| Mon 13 Aug 2007, 14:00 | | FUM - First Uranium - Reports results for the thre |
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FUM
FIU
FUM - First Uranium - Reports results for the three months ended June 30, 2007
First Uranium Corporation
(Continued under the laws of British Columbia, Canada)
(Registration number C0777384)
(South African registration number 2007/009016/10)
ISIN: CA33744R1029
Share code: FUM
("First Uranium")
FIRST URANIUM REPORTS RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2007
All amounts are in US dollars unless otherwise noted.
Toronto and Johannesburg - First Uranium Corporation (TSX:FIU, JSE:FUM)
(CA33744R1029:ISIN) ("First Uranium" or "the Corporation") today announced
that it recorded a net profit of US $5.5 million for the three months ended
June 30, 2007 ("Q1 2008") compared to a net loss of US$2.2 million recorded
for Q1 2007, primarily as a result of foreign exchange gains and net interest
income offset by operating losses incurred in the quarter under review.
Highlights
During Q1 2008, First Uranium:
- Raised gross proceeds of Cdn$150 million through an issue of 4.25% senior
unsecured convertible debentures (the "Debentures").
- Filed revised technical reports for each of the Ezulwini Mine and the
Buffelsfontein Tailings Recovery Project, which indicated improvement to
their respective NPVs and IRRs, reflecting the accelerated timetables for
both projects.
- Accelerated capital investment at the Ezulwini Mine to advance the plant
commissioning and production startup by three months.
- Acquired effective June 6, 2007 100% of the equity interest and
management control of Mine Waste Solutions (Proprietary) Limited and its
subsidiary Chemwes (Proprietary) Limited (collectively "MWS") to advance
the Buffelsfontein Tailings Recovery Project, following which First
Uranium has commenced to record for its account gold production from the
MWS plant.
- The South African Department of Minerals and Energy acknowledged receipt
of the Corporation`s prospecting permit application on incremental ground
contiguous to the Ezulwini Mine.
Subsequent to Q1 2008, First Uranium defined initial underground and surface
drilling targets related to the possible expansion of the existing Ezulwini
underground uranium and gold mine (the "Ezulwini Expansion Program").
In the second quarter of fiscal year 2008 ending September 30, 2007, the
Corporation plans to process 1.5 million tonnes of tailings through its MWS
gold plant, with expected production of over 12,000 ounces of gold.
"While we are actively pursuing additional avenues of growth through the
Ezulwini Expansion Program, our focus remains on advancing production at our
two uranium and gold projects, the Ezulwini Mine and the Buffelsfontein
Tailings Recovery Project," said Gordon Miller, President and Chief Executive
Officer of First Uranium.
"To this end we`ve accelerated the construction schedule at Ezulwini and, with
the completion of the acquisition of MWS, which included a gold plant,
tailings and a tailings deposition area, we are in the process of integrating
these facilities into the Buffelsfontein Tailings Recovery Project, which will
accelerate production from the Corporation`s Buffelsfontein tailings,"
continued Mr. Miller. "With the combined capital resources of cash and cash
equivalents, the net proceeds from the Debentures and anticipated revenue from
future sales of gold and uranium, we believe we are fully-funded to develop
our existing mining projects as currently planned and advance them to full
production by 2010."
Although spot prices for uranium, which reached $136 per pound at the end of
June, have recently softened to $110 per pound, this is still above the $50
per pound, upon which First Uranium has based its project economics for the
next 20 years. Concerns about the supply of uranium not being able to meet
near- to mid-term demand persist in the market. The Corporation has not yet
signed any contracts to supply uranium and does not expect to do so until it
is nearer production in June 2008.
Revenue
First Uranium generated revenue of $2.2 million during Q1 2008 from the
operation of the MWS gold plant, which the Corporation assumed ownership of on
June 6, 2007.
Expenditures
Expenses during Q1 2008 reflect normal costs associated with a development-
phase company that, with the exception of the newly acquired MWS operations,
was not yet in production.
Operating losses of $3.3 million in Q1 2008 reflect an increase from the $2.9
million loss in Q1 2007, primarily as a result of:
- An increase in services required to support the development of the
projects and establishing corporate offices including an increase in
employee compensation costs, consulting and professional fees to support
a growing infrastructure including the establishment of offices in
Johannesburg and Toronto, which were not in existence in Q1 2007.
- Stock-based compensation costs of $0.8 million relating to the amortized
cost of stock options granted to directors, officers, employees and
consultants. The fair value of the stock-based compensation was estimated
using the Black-Scholes option pricing model.
- The decrease in pumping and feasibility costs to $0.3 million in Q1 2008
(versus $1.5 million in Q1 2007), reflect the fact that these costs are
being capitalized in Q1 2008 as part of the mine infrastructure costs as
compared to being expensed as care and maintenance costs for the Ezulwini
Mine in Q1 2007, prior to commencement of development activities.
- Interest of $1.0 million was paid on the Debentures at the end of the
quarter.
- The accretion expense of $1.1 million also relates to the Debentures.
