Uranium One Announces 33% Increase in Q1 2011 Production to a Record 2.4 Million Pounds; Average Cash Costs of $14 per Pound

TORONTO and JOHANNESBURG, May 11 /CNW/ - Uranium One Inc. ("Uranium One") today reported record quarterly revenue of $101.9 million for Q1 2011 based on sales of 1.7 million pounds at an average realized sales price of $61 per pound. Quarterly production was a record 2.4 million pounds at a total cash cost per pound sold of $14.

Q1 2011 Highlights

Operational Results

• Total attributable production during Q1 2011 was a record 2.4 million pounds, 33% higher than total attributable production of 1.8 million pounds during Q1 2010.
• The average total cash cost per pound sold was $14 during Q1 2011, 22% lower than the average cash cost per pound sold of $18 during Q1 2010.
• First full quarter of attributable production from the recently acquired Akbastau and Zarechnoye mines was 366,900 pounds and 231,000 pounds, respectively.

Financial Results

• Attributable sales volumes during Q1 2011 were 1.7 million pounds, 120% higher than 0.8 million pounds sold during Q1 2010.
• Revenue was $101.9 million in Q1 2011, 187% higher than $35.5 million in Q1 2010. The average realized sales price during Q1 2011 was $61 per pound compared to $46 per pound in Q1 2010. The average spot price in Q1 2011 was $68 per pound.
• Earnings from mine operations were $51.2 million during Q1 2011, a 428% increase from earning from mine operations of $9.7 million in Q1 2010, due to increased sales volumes, an increase in the realized sales price, and decreased operating expenses.
• Net income during Q1 2011 was $14.0 million, or $0.01 per share compared to a net loss of $1.4 million or nil per share during Q1 2010.
• Adjusted net income during Q1 2011 was $14.7 million, or $0.02 per share compared to an adjusted net loss of $10.5 million or $0.02 per share in Q1 2010.

Corporate

• On March 21, 2011, ARMZ and Uranium One announced revised terms for ARMZ's acquisition of Mantra Resources, initially announced on December 15, 2011. Uranium One's option to acquire Mantra from ARMZ was also revised to allow for the option period to be extended to 24 months.

Chris Sattler, Chief Executive Officer of Uranium One, commented:

"The Uranium One team continues to achieve our operational and financial objectives. This quarter saw continued, low cost growth from our operations and a smooth integration of our recently acquired Akbastau and Zarechnoye mines. This is an excellent start to 2011, and provides a solid platform for the Company to focus on integrating Mantra Resources following the closing of ARMZ's acquisition in June."

Outlook

Uranium One's total attributable production guidance for 2011 remains at 10.5 million pounds.

During 2011, the average cash cost per pound sold is expected to be approximately $18 per pound based on $14 per pound at Akdala, $19 per pound at South Inkai, $12 per pound at Karatau, $18 per pound at Akbastau, $21 per pound at Zarechnoye, $25 per pound at the Powder River Basin and $35 per pound at Honeymoon.

Uranium One's attributable sales estimate for 2011 continues to be approximately 9.5 million pounds and 12.0 million pounds in 2012.

The Corporation revised its attributable capital expenditures for the full year 2011 from $244 million to $234 million, of which $74 million is for wellfield development, $21 million for resource definition drilling and $139 million for plant and equipment.

In 2011, general and administrative expenses excluding non-cash items, are expected to be approximately $37 million, restructuring and other non-recurring costs are expected to be $7 million, and exploration expenses are expected to be $7 million.

Fukushima

On March 11, 2011, north-eastern Japan suffered the devastating impacts of a 9.0 magnitude earthquake and subsequent tsunami. These events and the consequent damage sustained at the Fukushima Dai-ichi nuclear power plant have, among other things, led to a reduction in uranium demand in Japan due to the permanent shutdown of the Fukushima facility and program delays or extended outages at other reactors, as well as a reduction in spot and term uranium prices.

While the impacts from Fukushima are not yet fully known, spot and term uranium prices have begun to recover and current indications are that global uranium demand is expected to be reduced downwards by only 5% over the next decade. As a result, uranium market conditions are expected to continue to be positive, particularly for diversified low cost producers such as Uranium One.

Q1 2011 Operations and Projects

During Q1 2011, Uranium One achieved attributable production of 2.4 million pounds, an increase of 33% over attributable production of 1.8 million pounds for the comparable period in 2010, and 14% higher than production of 2.1 million pounds recorded in the Q4 2010. The increase is primarily due to the inclusion of production from the recently acquired 50% interest in Akbastau and 49.67% interest in Zarechnoye.

