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Uranium Energy Corp Reports Fiscal
2011 Production Results and Provides Operations Update
Corpus Christi,
TX, October 13, 2011 � Uranium Energy
Corp (NYSE AMEX: UEC, the "Company") is pleased to report financial
and production results for the fourth quarter and fiscal year ended July 31,
2011. Major
fourth quarter highlights
include the following:
- Production
increased and costs remain low: During the fourth quarter,
only the second full quarter of Palangana Mine
production, the Company produced 83,000 pounds of U3O8 in inventory,
including work-in-progress, as compared with 49,000 pounds in the
previous quarter. Since commencement of production in November
2010 through to July 31, 2011, the Company has produced a total of
153,000 pounds of U3O8 at a cash operating expense of approximately $13
per pound;
- The
Company signed its first multi-year sales contract;
- Both Palangana and Salvo projects received substantial
ongoing exploration and development;
- The
Company acquired the historically significant Anderson Mine project in
Arizona: In May 2011, terms were finalized to merge
with Concentric Energy Corp. to acquire the Anderson Mine uranium
project, a 7,581-acre mineral claim block located in Yavapai County,
Arizona, a former open-pit producer which has received 1,400 development
drill holes. This transaction completed after the close of the fourth
quarter;
- The
Company acquired the Coronel Oviedo Uranium Project in Paraguay:
This 247,000-acre (100,000-hectare) project area holds similar geology,
and similar geological potential, as the South Texas uranium belt; and
- The
balance sheet remains strong: As
of July 31, 2011, the Company remains debt-free with $30.7 million of
cash in the treasury and 153,000 lbs. of U3O8 in inventory.
Amir Adnani, President and Chief Executive Officer, stated,
"During our fiscal fourth quarter, we continued to make significant
progress with operations, delivering production growth at competitive
margins, validating our regional Texas �hub-and-spoke� strategy. With an eye
to the next up-cycle, we have been acquiring projects with significant
historical work at an attractive discount and with minimal dilution to the
Company. Concurrently, we see a groundswell of positive indicators emerging
for the nuclear industry, and are optimistic about the prospects for major
growth in the industry."
Palangana Mine - Production Update
Since production
began in November 2010 through to the July 31, 2011 fiscal year-end, the
Company has produced a total of 153,000 pounds of U3O8 in inventory,
including work-in-progress, at a cash operating expense of approximately $13
per pound. Well-pattern performance continued to improve with
production of 83,000 pounds of U3O8 during the fourth quarter of Fiscal 2011,
which represents only the second full quarter of Palangana
Mine production. The Company is stockpiling this uranium inventory for
future sales in the firming spot market, and anticipates generating its first
uranium sales this calendar year.
The three-phase
startup of Production Area-1 at the Palangana Mine
is continuing with the average depth of the wells at approximately 450
feet. Production initially commenced at the Phase I wellfield
(18 production and 27 injection wells) in November 2010, followed by the
Phase II wellfield (32 production and 22 injection
wells) in April 2011, with the final Phase III wellfield
(21 production and 18 injection wells) having commenced production in early
October.
Subsequent to the
July 31, 2011 year-end, field crews are addressing performance variations in
certain wells. As a result, indications for fiscal first quarter 2012
production range between 60,000 to 70,000 pounds U3O8. A number of injection
and production wells in the Phase 1 wellfield, the
smallest of the three fields, which has already produced 27% of the indicated
NI 43-101 resource of approximately 300,000 pounds, are being recompleted, and
new wells are being drilled to determine if plugging has occurred. Phase II
wells are also being evaluated and production is reduced there at least
temporarily. As noted above, the Phase III wellfield
commenced operations in early October.
Palangana - Ongoing Exploration and Development
During the fourth
quarter, the Company�s exploration group continued to direct and investigate
resource expansion efforts at Palangana. The
Company�s development team continues to bring Production Area-2 closer to
initial production with production drilling anticipated to start this
calendar year. Production Area-3 is progressing, with the application for
Production Area Authorization anticipated to be submitted by December 2011.
