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USEC Reports First Quarter 2012 Results

American Centrifuge Update

During the first quarter of 2012, USEC began work on the RD&D program and expects to fund the program activities through May 31, 2012. DOE proposed this two-year cost share program to enhance the technical and financial readiness of the centrifuge technology for commercialization. Under the cost-sharing arrangement, DOE’s total contribution would be capped at $300 million. Despite the lack of a conditional commitment for a loan guarantee, DOE’s proposal to share the cost of the RD&D program reflects the importance the U.S. government places on having a source of domestic uranium enrichment. The terms of USEC’s new credit facility allows spending on the American Centrifuge project of up to $15 million per month through May 31, 2012, but significantly limits spending after May 31. Unless we enter into definitive agreements with DOE for federal funding of the RD&D program, our spending on the project after May 31 will generally be limited to $1 million per month, an amount that will not support continuation of the proposed RD&D program.

USEC has been working with Congress and DOE on legislation to provide federal funding for the RD&D program in government fiscal year 2012, but federal funding for the program has yet to be approved. The current political environment in Washington has significantly slowed the legislative process and obtaining legislation providing for 2012 funding prior to May 31, or at all, is highly uncertain. We are also pursuing a non-legislative path to funding for 2012 with DOE. President Obama’s fiscal year 2013 budget proposal includes $150 million for the RD&D program. The U.S. House and Senate are considering appropriations bills that include funding for the program. However, given the significant uncertainty surrounding our prospects for finalizing an agreement and obtaining funding from DOE for an RD&D program and the timing thereof, we are also in parallel preparing for a demobilization of the project. Our evaluation of these options is ongoing.

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