| Thu 24 Jul 2008, 8:45 | | FUM - First Uranium Corporation - Provides production and project development |
|
FUM
FIU
FUM - First Uranium Corporation - Provides production and project development
update for the first fiscal quarter ended June 30, 2008
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 PROVIDES PRODUCTION AND PROJECT DEVELOPMENT UPDATE FOR THE FIRST
FISCAL QUARTER ENDED JUNE 30, 2008
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 Company") today announced its
production results for the fiscal quarter ended June 30, 2008 ("Q1 2009"),
during which the Company stockpiled 24,238 tonnes of ore on surface at its
Ezulwini Mine and processed 1,664,537 tonnes of reclaimed tailings at its Mine
Waste Solutions tailings recovery project ("MWS"). Gold production from MWS
totaled 8,530 ounces of gold for the quarter. In anticipation of the
commissioning of its gold and uranium plants at the Ezulwini Mine 11,543 tonnes
of gold ore and 12,695 tonnes of uranium ore had been stockpiled as at July 2,
2008.
Highlights
Ezulwini Mine
* underground stope development and ore grades in the stopes were in line
with expectations
* surface gold and uranium stockpile grades are in line with expectations
* the initial uranium and gold mill was commissioned
* on-site gold production commenced
* commissioning of the uranium plant and uranium production were delayed from
August 2008 to October 2008, due to late delivery of certain equipment
caused by the EPCM contractor, but is not expected to impact uranium
shipping volumes for FY2009
* refurbishment of both the main and ventilation shafts continues on schedule
for completion by the end of FY2009
* finalized agreements to obtain 10 megawatt ("MW") diesel generators to
supplement the power supplied by the South African national power utility,
Eskom, and secure a steady supply of owner-generated electrical power with
a total capacity of 24 MW, inclusive of 14 MW of existing stand-by units at
the mine
* filed an updated independent technical report on June 5, 2008 taking into
consideration the capital and operating costs of generating additional
power, revised acid price assumptions and a revaluation of metal price and
exchange rate assumptions, resulting in a revised NPV of $667 million and
IRR of 336%
* on June 9, 2008 Eskom agreed to increase its power commitment to the
Ezulwini Mine from 40 MW to 55 MW
MWS
* commissioning of the Phase 1A gold plant expansion to 7.6 million tonnes
per annum ("MTPA") was completed
* gold production and costs are running at planned levels
* construction of the 1.5 MTPA uranium plant and the expansion of the gold
plant by 7.8 MTPA is on schedule
* to supplement the power supplied by Eskom, agreements have been finalized
to purchase and install a power plant which will secure 30 MW of electrical
power until such time as Eskom can restore a steady, reliable supply to
meet MWS`s total electrical power requirements
* filed an updated independent technical report on June 5, 2008, taking into
consideration the capital and operating costs of generating additional
power, revised acid price assumptions and a revaluation of metal price and
exchange rate assumptions, resulting in a revised NPV of $413 million and
IRR of 70%
* completed the upgrade to the MWS gold plant to increase the design capacity
from 500,000 to 633,000 tonnes per month
* upgraded MWS No.5 tailings dam to enable a deposition rate of 633,000
tonnes of material per month
* approved, subject to financing, a plan to build an acid plant at MWS to
secure a long-term low-cost supply of sulphuric acid
"We are delighted that MWS`s first phase expansion is now operating at planned
output and costs and that the Ezulwini Mine is again producing gold and
stockpiling uranium ore for processing in the short term," said Gordon Miller,
President and Chief Executive Officer of First Uranium. "Our near-term
objectives are to expand our gold production, commission our two new uranium
plants and start generating cash from our operations. Although uranium plant
processing at the Ezulwini Mine has been delayed, we anticipate having
sufficient plant capacity to process all the ore available from the underground
development in this fiscal year. We remain on track to achieve our long-term
objective to become one of the world`s lowest cost uranium producers."
Ezulwini Mine
Gold and Uranium Plant Commissioning
The commissioning of the 2.4 MTPA gold plant and the first 0.6 MTPA milling unit
commenced on schedule during Q1 2009. Subsequent to the end of Q1 2009 the
Ezulwini Mine began gold production at its gold plant in July 2008, as planned.
The commissioning of portions of the 1.2 MTPA uranium plant began on schedule
during June 2008. Due to late deliveries of certain equipment caused by the
EPCM contractor, however, the first ADU recovery will be delayed from August
2008 until October 2008. The delay will not affect the Company`s uranium
shipments for the year ended March 31, 2009 ("FY2009"), as the capacity of the
mills and the uranium plant exceed the total of the ore currently stockpiled and
ore planned to be hoisted from underground development during the remainder of
FY2009.
