| Tue 2 Feb 2010, 7:48 | | FUM - First Uranium Corporation - First Uranium update on environmental |
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FUM
FIU
FUM - First Uranium Corporation - First Uranium update on environmental
authorization
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 UPDATE ON ENVIRONMENTAL AUTHORIZATION
Company Commences a Project Restructuring at MWS, Revises Ezulwini Mine
Plan and Undertakes Strategic Review
Toronto and Johannesburg - First Uranium Corporation (TSX:FIU, JSE:FUM)
(ISIN:CA33744R1029) ("First Uranium" or "the Company") today announced that
the Company has been engaged in intensive discussions at the most senior
levels with officials of the North West Provincial government, including the
Department of Agriculture, Conservation, Environment and Rural Development
("NWDACE") regarding its decision to withdraw the Company`s environmental
authorization ("EA") for the new Tailings Storage Facility ("TSF"). The TSF
was designed to accommodate future tailings deposition at the Mine Waste
Solutions ("MWS") tailings recovery project in South Africa. While the EA
has not yet been reinstated, based on these recent discussions, the Company is
cautiously optimistic that the EA will be reinstated.
Gordon Miller, President and CEO of First Uranium, commented, "As a result of
the circumstances that have been precipitated by the unexpected withdrawal of
the environmental authorization for our future tailings deposition site at MWS,
management`s key priorities are to resolve this authorization issue as quickly
as possible, seek strategic alternatives for financing and the immediate
restructuring of our operations."
Strategic Review, Project Restructuring and Capital Limitations
The announcement of the withdrawal of the EA has not only delayed construction
of the TSF, it has also disrupted certain well-advanced corporate financing
opportunities, which, along with the slower than expected production buildup at
the Ezulwini Mine, would, if alternative financing is not obtained, severely
compromise the Company`s financial position. The Company is now reviewing
strategic alternatives, and is engaged in discussions with respect to
alternative financing opportunities.
Notwithstanding progress at its operations discussed below, the continuing
discussions regarding the EA and the continuing financing discussions, the
Company has taken action to delay future development expenditures, particularly
at its MWS tailings recovery operation as part of a company-wide program to
conserve capital.
The construction of the first uranium plant module will be concluded by the
end of February 2010, at which time commissioning will commence. The plant
is expected to commence production of ammonium diuranate ("yellowcake")
during the second half of calendar year 2010. While the construction of the
third gold plant was progressing ahead of schedule and due for completion in
May 2010, as a result of the apparent withdrawal of the environmental
authorization for the TSF, construction and commissioning of the third gold
plant have been suspended.
Production at MWS will be scaled back from two gold plants to one at the end of
March 2010. The reduced production will enable the Company to maximize the
availability of its current deposition capacity until the permitting issue has
been resolved, but will also result in lower revenues and increase the amount of
financing required by the Company.
Under the revised construction schedule the MWS No. 5 Dam will provide
sufficient tailings deposition capacity for the one gold plant until the end of
December 2011. Subject to re-instatement of the EA and the receipt of additional
capital in the near term, the project will be able to continue along its
originally planned production trajectory of 35,000 ounces per quarter.
In addition, the Ezulwini Mine development plan is ahead of schedule, however,
the mine production forecast has been revised in response to slower than
expected mine production ramp up to date and the capital constraints.
MWS: Quarterly Tailings Recovery and Production Forecast
Q1 Q2 Q3 2010 Q3 Q4 2010
2010 2010 Forecast 2010 Forecast
Actual Actual Actual
Tonnes of ore 1,835 2,476 3,880 3,528 2,789
reclaimed (000s)
Average gold head 0.42 0.39 0.39 0.36 0.34
grade (g/t)
Gold plant recovery 44% 44% 51% 53% 52%
(%)
Gold reclaimed (oz) 11,007 13,422 25,019 21,891 15,844
Note: The increase in gold recoveries is possible through the
introduction of gold concentrates into the uranium plant where
exposure of material to an acidic environment liberates
additional gold that would otherwise not be available for
cyanidation.
At MWS, the Q3 2010 gold produced was less than forecast as the grade
reconciliation in the Buffelsfontein No. 4 Dam was slightly below
expectations and operations were interrupted by heavy rain storms
during the quarter.
The annualized production rate presented below assumes a protracted
permitting process during which MWS runs at an average reduced throughput
of 600,000 tonnes per month until January 2012. The ability to secure the
EA, as well as funding, sooner will allow acceleration of the annualized
gold production rate to 140,000 ounces per annum and uranium production to
960,000 pounds per annum as originally planned. From the point at which the
EA and funding are secured, MWS will require a six-month window to conclude
the necessary construction activities to realize the increased production rate.
