USEC Provides American Centrifuge Lead Cascade Test Program Update

The Lead Cascade test program of the American Centrifuge technology is producing results that achieve USEC (NYSE:USU) test program objectives, marking another important step in deploying this highly efficient uranium enrichment technology. Data gathered from groups of Lead Cascade prototype machines operating together in a closed-loop cascade configuration were consistent with the predictions of USEC’s analytical models regarding cascade and machine performance, and the product assays generated. The integrated testing program also demonstrated results that USEC believes achieve the October 2007 milestone under an agreement with the U.S. Department of Energy of having the Lead Cascade operational and generating product assay in a range useable by commercial nuclear power plants. The integrated testing program continues at the American Centrifuge Demonstration Facility, which is located within the building where USEC is constructing its commercial plant in Piketon, Ohio. In a centrifuge enrichment facility, a cascade is a group of centrifuge machines connected in a series and parallel arrangement to raise the concentration of the fissile uranium isotope. "During the past two months, our American Centrifuge team in Piketon has operated the machines in a variety of cascade configurations and we have obtained reams of valuable data about performance and safe operations,” said Philip G. Sewell, USEC senior vice president, American Centrifuge & Russian HEU. "We believe the Lead Cascade is meeting the key objectives that we set out, and the integrated testing program will continue to provide critical data for months to come. "Importantly, the data obtained thus far is consistent with the predictions of our analytical models. This result gives us even more confidence in the models, which are based on extensive computer analysis of data from individual centrifuges we have operated over the past two years,” Sewell said. DOE officials have observed the cascade operation and have been provided with information about the test results. USEC expects that DOE will follow its past practice of having an independent team of nuclear experts review the results. In a letter to DOE regarding test results, Vice President Vic Lopiano said, "In addition to generating product assays in a commercial range, Lead Cascade operation has provided important information regarding machine-to-machine interactions and the integrated efficiency of the cascade. An operating Lead Cascade has also been an invaluable training platform for our operators and technicians as we prepare for deployment of the commercial plant. "We look forward to the continued strong and supportive involvement of DOE as we endeavor to re-establish our nation’s leadership in this key nuclear technology for the betterment of our national economy, environment and energy security,” Lopiano said. The Lead Cascade prototype machines will also provide valuable data that the American Centrifuge team will use in the final development of the machines to be installed and operated in the commercial plant, which are called the AC100 series. USEC expects the integrated testing program to continue for an extended period at a variety of operating conditions and configurations. We expect the Lead Cascade test program to help us to identify improvements in design, assembly and operations that will be integrated into the AC100 machine. USEC expects to deploy several dozen AC100 machines in the Lead Cascade in late 2008 and begin test operations in early 2009. In September, USEC raised net proceeds of approximately $775 million through the concurrent issuance of 23 million shares of common stock and $575 million in aggregate principal amount of convertible notes. We believe that these proceeds, along with an existing $400 million bank credit facility and anticipated cash flow from operations, position USEC to meet the January 2008 milestone under our agreement with DOE of having a financing commitment secured for a 1 million SWU centrifuge plant. Also during the third quarter, we entered into a number of contracts related to procurement of key components and materials for the American Centrifuge Plant and we expect to enter into additional contracts by year end. We now have contracts in place for carbon fiber needed to manufacture the centrifuge rotor and for the outer steel casings for the centrifuge machines. Centrifuges in the AC100 series are expected to be the first used to produce enriched uranium for sale when commercial operations begin, scheduled for late 2009. In early 2007, USEC completed a comprehensive review of the cost of deploying the American Centrifuge Plant and established a target cost estimate of $2.3 billion. This target cost estimate included amounts spent on the project through early 2007 and estimates for cost escalation, but did not include financing costs or a reserve for general contingencies. Our target cost estimate assumes that we will be successful in reducing the capital cost per machine over time based on value engineering the design of centrifuge machines for high-volume manufacturing. We believe that the cost of deploying the American Centrifuge Plant is likely to be higher than provided for in our target cost estimate, as a result of high costs associated with the centrifuge machines being manufactured by our suppliers during the initial stage of deployment and higher costs in construction materials for completion of the plant. Spending as of September 30, 2007, of approximately $541 million, combined with contractual arrangements we have made and anticipate making in the near future for components of the American Centrifuge Plant exceeds the corresponding amounts included in our target cost estimate by approximately $150 million, or roughly 15%. Working closely with key suppliers, we are seeking to reduce the capital cost per machine while maintaining performance objectives to help achieve our target cost estimate. We continue to simplify the design of the centrifuge machines in order to reduce costs as well as to take advantage of technological advancements to improve performance. We are also contracting for the manufacture of the centrifuge machines in stages so that contracts for machines manufactured in later stages can benefit from the reduced costs we expect to realize over time. We believe that success in these value engineering efforts by our project team and our strategic suppliers may help to offset higher materials costs seen in some of the initial American Centrifuge project procurements. Using information collected from our efforts and further progress toward freezing the design of the AC100 machine, we expect to complete a comprehensive review and update of our target cost estimate for deployment of the American Centrifuge Plant in the first quarter of 2008. The cost estimate resulting from that review will for the first time include a reserve for general contingencies that will reflect the maturity of the project. The reserve for general contingencies, which is not included in our target cost estimate of $2.3 billion, will take into account potential variations in the project plans and uncertainty regarding associated costs that we cannot specifically identify at the time the estimate is prepared. Looking forward, the design of the various components and the overall machine design for the initial AC100 machine is expected to be finalized in 2008. The AC100 series machine is expected to have a performance level of approximately 350 SWU per machine per year. USEC plans to leverage the experience of strategic suppliers and use the results of the optimization and value engineering process by reducing the number of individual machine components for the AC100. We believe that this combined effort of our team and the industry manufacturing expertise of our four strategic suppliers will help the AC100 machines achieve their expected SWU performance at a target cost that is less than the prototype machine now being tested, while maintaining a high degree of reliability through robust design and quality manufacturing. USEC Inc., a global energy company, is a leading supplier of enriched uranium fuel for commercial nuclear power plants. Forward Looking Statements This document contains "forward-looking statements” – 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: the success of the demonstration and deployment of our American Centrifuge technology including our ability to meet our performance targets, target cost estimate and schedule for the American Centrifuge Plant and our ability to secure required external financial support; changes in existing restrictions on imports of Russian enriched uranium, including the imposition of duties on imports of enriched uranium under the Russian Contract; pricing trends in the uranium and enrichment markets and their impact on our profitability; changes to, or termination of, our contracts with the U.S. government and changes in U.S. government priorities and the availability of government funding, including loan guarantees; the impact of government regulation; the competitive environment for our products and services; changes in the nuclear energy industry; and other risks and uncertainties discussed in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K and subsequent quarterly Form 10-Qs. Revenue and operating results can fluctuate significantly from quarter to quarter, and in some cases, year to year. We do not undertake to update our forward-looking statements except as required by law.