Operational results for Uranium One's assets during Q1 2011 were:

Q1 2011 Financial Review

Revenue of $101.9 million was recorded in Q1 2011, 187% higher compared to revenue of $35.5 million in Q1 2010 due to an increase in both sales volumes and the average realized sales price.

Operating expenses per pound sold decreased by 22% to $14 per pound in Q1 2011 from $18 per pound in Q1 2010, mainly due to lower cash costs at South Inkai and Karatau.

The decrease in total average operating expense combined with increased revenue resulted in a 428% increase in earnings from mine operations to $51.2 million in Q1 2011, compared to $9.7 million in Q1 2010.

Attributable inventory as at March 31, 2011 was 3.6 million pounds, which includes work in progress as well as finished product ready to be shipped or in transit.

Net income during Q1 2011 was $14.0 million, or $0.01 per share compared to a loss of $1.4 million or nil per share during Q1 2010.

The adjusted earnings for Q1 2011 were $14.7 million, or $0.02 per share compared to an adjusted net loss of $10.5 or $0.02 per share in Q1 2010.

Consolidated cash and cash equivalents were $371.8 million as at March 31, 2011 compared to $324.4 million at December 31, 2010. Working capital was $225.2 million at March 31, 2011.

The following table provides a summary of key financial results:

Notes:

The following table provides a reconciliation of adjusted net earnings/(loss) to the consolidated financial statements:

Notes:

The financial statements, as well as the accompanying management's discussion and analysis, are available for review at www.uranium1.com and should be read in conjunction with this news release. All figures are in U.S. dollars unless otherwise indicated. All references to pounds sold or pounds produced are to pounds of U₃O₈.

Conference Call Details

Uranium One will be hosting a conference call and webcast to discuss the first quarter 2011 results on Wednesday, May 11, 2010 starting at 10:00 a.m. (Eastern Time). Participants may join the call by dialing toll free 1-888-231-8191 or 1-647-427-7450 for local calls or calls from outside Canada and the United States. A live webcast of the call will be available through CNW Group's website at: www.newswire.ca/en/webcast.

A recording of the conference call will be available for replay for a two week period beginning at approximately 1:00 p.m. (Eastern Time) on May 11, 2011 by dialing toll free 1-800-642-1687 or 1-416-849-0833 for local calls or calls from outside Canada and the United States. The pass code for the replay is 61777179.  A replay of the webcast will be available through a link on our website at www.uranium1.com.

About Uranium One

Uranium One is one of the world's largest publicly traded uranium producers with a globally diversified portfolio of assets located in Kazakhstan, the United States, and Australia.

Cautionary Statement

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

Investors are advised to refer to independent technical reports containing detailed information with respect to the material properties of Uranium One. These technical reports are available under the profiles of Uranium One Inc and UrAsia Energy Ltd. at www.sedar.com. Those technical reports provide the date of each resource or reserve estimate, details of the key assumptions, methods and parameters used in the estimates, details of quality and grade or quality of each resource or reserve and a general discussion of the extent to which the estimate may be materially affected by any known environmental, permitting, legal, taxation, socio-political, marketing, or other relevant issues. The technical reports also provide information with respect to data verification in the estimation.

Forward-looking statements: This press release contains certain forward-looking statements. Forward-looking statements include but are not limited to those with respect to the price of uranium, the estimation of mineral resources and reserves, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new deposits, success of exploration activities, permitting time lines, currency fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage and the timing and possible outcome of pending litigation. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes" or variations of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Uranium One to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, the completion of the transactions described in this press release, the future steady state production and cash costs of Uranium One, the actual results of current exploration activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, possible variations in grade and ore densities or recovery rates, failure of plant, equipment or processes to operate as anticipated, accidents, labour disputes or other risks of the mining industry, delays in obtaining government approvals or financing or in completion of development or construction activities, risks relating to the integration of acquisitions and the realization of synergies relating thereto, to international operations, to prices of uranium as well as those factors referred to in the section entitled "Risk Factors" in Uranium One's Annual Information Form for the year ended December 31, 2010 and Management Information Circular dated August 3, 2010, each of which is available on SEDAR at www.sedar.com, and which should be reviewed in conjunction with this document. Although Uranium One 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 forward-looking 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. Uranium One expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws.

For further information about Uranium One, please visit www.uranium1.com.