| Wed 12 Nov 2008, 10:33 | | FUM - First Uranium Corporation - First Uranium reports financial and |
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FUM
FIU
FUM - First Uranium Corporation - First Uranium reports financial and
operating results for second quarter ended September 30, 2008 and provides
technical updates
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 REPORTS FINANCIAL AND OPERATING RESULTS FOR SECOND QUARTER ENDED
SEPTEMBER 30, 2008 AND PROVIDES TECHNICAL UPDATES
"First Uranium on track to achieve our long-term objective to become
one of the world`s lowest cost uranium producers"
All amounts are in US dollars unless otherwise noted.
For a full discussion of financial and operating 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 and operating results for the three and six months ended September
30, 2008 ("Q2 2009" and "2009 YTD", respectively) and provided technical
updates for both the underground Ezulwini Mine ("Ezulwini") and the Mine
Waste Solutions tailings recovery operation ("MWS").
First Uranium`s primary focus has been the re-opening and development of
Ezulwini and the operations and capital expansions of MWS. During Q2 2009, the
Company operated at planned throughput and gold recovery rates at MWS and in
some instances exceeded plan; however, Ezulwini experienced delays in
underground development, as proportionately more time continues to be
allocated to fast track the shaft refurbishment project, and delays in
commissioning of the uranium plant due to construction delays. As a result,
during Q2 2009 MWS achieved 98.5 percent of its gold production forecast (4
percent above technical report plan published in April 2008) and Ezulwini did
not produce a significant amount of gold for delivery to the refinery.
References to "Q2 2008" and "2008 YTD" refer to the Company`s three- and six-
month fiscal periods ending September 30, 2007. References to "Q3 2008", "Q4
2008", "Q1 2009", "Q3 2009", "Q4 2009" and "Q1 2010" refer to the Company`s
three-month fiscal periods ending December 31, 2007, March 31, 2008, June 30,
2008, December 31, 2008, March 31, 2009 and June 30, 2009, respectively.
Summary for Q2 2009
* Ended the quarter with $36.7 million of cash and cash equivalents
* Signed a mandate and term sheet with a South African bank for debt financing
of up to ZAR900 million (approximately $100 million)
* Entered into a letter of intent to sell 25 percent of life-of-mine ("LOM")
gold production from MWS for two upfront payments totaling $125 million and
payments of $400 per ounce of gold delivered
* advanced refurbishment, construction and development activities at both
Ezulwini and MWS, with capital expenditures of $60 million in the quarter
* MWS generated $10.5 million of revenue for the quarter and reported
significantly improved financial results
* MWS exceeded planned production for the quarter
* MWS Phase 1B expansion (second gold module and first two uranium modules) on
schedule for completion during Q1 2010
* At MWS, the 30 MW power plant has arrived in South Africa and commissioning
is scheduled for April 2009
* Ezulwini commissioned first 50,000 tpm mill and 200,000 tpm carbon-in-leach
("CIL") circuit on schedule
* Ezulwini gold elution circuit commissioned in early November 2008 and gold
production has commenced
* Ezulwini shaft refurbishment accelerated by two months for completion in Q4
2009
* Ezulwini mine development and production rescheduled to optimize revenue
upon ompletion of shaft refurbishment
* At Ezulwini, stand-by diesel generating power sets ("gensets") with a
capacity of 10 megawatts ("MW") have been delivered to site and will be
installed once site preparation is completed
* Ezulwini uranium plant commissioning delayed until Q4 2009 due to
construction delays
* Completed MWS and Ezulwini technical updates and related economic models,
which project improved LOM production rates, reduced peak funding
requirements, lower operating costs and improved overall project economics
* Due to the recent softening of acid prices, deferred decision to build acid
plant until acid prices stabilize
Financial Overview
Q2 Q2 2009 2008
2009 2008 YTD YTD
Ezulwini Mine
Tonnes hoisted(a) 42,465 - 66,70 -
3
MWS
Tonnes reclaimed (000s) 1,839 1,227 3,504 1,628
