Uranium Energy Corp Reports Fiscal 2012 Q2 Production Results and Provides Operations Update
Corpus Christi, TX, March 12, 2012 � Uranium Energy Corp (NYSE AMEX: UEC, the �Company�) is pleased to report financial and production results for the second quarter ended January 31, 2012. Major second quarter highlights include the following:
- Completion of First Full Year of Production: This quarter marked the completion of the first full year of production, with a cumulative total of 236,000 pounds of U3O8 produced from Production Area-1 (PA-1) at an average cash cost(1) of $16 per pound. Of the 236,000 pounds produced, the Company has sold 120,000 pounds at an average price of $52 per pound generating revenues of $6.2 million and has 116,000 pounds available for sale in inventory with a market value of $6.0 million;
- Uranium Sales for the Quarter: UEC recorded revenue of $3.1 million resulting from the sale of 60,000 pounds of U3O8 at a sales price of $52 per pound with an average cash cost(1) of $17 per pound sold;
- Production Results for the Quarter: Production from Palangana�s PA-1 totaled 38,000 pounds and the Hobson facility processed 42,000 pounds of U3O8. Total cash costs(1) of production were stable with the prior quarter although the average cash cost(1) increased quarter-over-quarter due to lower production volume. During the six months ended January 31, 2012, the average cash cost(1) was $19 per pound. With Production Area-2 (PA-2) commencing production in late March 2012, the Company expects to maintain its low-cost production profile in subsequent quarters;
- Palangana�s Production Area-2 on Schedule for Start-up in late March 2012: Initial core leach studies have indicated very encouraging recovery yields;
- Palangana�s Production Area-3 to be Developed in Second Half of 2012: A permit application was filed with the Texas Commission on Environmental Quality (TCEQ) for Palangana�s Production Area-3 (PA-3) which was determined to be administratively complete and is now under a technical review. Similar to PA-2, initial core leach studies have indicated very encouraging recovery yields for PA-3, with wellfield development anticipated to commence in the second half of 2012;
- Two New Production Areas, 4 and 5, Have Been Identified: Work is underway to bring these zones into the production pipeline;
- Advanced Development Initiated at the Goliad ISR Project: The Radioactive Material License (RML) was received in December 2011, and was the final state authorization needed for start of construction at the Goliad ISR Project in South Texas, the Company�s second satellite project;
- Agreement to Acquire Cue Resources Ltd in an All-Stock Transaction: Cue�s Yuty ISR Project is on trend and south of the Company�s Coronel Oviedo Project in Paraguay;
- Drilling Continues at Coronel Oviedo Uranium Project in Paraguay: The 10,000-meter drilling program at this large ISR project commenced in late November 2011;
- Acquisition of Workman Creek Project in Arizona: The Company acquired an undivided 100% interest in the Workman Creek Project and subsequently established an inferred resource of 5.5 million pounds of U3O8; and
- The Company�s balance sheet remains strong: As of January 31, 2012, the Company had $16.9 million of cash in the treasury and 116,000 lbs. of U3O8 available for sale in inventory with a market value of $6.0 million. The Company is a debt-free, 100%-unhedged producer.
Palangana Mine - Production Update
During the six months ended January 31, 2012, the Palangana Mine produced 105,000 pounds of U3O8 and the Hobson facility processed 112,000 pounds of U3O8, at an average cash cost(1) of $19 per pound. During the three months ended January 31, 2012, the Palangana Mine produced 38,000 pounds of U3O8 and the Hobson facility processed 42,000 pounds of U3O8, at an average cash cost(1) of $27 per pound. It should be noted that the total cash costs(1) of production during the first and second quarters remained stable so that the increase in the average cash cost(1) per pound was a direct result of the lower pounds produced during the second quarter. With Production Area-2 (PA-2) commencing production in late March 2012, the Company expects to maintain its low-cost production profile in subsequent quarters.
Since the commencement of production to January 31, 2012, a total of 236,000 pounds at an average cash cost(1) of $16 per pound have been processed. At January 31, 2012, the Company had 116,000 pounds of U3O8 available for sale in inventory produced at an average cash cost(1) of $18 per pound, with a market value of $6.0 million based on an average uranium spot price of $52 per pound.
Production-to-date has been entirely from Production Area-1 (PA-1) at Palangana. Development of multiple Palangana production areas is well under way, with Production Area-2 (PA-2) scheduled next for start-up in late March 2012. A summary of Palangana�s Production Areas 1 through 3 and an introduction to the development of Production Areas 4 and 5 are provided below.
The three-phase startup of PA-1 at Palangana is continuing with the average depth of the wells at approximately 450 feet. Production initially commenced at the Phase I wellfield in November 2010, followed by the Phase II wellfield in April 2011, and the final Phase III wellfield having commenced production in early October 2011.
Performance variations at PA-1 continued to be addressed which included the addition of new wells to increase production capability at all three phases during the quarter. At Phase I, a combination of new well additions and the recompletion of existing injection and production wells resulted in the stabilization of production performance. At Phases II and III, in addition to the drilling of new wells, recompletion of existing injection and production wells were initiated in January 2012, and work is still underway.
At PA-2, wellfield drilling and casing continued through the quarter, with a majority of the wells being completed. Initial core leach studies have indicated very encouraging recovery yields. The first of two phases at PA-2 is on schedule for a late March 2012 start-up.
Palangana Mine � Development Update
At Production Area-3, a Production Area Authorization application was submitted to the TCEQ during the quarter which was determined to be administratively complete, and is now under technical review. Wellfield development of injection and production wells will coincide with the progress made on the TCEQ application, and may commence as early as this summer. Similar to PA-2, initial core leach studies have indicated very encouraging recovery yields.
The Company is pleased to be adding Production Areas 4 and 5 to the Palangana production pipeline. During the first quarter, exploration drilling was completed at these areas, with four drill rigs targeting several lightly explored areas. Three mineralized trends were further delineated by drilling 66 holes. Ore-quality mineralization in these trends occurs between 300 to 600 feet in depth. Additional delineation drilling and coring are scheduled to be conducted in these areas in the near future.
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