Why USEC Inc. (NYSE:USU) Went Down?
The $25.48 million market capped firm which supplies low grade uranium, USEC Inc. (NYSE:USU) saw its market valuation go down by close to 10 percent during trading on 20th February on the back of the firm filing a SEC update and issuing a press note to the effect that it had agreed to a amendment on its current agreement with the U.S. Department of Energy. The changes made to the agreement relates to the “research, development and demonstration” aspect of the ongoing “American Centrifuge project”. The tri-partite agreement was signed in 2012 and involved USEC Inc. (NYSE:USU), its fully owned entity American Centrifuge Demonstration, LLC and U.S. Department of Energy.
Secures Additional Government Funding
The changes in the terms of the agreement, will secure to the small capped energy supplier close to $16.7 million in additional funding through the rest of the research program. With the latest augmentation, the U.S. Department of Energy has set aside a total of close to $279 million. The changes to the funding terms of the agreement come close on the heels of January 2014 amendment which extended the term of the co-operation between the three entities to April 2014, from earlier end date of January 2014. At that time the cost allocation for the extended period had been raised to $28.8 million. Of the ear marked funds, the government agency is expected to pitch in with $23 million, while USEC Inc. (NYSE:USU) has to raise $5.76 million. These funding infusions brings governments share of the investment to further research in this project will reach $22.6 million with the reminder half a million dollars expected to be paid out in the next few weeks.
It is appropriate to note here that the agreement is centred on the setting up 120 centrifuge machines between June 2012 and April 2014 at a estimated cost of $350 million, of which $280 million will be funnelled in by U.S. Department of Energy, while USEC Inc. (NYSE:USU) has to fund the reminder 20 percent.