The Department of Energy expects to release this year some $35 million in funding for Centrus Energy Corp. to begin building a new uranium enrichment cascade required to produce 600 kilograms of high-assay low-enriched uranium fuel by June 1, 2020, according to a letter contract filed Monday with the U.S. Securities and Exchange Commission.
The temporary contract, which the company hopes to finalize by Oct. 31, provides a new level of detail about the agency’s bet on Centrus to craft a 16-machine enrichment cascade that could one day produce uranium for U.S. defense programs using the Bethesda, Md., company’s AC100-M centrifuges.
The deal is a no-fee, cost-sharing pact. On a Monday conference call with investors, Centrus CEO Daniel Poneman, a former deputy secretary of energy in the Barack Obama administration, said that arrangement is “well worth the investment.”
Most of the work in the first year or so of the deal involves procuring the subassemblies for the 16 AC100-M machines and delivering them by Dec. 15, 2020, to DOE’s Portsmouth Site near Piketon, Ohio.
Centrus will build the new machines in Portsmouth’s Gas Centrifuge Enrichment Plant, which once housed the company’s canceled American Centrifuge Project: another AC100-heritage project that included some non-U.S. components that rendered the machines ineligible to enrich defense uranium.
Once finalized, DOE expects its the contract with Centrus subsidiary American Centrifuge Operating Co. to be worth about $115 million over three years, including two years of firm funding. A separate,one-year option would cover final assembly of the cascade at Portsmouth, and production of high-assay low-enriched uranium.
Meanwhile, Poneman confirmed Monday that Centrus Chief Financial Officer Marian Davis would depart the company this week after a roughly eight-year run. Centrus announced Davis’ voluntary resignation in a June filing with the SEC.
Poneman told investors that Centrus is still set to return to profitability in 2020. In the 2019 second quarter, the company posted a net loss of more than $17.5 million, or $1.84 a share, on revenue of just over $10.5 million. Amid a drop in revenue, Centrus narrowed its losses from the same quarter of 2018, when the top line was about $39.5 million and losses were around $28 million, or $3.08 a share, according to the company’s latest quarterly earnings report.
Sluggish orders in the uranium resale business led the revenue decline, according to Centrus’ earnings release. Uranium orders are typically slower in the first half of the year, Poneman said on Monday’s investor call, with most of the year’s revenue materializing in the second half.
Centrus is optimistic about its revenue prospects for the remainder of the year and raised its guidance dramatically, to a range of $205 million to $230 million from the range of $125 million to $160 million forecast just one quarter ago.