| Wed 19 Dec 2007, 10:06 | | FUM - First Uranium Corporation - News Release - First Uranium announces |
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FUM
FIU
FUM - First Uranium Corporation - News Release - First Uranium announces
results of pre-feasibility study for The Buffelsfontein Tailings Recovery
Project
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 - December 19, 2007
FIRST URANIUM ANNOUNCES RESULTS OF PRE-FEASIBILITY STUDY FOR THE
BUFFELSFONTEIN TAILINGS RECOVERY PROJECT
All amounts are in US dollars unless otherwise noted.
NPV increases by 71% to $505 million - IRR increases from 69% to 151%
Toronto, Ontario - First Uranium Corporation (TSX:FIU, JSE:FUM)
(ISIN:CA33744R1029) ("First Uranium" or "the Corporation") today announced
the results of its pre-feasibility study (the "Buffels Report") on its
Buffelsfontein Tailings Recovery Project (the "Project") in South Africa.
Based on the Buffels Report, which was prepared by Minxcon Pty. Ltd., First
Uranium intends to immediately start construction for the expansion of the
existing gold plant and the initial modules of a new uranium plant at the
Project, with commissioning expected in November 2008.
The most significant changes identified in the Buffels Report from the
previously announced May 22, 2007 preliminary assessment report for the
Project, in order of their impact on the economics of the Project, are:
a decision to increase price assumptions for gold and uranium (see Table
1);
an increase in the capital investment in the Project due to the escalation
in the cost of construction materials and the expanded scope of the
Project;
a decision to implement an atmospheric leach process in the initial year of
operation and a subsequent change to a pressure leach process that is
expected to yield higher recovery rates and boost production;
an increase in the recovery rate of uranium in the flotation process;
the conversion of the Project`s mineral resources to mineral reserves (see
Tables 3,4 and 5);
The impact of these changes is summarized below (see Table 2).
Table 1: CHANGES TO PROJECT ASSUMPTIONS
Years ending Unit Mar Mar Mar Mar Beyond
2009 2010 2011 2012 Mar
2012
Previous Gold ($/oz.) $500 $500 $500 $500 $500
May 2007 price
Uranium ($/lb.) $50 $50 $50 $50 $50
price
Exchange (ZAR/$) 7.4 7.4 7.4 7.4 7.4
rate
Current Gold ($/oz.) $737 $734 $683 $627 $635
Dec 2007 price
Uranium ($/lb.) $104 $104 $91 $78 $45
price
Exchange (ZAR/$) 7.4 7.4 7.4 7.4 7.4
rate
Note:
The current real term commodity price assumptions are based on the
consensus of the nominal forecasts by the investment research analysts at
13 North American-based brokerage firms, adjusted downward by the US
inflation rate for the period covering the construction of the Project.
Table 2: SUMMARY OF CHANGES TO BUFFELS PROJECT
Units of Previous Current
measure May 2007 Dec 2007 Change
Gold Plant
Design capacity of gold Tonnes
plant: per month 600,000 633,000 6%
Module 1 600,000 650,000 8%
Module 2 600,000 650,000 8%
Module 3 1,800,000 1,933,000 7%
Total
Average annual gold 000 oz. 128 126 -2%
production
Peak annual gold 000 oz. 165 182 10%
production
Total LOM1 gold 000 oz. 2,054 2,024 -1%
production
Average LOM1 gold % 67.2% 66.0% -120
recovery bps
Uranium Plant
Design capacity of Tonnes
uranium plant2: per month 60,000 63,000 5%
Module 1 60,000 65,000 8%
Module 2 60,000 65,000 8%
Module 3 180,000 193,000 7%
Total
Average annual uranium 000 lb. 922 1,339 45%
production
Peak annual uranium 000 lb. 1,595 2,231 44%
production
Total LOM1 uranium 000 lb. 14,748 20,078 36%
production
Average LOM1 uranium % 28.8% 33.0% 420
recovery bps
Financial Measures
Net present value (NPV)3 $millions 295 505 71%
Internal rate of return % 69% 151% 8200
(IRR) bps
Capital investment $ 148 260 76%
millions
Peak funding $ 83 67 -19%
millions
Life of Mine Years 16 16 -
Cash cost - gold $ / oz. 220 264 20%
Cash cost - uranium $ / lb. 22 24 9%
Total operating cost $ / tonne 2.55 3.10 22%
Notes:
LOM is the abbreviation of `life of mine`.
