| Wed 4 Apr 2007, 11:45 | | FUM - First Uranium - News Release - First Uranium |
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FUM
FIU
FUM - First Uranium - News Release - First Uranium acquires MWS to complement
the Buffelsfontein Tailings recovery project in South Africa
FIRST URANIUM CORPORATION
Registration Number: C0777384
ISIN: CA33744R1029
Share code: FUM
("First Uranium" or "the Company")
NEWS RELEASE - April 4, 2007
NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE
SERVICES
FIRST URANIUM ACQUIRES MINE WASTE SOLUTIONS (PROPRIETARY) LIMITED TO COMPLEMENT
THE BUFFELSFONTEIN TAILINGS RECOVERY PROJECT IN SOUTH AFRICA
Toronto, Ontario - First Uranium Corporation (FIU:TSX, FUM:JSE,
CA33744R1029:ISIN) ("First Uranium" or "the Company") today announced that the
Company, through its wholly-owned subsidiary, First Uranium (Proprietary)
Limited, had entered into a binding agreement to acquire Mine Waste Solutions
(Proprietary) Limited ("MWS") and its subsidiary Chemwes (Proprietary) Limited
("Chemwes"), which owns and operates an existing gold mine tailings and re-
processing facility adjacent to the Company`s Buffelsfontein Project in South
Africa.
First Uranium has agreed to acquire all MWS shares for the equivalent of 200
million South African Rand (approximately US$27.5 million) in First Uranium
shares. The acquisition is subject to a number of conditions including, among
others, the satisfactory completion by the Company of a due diligence review of
MWS (which is expected to be completed by April 13, 2007) and the receipt of
required approvals from South African competition authorities, the Toronto Stock
Exchange, the JSE Limited, the investment committee of the Industrial
Development Corporation of South Africa Limited, the South African Reserve Bank
and the South African Department of Minerals and Energy. Subject to completion
of the due diligence and receipt of the requisite approvals, the transaction is
expected to close no later than August 31, 2007 with effect as of April 1, 2007.
The number of First Uranium shares to be issued will be approximately 3.2
million at CDN$10.20, the fifteen trading day volume weighted average price of
First Uranium`s shares traded on the TSX up to and including March 30, 2007.
All shareholders of MWS have agreed to tender their MWS shares to the offer. On
closing of the acquisition, First Uranium will assume management control of MWS
and its wholly-owned subsidiary, Chemwes.
The MWS assets to be acquired include:
* a gold plant which, based on its actual operating performance over the last
three years, has a proven capacity for processing 570,000 tonnes per month;
* three tailings dams from which gold and uranium can be recovered, one of
which is actively being depleted and another with sufficient disposal area
for several years of tailings deposition; and
* rock dumps.
The acquisition of the MWS gold plant will eliminate the necessity of building
the first gold plant planned for the Buffelsfontein Project, reducing both the
time and capital required to begin gold production. The combination of the
reduction in capital, the changes to the production schedule and the additional
cash flow from re-processing of MWS tailings will increase the total
Buffelsfontein Project net present value ("NPV") to US$240 million, an
accretive NPV improvement of US$29 million from the US$211 million originally
planned. In addition, the Buffelsfontein Project`s internal rate of return
will improve from 39% to 59%. The accretion analysis is based upon commercial
metrics of US$500 per ounce gold, US$40 per pound uranium, an exchange rate of
7.4 South African Rand to the U.S. dollar and a discount rate of 8%.
"This acquisition is very positive for our Buffelsfontein Project as we will be
able to begin a significant amount of our gold production one year ahead of
schedule, establish a lower cost for our first gold plant module, and begin the
first phase of uranium production at twice the rate previously contemplated,
thus achieving peak uranium production eight months ahead of schedule," said
Gordon Miller, President and Chief Executive Officer of First Uranium. "This
fits exactly into our strategy of bringing our two near-term projects into
production as quickly as possible."
Revised Project Development and Production Schedule
With regard to gold production, the acquisition of MWS will enable First Uranium
to begin to process approximately 500,000 tonnes per month, slightly lower than
the plant`s designed capacity due to restrictions to the rate of tailings
deposition. In the first year the Company expects to recover approximately
43,000 ounces of gold at a cash cost of $317 per ounce including royalties.
First Uranium intends to process MWS tailings with the highest gold grade first.
