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USEC Provides American Centrifuge Update

Stocks in this article: USU

The RD&D program is responsible for 1,175 direct jobs, including 470 in Ohio and 430 in Tennessee. Approximately 320 jobs have been added in recent months as a result of the program. The RD&D program also supports jobs at 169 companies from 28 states.

The cooperative agreement includes technical milestones for the RD&D program. The first two technical milestones have been achieved and certified by DOE. On March 15, 2013, we amended the cooperative agreement with DOE to provide for additional incremental funding. As part of that amendment, we added four new milestones related to specific testing requirements associated with the test program we developed with DOE for the RD&D program. The original remaining milestones have a milestone date of December 31, 2013, tied to the completion of the RD&D program. The new milestones have milestone dates beginning as early as May 15. In addition, the cooperative agreement contains non-binding performance indicators that are designed to be achieved throughout the RD&D program and ensure that the RD&D program is on track to achieve the milestones and other program objectives.

Under the agreed upon test program, construction activities for the new demonstration cascade required the suspension of machine operations for several months since late 2012. During this period we have removed existing cascade support equipment, constructed new infrastructure equipment and will soon be conducting integrated systems testing.

Manufacture and assembly of AC100 machines is continuing and may continue through the end of the program. Centrifuge operations and testing is also continuing at our test facility in Oak Ridge during this construction period. The new plant systems and other equipment have been installed and testing has begun, AC100 machines are being installed and we expect to operate the demonstration commercial cascade in the second half of 2013.

We are working with our strategic suppliers to maintain the manufacturing infrastructure developed over the last several years. However, we are constrained by our reduced level of spending. The RD&D program provides for the continued production of AC100 machines, which helps our suppliers gain additional cost experience and familiarity with the manufacturing process. Although we have delayed high-volume production of the AC100 machines, our strategic suppliers have demonstrated flexibility and initiative to keep the project moving forward. However, we face challenges with ensuring the ability and willingness of our strategic suppliers to continue at low rates of production for a prolonged period of time absent greater certainty on funding for the project and a definitive timeline for full remobilization.

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