Average gold recovery 0.20 0.26 0.18 0.26
grade (grams/tonne)
Total ounces of gold 11,821 10,12 20,35 13,54
reclaimed 4 1 4
Total ounces of gold 12,118 10,10 19,85 13,50
sold 8 9 2
Average selling price 870 619 874 625
per ounce ($)
Average cost per ounce 380 527 423 561
reclaimed ($)
Average Cash Cost per 363 472 404 497
ounce reclaimed ($)(b)
Summary of Consolidated
Financial Results
(in thousands of dollars,
except per share amounts)
Revenue(c) 10,546 6,253 17,35 8,436
1
Cost of sales (excluding (4,532 (4,78 (7,87 (6,73
amortization)(c) ) 0) 2) 6)
Amortization(c) (199) (563) (388) (862)
Gross profit 5,815 910 9,091 838
Operating loss(d) (1,072 (2,16 (4,92 (5,35
) 6) 0) 4)
(Loss) income for the (1,106 3,051 (6,90 8,522
period ) 1)
Basic and diluted (loss) (0.01) 0.02 (0.05 0.07
income per share )
Cash flow utilized in (10,28 (682) (12,5 14,62
operations 9) 00) 5
Cash outflow from (52,48 (26,6 (113, (40,4
investing activities 6) 65) 979) 32)
Notes:
(a) There was no recovery of gold or uranium
concentrates from processing facilities located at the
Ezulwini Mine during the reported periods.
(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 6 of the
Company`s MD&A.
(c) Revenue, cost of sales (including amortization)
relate to the sale of gold from the MWS operations.
For Q2 2008 and 2008 YTD 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 and accretion
expenses, foreign exchange gains and income tax
charges.
During Q2 2009, MWS generated $10.5 million of revenue from 12,118 ounces of
gold sold at an average selling price of $870 per ounce compared to $6.3
million from 10,108 ounces of gold sold at an average selling price of $619
per ounce in Q2 2008. A total of 11,821 ounces of gold were produced at MWS in
Q2 2009 at an average Cash Cost of $363 per ounce compared to 10,124 ounces of
gold produced during Q2 2008 at an average Cash Cost of $472 per ounce. The
higher average Cash Costs in Q2 2008 can be attributed primarily to the high-
cost mechanical load and placement operations that were required to mine the
remnants taken from the MWS No.2 tailings dam.
The Company incurred an operating loss of $1.1 million in Q2 2009 (Q2 2008:
$2.2 million) as increased revenues from the sale of gold at MWS were more
than offset by increased expenditures as a result of the ongoing and
increasing scope of activities, including the progression of work at Ezulwini
and MWS, general and administrative expenses and in Q2 2009 royalties and
related payments made to Buffelsfontein Gold Mines Limited and Simmer and Jack
Mines, Limited in respect of revenues from production at MWS.
The cash utilized in operating activities during Q2 2009 was primarily used to
fund the ongoing expenditures in excess of the cash generated from gold sales
at MWS. The cash utilized in operating activities during Q2 2008 reflected net
operating expenses offset by net interest received during the quarter.
The cash utilized in investing activities in Q2 2009 primarily related to
capital expenditures of $59.6 million ($35.4 million and $24.2 million at
Ezulwini and MWS, respectively). The cash utilized in investing activities
during Q2 2008 primarily comprised capital expenditures of $21.0 million at
Ezulwini and $5.6 million at MWS. $7.3 million of cash that was transferred to
restricted cash during Q1 2009 was released during the quarter to fund the 80
percent upfront payment on shipment of a 30 MW power plant.
At the end of Q2 2009, First Uranium had total assets of $395.2 million, total
liabilities of $166.4 million and shareholders` equity of $228.8 million. The
Company had cash and cash equivalents of $36.7 million (excluding $2.4 million
of restricted cash on deposit) compared to $164.7 million at the end of FY
2008. The Company currently holds its funds in cash and bank-sponsored
guaranteed investment certificates with Canadian and South African banks. The
decrease in cash and cash equivalents from the end of FY 2008 is primarily
attributable to $59.6 million and $111.2 million of cash utilized during Q2
2009 and 2009 YTD, respectively, for capital expenditures for the development
of the Company`s two mining operations and an increase in working capital of
$10.3 million and $12.5 million during Q2 2009 and 2009 YTD, respectively.
