Johannesburg - Uranium One could spend more than $1 billion (R7 billion) on increasing its uranium output from nothing last year to almost 28 million pounds a year by 2013 from 10 projects in South Africa, Australia, Kazakhstan and the US.
Chief executive Neal Froneman said yesterday that the group was looking to produce 2.5 million pounds of uranium this year from the Akdala mine in Kazakhstan as well as the Dominion mine near Klerksdorp, which has a uranium resource of more than 300 million pounds.
Corporate affairs director Jean Nortier said the group aimed to put in place a corporate debt facility of between $400 million and $500 million by the end of this year to fund acquisitions and projects. "We have been speaking to senior banks in Europe."
Following a merger between sxr Uranium One and Energy Metals, the new company, which will be the second-largest uranium mining company by market value, will have cash of $685 million.
Nortier said the expansion to almost 28 million pounds a year would be paid for out of existing cash resources as well as future cash flows. "We don't need to raise cash unless we have a large new project."
The first shipment of uranium from Dominion to Nufcor, a joint venture between between AngloGold Ashanti and Rand Merchant Bank, was made yesterday.
Uranium One plans to produce almost 500 000 pounds of uranium oxide at Dominion this year and 3.8 million pounds by 2011. Nortier said it took three months for uranium to be shipped offshore to a converter, so most of the money from this year's Dominion production would come through next year.
During commissioning, the mine and processing facilities experienced 70 days' worth of delays because of design failures and late delivery of stainless steel piping.
"Most of the problems have been in the processing," said Nortier.
Next year Uranium One expects to have five of its 10 uranium mines in production, including the South Inkai and Kharasan mines in Kazakhstan, Honeymoon in Australia, Dominion and Akdala.
Uranium One has 1 500 employees in South Africa, 250 in Kazakhstan and 65 in the US.
The price of uranium oxide peaked at a record $135 a pound last month before dropping slightly - its first decline in seven years. Froneman expected uranium oxide to climb to a record $150 a pound this year. "Long-run prices for uranium could move substantially higher."
The oxide price might take a breather for 18 months, or it could continue to ratchet up. "There is a poker game being played between the utilities and the uranium producers," Froneman said.
Uranium One rose 6.08 percent to R94.67 on the JSE yesterday. The general mining sector gained 2.07 percent.