USEC Provides American Centrifuge Update

  USEC Provides American Centrifuge Update

  *Research, development and demonstration program on schedule, on budget
  *DOE provides $44.4 million as next increment of funding
  *Installation of plant support systems and AC100 machines for RD&D
    commercial cascade nears completion
  *RD&D program employment exceeds 1100 with more than 300 workers added

Business Wire

BETHESDA, Md. -- March 18, 2013

USEC Inc. (NYSE:USU) today provided an update on the American Centrifuge
project and the ongoing cooperative research, development and demonstration
(RD&D) program. USEC is successfully executing the RD&D program with the
Department of Energy (DOE) to reduce the technical risks and improve the
future prospects of commercial deployment of the American Centrifuge

During the RD&D program we have built plant control systems, assembled AC100
centrifuge machines and conditioned the machines with uranium gas in our
existing lead cascade. Importantly, the RD&D program continues to operate on
schedule and on budget. The company has taken a non-cash charge of
approximately $1.1 billion for previously capitalized costs related to the
American Centrifuge project during the period of 2007 through late 2011. This
action has no effect on the RD&D program or the assets that have been
transferred to DOE. More information on the non-cash charge is contained in
our annual report on Form 10-K filed with the Securities and Exchange
Commission and posted on our website.

“We’ve seen solid performance from our team working on the RD&D program and
the program remains on budget and on schedule,” said John K. Welch, USEC chief
executive officer and president. “We are pleased to see continued broad-based,
bipartisan support for the American Centrifuge project due to its importance
in meeting national and energy security goals, and the opportunity to create
more jobs.”

Welch added, “Our American Centrifuge team is on track to meet program goals
and we remain committed to moving forward with commercialization of the
technology. We believe that is the path to USEC’s long-term competitiveness in
the uranium enrichment business and the best way to maximize value for all

The RD&D program is being conducted under our Lead Cascade license issued by
the U.S. Nuclear Regulatory Commission. We have operated centrifuges as part
of our lead cascade test program for more than one million machine hours since
August 2007. Through the lead cascade test program, we demonstrate the
performance of centrifuge machines, demonstrate the reliability of machine
components, obtain data on machine-to-machine interactions, verify cascade
performance models under a variety of operating conditions, and obtain
operating experience for our plant operators and technicians.

In June 2012, we entered into a cooperative agreement with DOE to provide
cost-share funding for the RD&D program. The cooperative agreement provides
for 80 percent DOE and 20 percent USEC cost sharing for work performed during
the period June 1, 2012, through December 31, 2013, with a total estimated
cost of $350 million. DOE’s total contribution would be up to $280 million and
our contribution would be up to $70 million.

The cooperative agreement is being incrementally funded, and $177.8 million of
DOE funding has been provided. Most recently, $44.4 million was provided this
month by DOE transferring the separative work unit component of low enriched
uranium to USEC that DOE had previously acquired from us in 2012 in exchange
for the transfer of quantities of our depleted uranium tails to DOE. The
remaining obligated funding has not yet been authorized and is subject to
congressional appropriations, congressional transfer or reprogramming
authority to permit the use of DOE funds previously appropriated for other
programs, or other sources available to DOE. Although we have adjusted our
program spending to accommodate changes to the timing and amount of federal
funding, we remain on schedule and budget to complete the RD&D program by the
end of 2013. The amount of federal funding made available to date is expected
to fund RD&D program activities through mid-June 2013, and we will continue to
work with Congress and the administration to fully fund the RD&D program
through December 2013 and achieve the remaining program milestones.

Under the cooperative agreement, we and our newly created subsidiary American
Centrifuge Demonstration, LLC (ACD) are carrying out the RD&D program. ACD has
put in place a program management and enhanced program execution structure,
which includes a board of managers who oversees and directs the management of
the RD&D program. The seven-person board is comprised of two independent
managers, two managers appointed by USEC, and one manager appointed by each of
Babcock & Wilcox Technical Services Group, Inc., Toshiba America Nuclear
Energy Corporation and Exelon Generation Company, LLC.

