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Q4 2008 Uranium One Inc. Earnings Conference Call - Final.

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OPERATOR: Good morning ladies and gentlemen, thank you for standing by. Welcome to the Uranium One Inc. 2008 annual results conference call. At this time all participants are in listen-only mode. Following the presentation we will conduct a question and answer session, instructions will be provided at that time for you to queue up for questions. (Operator Instructions) I would like to remind everyone this conference call is being recorded today Monday, March 16th, 2009, at 10 a.m. eastern time.

I would now like to turn the conference over to Mr. Jean Nortier, President and Chief Executive Officer, please go ahead sir.

JEAN NORTIER, PRESIDENT AND CEO, URANIUM ONE, INC.: Thank you, [Theodora]. I'd like to welcome you-all to Uranium One 2008 results conference call. With me on this call from Tokyo is our Chief Operating Officer, Steve Magnuson, who will take you through operational results and our Chief Financial Officer, Robin Merrifield who will review our financial results and today he is in South Africa.

Let me begin by making you all aware that this discussion contains certain forward-looking information with respect to Uranium One's operation and financial results. Actual future results may differ from expected results for a variety of reasons which are described in the cautionary statements regarding forward-looking information in our press release. Also please note that unless otherwise stated all reference to uranium refer to U-308 commonly know as Yellow Cake. Furthermore all references to production will be Uranium One's attributable share unless otherwise noted.

During 2008 Uranium One took a number of necessary steps to stabilize our business and to position ourselves to continue to grow in the current challenging economic environment that the world finds itself in. We have a disciplined and selected approach to our capital allocation decisions focused on developing and expanding production at core assets in Kazakhstan and in the US. Operation in Kazakhstan enjoy some of the lowest all in operating costs in the industry. Our sales contract book also enabled us to achieve the highest realized uranium price [and amounted up year growth]] last year. The combination of these two factors resulted in Uranium One generating very strong margins for 2008.

Uranium One's business and strategy is founded on the principle of building and maintaining strong partnerships. In an industry with a relatively limited number of suppliers and customers that are looking for stable secure sources of uranium, having strong partners is essential to success. Consistent with this strategy last month we announced we have taken a major step forward in announcing Uranium One's prominence in the nuclear fuel industry through the creation of a strategic partnership with the Japanese consortium consisting of the Tokyo electric power company, known as TEPCO, Toshiba Corporation and the Japan Bank for international corporation, or JBIC. The transaction involves a pro forma 19.9% equity stake in Uranium One to be issued to the consortium. The equity issue price is CAD2.30 per share and upon closing all results in gross proceeds of approximately CAD270 million to further strengthen our balance sheet.

In addition to the capital injection the Japanese parties have well established relationships in Kazakhstan and are well known the [KazAtomProm] the stated owned uranium mining company and we expect to gain from their knowledge and expertise in the nuclear fuel industry. The direct investment in Uranium One is an illustration of the confidence that industry players have in Kazakhstan; our assets and our ability to execute on our growth plans. The transaction also includes a uranium sales agreement that gives the consortium members a fixed quantity of uranium with deliveries commencing in 2014 as well as an option to purchase up to 20% of Uranium One's production, for which we have marketing rights at industry standard terms. Further details of the [OFTEC] agreement are subject to confidentiality and cannot be disclosed. But I can tell you there will be very minimal hedging of our realized uranium price going forward which is consistent with our strategy to develop a contract book that has a mix of long-term vice escalated contracts and [mockerated] contracts.

Looking to uranium market we have seen a significant pull back in the spot price for uranium to 42.50 per pound. As I pointed out before there continues to be a lot of focus on the spot price for uranium. While the spot price is important to Uranium One, as most of our contacts have pricing mechanisms related to the spot uranium price at the time of the delivery, we must keep in mind that most of the world's uranium sold under the long-term base escalated contracts. Long-term price indicator is currently $69 per pound.

Our contract book is expected to become more diversified over time, but we remain committed to providing shareholders with significant leverage to the uranium price by keeping vast majority of our contract book tied to market related pricing mechanisms. Currently, Uranium One has contracts in place for the sale of approximately 26 million pounds on an attributable basis. Approximately 16 million pounds of our existing contract book has floor price protection at weighted average floor price of about $47 per pound.

On the supply side of the uranium market we continue to see the balance of risk suggesting that we will see less primary production than expected. In our view there are three large swing factors in terms of supply. Cigar Lake, the proposed Olympic Dam expansion and the ramp up of production from Kazakhstan. There remains significant uncertainty over the timing of production from Cigar Lake and the Olympic Dam expansions. The one area where we have seen success is in the ramp up of production from Kazakhstan. Uranium One is fortunate to be a participant in this success story.

On the demand side it is important to remember that nuclear power provides base load electricity which has proven historically to be insensitive to recessionary periods. And the current level of reactive fleet of 436 units is poised to grow with 43 reactors now under construction around the world, 25 of which are in China, Russia and India. Where political motivation seems to be the driving force for a new reactor [bolt].

Before I turn the call over to Steve Magnuson and Robin Merrifield to brief you on our operational and financial performance I'd like to point out some highlights to you. During 2008 Uranium One had increased production, sales volume and revenue as compared to 2007. Total production for the year was 2.9 million pounds, 1.9 million pounds from Akdala and 800 pound from South Inkai with the remainder from Kharasan and Dominion, prior to that operation being placed on care and maintenance. This was a 41% increase over the production levels achieved during 2007.

Uranium sales for 2008 totaled 2.2 million pounds, up 37% compared to 1.6 million pounds sold here in 2007. Now our average realized price per pound of uranium sold was $68 per pound for the year, generating revenue of $150 million. A couple of important milestones were achieved in the fourth quarter of 2008. Firstly we received our first dividend from our Betpak Dala joint venture in the amount of $40 million, net of Kazakh withholding taxes. And we announced in December industrial production approvals were granted for the South Inkai uranium mine, which allows for the continued ramp up in production to full capacity of 5.2 million pounds of U-308 per year on 100% basis.

I'd now like to take a quick recap of some of our previously announced guidance as well as some additional guidance regarding our expected sales volume and inventory levels. For 2009 our estimated total production guidance remains unchanged at 3.5 million pounds...

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