The US Department of Energy has largely completed its initial technical review of USEC's application for the American Centrifuge Plant and is proceeding to the next stage of the loan guarantee process. DOE has provided USEC with a draft term sheet that will serve as a framework for discussions between USEC and the DOE, USEC reports.
"The Department's decision to move forward reflects the significant progress we have made on both the technical and financial fronts in deploying the next generation of U.S. uranium enrichment technology," said John K. Welch, president and CEO of USEC.
DOE transmitted to USEC a confidential draft term sheet for DOE's issuance of a loan guarantee in support of USEC's American Centrifuge Project. The terms and conditions in the draft term sheet provide a framework for the commencement of discussions on terms between USEC and DOE and may change as a result of due diligence.
The plant would run the AC100 centrifuge machine. USEC has worked for the past decade to significantly improve and update the original U.S. centrifuge technology design developed by the Department of Energy using modern materials and techniques such as carbon fiber and computer-controlled assembly and operations. To date, USEC has invested more than $1.8 billion in the American Centrifuge Project including construction of the commercial American Centrifuge Plant in Piketon, Ohio and for technology development, testing and manufacturing centres in Oak Ridge, Tennessee.
Since March, USEC has operated its lead cascade of production-ready AC100 centrifuges in a commercial plant cascade configuration. Since August 2007, USEC's American Centrifuge machines have amassed more than 500,000 machine hours of runtime.
Earlier in 2010, the company renewed a revolving credit facility and attracted a $200 million strategic investment from industry leaders Toshiba and Babcock & Wilcox and closed the $75 million first phase of the strategic investment in early September.
USEC submitted an updated loan guarantee application to DOE in late July. Completion of due diligence by DOE and negotiation of terms and conditions between DOE and USEC are the next steps toward issuance of a conditional commitment. Funding under a DOE loan guarantee will only occur following conditional commitment, final documentation and satisfaction of conditions to closing.
USEC has pre-sold more than $3 billion of the initial output of the plant and is establishing a joint venture with Babcock &Wilcox for manufacture and assembly of the AC100 commercial machines.