UrAsia interim financial results
Trading Symbol (TSXV: UUU and AIM:UUU)
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For the three months ended October 31, 2006
(All amounts are in United States dollars (US$) unless otherwise noted)
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VANCOUVER, Dec. 29 /CNW/ - UrAsia Energy Ltd. (the 'Company' or 'UrAsia')
is pleased to report the Company's unaudited interim consolidated financial
results for the three months ended October 31, 2006
The Company is a Canadian-based uranium mining and development company
that is focused on the development and operation of low cost, in-situ leach
uranium projects in Central Asia. On November 7, 2005 UrAsia acquired indirect
interests in three uranium projects in the Republic of Kazakhstan, including
the Akdala operating mine "Akdala" and the South Inkai uranium project "South
Inkai" and the Kharassan uranium project "Kharassan". In addition, the Company
has an extensive uranium exploration portfolio in the Kyrgyz Republic.
UrAsia has a 70% interest in the Betpak Dala Joint Venture, which has a
100% interest in the Akdala operating uranium mine and the South Inkai uranium
development project; and a 30% interest in the Kyzylkum Joint Venture which
has a 100% interest in the Kharassan uranium development project.
Highlights for the Quarter
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- Net Income for the three months ended October 31, 2006 amounted to
$25,912,000 ($0.05 per share), after crediting an unrealized foreign
exchange gain of $27,023,000
- Loss from operations for the three months ended October 31, 2006 was
$2,636,000, and included earnings from mine operations of $1,567,000.
- Production increased for the fourth quarter in a row to 513,000
pounds of U(3)O(8). (70 % share). Sales amounted to 99,000 pounds of
U(3)O(8). (70 % share).
- Sales of U(3)O(8) in November and December, 2006 amounted to 880,000
pounds of U(3)O(8) (70 % share) at an average price of $51/lb for
proceeds of $45 million.
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Commenting on the Company's interim financial results, Phillip
Shirvington, President and Chief Executive Officer, said: "The Company
continues to meet or exceed its construction and production targets, and is
reaping the benefits of its un-hedged sales contracts as the spot price
continues to increase. Deliveries during calendar 2006 are heavily weighted
towards the end of the year."
Financial Results of Operations
During the three months ended October 31, 2006 all production and sales
related to the Company's 70% interest in the Akdala uranium mine. The
Company's attributable share of revenue from uranium sales, under new
contracts amounted to $4,193,000 or approximately $42.25/lb of U(3)O(8).
Deliveries, which occur at intermittent intervals during the year, were low
for the quarter at 99,200 pounds of U(3)O(8). After the deduction of
production costs expended during the period of $1,417,000 ($14.28/lb
U(3)O(8)), depreciation and depletion charges of $1,209,000 ($12.18 /lb
U(3)O(8)), the mine operations reflected a pre-tax income of $1,567,000. The
production unit cost increase, from $11.76 in the previous year, is a function
of the fixed costs of production being applied against a lower sales volume in
the period. The average unit cost of depletion increased from the previous
year average of $6.29 /lb U(3)O(8) to $12.18 /lb U(3)O(8), due to the
finalization of the purchase price allocation between Akdala Mine and South
Inkai. Sales to nuclear facilities do not occur evenly throughout the year as
they are dependant upon delivery dates to utilities. Deliveries in the quarter
were approximately only 20% of production.
After the deduction of general and administration costs of $1,195,000,
non-cash stock based compensation expense of $1,099,000, exploration costs of
$1,779,000 and other expenses of $130,000 the Loss from operations amounted to
$2,636,000.
After allowing for interest and other income of $2,215,000, unrealized
foreign exchange gains of $27,023,000 and income taxes of $690,000, the
Company recorded Net Income for the three months ended October 31, 2006 of
$25,912,000 ($0.05 per share).
The unrealized foreign exchange gain arose mainly from translation of the
future Kazak Income Tax liability in respect of the Company's investment in
Kazakhstan. During the quarter the Kazakh Tenge weakened by 7% against the US
dollar.
Cash position
At December 20, 2006, the Company had a cash position of approximately
$56 million that will be used to continue development of the South Inkai and
Kharassan uranium projects within the Republic of Kazakhstan and to continue
exploration drilling, which commenced this year, on the Company's Kyrgyz
uranium exploration licenses.
Construction and Development Update
The initial construction phase at the South Inkai and Kharassan uranium
projects has progressed well with production still being targeted for the end
of 2007.
During the three month period ended October 31, 2006, at South Inkai
construction of the road to the process plant was completed, and the
foundations for the office building, accommodation module, auxiliary building,
special laundry and shift camp were completed. Earth-moving for slime pit and
pregnant and leaching solution ponds were completed and work continues on the
consolidation of the bed by means of rammer and roller. Earth-moving and
foundation works on the main plant are 90% completed, foundation ramming and
backfilling are under way.
An additional contract was awarded in October for the construction of the
ammonium nitrate warehouse with solution plant, acid storage with pumping
station, ramp for acid tank truck, first aid outlet and production pumping
house.
Due to the increase of electrical power requirements at the South Inkai
construction site and the commissioning of additional power consuming
equipment, an additional 400 KVA transformer was ordered and is to be
installed in December 2006.
At Kharassan construction has commenced with the completion of the
foundation work for most structures including the equipment and machinery
storehouse. Other progress includes: Pregnant solutions (main) plant -
foundations and equipment pedestals completed with "non-standard" process
equipment being mounted and a total of 6 ion exchange columns set;
Accommodation building - foundation construction in progress; Pregnant
/leaching solution ponds - earthwork completed; and Sulfuric acid storage
building - concrete work completed.
The five buildings above are scheduled to have roofing and siding
installed by the end of December together with the delivery of "non-standard"
major process equipment.