The recent market turbulence arising from the credit crisis has resulted in
growing concerns of significantly reduced economic activity worldwide, a
severe limitation in access to capital, volatility and uncertainty of
prospects for global metal prices, exchange rates and the cost of materials.
Management is carefully monitoring these developments, how these conditions
may impact the Company`s operations, financial condition and outlook and is
proactively assessing non-critical capital expenditures and opportunities to
reduce operating costs. In addition, as mentioned earlier, the Company plans
to raise $125 million through a gold stream transaction and is in advanced
negotiations with a South African bank to establish additional access to debt
capital, to complete near- and medium-term funding requirements of currently-
identified projects and provide increasing financial flexibility to the
Company.
Assuming the completion of these financing activities, the Company anticipates
that its capital programs will continue as planned and that both mines will be
generating free cash flow by April 2010 with estimated peak funding in
December 2009 of approximately $67 million (excluding the cost of installing
an acid plant as the Company has deferred that decision until sulphuric acid
prices stabilize).
Operational Overview
MWS QUARTERLY PRODUCTION RESULTS
Q3 2008 Q4 2008 Q1 2009 Q2 2009
Tonnes 832,208 1,592,242 1,664,537 1,839,188
processed
Head grade 0.455 0.370 0.369 0.407
Recovered 0.275 0.139 0.160 0.200
grade
Recovery % 60% 38% 43% 49%
Gold recovered 229 219 265 368
(kg)
Gold recovered 7,357 7,030 8,530 11,821
(oz)
At MWS:
* Reprocessed 1.8 million tonnes of tailings through the gold plant at a yield
of 0.2 grams of gold per tonne, producing 11,821 ounces of gold compared to
forecast of 11,334 ounces
* Completed all planned changes to the gold plant to bring the plant capacity
to above the nameplate processing capacity of 21,000 tonnes per day
* Progressed construction of Phase 1B on budget and on schedule for completion
during April 2009
* Optimized the tailings deposition system on MWS No.5 tailings dam with
cycloning technology thereby increasing the capacity of that dam and
postponing the requirement for the earlier commissioning of the next
deposition site
At Ezulwini:
* Milled 44,014 tonnes of gold-bearing ore sourced from surface stockpiles
* Successfully commissioned the first 50,000 tonne per month grinding mill and
the 200,000 tonne per month CIL circuit
* Proportionally more time has been allocated to fast track the shaft
refurbishment project with resultant delays to underground development and
production. This resulted in 42,465 tonnes of gold- and uranium-bearing ore
being hoisted compared to plan of 83,300 tonnes
* Completion of shaft refurbishment accelerated by two months to January 2009
to allow for full use of the shaft for mining and hoisting
* Experienced delays in commissioning the elution circuit, which resulted in
the lockup of 1,400 ounces of gold on carbon
* Subsequent to the end of Q2 2009, the elution circuit was successfully
brought on stream and gold is currently being produced for delivery to a
refinery
* Installed second grinding mill (also with a capacity of 50,000 tonnes per
month) to feed ore to the uranium plant
* Commissioning of uranium plant delayed until Q4 2009 due to construction
delays
* At the end of Q2 2009, had stockpiled ore as shown in the following table:
EZULWINI MINE SURFACE STOCKPILE STATUS (as at September 30, 2008)
Gold grade U3O8 grade
Source Tonnes (grams/tonne)* (%)*
Clean up and 108,662 2.00 -
development
Upper Elsburg ore - - -
Middle Elsburg ore 41,527 3.89 0.045
*Sampled belt grades
Commenting, First Uranium President and CEO Gordon Miller said: "With MWS
operating as planned, our primary focus now is the successful commissioning of
the Ezulwini Mine, where we are accelerating the shaft refurbishment, to allow
for earlier implementation of full planned production rates from underground,
and shifting the focus of our underground activities to the development of
higher grade faces to take into account current commodity prices. As of the
date of this release, the elution circuit at Ezulwini has been successfully
commissioned and gold smelting has commenced. Despite construction delays, we
are confident that the uranium plant will be successfully commissioned in
early 2009."
