| Mon 12 Nov 2007, 8:13 | | FUM - First Uranium Corporation - Quarter results |
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FUM
FIU
FUM - First Uranium Corporation - Quarter results
First Uranium Corporation
(Continued under the laws of British Columbia, Canada)
(Registration number C0777384)
(South African registration number 2007/009016/10)
Share code: FUM ISIN: CA33744R1029
FIRST URANIUM CORPORATION
NEWS RELEASE - November 12, 2007
FIRST URANIUM REPORTS RESULTS FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER
30, 2007
All amounts are in US dollars unless otherwise noted.
Toronto and Johannesburg - First Uranium Corporation (TSX:FIU, JSE:FUM)
(ISIN:CA33744R1029) ("First Uranium" or "the Corporation") today announced
that it recorded net income of $3.1 million for the three months ended
September 30, 2007 ("Q2 2008") compared to net income of $0.8 million for the
three months ended September 30, 2006 ("Q2 2007"), primarily as a result of
foreign exchange translation gains and interest income offset by operating
losses incurred in the quarter under review.
Net income for the first half of the Corporation`s fiscal year ending March
31, 2008 ("FY 2008") was $8.5 million compared to a net loss for the prior
fiscal year ("FY 2007") of $1.5 million, which primarily reflected
expenditures in connection with preparing its two uranium and gold projects
for production.
Highlights
During Q2 2008, First Uranium:
* benefited from the first full quarter of its 100% of ownership of the
assets of Mine Waste Solutions (Proprietary) Limited ("MWS"), which were
acquired effective June 6, 2007, and that now form part of the
Buffelsfontein Tailings Recovery Project
* processed 1.2 million tonnes of tailings through its MWS gold plant,
producing 10,124 ounces of gold at a total cost of $527 per ounce
* began hoisting development material at its Ezulwini Mine, in September
as scheduled, with a total of 9,940 tonnes hoisted by the end of the
quarter
* defined initial underground and surface drilling targets related to the
possible expansion of the existing Ezulwini underground uranium and gold
mine
* approved an $11.7 million capital program to construct a reclamation
station and pipelines at the Buffelsfontein Tailings Recovery Project
and increase the planned processing rate from 500,000 tonnes per month
to 630,000 tonnes per month
* entered into an agreement with Nuclear Fuels Corporation of South Africa
(Proprietary) Limited ("Nufcor") to calcine the yellowcake from First
Uranium to produce uranium oxide for dispatch to converters as of
January 2009
Subsequent to the end of Q2 2008, First Uranium:
* completed an interim off-take agreement with Nufcor pursuant to which
Nufcor will purchase yellowcake from First Uranium from June 2008 until
January 2009 at rates based on the then prevailing spot prices
* pending completion of the Ezulwini Mine gold plant (expected in April
2008), commenced third-party toll-milling of the hoisted development
material and gold ore from the Ezulwini Mine
* was granted a conditional prospecting right over an area of 6,843
hectares of property known to contain gold and uranium minerals adjacent
to the Corporation`s Ezulwini mining rights, which are comprised of
3,717 hectares
During Q3 2008, First Uranium plans to:
* hoist 30,000 tonnes of gold and uranium bearing ore at the Ezulwini Mine
toll treat the 30,000 tonnes of ore at a yield of approximately 5.5 to
6.0 grams of gold per tonne, producing in excess of 5,500 ounces of gold
* process approximately 1.4 million tonnes of tailings through its MWS
gold plant, with expected production in excess of 9,600 ounces of gold
* complete the hydraulic mining and clean up of the remnant of MWS No. 2
tailings dam
* complete the construction of the pipeline to the MWS gold plant in
November, whereafter hydraulic mining of the mineral resources in the
Buffelsfontein tailings dams will commence
* commence the MWS gold plant upgrade to increase planned capacity from
500,000 tonnes per month to 630,000 tonnes per month with completion
scheduled in Q4 2008.
* complete a feasibility study for the further expansion of the MWS gold
plant, which is targeted for completion in November 2008. The expansion
will involve the construction of two additional gold plant modules and
three uranium plant modules
"Gold is now being produced at both of First Uranium`s properties: at the MWS
plant at our Buffelsfontein Tailings Recovery Project and in a toll milling
arrangement for the ore being hoisted at our Ezulwini Mine," said Gordon
Miller, President and Chief Executive Officer of First Uranium. "With the
spot price for gold currently over $800 per ounce, that production is
expected to make a solid contribution to our cash flow."
"Our focus remains on advancing uranium and gold production at both of our
projects," continued Mr. Miller. "Construction is well underway and we are
on schedule to commission our own gold plant at the Ezulwini Mine in April
2008 and the uranium plant in June 2008. At the Buffelsfontein Tailings
Recovery Project we expect to begin construction this month to both double
our gold plant capacity and commission the first two modules of our uranium
plant by November 2008."
The spot price for uranium rose to $136 per pound at the end of June,
softened to $75 per pound and has recently risen to $90 per pound.
Management believes that the $50 per pound assumption upon which the project
economics were based remains reasonable and conservative. The Corporation
has not yet signed any contracts that have defined commitments to supply
uranium.
Mr. Miller added, "With rising prices for uranium and gold, and the net
proceeds from our equity and debenture offerings, we are confident that we
are fully-funded to develop our existing mining projects as currently planned
and advance them to full production by 2010."