The commissioning of the second 0.6 MTPA mill is scheduled during Q2 2009; at
which point milling capacity will be utilized to consume existing stockpiles
while mining rates ramp up as per plan. The civil engineering work required for
the commissioning of the remaining milling capacity is on schedule for
completion during Q4 2009.
Upper Elsburg ("UE") and Shaft Re-engineering Project
Although there is still some work still to do, the Company has completed the
installation of resin injection, bolts and screens to prevent future impact on
the main shaft from possible ground movement within the weak Western Areas
Formation ("WAF") where it is intersected by the main shaft and vent shaft. For
the vent shaft, support is 60% complete above and below the WAF zone.
In the main shaft, the installation of loading boxes on the Koepe winder and
repairs to the common orepass are complete. The ore loading system at the shaft
bottom has been replaced and now exceeds current mining requirements. The shaft
support in the WAF zone is 96% complete.
Fabrication of the main shaft hanging tower is complete and 45% installed. The
final commissioning of the hanging tower steel work in the main shaft is
expected to be completed by March 2009. This new system will allow for a long-
life low-maintenance shaft system. Once the shaft is de-stressed, mining in the
shaft de-stress cut area is expected to continue for a further six years.
Surface stockpiling of ore from the UE development and stoping operations
continued in Q1 2009.
Middle Elsburg ("ME") Project
Hoisting from underground and surface stockpiling of uranium and gold bearing
ore from the ME continued during Q1 2009.
The opening up, sampling and preparation of new stopes has resulted in
sufficient mining areas being available to meet start up production
requirements. It is anticipated that commercial production rates from the ME
uranium and gold ore-body will be achieved during the latter part of FY2009 as
scheduled.
Results from development sampling, stope sampling and run of mine belt sampling
continue to provide positive reconciliations to the gold and uranium grades
estimated in the current ME mineral resource block model.
Ezulwini Mine Surface Stockpile Status (as at July 2, 2008)
Gold grade U3O8 grade
Source Tonnes (grams/tonne)* (%)*
Clean up and 127,500 1.11 -
development
Upper Elsburg 11,543 4.64 -
stopes
Middle Elsburg 12,695 3.89 0.045
stopes
*Sampled belt grades
MWS
Commissioning of Buffelsfontein Tailings
Commissioning of the Phase 1A gold plant expansion from 6.0 MTPA to 7.6 MTPA and
the installation of the pumping system to bring tailings from the new
Buffelsfontein tailings complex has progressed well, and the Phase 1A designed
plant throughput is now being consistently achieved. Minor modifications to the
hydraulic mining system to improve throughput and to the carbon-in-leach ("CIL")
plant flow sheet to improve recovery are being implemented. Modifications
completed to date include:
* installation of high shear oxygen reactors to improve gold recovery grades
to 0.19 grams per tonne in the expanded CIL circuit
* flotation tailings from the tailings disposal line have been re-routed to
the CIL gold circuit to reduce float tails grades and increase overall gold
recovery rates to expected levels
* pump station modifications, including the installation rubber-lined piping
and transfer pumps, were completed during a planned five-day plant shutdown
during June 2008
* two track-mounted water cannons for the hydraulic mining of the tailings
dams were installed in July 2008
Based on its performance during the first three weeks of July 2008, the MWS
Phase 1A gold plant is now producing gold at designed rates and at planned
costs. The remaining modifications for the commissioning of Phase 1A to
transition operations to the Buffelsfontein complex of dams are expected to be
completed in Q2 2009. These modifications include:
* installation of a slime re-pulping system to break up clay lumps and
improve hydraulic mining rates to 1.9 million tonnes per quarter and to
stabilize pulp densities pumped to the plant
* the installation of an additional track-mounted water cannon
MWS Quarterly Production Results
Q3 2008 Q4 2008 Q1 2009
Tonnes processed 832,208 1,592,242 1,664,537
Head grade 0.455 0.370 0.369
Recovery % 60% 38% 43%
Gold recovered (kilograms) 229 219 265
Gold recovered (ounces) 7,357 7,030 8,530
Construction
The construction of a 7.8 MTPA uranium and pyrite flotation plant, a 7.8 MTPA
gold plant and a 1.5 MTPA uranium plant has progressed according to schedule.
All excavation work and blasting of Dolomite outcrops has been completed.
Several of the foundations for tanks and other sections of these plants were in
place by the end of the quarter. Project engineering and procurement are on
schedule for the completion of the commissioning of these plant modules at the
end of Q4 2009.