Outlook
During Q3 2009:
* Ezulwini plans to hoist in excess of 57,000 tonnes of uranium- and gold-
bearing ore
* Ezulwini plans to process approximately 109,000 tonnes of gold-bearing ore
from the Upper and Middle Elsburg reefs and surface stockpiles through the
gold plant and produce approximately 6,900 ounces of gold
* Ezulwini plans to commence milling of uranium- and gold-bearing ore from the
Middle Elsburg reef through the gold plant for future extraction of
contained uranium when the uranium processing plant is commissioned
* MWS plans to reprocess 1.9 million tonnes of tailings through gold plant at
a yield of approximately 0.21 grams of gold per tonne with expected
production of in excess of 12,900 ounces of gold
* MWS plans to commence upgrade on carbon elution and regeneration circuits,
and the addition of an eighth CIL stage, to further improve recoveries
* MWS will continue with the upgrade of the MWS No.5 tailings dam to
accommodate the deposition of 1,283,000 tonnes of tailings per month
The next major milestone for Ezulwini is the completion and commissioning of
the 100,000 tonne per month uranium plant, which is scheduled to commence
recovery of uranium in Q4 2009. Current mine production from the Middle
Elsburg reef of Ezulwini, which was being stockpiled separately on surface to
feed the uranium plant during its commissioning phase, will now be milled
through the gold circuit with the uranium-bearing tailings being redeposited
on the tailings dam for introduction to the uranium circuit upon
commissioning. Ezulwini also plans to commission the second 50,000 tonne per
month mill module by the end of December 2008.
First Uranium has not yet signed any long-term contracts to sell uranium,
although the Company has the option to use an existing take-and-pay agreement
with South African-based Nufcor. As long-term uranium supply contracts
currently tend to require delivery of fixed amounts of uranium over a fixed
time period, First Uranium wants to complete the commissioning of at least one
of its uranium plants prior to entering into any such uranium contracts.
The current and planned capital projects at MWS include:
* Construction of Phase 1B that is 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 of
the Buffelsfontein Gold Mine for uranium
An upgrade to accommodate a deposition rate of 1.3 million tonnes of material
per month on the MWS No.5 tailings dam is underway in advance of the
commissioning of Phase 1B.
"Our near-term objectives are to expand our gold production, commission our
new uranium plants and to generate positive cash flow from both operations,"
added Mr. Miller. "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."
Technical Updates
Commenting on the implications for the Company of the recent global financial
crisis, Mr. Miller stated that: "Following the market turbulence created by
the global credit crisis, First Uranium has completed technical updates for
both operations in order to reduce the Company`s financial risk profile. We
have implemented changes to our mine plans to optimize our long-term capital,
production and cost schedules. These changes have resulted in the deferral of
near-term production, the reduction of peak funding requirements and improved
financial returns. Through these decisive pre-emptive actions, we have reduced
the Company`s overall enterprise risk during a period of heightened global
uncertainty."
