Dear Shareholder,
As we begin a new year, I would like to provide for you a
status report on the Company's accomplishments for the past
year. First and foremost, I would like to thank you as a UEC
shareholder for your continued support and confidence in the
Company and its management.
Despite 2011 having been a challenging year for the uranium
sector, UEC, as one of the few uranium producers worldwide,
was able to execute on its key objective of initiating and
ramping-up production at low cash costs. Strategic
acquisitions were also made to favorably position UEC for
long-term growth in the uranium sector.
With an emerging low-cost production profile, one of North
America's strongest technical teams and a growing base of
operations in South Texas -- combined with over $20 million
in cash and $7 million of uranium in inventory as of the
latest quarter end (October 31, 2011) -- UEC is well
positioned for strong growth and a rewarding 2012.
2011 Achievements and Upcoming Milestones:
South Texas Operations
- Mine construction to commence at Goliad ISR Project - As of December 2011, the Company has received all of the state-level permits to start construction at our 100%-owned Goliad project in South Texas. The procurement of materials and initial wellfield development is scheduled to commence in early 2012.
- Production Advances- At Palangana in South Texas, the Company initiated production at Production Area-1 (PAA-1) in November 2010. The nearby Hobson plant has processed more than 200,000 pounds of U3O8 from Palangana. Both facilities are establishing strong safety and environmental records.
- Uranium Sales - In October 2011, UEC generated revenues of $3.1 million by completing its first uranium sale for 60,000 pounds of U3O8 at an average sales price of $52 per pound and an average cash cost of $14 per pound. As of October 31, 2011, the Company had 134,000 pounds of U3O8 available for sale in inventory with a market value of $7 million.
-
Data Acquisition - In September 2011, UEC acquired the
South Texas uranium database package from Uranium One. This
database contains over 2.8 million feet of drilling results
and 40 uranium targets. The database is currently being
reviewed by the exploration team in order to identify
acquisition and exploration targets in an ongoing effort to
develop additional uranium sources for processing at the
Hobson plant.
- South Texas Exploration and Resource Development - In the second half of 2011 the Company's exploration team continued to direct and investigate resource expansion opportunities at the Palangana and Salvo projects.
The Company's development team continues to advance
Production Area-2 (PAA-2) at Palangana towards initial
production. PAA-2 is scheduled to commence operations in
April 2012. Production Area-3 (PAA-3) is also advancing with
a production application scheduled to be filed this
month.
The 2011 drilling campaign at the Company's Salvo project
resulted in an independent NI 43-101 Technical Report in
April 2011, which identified an inferred resource estimate of
2.8 MM lbs. of U3O8. Drilling with two rigs resumed in
October 2011 to further expand the current resource estimate
and is expected to continue throughout 2012. Additional
leases have been acquired to expand the project area to
include additional prospective zones.
Metallurgical and other tests are also being performed to
reaffirm ISR amenability at Salvo.
The Company has firmly established its "hub-and-spoke"
strategy in South Texas with four ISR projects in close
proximity to the Company's Hobson processing plant. Initial
operations have proven to produce uranium at low cash costs.
UEC is committed to increasing its resources and operations
in South Texas through acquisition, exploration and
permitting activities.
Corporate Acquisitions and Advancements
-
Property Acquisitions and Exploration in Paraguay - In
addition to the May 2011 acquisition of the 247,000-acre
uranium property located in the area of Coronel Oviedo,
Paraguay, the Company entered into an agreement in October
2011 to acquire a further six prospecting permits covering
740,000 acres in the same area, bringing the total land
package to nearly one-million acres. Globally, UEC now
controls one of the largest land packages with ISR
potential.
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 by pump-test studies. The Company has initiated a 10,000-meter drill program on this district-scale project. -
Property Acquisitions in Arizona - In September 2011, UEC
acquired a 100% interest in the Anderson project, a
7,581-acre mineral claim block located in Yavapai County,
Arizona, with a previous history of small-scale uranium
production. Anderson was brought to the feasibility stage
twice in the late 1970's by major mining companies. Company
geologists are analyzing all historic project data
including results from over 1,400 drill holes, with the
objective of completing an updated NI 43-101 Technical
Report during the first quarter of 2012.
In December 2011, UEC also acquired the Workman Creek project located in Gila County, Arizona. This project has over 400 exploration and development drill holes completed in the 1970's by Wyoming Minerals Corp, a subsidiary of Westinghouse. A positive feasibility study was completed on Workman Creek during the 1980's.