Goliad
Development Update
Subsequent to the
close of the fourth quarter, the Texas Commission on Environmental Quality
(TCEQ) has continued to make progress with the one remaining license needed
to initiate construction at the Goliad project, the Radioactive Materials
License (RML), which was received in draft form on August 29, 2011. The final
RML is anticipated this calendar year. Before the Company initiates in-situ
recovery of uranium at Goliad�s Production Area One, the regional
Environmental Protection Agency must complete its review of and concur with
the Aquifer Exemption which has already been granted to the Company by TCEQ.
Salvo
Exploration
Phase II drilling
of 47 holes in prospective new zones concluded during the summer of 2011 to
further expand the current Inferred Resource Estimate of approximately 2.8
million pounds. Metallurgical and other tests are also being performed to
reaffirm ISR amenability at Salvo. The project area was expanded during the
fourth quarter to include additional prospective zones.
Paraguay
Update
The Company has
acquired a 247,000-acre uranium property located in the area of Coronel
Oviedo, Paraguay. Share dilution to acquire the project was well below 1%.
The Coronel Oviedo Project is geologically very similar to the Company's
projects in the South Texas uranium belt and is anticipated to be
ISR-amenable as initially indicated through pump-test studies. This project
is an excellent fit for our technical team which has a distinctive track
record of discovering and advancing sandstone-hosted uranium deposits. The Company
plans to complete a 10,000-meter drill program early in Fiscal 2012.
Financial
Review
The following is
a financial review of the Company for the three months and twelve months
ended July 31, 2011, and should be read in conjunction with the consolidated
financial statements and management�s discussion and analysis as contained in
the Company�s Form 10-K filing available at the Company�s website at www.uraniumenergy.com or on EDGAR at www.sec.gov.
Results of Operations
For the three
months ended July 31, 2011, the Company recorded a net loss of $5.6 million
or $0.08 per share (2010 Q4: $7.2 million or $0.13 per share). For
Fiscal 2011, the Company recorded a net loss of $27.4 million or $0.40 per
share (Fiscal 2010: $14.5 million or $0.25 per share, which includes a gain
on sale of Cibola Resources, LLC of $8.5 million or $0.14 per share).
Expenses for Fiscal 2011 totaled $27.9 million (Fiscal 2010: $22.4 million)
and include $11.4 million (Fiscal 2010: $6.4 million) for mineral property
expenditures, $8.8 million (Fiscal 2010: $7.6 million) for general and
administrative, $6.3 million (Fiscal 2010: $7.0 million) for stock-based
compensation and $1.1 million (Fiscal 2010: $0.8 million) for depreciation,
depletion and accretion.
The Company has
grown substantially, particularly over the last two years since the
acquisition of the South Texas Mining Venture, L.L.P. in December 2009.
This resulted in the acquisition of the Corpus Christi office and existing infrastructure,
and focused the Company towards the commencement of production at the
Palangana Mine in November 2010, including preparation of the Hobson
Processing Facility, for most of Fiscal 2010 and the first half of Fiscal
2011. At July 31, 2011, we held uranium concentrates in inventory but
did not generate revenue from sales during Fiscal 2011.
The Company
announced its first multi-year uranium sales contract on June 16, 2011.
The sales contract provides for the delivery of 300,000 pounds of U3O8 over a
period of three years starting in August 2011, with the price to be based on
published market price indicators at the time of delivery.
Liquidity
Net cash used in
operating activities for the fiscal year ended July 31, 2011 was $23.7
million compared to $5.0 million last year. Net cash provided from
financing activities for the twelve months ended July 31, 2011 was $36.8
million compared to $1.2 million last year. Net cash used in investing
activities for the twelve months ended July 31, 2011 was $3.5 million
compared to net cash provided of $9.2 million last year. As of July 31, 2011,
the Company had cash and cash equivalents of $30.7 million.
