Uranium One: Some Positives Exist Despite Q1Earnings Miss

Beleaguered miner Uranium One Inc. (SXRZF.PK) missed analyst estimates again in the first quarter, posting a loss of C$0.02 share versus an anticipated profit of C$0.02. This was due to weak sales at the Kazakhstan-based Akdala mine. Sales totaled 283,300 pounds, well below production of 431,500 pounds. This reflects the timing of the utility purchases, and the company downplayed it on a conference call.

"On a positive note, Akdala production costs remain low at $12 [a pound]," UBS Securities analyst Brian MacArthur wrote in a note to clients.

The bigger issue for this company is the Dominion mine in South Africa, which continues to disappoint. RBC Capital Markets analyst Adam Schatzker noted that "underground mined tonnage and grades continued to be poor," leading to production of just 42,900 pounds.

He wrote:

If substantial progress is not made, we think [Uranium One] may have to allocate uranium from other mines to service its Dominion contract.

On the other hand, Mr. Schatzker pointed out that pre-commercial production at the Inkai project (also in Kazakhstan) was impressive at 206,400 tonnes.

He also noted:

[Uranium One] will have to reduce the production rate given thee current pilot license capacity of 780,000 [pounds] per year.