| Mon 11 Aug 2008, 8:53 | | FUM - First Uranium Corporation - First Uranium reports results for first |
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FUM
FIU
FUM - First Uranium Corporation - First Uranium reports results for first
quarter ended June 30, 2008
(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 REPORTS RESULTS FOR FIRST QUARTER ENDED JUNE 30, 2008
All amounts are in US dollars unless otherwise noted.
For a full discussion of results, the Financial Statements and Management
Discussion & Analysis, please see the Company`s website, www.firsturanium.com
under "Regulatory Filings"
Toronto and Johannesburg - First Uranium Corporation (TSX:FIU, JSE:FUM)
(ISIN:CA33744R1029) ("First Uranium" or "the Company") today announced its
financial results for the fiscal quarter ended June 30, 2008 ("Q1 2009"). At
the Ezulwini underground uranium and gold mine (the "Ezulwini Mine"), First
Uranium is continuing the ramp up of gold production through its newly
commissioned gold plant and by the end of October 2008, expects to commence
uranium production as well. The rehabilitation of the main shaft at the
Ezulwini Mine is also progressing as planned. At Mine Waste Solutions ("MWS"),
where gold production has been recognized since a gold plant was acquired in
June 2007, construction is continuing on the next phase of the plants that are
designed to double MWS`s current gold production capacity and commence
processing of uranium by the end of the fiscal year ending March 31, 2009
("FY2009").
References to "Q1 2008" refer to the Company`s three-month fiscal period ending
June 30, 2007. References to "Q2 2009" and "Q3 2009" refer to the Company`s
three-month fiscal periods ending September 30, 2008 and December 31, 2008,
respectively.
Highlights
During Q1 2009, First Uranium:
- ended the quarter with $102.1 million cash and cash equivalents on hand
- hoisted 24,238 tonnes of ore at the Ezulwini Mine, which resulted in a
stockpiled inventory of 12,695 tonnes of gold and uranium bearing ore from
the Middle Elsburg ("ME") reef horizon and 11,543 tonnes of gold bearing
ore from the Upper Elsburg ("UE") reef horizon, estimated to contain in the
aggregate:
- 3,164 ounces of gold from the 11,543 tonnes at an average grade of
4.64 grams of gold per tonne and the 12,695 tonnes at an average grade
of 3.89 grams of gold per tonne
- 10,060 pounds of uranium from the stockpiled 12,695 tonnes of ME ore
at an average grade of 0.45 kilograms per tonne
- reclaimed 1.7 million tonnes of tailings through the MWS gold plant at a
yield of 0.16 grams of gold per tonne, producing 8,530 ounces of gold at a
Cash Cost (as defined in the `Summary of Operating Results`) of $464 per
ounce
- completed the upgrading of the MWS gold plant to increase the design
capacity from 500,000 tonnes per month to 633,000 tonnes per month during
May 2008
- upgraded MWS No.5 tailings dam during May 2008 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 low-cost supply of sulphuric acid, a necessary reagent for the
production of uranium, from the sulphur contained in the pyritic material
within the tailings dams, which are already being processed for gold at MWS
- entered into agreements to supplement the power supplied to the Ezulwini
Mine and MWS by the South African national power utility ("Eskom") by
obtaining diesel-fired generators and a power plant to secure a steady
supply of electrical power, which will provide total incremental capacity
of 54 megawatts ("MW"), inclusive of existing stand-by units, until Eskom
could be expected to restore a steady, reliable supply of electrical power
- filed updated independent technical reports on June 5, 2008 on both the
Ezulwini Mine and MWS, 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, for which
projected revised net present values are $667 million for the Ezulwini Mine
and $413 million for MWS and the projected internal rates of return are
336% for the Ezulwini Mine and 70% for MWS
- received notification on June 9, 2008, that Eskom will be able to increase
its supply of power to the Ezulwini Mine from 40 MW to 55 MW, which is
expected to reduce the Company`s requirement to generate its own additional
power and the costs thereof
Subsequent to the end of Q1 2009, First Uranium:
- continued commissioning the Ezulwini Mine`s 200,000 tonne per month gold
plant with the first 50,000 tonne per month module commencing production of
gold bullion in July 2008
- continued commissioning the Ezulwini Mine`s 100,000 tonne per month uranium
plant, which had been scheduled for production of ammonium diuranate
("yellowcake") in August 2008 and is now scheduled for October 2008
- finalized and implemented two-year agreements with the National Union of
Mineworkers ("NUM") at both the Ezulwini Mine and MWS
- resolved previously disclosed issues of handling clay content in tailings
at MWS, with the result that the MWS gold plant throughput and recovery
rates are at, and sometimes slightly above, design specifications
During Q2 2009, First Uranium plans to:
- hoist approximately 83,300 tonnes of ore at the Ezulwini Mine, of which
approximately 65,500 tonnes would comprise gold and uranium bearing ore
from the ME reef horizon and approximately 17,800 tonnes would comprise
gold bearing ore from the UE reef horizon
- process approximately 17,200 tonnes of gold bearing ore through the newly
commissioned gold plant at the Ezulwini Mine
- commission the second 50,000 tonne per month mill module of the gold plant
at the Ezulwini Mine during September 2008
- publish an updated technical report for the Ezulwini Mine
- reclaim 1.9 million tonnes of tailings through the MWS gold plant at a
yield of approximately 0.2 grams of gold per tonne with expected production
of approximately 12,000 ounces of gold
"Our first quarter of 2009 was highlighted by the commissioning of our Ezulwini
Mine gold plant and the production of gold in July as planned," said Gordon
Miller, President and Chief Executive Officer of First Uranium. "Although the
final commissioning stages of the uranium plant at the Ezulwini Mine have been
delayed until October 2008 as a result of the late delivery of certain
equipment, we believe that this will not affect our planned production for the
fiscal year as the capacity of the mills and the uranium plant will exceed the
planned near-term capability of the mine to produce ore.