The above expenses were partially offset during Q1 2008 by $4.4 million of
interest income from the $177.7 million of net proceeds from the Corporation`s
initial public offering (the "Offering") and the net proceeds from the issue
of the Debentures.
The Corporation also benefited from foreign exchange gains of $6.4 million
during Q1 2008 (Q1 2007: $0.8 million), which result from the Corporation
reporting in US dollars, while the majority of its cash funds are held in
Canadian dollars and in South African rand, each of which have strengthened
against the US dollar.
Cash and Capital Expenditures
First Uranium ended Q1 2008 with cash and cash equivalents of $275.2 million
as compared to $138.9 million at the fiscal year ended March 31, 2007. This
position reflects the net proceeds of both the Offering and the Debentures,
less the cost of certain assets acquired from Simmer & Jack,cash utilized in
operations and capital invested for additions to property, plant and
equipment.
Including cash and cash equivalents, the Corporation had $373.5 million of
assets at the end of Q1 2008. Total liabilities at the end of Q1 2008 of
$118.9 million included $89.3 million for the debt portion of the Debentures
and an $11.1 million future tax liability arising from the MWS acquisition.
Shareholders` equity amounted to $254.6 million.
Production Overview
To date, US$29.1 million has been spent on re-opening and re-furbishing the
Ezulwini Mine. The shaft stabilization is on track for completion in September
2007 and the Corporation expects to commence hoisting ore in October 2007. The
first gold plant module is scheduled for completion in April 2008, three
months ahead of the previously disclosed schedule; and, the first uranium
plant module is on track for completion in June 2008 to achieve an average
annual production of 290,000 ounces of gold and 888,000 pounds of uranium over
the 18-year life of the mine.
The accelerated schedule for commissioning all modules of the gold and uranium
plants results in an accelerated capital investment profile, which will
provide the flexibility sooner to significantly increase uranium production if
and when market pricing dictates.
Also at the Ezulwini Mine, the Corporation has commenced the development to
access the shaft destress cut and has accessed the Upper Elsburg horizon on
levels 38a and 41. Development on both of these levels has started. The
Company plans to collect chip samples at six metre intervals from the reef
horizon. Chip sampling in two sections six metres apart on both levels has
indicated a reef horizon that is 2.4 metres thick. Samples averaged 11.2
grams per tonne gold and 4.7 grams per tonne gold on levels 38a and 41,
respectively.
Opening up of the Middle Elsburg reef is well underway with 76 panels sampled
and 24 panels selected for development, giving a face length of 568 metres
with an average grade of 6.76 grams per tonne gold and 660 grams per tonne
uranium.
The samples were collected in accordance with industry standard practice. An
independent laboratory prepared and assayed the samples using industry
standard methods.
The clean up process to date on surface and underground has generated a
stockpile in excess of 70,000 tonnes containing more than 88 kilograms of
recoverable gold.
In addition, First Uranium has identified initial drill targets which may
justify the development of a new 250,000 tonne-per-month shaft at the Ezulwini
Mine, which would allow a significant increase in uranium and gold production.
This expansion program has the potential to significantly increase production
beyond levels currently planned and thereby extend the current 19-year mine
plan, which only consumes 20% of the significant resource area at this site.
The Corporation`s Buffelsfontein Tailings Recovery Project began producing
gold from June 6, 2007 as a result of the acquisition of MWS. A total of
401,621 tonnes of tailings material was processed in the period under review,
resulting in gold sales of 3,395 ounces at a total cost of $664 per ounce. The
MWS operation is mining the remnant of its current resource, due to be
exhausted by December 2007. The operation requires mechanical cleaning of the
floor material, temporarily increasing the operating cost significantly. The
mechanical cleaning will continue in Q2 2008, with expected production of over
12,000 ounces of gold at a cash cost of $520 per ounce. The mechanical
cleaning will stop as the new Buffelsfontein tailings dams are brought online,
when it is expected that the production and average cost will then revert to
the planned targets of $360 per ounce as per the May 22, 2007 revised
technical report by Scott Wilson Roscoe Postle Associates. The average sale
price was $643 per ounce. Uranium production is expected to commence in
November 2008 to achieve an average annual production of 128,000 ounces of
gold and 922,000 pounds of uranium over the 16-year life of the project.
Technical Disclosure
With the exception of the third, fourth, fifth and sixth paragraphs under the
heading "Production Overview" in this news release, the technical disclosure
relating to the Ezulwini Mine is extracted from a technical report entitled
"Technical Report - Preliminary Assessment of the Ezulwini Project, Gauteng
Province, Republic of South Africa" originally submitted on November 8, 2006
and December 5, 2006 and revised on May 9, 2007, prepared in accordance with
NI 43-101 by Wayne Valliant, P.Geo. and R. Dennis Bergen, P.Eng. of Scott
Wilson Roscoe Postle Associates Inc. ("Scott Wilson RPA").