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.

Significant additional financing is needed to complete the American Centrifuge
Plant (ACP). Potential sources of financing include:

  *We applied for a $2 billion loan guarantee for the project under the DOE
    Loan Guarantee Program in July 2008. We continue to pursue a DOE loan
    guarantee and are planning to update the DOE loan guarantee application
    for the project during 2013.
  *We have also had discussions with Japanese export credit agencies
    regarding financing up to $1 billion of the cost of completing the ACP,
    with such potential financing predicated on the project receiving a DOE
    loan guarantee.
  *We also expect to need at least $1 billion of capital for the project in
    addition to the DOE loan guarantee and the Japanese export credit funding.
    The amount of additional capital is dependent on a number of factors,
    including the amount of any revised cost estimate and schedule for the
    project, the amount of contingency or other capital that DOE, Japanese
    export credit agencies or investors may require, and the amount of the DOE
    credit subsidy cost that would be required to be paid in connection with a
    loan guarantee. We currently anticipate the sources for this capital to
    include cash generated by the project during startup, available USEC cash
    flow from operations and additional third party capital. We expect the
    additional third-party capital would be raised at the project level,
    including through the issuance of additional equity participation in the

We have no assurances that we will be successful in obtaining this financing,
and if successful, our ultimate ownership share of the project will likely be
reduced as a result of raising equity and other capital to deploy the project.
USEC issued its annual report on Form 10-K today and the report provides
additional information on the company’s efforts to commercialize the American
Centrifuge technology, including risks and uncertainties. The Form 10-K can be
found in the Investor Relations section at An informational
video has also been posted on the USEC website that provides a visual update
on the RD&D program. The video can be accessed at

USEC Inc., a global energy company, is a leading supplier of enriched uranium
fuel for commercial nuclear power plants.

Forward Looking Statements

This news release contains “forward-looking statements” within the meaning of
Section 21E of the Securities Exchange Act of 1934 – that is, statements
related to future events. In this context, forward-looking statements may
address our expected future business and financial performance, and often
contain words such as “expects”, “anticipates”, “intends”, “plans”,
“believes”, “will” and other words of similar meaning. Forward-looking
statements by their nature address matters that are, to different degrees,
uncertain. For USEC, particular risks and uncertainties that could cause our
actual future results to differ materially from those expressed in our
forward-looking statements include, but are not limited to: uncertainty
regarding the timing, amount and availability of additional funding for the
research, development and demonstration (“RD&D”) program and the dependency of
government funding on Congressional appropriations; restrictions in our credit
facility on our spending on the American Centrifuge project and the potential
for us to demobilize the project; limitations on our ability to provide any
required cost sharing under the RD&D program; uncertainty concerning our
ability through the RD&D program to demonstrate the technical and financial
readiness of the centrifuge technology for commercialization; uncertainty
concerning the ultimate success of our efforts to obtain a DOE loan guarantee
and other financing for the American Centrifuge project and the timing and
terms thereof; potential changes in our anticipated ownership of or role in
the American Centrifuge project, including as a result of the need to raise
additional capital to finance the project; the impact of actions we have taken
or may take to reduce spending on the American Centrifuge project, including
the potential loss of key suppliers and employees, and impacts to cost and
schedule; the impact of delays in the American Centrifuge project and
uncertainty regarding our ability to remobilize the project; changes in U.S.
government priorities and the availability of government funding, including
loan guarantees; and other risks and uncertainties discussed in our filings
with the Securities and Exchange Commission, including our annual report on
Form 10-K, which is available on our website at We do not
undertake to update our forward-looking statements except as required by law.


Media: Paul Jacobson, 301-564-3399
Investor Relations: Steven Wingfield, 301-564-3354
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