"At MWS we made significant operational improvements during Q1 2009, which
enhanced gold production. During Q2 2009, we expect to operate the MWS gold
plant at designed throughput and recovery rates. Uranium production is expected
in Q3 2009 at the Ezulwini Mine and Q4 2009 at MWS."
Summary of Operating Results
Q1 2009 Q1 2008
Ezulwini Mine
Tonnes hoisted (000s)(a) 24,238 -
MWS
Tonnes reclaimed (000s) 1,665 402
Average gold recovery grade 0.16 0.27
(grams/tonne)
Total ounces of gold reclaimed 8,530 3,420
Total ounces of gold sold 7,741 3,395
Average selling price per ounce ($) 879 643
Average cost per ounce reclaimed ($) 482 669
Average Cash Cost per ounce reclaimed 464 581
($)(b)
(in thousands of dollars, except per
share amounts)
Revenue(c) 6,805 2,183
Cost of sales (excluding (3,340) (1,956)
amortization)(c)
Amortization(c) (189) (299)
Operating loss(d) (3,902) (3,292)
Gross profit (loss) 3,276 (72)
(Loss) income for the period (5,795) 5,471
Basic and diluted (loss) income per (0.04) 0.04
share
Cash flow (utilized by) generated from (19,610) 9,979
operations
Cash outflow from investing activities (44,080) (8,397)
Notes:
(a) There was no recovery of gold or uranium concentrates from
processing facilities located at the Ezulwini Mine during Q1
2009 or Q1 2008.
(b) Cash cost per ounce is defined as cost of sales divided by
ounces of gold sold. Total cash costs exclude amortization
expense and inventory purchase accounting adjustments. For
further information on this non-GAAP performance measure see
pages 5 of the Company`s MD&A.
(c) Revenue, cost of sales (including amortization) relate to
the sale of gold from the MWS operations. For Q1 2008 only
the results of MWS for the month of June 2007 were included in
the Company`s consolidated results as the effective date of
acquisition of MWS was June 6, 2007.
(d) This is a non-GAAP measurement. Operating loss is loss
before interest income, interest expenses, accretion expenses,
foreign exhchange (losses) gains and income tax charges.
During Q1 2009, a total of 8,530 ounces of gold were reclaimed at MWS at an
average Cash Cost of $464 per ounce compared to 3,420 ounces of gold reclaimed
during Q1 2008 at an average Cash Cost of $581 per ounce. MWS generated $6.8
million of revenue from 7,741 ounces of gold sold at an average selling price of
$879 per ounce compared to $2.2 million from 3,395 ounces of gold sold at an
average selling price of $643 per ounce in Q1 2008.
The relatively high average Cash Costs at MWS for Q1 2008 can be attributed
primarily to the diminishing resources taken from the MWS No.2 tailings dam,
which necessitated a high-cost mechanical load and placement operation. With the
transition during December 2007 to the high-volume, low-cost operations
associated with the mining of the tailings from Buffelsfontein Gold Mines
Limited "(BGM"), the average Cash Costs started to decrease. As throughput and
gold production increase, average Cash Costs are expected to decrease further.
The Company incurred an operating loss of $3.8 million in Q1 2009 (Q1 2008: $3.3
million) that reflects increased revenues which were more than offset by
increased expenditures as a result of the ongoing and increasing scope of
activities, including the progression of work at the Ezulwini Mine and MWS, the
costs of corporate offices in Johannesburg and Toronto, other expenses of
operating a public company and in Q1 2009 royalties and related payments made to
BGM and Simmer & Jack Mines, Limited ("Simmer & Jack") in respect of revenues
from production at MWS.