Ezulwini
* An increase to the estimated measured and indicated mineral resource from
6.8 million pounds of uranium and 1.9 million ounces of gold to 7.1 million
pounds of uranium and 2.8 million ounces of gold, due to: availability of
additional diamond drilling information; the reinterpretation and a better
understanding of the Middle Elsburg reefs base data, as well as the
associated geology; a fundamental improvement in the understanding of the
Upper Elsburg reef; and the upgrading of areas previously categorized as
inferred resources (see Estimated Mineral Resource tables below)
* A decrease to the inferred mineral resource estimate from 218.3 million
pounds of uranium and 32.1 million ounces of gold to 188.7 million pounds of
uranium and 25.5 million ounces of gold, due to the upgrading of resources
from the inferred category into the measured and indicated category at higher
cut-off grades (see Estimated Mineral Resource tables below)
* The addition to the inferred mineral resource estimate of another 15.1
million pounds of uranium and 3.5 million ounces of gold from the Zuurbekom
exploration area adjacent to the Ezulwini mining property, due to the
acquisition of the exploration rights to the Zuurbekom area and the
availability of additional diamond drilling information
Average annual LOM production estimate increased from 951,000 pounds of
uranium and 306,000 ounces of gold to 1.12 million pounds of uranium and
352,000 ounces of gold as a result of a more detailed scheduling of Upper
Elsburg LOM production, as well as the overall increase in the Middle Elsburg
grades, resulting in a more robust uranium and gold production profile
* Average LOM Cash Costs reduced from $33 per pound of uranium and $376 per
ounce of gold to $25 per pound of uranium and $340 per ounce for gold, due to
more accurate costing related to actual operational performance and the
overall increase in the mined grade offset by inflation related adjustments
* Improvement to the net present value ("NPV") from $667 million to $924
million as a result of the change in LOM commodity prices and Rand/Dollar
exchange rates and, to a lesser extent, the increase in the overall recovered
grades for both uranium and gold
* Capital expenditures of $28 million for the remainder of fiscal 2009, which
ends March 31, 2009 ("F2009")
* Reduced uranium production forecast from 328,500 pounds to 37,000 pounds for
F2009 and from 605,900 pounds to 440,000 pounds for F2010
* Reduced gold production forecast from 87,300 ounces to 21,400 ounces for
F2009 and from 243,400 ounces to 141,100 ounces for F2010
* Reduced planned LOM operating unit costs from $74 per tonne to $63 per tonne
REVISED PROJECT ECONOMICS FOR EZULWINI
From Revised Revised
news report report
release using April using
of 21, 2008 October
April assumptions 2008
21, assumptions
2008
Long-term uranium 50 50 52
price ($ per pound)
Long-term gold price 711 711 748
($ per ounce)
Long-term exchange 7.57 7.57 8.95
rate (ZAR/US$)
Rock value per tonne 133 139 147
milled ($/tonne)
Life-of-mine average
co-product operating
costs
Operating cost per 74 74 63
tonne milled ($/tonne)
Uranium Cash Cost 33 29 25
($/pound)
Gold Cash Cost 376 400 340
($/ounce)
Capital expenditures $201 $136 $117
million million million
Average annual life-of-
mine production
Uranium (pounds) 951,000 1,117,000 1,117,000
Gold (ounces) 306,000 352,000 352,000
Annual production
Year 1 Gold 87,300 21,400 21,400
production (ounces)
Year 2 Gold 243,400 141,100 141,100
production (ounces)
Year 3 Gold 345,800 251,800 251,800
production (ounces)
Year 1 Uranium 328,500 37,000 37,000
production (pounds)
Year 2 Uranium 605,900 440,000 440,000
production (pounds)
Year 3 Uranium 690,900 715,100 715,100
production (pounds)
NPV8 $667 $634 $924
million million million
IRR 336% 129% 398%
Notes:
1. Co-product costs assume that operating cash costs are split in proportion
to the revenue earned from each product.