MWS: Annual Production Forecast
FY 2011 FY 2012
Gold
Production (oz) 57,000 64,000
Estimated cost ($/oz) 459 490
Uranium
Production (lb) 270,000 560,000
Estimated cost ($/lb) 43 36
Note:
Gold "Cash Costs" are costs directly related to the physical activities
of producing gold and include mining, processing and other plant costs;
third-party refining and smelting costs; marketing expense, on-site
general and administrative costs; royalties; on-mine drilling
expenditures that are related to production and other direct costs. Sales
of by-product metals are deducted from the above in computing cash costs.
Cash costs exclude depreciation, depletion and amortization, corporate
general and administrative expense, exploration, interest, and pre-
feasibility costs and accruals for mine reclamation. Cash costs are
calculated and presented using the "Gold Institute Production Cost
Standard" applied consistently for all periods presented. The Gold
Institute was a non-profit industry association comprised of leading gold
producers, refiners, bullion suppliers and manufacturers. This institute
has now been incorporated into the National Mining Association. The
guidance was first issued in 1996 and revised in November 1999. Total
cash costs per ounce is a non-GAAP measurement and investors are
cautioned not to place undue reliance on it and are advised to read all
GAAP accounting disclosures presented in the Corporation`s audited
consolidated financial statements for FY 2009 and accompanying footnotes
thereto.
Uranium "Cash Costs" calculations take into account the incremental
ounces of gold recovered when the ore is run through the atmospheric
leach tanks of the uranium plant.
OUTLOOK - EZULWINI MINE
Production build up at the Ezulwini mine is progressing more slowly than
originally anticipated due to the challenges of training and building up the
efficiency of the mining crews with the result that the mine has yet to
generate positive operating cash flow. Based on the performance to date and
the Company`s current cash position, the Ezulwini mine plan has been revised
as reflected below.
Ezulwini Mine: Quarterly Underground Production Forecast
Q1 Q2 Q3 2010 Q3 Q4 2010
2010 2010 Forecast 2010 Forecast
Actual Actual Actual
Upper Elsburg Mining
Activity
Cumulative metres of 369 605 749 1,672 1,817
mining face available
Blasted face grade - 4.66 7.79 6.43 7.42 7.33
gold (g/t)
Middle Elsburg Mining
Activity
Cumulative metres of 408 754 1,131 1,024 1,311
mining face available
Blasted face grade - 2.95 3.13 3.06 3.20 3.28
gold (g/t)
Blasted face grade - 480 439 552 557 560
uranium (g/t)
Facelength ("FL")
Buildup
Gold (kg/m of FL 15 28 75 81 91
blasted)
Uranium (kg/m of FL 1,077 1,377 3,328 2,862 3,690
blasted)
Mill Production
(combined)
Tonnes of ore milled 92 95 145 117 137
(000s)
Notes:
Face-length buildup is a metric to indicate the content of gold
and uranium produced for a horizontal metre of blasted face
length.
The current mining rate is not expected to immediately fill the
uranium and gold plants that have production capacities of
100,000 tonnes per month and 200,000 tonnes per month,
respectively.
A minimum three-month delay is expected between uranium
production and sales, allowing time for calcining, shipment and
conversion.
The anticipated increase in stope grades has been determined on
the basis of current in situ sampling of reef development and
sampling of new stopes that are being opened up.
The forecast face length represents the amount of face length
available for mining, not necessarily what will be mined.
Ezulwini Mine: Annual Production Forecast:
FY 2011 FY 2012 FY 2013
Gold
Production (oz) 133,000 194,000 265,000
Estimated by-product cash 909 672 634
costs ($/oz)
Uranium
Production (lb) 207,000 312,000 390,000
Estimated by-product cash 46 40 41
costs ($/lb)
Notes:
"Cash Costs" are costs directly related to the physical activities of
producing gold and include mining, processing and other plant costs;
third-party refining and smelting costs; marketing expense, on-site
general and administrative costs; royalties; on-mine drilling
expenditures that are related to production and other direct costs.
Sales of by-product metals are deducted from the above in computing
cash costs. Cash costs exclude depreciation, depletion and
amortization, corporate general and administrative expense,
exploration, interest, and pre-feasibility costs and accruals for mine
reclamation. Cash costs are calculated and presented using the "Gold
Institute Production Cost Standard" applied consistently for all
periods presented. The Gold Institute was a non-profit industry
association comprised of leading gold producers, refiners, bullion
suppliers and manufacturers. This institute has now been incorporated
into the National Mining Association. The guidance was first issued in
1996 and revised in November 1999. Total cash costs per ounce is a non-
GAAP measurement and investors are cautioned not to place undue
reliance on it and are advised to read all GAAP accounting disclosures
presented in the Corporation`s audited consolidated financial
statements for FY 2009 and accompanying footnotes thereto.