The loss of $5.8 million in Q1 2009 was primarily the result of the ongoing
expenditures mentioned above and foreign exchange losses on translation of
Canadian and South African assets, liabilities, revenues and expenses converted
to the US dollar. The Company reported net income of $5.5 million in Q1 2008
that was primarily the result of foreign exchange translation gains and net
interest income earned, partially offset by operating losses.
The cash utilized in operating activities during Q1 2009 was primarily used to
fund the ongoing expenditures in excess of the cash generated from gold sales.
The cash generated from operating activities during Q1 2008 was mainly the
result of the net interest earned on cash balances during the quarter and the
payment by Simmer & Jack of an outstanding receivable.
At the end of Q1 2009, First Uranium had total assets of $394.4 million, total
liabilities of $166.1 million and shareholders` equity of $228.3 million. It had
cash and cash equivalents of $102.1 million (excluding $9.7 million of
restricted cash on deposit) compared to $164.7 million at the end of FY 2008.
The decrease in cash and cash equivalents from the end of FY 2008 was primarily
attributable to $34.2 million of cash utilized during Q1 2009 for capital
expenditures for the development of the Company`s two mining operations and
increased working capital.
Outlook
The next major milestone for the Ezulwini Mine is the completion of the
commissioning of the 100,000 tonne per month uranium plant which is scheduled to
deliver its first shipment of yellowcake in October 2008. Current mine
production from the ME section of the Ezulwini Mine is being stockpiled
separately on surface to feed the uranium plant during its commissioning phase.
The Ezulwini Mine also plans to commission the second 50,000 tonne per month
mill module during September 2008.
First Uranium has not yet signed any long-term contracts to sell uranium,
although the Company does have the option to use a take and pay agreement with
Nufcor. As long-term uranium supply contracts are currently all tending to be of
a fixed delivery nature, First Uranium wants to complete the commissioning of at
least one of its uranium plants prior to entering into any such uranium
contracts.
It is expected that all four holes being drilled under the Ezulwini exploration
program will have intersected the E9EC reef horizon by the end of the September
2008. Deflections from these four existing boreholes will provide supplemental
borehole valuation data. The Phase 2 drilling project is expected to start in Q3
2009. The final holes of the Phase 1 drilling project and the first reef
intersections of the Phase 2 drilling project are expected to begin during Q4
2009.
The current and planned capital projects at MWS include:
- construction of the second gold module and the first two uranium modules
that are scheduled for commencement of commissioning in January 2009 and
completion in April 2009
- construction of the third gold module and the third uranium module that are
scheduled for commissioning in December 2009, increasing plant capacity to
1.9 million tonnes per month
- the establishment of a single large tailings dam that will accommodate all
future production tailings as well as tailings from processing the ore from
BGM for uranium
- permitting for additional tailings deposition facilities
An upgrade to accommodate a deposition rate of 1.3 million tonnes of material
per month on the MWS No.5 tailings dam is planned in advance of the
commissioning of the second module of the MWS gold plant and the first two
modules of the uranium plant. In the event that the MWS No.5 tailings dam is
found to be insufficient, additional tailings dam locations have been
identified.
As previously reported, a specification and procurement study for a sulphuric
acid plant has been initiated and is expected to be completed in October 2008.
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 addition of owner-operated power generation, prices for
uranium and gold, prices for power, availability and prices for sulphuric acid,
the estimation of mineral resources and reserves, the realization of estimated
pyrite content in the MWS tailings, 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, 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 "goals", "targets", "plans", "expects", "is expected",
"deadlines", "anticipates", or "believes" or variations of such words and
phrases, or state that certain actions, events or results "could", "would",
"should" 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 Company`s expectations as at 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 prefeasibility study and the preliminary
economic assessment for the respective projects 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.
Review by Board of Directors
The First Uranium Board of Directors, on the recommendation of its Audit
Committee, has approved the contents of this disclosure.
Conference Call
First Uranium will conduct a conference call with investors to discuss the
information in this news release at 10:00 a.m. local Toronto time and 4:00 p.m.
local Johannesburg time on Tuesday, August 12, 2008. The conference call will
be available simultaneously to all interested investors and news media.
Callers may dial 1 800 319-4610 (Canada and the US) or 0800 981 705 (South
Africa). Callers from other international locations may call +1 604 638-5340.
The call will be webcast at
http://services.choruscall.com/links/firsturanium080812.html and available for
replay shortly after the call for 90 days.
A telephone replay of the conference call will be available for 30 days. To
access the replay, callers may dial 1 800 319-6413 (Canada and the US). Callers
from other international locations may access the replay by dialing +1 604 638-
9010 (Canada). Access to the replay will require the code 2128, followed by #.
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
low-cost 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
11 August 2008
Sponsor: Investec Bank Limited
Date: 11/08/2008 08:53:22 Produced by the JSE SENS Department.
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