Financial Highlights
(thousands of dollars) Q2 Q2 2008 2007
2008 2007 YTD YTD
Revenue 6,253 - 8,436 -
Operating income (loss) (2,166) 258 (5,354) (2,651)
Non-operating income and expenses 5,268 528 13,927 1,199
Net income (loss) for the period 3,051 786 8,522 (1,452)
Cash and cash equivalents at end of period 254,332 1,158 254,332 1,158
Revenue
First Uranium generated revenue during Q2 2008 and the first half of FY 2008
solely from the processing of MWS tailings material and sale of gold from the
MWS gold plant.
Operating income (loss)
Operating income (loss) includes the following:
* cost of sales for the gold production in the first half of FY 2008
reflects significantly higher unit costs than the long-term expectation
of costs for this operation as the acquired tailings dams are nearing
the end of their productive life and the hydraulic mining operation was
subject to additional costs for mechanical loading and placement of
tailings material
* employee compensation costs, consulting and professional fees, as well
as shared services fees paid to the Corporation`s majority shareholder,
Simmer & Jack
* higher general, consulting and administrative expenses were primarily
from an increase in services required to support the development of the
projects, the costs of corporate offices in Johannesburg and Toronto and
other expenses of operating a public company, which were not applicable
in FY 2007
* stock-based compensation related to the amortized cost of stock options
granted to directors, officers, employees and consultants
* pumping and feasibility costs in connection with the maintenance,
assessment commencement and re-commissioning of the Ezulwini Mine
Non-operating income and expenses
Non-operating income and expenses for the periods reported included:
* interest income that was primarily earned on the net proceeds raised
from First Uranium`s offerings of equity issued in December 2006 and
senior unsecured convertible debentures issued in May, 2007
* interest expense paid and accrued on the debentures and accretion
expense related to the debentures
* foreign exchange translation gains that reflect that the Corporation
holds the majority of its net assets in Canadian dollars and in South
African rand, which have both strengthened against the Corporation`s
reporting currency of US dollars
Cash and Capital Expenditures
Cash and cash equivalents at the end of the first half of 2008 increased by
$115.4 million to $254.3 million from the end of FY 2007, primarily as a
result of the $130.6 million net proceeds raised through the issuance of
debentures, cash from operating activities and translation gains on cash held
in currencies other than US dollars offset by capital expenditures of $35.5
million at the Ezulwini Mine.
Capital investments of $148 million and $271 million are planned to complete
the construction of the Buffelsfontein Tailings Recovery Project and the
Ezulwini Mine, for which $34.8 million of current commitments exist.
Capital investments for property plant and equipment in were $31.1 million in
Q2 2008, $10.5 million in Q1 2008 and $20.8 million in FY 2007, totaling
$62.4 million invested to date.
First Uranium anticipates that future capital requirements relating to its
development of the Ezulwini Mine and the Buffelsfontein Tailings Recovery
Project will be funded through a combination of current cash and cash
equivalents and internal cash flow.
The Corporation holds its funds in cash and bank-sponsored guaranteed
investment certificates. It has no exposure to asset-backed commercial
paper.
Production Overview
During the last week of September 2007, 9,940 tonnes of reef development ore
was hoisted to surface, which will be stockpiled for use as the initial feed
for the new mill and gold plant that are scheduled to be commissioned in
April 2008.
Subsequent to the end of Q2 2008, in October the Ezulwini Mine began to toll
treat higher grade gold bearing ore at a neighbouring gold plant, which will
continue until the new gold plant is commissioned.
At the Ezulwini Mine the gold plant currently under construction is expected
to be commissioned in April 2008 and the uranium plant is expected to be
commissioned in June 2008. Annual average production at the Ezulwini Mine
is expected to be 888,000 pounds of uranium and 290,000 ounces of gold over
the estimated 18-year life of the project.
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 1.6
million tonnes of tailings material was processed in the first half of 2008,
resulting in gold sales of 13,544 ounces at an average cash cost of $497 per
ounce. The average sale price for gold during the first half of FY 2008 was
$623 per ounce.
The average total cost per ounce during the first half of 2008 was $561 per
ounce, significantly higher than the Corporation`s long-term outlook for cash
costs at this operation, as the acquired MWS tailings are nearing the end of
their productive life. Cleaning up the remaining tailings from MWS tailings
dam No. 2, which requires mechanical loading and placement near the hydraulic
mining operation, reduces tonnages and increases handling costs relative to a
normal reclamation operation. More efficient hydraulic reclamation
operations at Buffelsfontein dam No. 2 are expected to commence during
November 2007.
The Corporation is in the process of expanding the existing MWS plant to
increase the plant capacity from the planned rate of 500,000 tonnes per month
to 630,000 tonnes per month. The expansion project is planned for
completion by the end of March 2008. Uranium production at the
Buffelsfontein Tailings Recovery Project is expected to commence in November
2008 to achieve an average annual production of 922,000 pounds of uranium
along with 128,000 ounces of gold over the 16-year life of the project.
Technical Disclosure
Technical disclosure under the heading "Production Overview" in this news
release 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.
Technical disclosure under the heading "Production Overview" in this news
release 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
MD&A relevant to their respective contributions has been reviewed and
approved by Messrs. Bergen and Valliant.
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 November 9, 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 10:00 a.m. local
Toronto time or 5:00 p.m. local Johannesburg time on Tuesday, November 13,
2007. The conference call will be available simultaneously to all interested
investors and the news media at (416) 644-3430 or 1 (800) 588-4942 (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=2089340. A replay
of the conference call will be available on this site until the end of
November.
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 416 342-5639 or bob@firsturanium.com
Date: 12/11/2007 08:13:01 Produced by the JSE SENS Department.
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