Acquisitions
Update
The downturn in
the uranium market has provided the Company with an excellent opportunity to
make strategic acquisitions at attractive discounts to historical valuations.
The Company closed two transactions subsequent to the fourth quarter.
Anderson Project
in Arizona
The Company and
Concentric Energy Corp. ("Concentric") announced the completion of
the stock-for-stock merger (the "Merger") effected under the laws
of Nevada on September 9, 2011. Under the Merger, which was previously
announced on May 6, 2011, UEC has issued 1,253,440 common shares of the
Company to the former Concentric stockholders to acquire Concentric. The sole
purpose of the Merger was to acquire Concentric�s undivided 100% interest in
the Anderson Property, a 7,581-acre mineral claim block located in Yavapai
County, Arizona, with a previous history of small-scale, open-pit uranium
production.
With the
acquisition of the Anderson Mine project, UEC is now the leading uranium
player in Arizona, as well as in South Texas. Arizona is both a business and
energy-friendly state. Three of the largest nuclear power plants in the U.S.
are in Arizona, and all three plants have recently received their 20-year
license extensions.
South Texas
Uranium Exploration Data
Additionally, the
Company completed the acquisition of a South Texas uranium exploration data
package (the "Database") from Uranium One. Refer to the Company�s
news release dated August 31, 2011 which provides specific details on the
acquired data, as well as the history of the Database. This strategic
database is anticipated to significantly advance the Company�s ongoing exploration
efforts in South Texas.
Uranium
Market Update
During the Company�s fourth quarter ending July 31, 2011, the spot price of
uranium decreased from $55.50/lb. to $51.50/lb. according to the Ux Consulting Company. Since the earthquake and
tsunami in Japan occurred during March 2011, and as news of reactor damage at
the Fukushima nuclear power plant began emerging, the spot uranium price
declined very rapidly from $68.00/lb. to $50.00/lb. and has since stayed in a
narrow range. The primary sellers appeared to be financial institutions and
traders and the primary buyers were utilities and producers during this very
tumultuous time. Since then, the spot price seems to be finding strong
support in the low $50�s, and the longer term contract uranium price has
declined from $73.00/lb. to $64.00/lb., post-Fukushima, according to the Ux Consulting Company.
Looking forward, despite concerns generated by the Japanese developments, the
underlying uranium market fundamentals still point in favor of insufficient supply
relative to current and growing demand on a longer-term basis. The worldwide
nuclear build-out continues and the number of reactors currently under
construction totals 62 in 15 different countries. The largest percentage
of nuclear expansion is planned in China where 27 new-generation reactors are
currently under construction. China, India, Russia and South Korea continue
to lead the global nuclear build-out and these governments have reaffirmed
their commitment to nuclear energy post-Fukushima.
About Uranium Energy
Corp
Uranium Energy Corp is a U.S.-based uranium production, development and
exploration company operating North America�s newest emerging uranium mine.
The Company�s fully licensed and permitted Hobson processing facility is
central to all of its projects in South Texas, including the Palangana
in-situ recovery project, which is ramping up initial production, and the
Goliad in-situ recovery project which is in the final stages of mine
permitting for production. The Company�s operations are managed by
professionals with a recognized profile for excellence in their industry, a
profile based on many decades of hands-on experience in the key facets of
uranium exploration, development and mining.
Contact North
America: Investor Relations, Uranium Energy Corp:
Toll Free: (866)
748-1030
Fax: (361) 888-5041
E-mail: info@uraniumenergy.com
Stock Exchange
Information:
NYSE-AMEX: UEC
Frankfurt Stock Exchange Symbol: U6Z
WKN: A�JDRR
ISN: US916896103
Notice to U.S.