The tonnes to be processed in the uranium plant are included in, not
additional to, the tonnes to be processed in the gold plant.
NPV is calculated using an 8% real discount rate.
Schedule for construction
With the acquisition of Mine Waste Solutions ("MWS") effective June 6,
2007, the Project effectively was in operation with a design capacity to
process 500,000 tonnes of tailings per month through the gold plant. In
September 2007, the Corporation`s Board of Directors approved an expansion
of the capacity of the gold plant to process 633,000 tonnes of tailings per
month. This expansion is expected to be completed by January 2008.
Also in September 2007, the Board of Directors approved the construction of
a monitoring station and pipelines to transport the tailings that would be
hydraulically mined from the Buffels and Harties tailings dams. The
monitoring station and pipelines are now in production.
The further expansion of the MWS gold plant to double its capacity and the
construction of the first two modules of the Project`s uranium plant are to
begin immediately, for commissioning in November 2008. The third and
final modules of the gold plant and the uranium plant are to be
commissioned in November 2009.
Increase in uranium recovery from the flotation process
First Uranium believes that the effective recovery rate from mill feed to
uranium production for the Project will be better than previously
determined due to the expected results of further test work. The
effective recovery rate is the combination of recoveries in the flotation
process and in the plant. The preliminary assessment for the Project
published in May 2007, reported a 30% recovery in the flotation process and
a 90% recovery in the plant for a blended recovery rate of 27%.
Recent tests lead the Corporation to expect a 36.8% recovery from the
flotation process. Plant recovery rates, however, will initially be less
than the previously reported 90% rate as management has decided to refine
the pressure leach process and intends to commission the first two modules
of the uranium plant as planned in November 2008 with an atmospheric leach
process. Initially the plant is expected to achieve a yield of 75% using
an atmospheric leach process. The economic model in the Buffels Report is
based on the assumption that by November 2009 the Corporation will have
completed sufficient testing in advance of the implementation of a pressure
leach process. Although still in the pre-feasibility stage, the pressure
leach process is expected to increase the plant recovery rate back to 90%
for an effective recovery rate of 33% and, hence, yield a higher uranium
production. The pressure leach process will also contribute an acid by-
product for the gold circuit to improve gold recovery.
Earlier plans for the Project to currently be at the feasibility stage are
being postponed until further testing of the pressure leach process is
completed and land optioning for the farms covering the preferred site for
the new tailings dam are concluded.Conversion of resources to reserves
Recent geological work at the Project, which included drilling 66 new bore
holes on the tailings dams and the remodelling of all the dams, increased
the level of confidence in the mineral resources. The subsequent
conversion of most of the Project`s mineral resources to proven and
probable reserves resulted in a reduction in the number of tonnes, ounces
and pounds on some tailings dams, but this was more than offset by the
confirmation of a portion of the Mine Waste Solutions ("MWS") No.5 dam as a
proven reserve. Although it was hoped that the conversion of the MWS No.
5 dam would extend the life of the Project, the life of the Project will
remain at approximately 16 years due to the higher monthly feed capacity of
the gold plant and the changes between the previously stated resources (see
Table 3) and the mineral reserves (see Table 5).
Table 3: RESOURCE ESTIMATE (as per the May 22 technical report)
Resource Gold Uranium
Category
Place Dam Tonnes Grade Content Tonnes Content
(millions) (g/t) (oz (kg/t) (Mlb)
000s)
Measured
2 23.7 0.40 301 0.087 4.54
Buffels
3 29.4 0.35 335 0.103 6.67
Buffels
4 16.4 0.38 202 0.102 3.68
Buffels
Total Measured 69.5 0.38 838 0.097 14.90
Indicated
5 45.6 0.21 306 0.062 6.23
Buffels
1 92.6 0.32 941 0.061 12.45
Harties
2 35.6 0.31 354 0.058 4.56
Harties
5 23.1 0.31 228 0.053 2.70
Harties
6 14.6 0.22 105 0.059 1.90
Harties
MWS 2 2.6 0.45 38 0.080 0.46
MWS 4 14.4 0.29 134 0.140 4.45
Total Indicated 228.6 0.29 2,106 0.065 32.74
Total Meas. & 298.0 0.31 2,944 0.073 47.64
Indicated
Inferred
7 1.7 0.54 30 0.243 0.93
Harties
Flanagan 0.04 0.80 1 0.229 0.02
Harties
Ellaton 1.5 0.52 25 0.087 0.29
Harties
NKGE 0.7 0.41 9 0.158 0.24
Harties
MWS 5 60.7 0.29 566 0.093 12.44
Total Inferred 64.7 0.30 631 0.098 13.92
Notes:
CIM definitions were followed for mineral resources.