With the Anderson and Workman Creek acquisitions, UEC is now a leading uranium company in Arizona in addition to South Texas. - Analyst Coverage- Five recognized uranium analysts in the U.S. and Canada cover and report on the Company's developments. Most recently, Global Hunter Securities initiated coverage as of September 2011. The Company, and myself, were fortunate to receive continued international recognition through interviews with major news services including Bloomberg, Dow Jones and Reuters that were distributed globally.
Honoring Edward Robert Brezinski
Last month, we lost a key member of the UEC team and a
distinguished veteran of the nuclear industry. Edward Robert
Brezinski, Vice President of Marketing and Sales, passed away
at the age of 57 on December 10, 2011.
Ed was involved in the industry for more than 25 years. He began his career at Northeast Utilities as a lead purchaser of uranium, conversion, enrichment and fabrication services and later served as a trader with UG USA, NUKEM Inc., NYNCO and Energy Solutions. Ed first joined UEC in July 2007 as a member of the Advisory Board and was recently appointed as Vice President of Marketing and Sales in March 2011.
Ed's extensive knowledge of the uranium markets contributed
greatly towards UEC's growth and success. His tireless
efforts as a nuclear industry spokesperson benefited not only
the Company, but the entire industry as well. He will be
dearly missed.
Uranium Shortfall Continues and its Effects on the Uranium
Price
Despite the impact of Fukushima, the fundamentals of the
uranium sector remain intact and appear poised for both
near-term and long-term growth. There are currently 435
reactors operating, 62 reactors under construction, 156
reactors at the planning stage and 343 reactors under
proposal. China, India, Russia and South Korea, the four
major drivers of nuclear growth, have evaluated and renewed
their commitment to nuclear power.
In China alone, government sources have announced plans to
significantly increase Chinese nuclear capacity from 11GW
today to possibly 86GW or more by 2020. With the emerging
markets continuing to drive demand growth for nuclear power,
the outlook for the uranium industry remains strong.
For 2011, global uranium consumption was approximately 175
million pounds while uranium production is estimated to reach
only about 145 million pounds. To date, this shortfall has
been made up from secondary sources of uranium such as
government inventories, recycled materials, and down-blended
weapons-grade material provided under the HEU Agreement
between the U.S. and Russia, currently providing
approximately 24 million pounds of supply annually and set to
expire in 2013.
Despite this need for new production, current price levels in
the range of $50 to $55 per pound are insufficient to
incentivize the development of new conventional uranium
projects. At current prices for example, Kazakhstan, the
source of nearly all production growth in the last decade,
has indicated that no new uranium projects will be developed
and, at the same time, is attempting to minimize further
downward pressure on uranium prices by stabilizing its
production levels. Over the course of the previous year,
emerging supply constraints have also been exposed by
operational challenges at existing mines and delays at
development projects across the globe. Furthermore, secondary
sources are expected to decrease over the long-term,
especially with the expiry of the HEU agreement.
We view recent merger and acquisition activities in the
uranium sector by major companies including Rio Tinto and
China Guangdong Nuclear Power Corp., among others, as further
evidence that the outlook for the uranium sector remains
robust. As the sector nears major supply shortages and higher
uranium prices, UEC is extremely well positioned with
increasing production at low cash costs and a growing
portfolio of extensively explored and established uranium
projects.
As North America's newest uranium producer with a high-growth and low-cost profile, Uranium Energy Corp is positioned to make you a proud shareholder in 2012. Thank you again for your support and continuing contribution.
Stay in close touch by calling 1-866-748-1030, emailing info@uraniumenergy.com.
Best regards,
Amir Adnani
President and CEO
Uranium Energy Corp
About Uranium Energy Corp
Uranium Energy Corp. (NYSE-AMEX: UEC) 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 has been granted its Mine Permit and
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: AØJDRR
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 herein
are economically or legally mineable.
Safe Harbor Statement
Except for the statements of historical fact contained
herein, the information presented herein 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 herein and
in any document referred to herein.
Certain matters discussed herein 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 herein can be found in the Company's
filings with the Securities and Exchange Commission. For
forward-looking statements herein, 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 document
shall not constitute an offer to sell or the solicitation of
an offer to buy securities.
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