While South Africa falters Uranium One says ops in Kazakhstan will lead to dividends
Despite its huge writedowns relating to its Dominion operation (see: Uranium One’s writedown shocker but acquisitions save the day) Uranium One’s (TSX, JSE:UUU) management gave the assurance today that first dividends would still flow from core operations in Kazakhstan in the current quarter, although the company was still battling with sulphuric acid supply in the country.Shareholders would definitely see the smooth payment of dividends in the final quarter of the year as construction loans to joint venture partners were repaid to the company in Kazakhstan. Thereafter, regular dividend payments could be expected from the Betpak Dala joint venture in the country."There are no issues that will affect the payment of dividends," said chief executive officer Jean Nortier.Nortier said today the company needed 40% to 50% more sulphuric acid next year than it obtained in 2008, in order to hit its production guidance for Kazakhstan on the head. Uranium one recognised the fact that it had to move closer to producing sulphuric acid for its own account and was therefore investing in the joiny venture sulphuric acid plant at Zhanakorgan.Supply was primarily a logistical issue and one that affected producers countrywide. For this reason, the company’s medium to long term strategy was to supply itself.He said the 2009 production forecast for its South Inkai mine (70%) in Kazakhstan was cut by 300, 000 pounds due to the issue of sulphuric acid availability. However, there were enough "drill holes" at South Inkai to increase production if more sulphuric acid became available.South Inkai starts commercial production next year and is currently expected to produce 2.1m pounds in 2009. Nortier said the company was making good progress with full government approvals for industrial production that will lead the ramp up to full production of 5.2m pounds. He said it was only awaiting final documentation.Uranium One’s Kharasan project would not so much be affected by the supply of sulphuric acid in order to achieve its production targets, but more by technical issues in the form of wells that required cleaning.Kharasan is expected to produce 650,000 pounds of uranium in 2009, of which 195,000 pounds would be attributable to Uranium One. The mine that started pilot production in the third quarter is expected to start industrial production in 2010 and to reach annual production of 5.2m pounds in 2012.Nortier said Kharasan had a large orebody which presented a real opportunity to expand production in future, but the current focus was only to get it into production.Uranium One also owns 70% of the Akdala mine in south Kazakhstan and expects the mine in steady production state to deliver 2.6m pounds of uranium next year. Uranium One has formed a joint venture with Kazatomprom and other parties to build a sulphuric acid plant at Zhanakorgan, near Kharasan, that will produce 500 000t per year after it is completed in 2011.The company will own 19% of the plant and plans to contribute $12m to the construction cost during fourth quarter 2008 and first quarter 2009 from working capital. Its remaining $28m funding commitment will be paid in 2010.