Mineral Resource Update for the Ezulwini Mine
The verification of historic sampling data, the results of the new sampling and
the addition of new properties is expected to result in a significant increase
in the amount of verified data available to update the previous mineral resource
estimate for the Ezulwini Mine. In addition, results from new surface and
underground drilling continue to be added to the geological data base. A revised
mineral resource estimate and updated technical report are expected to be
published during Q2 2009.
Sulphuric Acid Plant Update
As disclosed on April 21, 2008, subject to financing, the Company is proceeding
with plans to install its own sulphuric acid manufacturing plant, which will
utilize the Company`s significant stores of sulphur bearing pyrite in the MWS
tailings to secure a long-life low-cost source of supply of sulphuric acid, a
necessary reagent for the production of uranium. Based on a preliminary
assessment the Company anticipated that it would construct a standard 600 tonne
per day sulphuric acid plant for an estimated $124 million. The Company is also
verifying the sulphide sulphur content of the tailings and assessing the
benefits of installing a smaller, `fit for purpose` acid plant which would be of
sufficient size to supply the Company`s requirement of approximately 300 tonnes
of acid per day. If a smaller plant is to be installed or the Company can
procure a second-hand acid plant, less capital will be required. The Company is
planning to use project financing, end-user financing or corporate debt to
procure the acid plant.
Power Update
During Q1 2009, the electrical power requirements of both MWS and the Ezulwini
Mine were supplied by South Africa`s national power utility, Eskom, without any
interruptions that plagued the country in the previous quarters. As a backup
plan to secure a continual supply of electrical power at the Ezulwini Mine,
however, the Company has connected the existing 14 megawatts ("MW") of standby
diesel generated power to the new plant and has proceeded with its order to
secure diesel generators with a further capacity of 10 MW on a lease basis.
At MWS, the Company is in the process of shipping the 30 MW power plant that it
recently acquired to secure sufficient power to start up the uranium and add-on
gold plant modules planned for commissioning in Q4 2009. On June 9, 2008, Eskom
agreed to increase its power commitment at the Ezulwini Mine from 40 MW to 55
MW, which is expected to reduce the projected requirement and cost of owner-
generated power until 2011. The Company will, however, have its own secure
alternative source of power in the event of any further unexpected power
disruptions.
Technical Disclosure
Technical disclosure in this news release relating to the tonnage of the
stockpiles has been prepared by Warren de Witt, who is a "qualified person"
under NI 43-101 and is independent of First Uranium. Mr. de Witt has reviewed
and approved the disclosure in this news release.
Financial Results: Release and Conference Call
For its first fiscal quarter ended June 30, 2008, First Uranium expects to
release its financial results on Monday, August 11, 2008. A conference call
for the benefit of investors is planned for Tuesday, August 12, 2008 at
10:00 am (Toronto and New York) and 4:00 pm in South Africa.
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 availability of electrical power, the planned addition of
owner-operated power generation, price of electrical power and sulphuric
acid, the estimation of mineral resources and reserves, the realization of
estimated pyrite content in the MWS tailings dams, expected dates of
commissioning or commencement of production, 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, availability of financing on acceptable terms,
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 "goal", "objective", "plans", "continues", "expects" or "does
not expect", "is expected", "projected", "assumed", "budget", "design",
"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", "should",
"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, availability of equipment, materials and fuel,
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, to price of electrical power and
sulphuric acid. 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 Company`s expectations as of the date
of this news release; (ii) actual results may differ materially from the
Company`s expectations if known and unknown risks or uncertainties affect its
business, or if estimates or assumptions prove inaccurate; (iii) the Company
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 Company 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) consistent supply of sufficient power will be available to
develop and operate the projects as planned; (ii) approvals to transfer or
grant, as the case may be, mining rights will be obtained; (iii) metal prices,
exchange rates and discount rates applied in the pre-feasibility study and
preliminary economic assessment are achieved; (iv) mineral resource estimates
are accurate; (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 Black
Economic Empowerment ("BEE") investors will maintain their interest in the
Company and their investment in the Company`s common shares to a sufficient
level to continue to support the Company`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.
About First Uranium Corporation
First Uranium Corporation (TSX:FIU, JSE:FUM) is focused on the development
of its South African uranium and gold mines with the goal of becoming a
significant producer through the re-opening and underground development of
the Ezulwini Mine and the expansion of the Mine Waste Solutions tailings
recovery facility. First Uranium also plans to grow production by pursuing
value-enhancing acquisition and joint venture opportunities in South Africa
and elsewhere.
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 (office), 416 558-3858 (mobile) or bob@firsturanium.ca
24 July 2008
Sponsor: Investec Bank Limited
Date: 24/07/2008 08:45:40 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