Investors
The mineral resources referred to herein have been estimated in accordance
with the definition standards on mineral resources of the Canadian Institute
of Mining, Metallurgy and Petroleum referred to in NI 43-101 and are not compliant
with U.S. Securities and Exchange Commission (the "SEC") Industry
Guide 7 guidelines. In addition, measured mineral resources, indicated
mineral resources and inferred mineral resources, while recognized and
required by Canadian regulations, are not defined terms under SEC Industry
Guide 7 and are normally not permitted to be used in reports and registration
statements filed with the SEC. Accordingly, we have not reported them
in the United States. Investors are cautioned not to assume that any part or
all of the mineral resources in these categories will ever be converted into
mineral reserves. These terms have a great amount of uncertainty as to
their existence, and great uncertainty as to their economic and legal
feasibility. In particular, it should be noted that mineral resources
which are not mineral reserves do not have demonstrated economic
viability. It cannot be assumed that all or any part of measured
mineral resources, indicated mineral resources or inferred mineral resources
will ever be upgraded to a higher category. In accordance with Canadian
rules, estimates of inferred mineral resources cannot form the basis of
feasibility or other economic studies. Investors are cautioned not to
assume that any part of the reported measured mineral resources, indicated
mineral resources or inferred mineral resources referred to in this news
release are economically or legally mineable.
Under NI 43-101 an issuer may disclose an estimate of the quantity and
grade of a historical mineral resource made before the instrument came into
force if the estimate is an estimate of mineral resources prepared by or on
behalf of a person or company other than the issuer and the disclosure
identifies the source and date of the historical estimate, confirms that the
historical estimate is relevant, comments on its reliability, and
explains any differences between the categories used in the historical
resource and those permitted by NI 43-101. Any such resources are historical in
nature and were compiled before the implementation of NI 43-101 reporting
standards, and the Company may not have independently verified
any such resource so is not treating them as current resources. Any
such historical
resources were prepared to industry standards in place at the time and are
considered relevant today. Any such estimate, although
prepared by experienced personnel and considered relevant should not be
relied on.
Safe Harbor
Statement
Except for the statements of historical fact contained herein, the
information presented in this news release constitutes "forward-looking
statements" as such term is used in applicable United States and
Canadian laws. These statements relate to analyses and other information that
are based on forecasts of future results, estimates of amounts not yet
determinable and assumptions of management. Any other statements that express
or involve discussions with respect to predictions, expectations, beliefs,
plans, projections, objectives, assumptions or future events or performance
(often, but not always, using words or phrases such as "expects" or
"does not expect", "is expected", "anticipates"
or "does not anticipate", "plans, "estimates" or
"intends", or stating that certain actions, events or results
"may", "could", "would", "might" or
"will" be taken, occur or be achieved) are not statements of
historical fact and should be viewed as "forward-looking
statements". Such forward looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from
any future results, performance or achievements expressed or implied by such
forward-looking statements. Such risks and other factors include, among
others, the actual results of exploration activities, variations in the
underlying assumptions associated with the estimation or realization of
mineral resources, the availability of capital to fund programs and the
resulting dilution caused by the raising of capital through the sale of
shares, accidents, labor disputes and other risks of the mining industry
including, without limitation, those associated with the environment, delays
in obtaining governmental approvals, permits or financing or in the
completion of development or construction activities, title disputes or
claims limitations on insurance coverage. Although the Company 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 such
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 contained in this news release and in any document referred to in
this news release.
Certain matters discussed in this news release and oral statements made from
time to time by representatives of the Company may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995 and the Federal securities laws. Although the Company believes that
the expectations reflected in such forward-looking statements are based upon
reasonable assumptions, it can give no assurance that its expectations will
be achieved. Forward-looking information is subject to certain risks,
trends and uncertainties that could cause actual results to differ materially
from those projected. Many of these factors are beyond the Company's ability
to control or predict. Important factors that may cause actual results to
differ materially and that could impact the Company and the statements
contained in this news release can be found in the Company's filings with the
Securities and Exchange Commission. For forward-looking statements in this
news release, the Company claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. The Company assumes no obligation to update or supplement
any forward-looking statements whether as a result of new information, future
events or otherwise. This press release shall not constitute an offer
to sell or the solicitation of an offer to buy securities.
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