A zero grade cutoff grade was used.
Rows and columns may not add exactly due to rounding.
Preliminary metallurgical test results indicated that recoveries would be
approximately 27% for uranium and 68% for gold.
Mineral resources that are not mineral reserves do not have demonstrated
economic viability.
The Buffels Report includes a new mineral resource estimate that includes
mineral reserves as shown below (see Table 4). Unlike underground mines,
virtually all of the resources in a tailings recovery operation sit above
ground and there is a greater certainty of what can or can not be
categorized as reserves.
Table 4: MINERAL RESOURCE ESTIMATE 2007 (includes mineral reserves)
Resource Category Gold Uranium
Place Dam Tonnes Grade Content Tonnes Content
(millions) (g/t) (oz (kg/t) (Mlb)
000s)
Measured
2 24.1 0.40 309 0.086 4.58
Buffels
3 24.9 0.35 280 0.099 5.44
Buffels
4 14.1 0.37 170 0.102 3.17
Buffels
5 23.9 0.21 163 0.062 3.26
Harties
6 13.3 0.20 85 0.063 1.85
Harties
Total Measured 100.3 0.31 1,008 0.083 18.30
Indicated
5 47.6 0.24 360 0.063 6.62
Buffels
1 74.4 0.26 624 0.062 10.17
Harties
2 43.8 0.26 369 0.060 5.79
Harties
7 1.3 0.27 11 0.164 0.46
Harties
NGKE 1.2 0.50 19 0.182 0.47
Harties
MWS 2 0.6 0.45 9 0.082 0.11
MWS 4 (Dom 1) 9.7 0.14 43 0.047 1.00
MWS 4 (Dom 2) 17.4 0.28 157 0.133 5.12
MWS 5 40.3 0.31 402 0.088 7.81
Indicated
Total Indicated 236.3 0.26 1,993 0.072 37.55
Total Meas. & 336.6 0.28 3,001 0.075 55.85
Indicated
Inferred
Ellaton 1.3 0.39 16 0.147 0.41
Harties
Flanagan 0.0 - - - -
Harties
MWS 5 15.2 0.30 146 0.095 3.17
Inferred
MWS 5 (from 4.7 0.18 26 0.102 1.05
2)
Total Inferred 21.2 0.28 188 0.099 4.63
Notes:
Mineral resources are quoted as in-situ mineral resources.
No cutoff grades were applied.
Rows and columns may not add exactly due to rounding.
Effective date: November 1, 2007.
Mineral resources include mineral reserves. Resources which are not
reserves do not have demonstrated economic viability.
Table reflects depletion of 1.5 million tonnes from July through October
2007 for MWS No. 2 Dam.
Previously no reserves were estimated for the Project. Subsequent to the
drilling and metallurgical test work that has been conducted on the dams
and the completion of the Buffels Report, the following mineral reserves
have been signed off.
Table 5: MINERAL RESERVE ESTIMATE 2007
Reserve Gold Uranium
Classification
Place Dam Tonnes Grade Content Tonnes Content
(millions) (g/t) (oz (kg/t) (Mlb)
000s)
Proven
2 24.1 0.40 309 0.086 4.58
Buffels
3 24.9 0.35 280 0.099 5.44
Buffels
4 14.1 0.37 170 0.102 3.17
Buffels
5 23.9 0.21 163 0.062 3.26
Harties
6 13.3 0.20 85 0.063 1.85
Harties
Total Proven 100.3 0.31 1,008 0.083 18.30
Probable
5 47.6 0.24 360 0.063 6.62
Buffels
1 74.4 0.26 624 0.062 10.17
Harties
2 43.8 0.26 369 0.060 5.79
Harties
7 1.3 0.27 11 0.164 0.46
Harties
NKGE 1.2 0.50 19 0.182 0.47
Harties
MWS 2 0.6 0.45 9 0.082 0.11
MWS 4 (Dom 2) 17.4 0.28 157 0.133 5.12
MWS 5 40.3 0.31 402 0.088 7.81
Indicated
Total Probable 226.6 0.27 1,950 0.073 36.55
Total Proven & 326.9 0.28 2,958 0.076 54.85
Probable
Notes:
Mineral reserves are quoted as fully diluted delivered to mill estimates.