2. NPV is calculated using a nominal discount rate of 8%
3. Capital expenditures estimates are exclusive of sustaining capital.
MWS
* The average head grade of the tailings from Buffelsfontein No.2 tailings dam
is proving to be 10 percent higher than indicated in the technical report
dated June 5, 2008 and filed on SEDAR, this trend is expected to continue
over the LOM and consequently a block factor of 110 percent (the "Block
Factor") has been applied
* The expansion of the reclamation process and gold plant from 633,000 tonnes
per month to 1,283,000 tonnes per month has been deferred from December 2008
to April 2009, as has the rest of Phase 1B (including the startup of the
first two uranium plant modules), with a corresponding deferral of capital
associated with the entire expansion
* The mining sequence has been altered to optimize operational efficiencies
and improved utilization of infrastructure
* Removal of production, capital and operating history from the model to an
effective September 2008 start date resulted in the estimated NPV of the
model increasing from $420 million to $496 million
* Incorporation of the Block Factor, expansion and capital deferral, and
altered mining sequence improved the estimated NPV of the project from $496
million to $541 million
* Applying updated consensus commodity prices improves the estimated NPV by a
further $100 million from $541 million to $641 million
* The average LOM Cash Cost for uranium was reduced marginally from $22 per
pound to $21 per pound and reduced substantially for gold from $347 per
ounce to $279 per ounce
* Reduced capital expenditure for year F2009 from $117 million to $76 million
* Increased capital expenditure for year F2010 from $115 million to $149
million (see Capital Expenditure Table below)
* Deferred the F2009 forecast for uranium production of 141,200 pounds to
future years and decreased the forecast for F2010 from 1,077,600 pounds to
854,700 pounds, having assumed a lower mass pull to offset higher acid
prices
* Reduced the forecast for gold production from 56,300 ounces to 45,500 ounces
for F2009 and increased gold production from 119,700 ounces to 128,500
ounces for F2010
* Reduced planned LOM operating unit costs from $3.44 per tonne to $3.02 per
tonne
REVISED PROJECT ECONOMICS FOR MWS
From news Revised Revised
release report report
of April using April using
21, 2008 21, 2008 October
assumptions 2008
assumptions
Long-term uranium price 50 50 52
($ per pound)
Long-term gold price ($ 711 711 748
per ounce)
Long-term exchange rate 7.57 7.57 8.95
(ZAR/US$)
Rock value per tonne 8.01 8.17 8.91
milled ($/tonne)
Life-of-mine average co-
product operating costs
Gold operating cost per 2.12 2.19 1.86
tonne reclaimed
($/tonne)
Uranium operating cost 9.82 10.19 8.64
per concentrate tonne
($/tonne)
Uranium Cash Cost 22 27 21
($/pound)
Gold Cash Cost ($/ounce) 347 339 279
Capital expenditures $241 $276 $254
million million million
Average annual life-of-
mine production
Uranium (pounds) 1,317,000 1,388,000 1,388,000
Gold (ounces) 130,000 129,000 141,000
Annual production
Year 1 Gold production 56,300 45,500 45,500
(ounces)
Year 2 Gold production 119,700 128,500 128,500
(ounces)
Year 3 Gold production 160,600 195,600 195,600
(ounces)
Year 1 Uranium 141,200 - -
production (pounds)
Year 2 Uranium 1,077,600 854,700 854,700
production (pounds)
Year 3 Uranium 2,203,600 1,797,700 1,797,700
production (pounds)
NPV8 $419 $465 $641
million million million
IRR 75% 71% 113%
Notes:
Co-product costs assume that operating cash costs are split in proportion to
the revenue earned from each product.
NPV is calculated using a real discount rate of 8%
CAPITAL EXPENDITURES FOR FISCAL YEARS 2009 TO 2011
F2009 1st 2nd half F2009 F2010 F2010 F2011 F2011
April half F2009 Actual + April Oct April `08 Oct
`08 F2009 Forecast Forecast `08 `08 Forecast `08
Forecast Actual Forecast Foreca Forec
st ast
Ezulwini 73 60* 28 88 22 25 12 19
MWS 117 41 35 76 115 149 19 35
Company 190 101 63 164 137 174 31 54
* Excluding capitalized pre-production costs
Summary spreadsheets for the revised technical reports and related economics
have been posted on the Company`s website at www.firsturanium.com.
Sulphuric Acid Plant Update
As disclosed on April 21, 2008, subject to financing, the Company planned to
install its own sulphuric acid manufacturing plant, which would utilize the
Company`s significant supplies of sulphide sulphur in both the MWS tailings
and Ezulwini ore and 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 has also considered the installation of a smaller `fit-for-
purpose` acid plant that would have a capacity of 300-450 tonnes per day at a
cost of approximately $75 million. Due to recent softening of sulphuric acid
prices, the Company has now deferred its decision to build an acid plant until
acid prices stabilize.
Power Update
During Q1 2009 and Q2 2009, the electrical power requirements of both MWS and
Ezulwini were supplied by South Africa`s national power utility, Eskom,
without interruptions experienced in the previous quarters. As a backup plan
to secure a continual supply of electrical power at Ezulwini, the Company has
connected the existing 14 megawatts ("MW") of standby diesel generated power
capacity to the new plant and further diesel generating power with a capacity
of 10 MW arrived on site and will be installed once site preparation is
completed. At MWS, the 30 MW power plant that the Company recently acquired to
secure sufficient power to start up the uranium and add-on gold plant modules
planned for commissioning in April 2009 is currently in South Africa
undergoing testing and refurbishment before being delivered to MWS.