By the end of 2007, the Company also expects to complete a pipeline from the
Buffelsfontein site to the MWS gold plant to process tailings with the highest
gold grade available from select areas of the Buffelsfontein site. First
Uranium expects to increase the gold plant`s average monthly processing capacity
to 1,200,000 tonnes per month by November 2008, with the construction of a
600,000 tonnes per month plant module.
With regard to uranium production, the Company`s original plan had been to build
a uranium plant at the Buffelsfontein site by June 2008. With this
acquisition, the Company now plans to build a uranium plant by November 2008
with twice the previously contemplated capacity beside the MWS gold plant. The
addition of MWS tailings deposition capacity will enable First Uranium to
process 40,000 tonnes of tailings per day immediately upon completion of the
uranium plant compared to its original plan of processing 20,000 tonnes per day
until June 2009 and then increasing its processing to 40,000 tonnes per day.
The acquisition will also allow the Company to move forward by eight months the
construction of the third plant module, which is designed to increase processing
to 60,000 tonnes per day.
The acquisition of MWS is expected to increase the life of the Buffelsfontein
Project by 3 years from 14 to 17 years.
The figure below depicts the revised planned production as a result of the MWS
acquisition:
View the figures on the website www.firsturanium.com
The resource table below reflects the contribution of MWS resources to the
Buffelsfontein Project.
Gold Uranium Cont. Cont.
Tonnes Grade Grade Gold Uranium
(t 000s) (g/t) (%) (oz 000s) (lb 000s)
Buffelsfontein Measured 115,064 0.31 0.0083 1,144 21,130
Buffelsfontein Indicated 165,953 0.31 0.0059 1,628 21,603
Total Measured & 281,017 0.31 0.0069 2,772 42,733
Indicated
Inferred
Buffelsfontein 1,740 0.54 0.0243 30 932
MWS 18,128 0.32 0.0120 188 4,786
Combined 19,868 0.34 0.0131 218 5,718
Notes:
1. CIM definitions were followed for mineral resources.
2. Mineral resources that are not mineral reserves do not have demonstrated
economic viability.
3. A zero grade cutoff was used.
4. Rows and columns may not add exactly due to rounding.
5. MWS resources reflected in this table include all of Dam 2 and the lower
portion of Dam 4, as the top 12 metres of Dam 4 contains an uneconomic gold
grades, which the Company will remove.
Review of Technical Disclosure
All technical disclosure in this news release relating to the Buffelsfontein
Project and the MWS acquisition has been reviewed and approved by R. Dennis
Bergen, P.Eng and Wayne Valliant P.Geo of Scott Wilson Roscoe Postle Associates
Inc. ("Scott Wilson RPA"), each of whom is a "qualified person" under National
Instrument 43-101 ("NI 43-101") and is independent of First Uranium. In
accordance with NI 43-101, the Company will file a revised technical report for
the Buffelsfontein Project, reflecting the impact of the MWS acquisition, within
45 calendar days of this release.
The MWS resources disclosed in this news release are from MWS Dams 2 and 4.
Scott Wilson RPA has reviewed the MWS production records and mineral resource
reconciliation for Dam 2 and considers the remaining tailings reported by MWS as
inferred mineral resources as per NI 43-101.
Scott Wilson RPA has reviewed an internal mineral resource report by MWS on Dam
4. The mineral resource estimate was based on appropriately spaced drill holes
and used a computerized block model methodology. In the opinion of Scott Wilson
RPA the data density and methodology was suitable for the mineral resource
estimate of the tailings. However, based on the requirement for additional data
verification, the Dam 4 mineral resources have been classified as inferred as
per NI 43-101.
MWS also has Dam 5, which has not been analyzed sufficiently for use in the
technical analysis disclosed in this news release and which currently serves as
a tailings deposit area. If and when the Company is able to complete sufficient
work to categorize Dam 5 as a resource pursuant to NI 43-101, the Company
expects the conversion of Dam 5 to resources would result a further extension of
the life of the Buffelsfontein Project an additional 3 years from 17 to 20
years.
The economic analysis contained in this news release is based, in part, on
inferred resources, and is preliminary in nature. Inferred resources are
considered too geologically speculative to have mining and economic
considerations applied to them and to be categorized as Mineral Reserves. There
is no certainty that the reserves development, production and economic forecasts
contained in this news release and which will be the subject of a preliminary
assessment, will be realized.