Effective date: November 1, 2007.
Based on assumptions of a gold price of $635 per ounce, a uranium price of
$45 per pound and and ZAR/$ exchange rate of 7.40.
A reserve cutoff grade of 0.28 grams per tonne gold equivalent was used,
uranium grades were converted to gold equivalent using a conversion factor
of 1 gram per tonne, which equals 0.503 kilograms per tonne on an extracted
metal basis.
Rows and columns may not add exactly due to rounding.
The gold recovery applied was 66%.
The uranium recovery used was based on an atmospheric leach process of 27%.
Table reflects depletion of 1.5 million tonnes from July through October
2007 for MWS No. 2 Dam.
Location of a new tailings dam site is being finalized
Discussions are being concluded towards securing land access to locate a
new tailings dam that is intended to contain all the processed tailings
that will be discharged during the life of the Project. Due to new
environmental requirements regarding the placement of any new tailings dams
and the negotiations required with land owners, the new dam is likely to be
located significantly further from the Project than originally planned.
Once established, the resulting tailings dam would have less uranium,
sulphur and pyrite and a superior design that mitigates erosion and,
therefore, would be expected to have a significantly less environmental
impact than the existing tailings that are about to be hydraulically mined
at the Project.
"As a result of the all the technical work conducted during the past year,
the overall confidence in the project has improved significantly," said
Gordon Miller, President and Chief Executive Officer of First Uranium. "We
will further refine the work done to date to determine the optimum NPV for
the pressure leach process and to finalize the location for a new tailings
dam, but we won`t let any of this interfere with our priority to meet our
delivery deadlines and ensure that the Project remains on track."
First Uranium intends to file the new technical report in respect of the
pre-feasibility study within 45 days from the date of this release.
Technical Disclosure
All technical disclosure in this news release relating to the
Buffelsfontein tailings recovery project has been prepared in accordance
with National instrument 43-101 ("NI 43-101) by Daan van Heerden, B.Sc.,
M.Comm., Charles Muller, B.Sc, Pr.Sci.Nat, and Johan Odendaal, B.Sc.,
M.Sc., Pr.Sci.Nat all of Minxcon Pty Ltd., Treavor Pearton, B.Sc Eng PhD,
FGSA and Mike Valenta, Pr Eng, B.Sc., of Metallicon Process Consulting
(Pty) Ltd. each of whom is a "qualified person" under NI 43-101 and is
independent of First Uranium.
Historical technical disclosure in this new release relating to the Project
is extracted from a technical report entitled "Technical Report -
Preliminary Assessment of the Buffelsfontein Project, North West Province,
Republic of South Africa" originally submitted on November 8, 2006, revised
on December 5, 2006, January 31, 2007 and May 22, 2007 prepared in
accordance with NI 43-101 by R.Dennis Bergen, P.Eng and Wayne Valliant,
P.Geo of Scott Wilson RPA, each of whom is a "qualified person" under NI 43-
101 and is independent of First Uranium.
The disclosure contained in this news release relevant to their respective
contributions has been reviewed and approved by Messrs. Bergen, van
Heerden, Muller, Odendaal, Pearton, Valliant and Valenta.
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 and
title disputes or claims and limitations on insurance coverage. 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", "likely" 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) 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; (ii)
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 (iii) 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 pre-feasiblity study or the preliminary
economic assessment, as the case may be, are achieved; (iii) mineral
resource and reserve estimates are accurate; (iv) the results of the
testing of the pressure leach process will be positive and the process will
be implemented; (v) the technology used to develop and operate its two
projects has, for the most part, been proven and will work effectively;
(vi) that labour and materials will be sufficiently plentiful as to not
impede the projects or add significantly to the estimated cash costs of
operations; (vii) that outstanding approvals for the completion of an
acquisition, the transfer of mining rights and the approval of mining
rights will be granted; (viii) 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 (ix) 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.
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:
Bob Tait, VP Investor Relations at 416 558-3858 or bob@firsturanium.com
Date: 19/12/2007 10:06:03 Produced by the JSE SENS Department.
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