Construction of the bridge across the Syr-Darya River is in full
progress. The first coffer dam was set and two piers for first of two supports
in the river bed had been drilled at the end of October. Construction of the
two main bridge supports is on schedule for completion in December before the
rising of the river level.
Construction and re-paving of the road from the bridge site to the
industrial complex began in October.
On October 20, 2006, UrAsia entered into an agreement to acquire a 50%
interest in Joint Drilling LLP, a Kazakhstan drilling contractor, licensed in
Kazakhstan to drill uranium wells. The company will supply up to eight US
built GEFCO drill rigs to Joint Drilling in order to accelerate the numerous
drilling programs on all of UrAsia's mining and development properties.
Outlook
The Company is continuing to proceed with its Kazakhstan uranium projects
which entail the continuation of production at the Akdala mining operation at
a rate of 2.6 million pounds per annum, and the development of the in-situ
mining operations at South Inkai and Kharassan.
UrAsia's attributable annual production for the calendar year 2006 is
expected to be approximately 1.8 million pounds of U(3)O(8) (700 t U).
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URASIA ENERGY LTD.
Consolidated Balance Sheets
(Unaudited)
(United States dollars in thousands)
As at
Oct 31/2006 Jul 31/2006
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Assets
Current assets
Cash and cash equivalents $ 107,477 $ 128,328
Restricted cash 2,500 2,500
Accounts receivable 2,062 10,173
Current portion of loans to joint ventures 6,457 4,440
Inventory 19,874 11,940
Prepaid expenses 3,035 1,177
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141,405 158,558
Loans to joint ventures 24,000 21,000
Mineral properties, plant and equipment 773,623 762,547
Other assets 10,502 8,920
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$ 949,530 $ 951,025
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Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 4,395 $ 6,095
Income taxes payable 3,152 3,080
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7,547 9,175
Due to Republic of Kazakhstan 1,046 1,046
Future income taxes 338,211 365,491
Asset retirement obligation 1,961 1,953
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348,765 377,665
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Shareholders' equity
Share capital 613,483 612,941
Contributed surplus 10,258 9,307
Retained deficit (22,976) (48,888)
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600,765 573,360
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$ 949,530 $ 951,025
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Commitments and contingencies (Note 8)
Subsequent events (Note 11)
Approved by the Board:
"Ian Telfer" Director
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"Phillip Shirvington" Director
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URASIA ENERGY LTD.
Consolidated Statements of Operations and Retained (Deficit) Earnings
(Unaudited)
(United States dollars in thousands, except per share amounts)
Three months ended
Oct 31/2006 Oct 31/2005
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Mine operations
Revenue from uranium sales $ 4,193 $ -
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Production costs 1,417 -
Depreciation and depletion 1,209 -
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Earnings from mine operations 1,567 -
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Expenses
General and administration 1,195 122
Stock-based compensation 1,099 -
Exploration 1,779 -
Other 130 -
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4,203 122
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Loss from operations (2,636) (122)
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Other income
Interest and other income 2,215 193
Foreign exchange gain 27,023 727
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29,238 920
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Income before income taxes 26,602 798
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Provision for (recovery of) income taxes
Current 1,069 2
Future (379) -
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690 2
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Net income for the period 25,912 796
Retained (deficit) earnings, beginning of period (48,888) 51
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Retained (deficit) earnings, end of period $ (22,976) $ 847
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Earnings per share:
Basic $ 0.05 $ 0.01
Diluted $ 0.05 $ 0.01
Weighted average number of shares
outstanding (000's):
Basic 479,850 98,378
Diluted 483,249 98,378
URASIA ENERGY LTD.
Consolidated Statements of Cash Flows
(Unaudited)
(United States dollars in thousands)
Three months ended
Oct 31/2006 Oct 31/2005
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Operating activities
Net income for the period $ 25,912 $ 796
Items not involving cash:
Depreciation and depletion 1,209 -
Stock-based compensation 1,099 -
Future income taxes (379) -
Foreign exchange gain (27,885) -
Other 8 -
Changes in non-cash working capital:
Accounts receivable 8,112 748
Accrued interest receivable to joint ventures (517) -
Prepaid expenses (1,811) -
Inventory (4,810) -
Accounts payable and accrued liabilities (1,779) (303)
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Cash (used in) provided by operating activities (841) 1,241
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Financing activities
Issue of common shares, net of issue costs 395 48,720
Repayment of short-term loan - (106)
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Cash provided by financing activities 395 48,614
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Investing activities
Acquisition of interest in Betpak - (5,000)
Cash advances to joint ventures (4,500) -
Acquisitions of mineral properties,
plant and equipment (14,332) (1,265)
Advance cash payment for other assets (2,409) -
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Cash used in investing activities (21,241) (6,265)
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Effect of exchange rate change on cash 836 -
Net cash (outflow) inflow for the period (20,851) 43,590
Cash and cash equivalents, beginning of period 128,328 2,630
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Cash and cash equivalents, end of period $ 107,477 $ 46,220
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Supplemental Information
Income taxes paid $ 748 $ -
Interest paid $ - $ -
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On behalf of UrAsia Energy Ltd.
"Phillip Shirvington"
President and Chief Executive Officer
To view the full financial statements for the quarter, please visit
www.sedar.com. For further information contact Investor Relations at
1-866-798-0824 or (604) 608 0824.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release. The
foregoing information may contain forward-looking statements relating to
the future performance of UrAsia Energy Ltd. Forward-looking statements,
specifically those concerning future performance, are subject to certain
risks and uncertainties, and actual results may differ materially. These
risks and uncertainties are detailed from time to time in the Company's
filings with the appropriate securities commissions.
For further information: Investor Relations at 1-866-798-0824 or (604)
608 0824.