Technical disclosure under the same heading relating to the Buffelsfontein
Tailings Recovery Project is extracted from a technical report entitled
"Technical Report - Preliminary Assessment of the Buffelsfontein Project,
Northwest Province, Republic of South Africa" originally submitted on November
8, 2006, revised on December 5, 2006 and January 31, 2007 and further revised
on May 22, 2007, prepared in accordance with National Instrument 43-101 ("NI
43-101") by R. Dennis Bergen, P.Eng. and Wayne Valliant, P.Geo. of Scott
Wilson RPA. Each of Mr. Valliant and Mr. Bergen is a "qualified person" under
NI 43-101 and is independent of First Uranium. The technical disclosure
contained in this news release has been reviewed and approved by Messrs.
Bergen and Valliant.
Messrs. Bergen and Valliant are each a "qualified person" under NI 43-101 and
are independent of First Uranium. The technical disclosure contained in this
news release relevant to their respective contributions has been reviewed and
approved by Messrs. Bergen and Valliant.
The economic analysis contained in this news release is contained in the
technical reports mentioned above and 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 on
which the preliminary assessment contained in the technical reports are based,
will be realized.
Cautionary Language Regarding Forward-Looking Information
This news release contains certain forward-looking statements. Forward-
looking statements include but are not limited to those with respect to the
price of uranium and gold, the estimation of mineral resources and reserves,
the realization of mineral reserve estimates, the timing and amount of
estimated future production, costs of production, capital expenditures, costs
and timing of development of new deposits, success of exploration activities,
permitting time lines, currency fluctuations, requirements for additional
capital, government regulation of mining operations, environmental risks,
unanticipated reclamation expenses, title disputes or claims and limitations
on insurance coverage and the timing and possible outcome of pending
litigation. In certain cases, forward-looking statements can be identified by
the use of words such as "plans", "expects" or "does not expect", "is
expected", "budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates", or "does not anticipate", or "believes" or variations of such
words and phrases, or state that certain actions, events or results "may",
"could", "would", "might" or "will" be taken, occur or be achieved. Forward-
looking statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of
First Uranium to be materially different from any future results, performance
or achievement expressed or implied by the forward-looking statements. Such
risks and uncertainties include, among others, the actual results of current
exploration activities, conclusions of economic evaluations, changes in
project parameters as plans continue to be refined, possible variations in
grade and ore densities or recovery rates, failure of plant, equipment or
processes to operate as anticipated, accidents, labour disputes or other risks
of the mining industry, delays in obtaining government approvals or financing
or in completion of development or construction activities, risks relating to
the integration of acquisitions, to international operations, to prices of
uranium and gold. Although First Uranium has attempted to identify important
factors that could cause actual actions, events or results to differ
materially from those described in forward-looking statements, there may be
other factors that cause actions, events or results not to be as anticipated,
estimated or intended. It is important to note, that: (i) unless otherwise
indicated, forward-looking statements indicate the Corporation`s expectations
as at June 13, 2007; (ii) actual results may differ materially from the
Corporation`s expectations if known and unknown risks or uncertainties affect
its business, or if estimates or assumptions prove inaccurate; (iii) the
Corporation cannot guarantee that any forward-looking statement will
materialize and, accordingly, readers are cautioned not to place undue
reliance on these forward-looking statements; and (iv) the Corporation
disclaims any intention and assumes no obligation to update or revise any
forward-looking statement even if new information becomes available, as a
result of future events or for any other reason.
In making the forward-looking statements in this news release, First Uranium
has made several material assumptions, including but not limited to, the
assumption that: (i) approvals to transfer or grant, as the case may be,
mining rights will be obtained; (ii) metal prices, exchange rates and discount
rates applied in the preliminary economic assessments are achieved; (iii)
mineral resource estimates are accurate; (iv) the technology used to develop
and operate its two projects has, for the most part, been proven and will work
effectively; (v) that labour and materials will be sufficiently plentiful as
to not impede the projects or add significantly to the estimated cash costs of
operations; (vi) that outstanding approvals for the completion of an
acquisition, the transfer of mining rights and the approval of mining rights
will be granted; (vii) that Black Economic Empowerment ("BEE") investors will
maintain their interest in the Corporation and their investment in the
Corporation`s common shares to a sufficient level to continue to support the
Corporation`s compliance with 2014 BEE requirements; and (viii) that the
innovative work on stabilizing the main shaft at the Ezulwini Mine will be
successful in maintaining a safe and uninterrupted working environment until
2024.
Conference Call
First Uranium will conduct a conference call with investors to discuss the
Corporation`s first quarter results and related matters at 11:00 a.m. local
Toronto time or 5:00 p.m. local Johannesburg time on Monday, August 13, 2007.
The conference call will be available simultaneously to all interested
investors and the news media at (416) 644-3424 or 1 (800) 594 3790 (toll free)
or +09 (800) 2288 3501 (toll free from South Africa) or through a webcast at
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1972960
The call will be available through replay at this website for one month.
A copy of First Uranium`s results and the MD&A are available at www.sedar.com
as well as on First Uranium`s website (www.firsturanium.com).
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 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:
Bob Tait, VP Investor Relations at 416 558-3858 or bob@firsturanium.com
Sponsor: Investec Bank
Date: 13/08/2007 14:00:26 Produced by the JSE SENS Department.
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