In the event of any further unexpected power disruptions, by procuring these
alternative sources of power, the Company has secured sufficient capacity to
meet its power requirements during the early stages of each operation`s
development and to run emergency systems at the underground operation at
Ezulwini, if required. A provision has been included in each operation`s
operating costs for the expectation of having to run these alternate power
sources during peak demand periods, although there has been no need to use
these systems since they`ve been procured.
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.
All technical disclosure in this news release relating to the underground
Ezulwini Mine project, except for the Zuurbekom mineral resource estimate,
will be presented in a Preliminary Assessment Technical Report to be 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 Roscoe Postle
Associates Inc., each of whom is a "qualified person" under NI 43-101 and is
independent of First Uranium. The disclosure contained in this news release
has been reviewed and approved by Mr. Bergen and Mr. Valliant.
The Zuurbekom mineral resource estimate in this news release has been prepared
in accordance with NI 43-101 by Charles Muller, B.Sc, Pr.Sci.Nat of Minxcon
Pty Ltd., who is a "qualified person" under NI 43-101 and is independent of
First Uranium.
All updates to the technical disclosure in this news release relating to the
MWS operation has been reviewed and approved by James Fisher, EVP Corporate
Development of First Uranium. Mr. Fisher is a Chartered Engineer, a fellow of
The Institute of Materials, Minerals and Mining, a member of the South African
Institute of Mining and Metallurgy, a member of the Mine Metallurgical
Managers Association of South Africa and a "qualified person" under NI 43-101
with regard to these updates.
The economic analysis contained in this news release is contained in the
Technical Report 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 Report is based, will be realized. The
Technical Report is expected to be submitted to SEDAR on or before December
29, 2008.
Financial Results: Release and Conference Call
First Uranium will conduct a conference call with investors to discuss the
information in this news release at 11:00 a.m. local Toronto time and 6:00
p.m. local Johannesburg time on Wednesday, November 12, 2008. The conference
call will be available simultaneously to all interested analysts, investors
and 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/firsturanium081112.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 #.
Cautionary Language Regarding Forward-Looking Information
This news release contain certains forward-looking statements. Forward-
looking statements include but are not limited to those with respect to the
price of uranium and gold, requirements for additional capital, availability
of financing on acceptable terms, the availability of electrical power, the
planned addition of owner-operated power generation, price of electrical
power, supply and price of sulphuric acid, the estimation of mineral resources
and reserves, the realization of mineral reserve estimates, the realization of
estimated pyrite content in MWS tailings dams, 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, 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
"goal", "objective", "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 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, to international operations, to prices of uranium and gold, actual
results of current exploration activities. 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 the date of this news release; (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) the conditions precedent to the prospective gold stream transaction
and debt facility will be satisfied and each transaction will be completed;
(ii) approvals to transfer or grant, as the case may be, mining rights or
prospecting rights will be obtained; (iii) metal prices, exchange rates and
discount rates applied in the prefeasibility study or preliminary economic
assessment, as the case may be, 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 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; (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; and (ix) consistent supply of
sufficient power will be available to develop and operate the projects as
planned.