Update on other Strategic Discussions
First Uranium`s primary goal continues to be to bring its two uranium and gold
projects, Buffelsfontein and Ezulwini, into production. The acquisition of MWS
complements this goal by bringing the Buffelsfontein Project`s production
forward and adds value to the Company and its shareholders. In addition, the
Company continually evaluates further acquisitions, joint ventures and/or
development opportunities relating to strategically located uranium prospects
and properties in Southern Africa, which have the potential to add additional
growth. One such potential opportunity could be Harmony Gold Mining Company
Limited`s Randfontein gold mine, which is adjacent to First Uranium`s Ezulwini
underground mine project, in respect of which some preliminary discussions have
been held. There can be no assurance that any agreement or transaction might be
completed with Harmony.
It was reported in the South African media on March 30, 2007 that the Company
could be a possible takeover target for other producers. Neither the Company
nor its 67% shareholder, Simmer and Jack Mines, Limited, is in any discussions
with third parties regarding any possible takeover transaction with respect to
First Uranium.
Cautionary Language regarding Forward-Looking Information
This news release contains and refers to forward-looking information based on
current expectations. All other statements other than statements of historical
fact included in this release including, without limitation, statements
regarding potential production rates and operating costs, processing and
development plans, estimated net present values and future plans and objectives
of First Uranium are forward-looking statements (or forward-looking information)
that involve various risks and uncertainties. There can be no assurance that
such statements will prove to be accurate, such statements are subject to
significant risks and uncertainties, and actual results and future events could
differ materially from those anticipated in such statements.
In making the forward-looking statements in this news release, the Company has
applied several material assumptions, including but not limited to, the
assumption that:
* the integrated operation of the Buffelsfontein Project and the MWS gold
processing plant is viable operationally and economically;
* metal prices, exchange rates and discount rates applied in the accretion
analysis are achieved;
* regulatory approvals will be obtained within the expected time frame;
and
* production capacity and mineral resource estimates are accurate.
Important factors could cause actual results to differ materially from First
Uranium`s expectations. Such factors include, among others: the actual results
of the planned feasibility studies on First Uranium`s projects; the actual
results of additional exploration and development activities at First Uranium`s
projects; the timing and amount of estimated future production and the costs
thereof; capital expenditures; the costs and timing of the development of First
Uranium`s projects; the availability of any additional capital required to bring
future projects into production; conclusions of economic evaluations; changes in
project parameters as plans continue to be refined; future prices of
commodities; the failure of plant, equipment or processes to operate as
anticipated; accidents; labour disputes; delays in obtaining governmental
approvals, permits or financing or in the completion of development or
construction activities; delays in closing the MWS acquisition; delays or
complications relating to the re-engineering at the MWS site and the integration
of the MWS assets into First Uranium`s development plans; the actual recovery
rates of the MWS gold plant; currency fluctuations, as well as those factors
discussed under "Risk Factors" in First Uranium`s final prospectus dated
December 12, 2006 as filed with securities regulatory authorities in Canada.
Although First Uranium has attempted to identify important factors that could
cause actual results to differ materially, there may be other factors that cause
results not to be as anticipated, estimated or intended.
These forward-looking statements are made as of the date hereof and there can be
no assurance that such forward-looking statements will prove to be accurate as
actual and future events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on forward-
looking statements that are included herein, except in accordance with
applicable securities laws.
Conference Call
An investor conference call with regard to the acquistion of MWS has been set up
for Wednesday, April 4 at 10h00 (16h00 in South Africa). The following numbers
have been set up for participants on this conference call:
Toronto 416 644 3420
Toll free 1 800 594 6315
South Africa 09 800 0022 8228
A replay of this call will be available for one week at the following numbers:
Toronto 416 640 1917
Toll free 1 877 289 8525
A passcode of 21225860# is required to access the replay.
About First Uranium Corporation
First Uranium Corporation is focused on the development of South African uranium
and gold mines with the goal of becoming a significant producer through the re-
opening and development of the Ezulwini underground mine, and the construction
of the Buffelsfontein tailings recovery facility. First Uranium also plans to
grow production by pursuing acquisition and joint venture opportunities.
First Uranium Corporation
1240-155 University Avenue, Toronto, ON Canada M5H 3B7
www.firsturanium.com
For further information, please contact:
Gordon Miller, President and Chief Executive Officer at +27 11 830 0390 or Bob
Tait, VP Investor Relations at 416 558-3858 or bob@firsturanium.com
Date: 04/04/2007 11:45:01 Produced by the JSE SENS Department.
