in its second quarter for a US$68 million loss and there will be more to come, Uranium One CEO Jean Nortier says in a conference call.

Nortier says he expects another charge in the third quarter with the potential sale or joint venture of its Australian Honeymoon project.

Although Nortier had said in this year’s first quarter he didn’t expect to sell any uranium properties, Uranium One has since decided to sell its smaller development projects and refocus its efforts on its core assets. These include the Dominion uranium mine in South Africa, the Akdala mine in Kazakhstan and the Moore Ranch project in the U.S. for which the company recently completed a feasibility study.

Investor relations manager Rob Buchanan says the decision to shed the Honeymoon project was painful, but that with capital limited, especially in today’s market, the company needs to be disciplined.

Buchanan says Uranium One ranked its priorities this spring and the Honeymoon project didn’t make the cut primarily because of its projected six year mine life. He says the company is focusing on longer life properties.

The Honeyoon project, located in the state of South Australia, holds an indicated resource of 1.2 million tonnes grading 0.24% U₃O₈. Construction on the project was expected to begin this year after Honeymoon received long awaited governmental approval.

Uranium One went as far as completing an 18-month leach trial and projected it would produce 880,000 lbs. of U₃O₈ a year. But now those plans are almost certainly on hold.

“I can’t speculate on the size of the impairment,” Nortier says of the impending sale of the Honeymoon project. He says the company is currently in discussion with potential suitors.

Buchanan adds that all options are on the table and that a deal could come in the form of a joint venture or an outright sale. One thing is for certain.

“The company’s not going ahead as 100% owner of the project,” he says.

On news of the second qurater results, Uranium One’s share price jumped 43 to close at $3.71. The price was likely buoyed by stumbling at Cameco‘s (CCO-T) Cigar Lake uranium project.

Uranium One also posted record uranium production numbers this quarter with 767,100 lbs. U₃O₈, 24% more than during the previous one.