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
operation. 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 bob@firsturanium.ca or
+1 416 342-5639 (office) or +1 416 558-3858 (mobile)
*****
PREVIOUS ESTIMATED MINERAL RESOURCES FOR EZULWINI (as at January 2007)
Tonne Grade Content
Category/Reef s
Au U3O8 Au U3O8
Measured (000 (g/t (%) (000 (000
t) Au) oz) lb)
UE Shaft Pillar 2,490 7.7 - 615 -
Middle Elsburg 2,450 4.9 0.072 384 3,888
Total 4,940 6.3 0.072 999 3,888
Indicated
UE Shaft Pillar 3,640 5.8 - -
683
Middle Elsburg 1,370 5.8 0.095 2,880
257
Total 5,010 5.8 0.095 940 2,880
Measured and
Indicated
UE Shaft Pillar 6,130 6.6 - 1,298 -
Middle Elsburg 3,820 5.2 0.080 6,768
641
Total 9,950 6.1 0.080 1,939 6,768
Inferred
Upper Elsburg 64,55 5.8 - 12,05 -
0 5
Middle Elsburg 4,810 2.3 - 351 -
Channel
Middle Elsburg 132,1 4.7 0.075 19,74 218,3
00 2 19
Total 201,4 5.0 0.075 32,14 218,3
60 8 19
Notes:
1. CIM definitions were followed for mineral resources
2. UE refers to the Upper Elsburg reef horizon, which is mined for gold
only; ME refers to the Middle Elsburg reef horizon, which is mined for
gold and uranium
3. Mineral resources were estimated at a cut-off grade of 4.0 g/t Au
4. Mineral resources were estimated using an average long-term gold price of
US$500 per ounce, and a US$/R
exchange rate of 7.0
5. A minimum mining width of 1.53 m was used
6. Rows and columns may not add exactly due to rounding
7. Mineral resources that are not mineral reserves do not have demonstrated
economic viability
REVISED MINERAL RESOURCE ESTIMATES FOR EZULWINI (as at October 2008)
Category/Reef Tonne Grade Content
s
Au U3O8 Au U3O8
Measured (000 (g/t (%) (000 (000
t) Au) oz) lb)
UE Shaft Pillar 2,138 7.86 - 540 -
Middle Elsburg 1,518 5.31 0.067 259 2,242
(E9Ec)
Total 3,656 6.80 799 2,242
Indicated
UE Shaft Pillar 3,348 6.31 - 679 -
UE Pillars 1+2 2,227 5.59 - 400 -
(EC)
UE Pillars 1+2 521 5.14 - 86 -
(ED)
UE Pillar 3 118 7.64 - 29 -
(MB)
UE Pillar 4 1,285 6.68 - 276 -
(ED)
Middle Elsburg 2,873 5.39 0.077 498 4,876
(E9Ec)
Total 10,37 5.90 1,968 4,876
2
Measured and
Indicated
UE Shaft Pillar 5,486 6.91 - 1,220 -
UE Pillars 1+2 2,227 5.59 - 400 -
(EC)
UE Pillars 1+2 521 5.14 - 86 -
(ED)
UE Pillar 3 118 7.64 - 29 -
(MB)
UE Pillar 4 1,285 6.68 - 276 -
(ED)
Middle Elsburg 4,391 5.36 0.074 757 7,117
(E9Ec)
Total 14,02 6.14 2,768 7,117
8
Inferred
UE 45,71 5.43 - 7,977 -
2
UE Pillars 1+2 45 8.62 - 12 -
(EC)
UE Pillars 1+2 112 12.50 - 45 -
(ED)
Middle Elsburg 7,737 6.43 0.088 1,599 15,00
(E9Ec) 6
Left below 105,0 4.70 0.075 15,87 173,6
2,500 metres 75 8 89
Total 158,6 5.00 25,51 188,6
81 2 95
ADDITIONAL MINERAL RESOURCE ESTIMATES FOR EZULWINI
Category/Reef Tonne Grade Content
s
Au U3O8 Au U3O8
Inferred (000 (g/t (%) (000 (000
t) Au) oz) lb)
Zuurbekom 34,89 3.16 0.020 3,541 15,07
5 1
Notes:
1. CIM definitions were followed for mineral resources
2. UE refers to the Upper Elsburg reef horizon, which is mined for gold
only; ME refers to the Middle Elsburg reef horizon, which is mined for
gold and uranium; Zuurbekom refers to the adjacent property for which
exploration rights were granted in November 2007
3. Mineral resources were estimated at a cut-off grade of 4.0 g/t Au for the
UE reef and a 3.0 g/t for the ME
4. Mineral resources were estimated using an average long-term gold price of
US$500 per ounce, and a US$/R
exchange rate of 7.0
5. A minimum mining width of 1.53 m was used
6. Rows and columns may not add exactly due to rounding
7. Mineral resources that are not mineral reserves do not have demonstrated
economic viability
Date: 12/11/2008 10:33:02 Produced by the JSE SENS Department.
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