The face-length buildup is a metric to indicate the content of gold
and uranium produced for a horizontal metre of blasted face length.
The cash costs are shown on co-product basis, where costs are
allocated to each metal on the basis of the revenue contribution from
each metal.
Q3 2010 PRODUCTION UPDATE
During the quarter ended December 31, 2009 ("Q3 2010"), the Company produced
10,054 ounces of gold from the Ezulwini Mine, a 26% percent increase compared
to the previous quarter, and 21,891 ounces of gold from the Mine Waste Solutions
tailings recovery project ("MWS"), a 63% increase compared to the previous
quarter. During the quarter, the Company also continued to optimize its
uranium production at the Ezulwini Mine and has shipped its first container
of 23,760 pounds of uranium in the form of "yellowcake" (ammonium diuranate)
for processing in the United States.
Quarterly Production Results
Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010
Ezulwini
Total tonnes of ore milled 80,079 108,622 92,468 94,599 108,503
Gold produced (oz) 6,411 4,267 3,791 7,952 10,054
Gold sold (oz) 6,411 4,267 3,379 7,047 8,213
Uranium shipped to converter - - - - 23,760
(lb)
MWS
Tonnes of ore reclaimed 1,798 1,693 1,835 2,476 3,528
(000s)
Average gold head grade 0.42 0.41 0.42 0.39 0.36
(g/t)
Gold plant recovery (%) 50% 47% 44% 44% 53%
Gold reclaimed (oz) 12,235 10,513 11,007 13,422 21,891
Gold sold (oz) 12,581 10,417 10,676 11,739 21,091
In Q4 2010, MWS expects to:
* commence commissioning of one flotation circuit and the uranium plant.
The remaining two flotation circuits, the third gold plant and the TSF will
be completed upon reinstatement of the EA and the receipt of funding;
* terminate the EPCM contract and dismiss all construction personnel from
the project; and
* focus production on one of the existing gold plants for an estimated
quarterly production of 15,844 ounces of gold.
In Q4 2010, the Ezulwini Mine expects to:
* open up over 400 metres (net of mining activity) for a total of over 3.1
kilometers of available mining face underground at the Ezulwini Mine; and
* record our first sale of uranium.
Technical Disclosure
All technical disclosure in this news release relating to MWS has been prepared
in accordance with National Instrument 43-101 ("NI 43-101) by Jim Fisher who is
a Chartered Engineer and is a "qualified person" under NI 43-101.
All technical disclosure in this news release relating to the Ezulwini Mine has
been prepared in accordance with NI 43-101 by R. Dennis Bergen, P.Eng.,
Associate Principal Mining Engineer, with Scott Wilson Roscoe Postle Associates
Inc. ("Scott Wilson RPA") who is a "qualified person" under NI 43-101 and is
independent of First Uranium.
About First Uranium Corporation
First Uranium Corporation (TSX:FIU, JSE:FUM) is focused on its goal of
becoming a significant low-cost producer of uranium and gold through the
expansion of the underground development to feed the new uranium and gold
plants at the Ezulwini Mine and through the expansion of the plant capacity
of the Mine Waste Solutions tailings recovery facility, both operations
situated in South Africa. First Uranium also plans to grow production by
pursuing value-enhancing acquisition and joint venture opportunities in
South Africa and elsewhere.
For further information, please contact:
Bob Tait, Vice President, Investor Relations at bob@firsturanium.ca
+1 416 342-5639 (office) or +1 416 558-3858 (mobile)
1240-155 University Avenue, Toronto, ON M5H 3B7
Cautionary Language Regarding Forward-Looking Information
This news release contains and refers to forward-looking
information based on current expectations. All other statements
other than statements of historical fact included in this release
including, without limitation, statements regarding the timing and
receipt of required permits, the timing and availability of financing
on acceptable terms, the timing and amount of estimated future production,
processing and development plans and future
plans and objectives of First Uranium are forward-looking statements
(or forward-looking information) that involve various estimates,
assumptions, risks and uncertainties. For more details on these
estimates, assumptions, risks and uncertainties, see the Company`s
most recent Annual Information Form on file with the Canadian
provincial securities regulatory authorities on SEDAR at www.sedar.com.
These forward-looking statements are made as of the date hereof and
there can be no assurance that such statements will prove
to be accurate, such statements are subject to significant risks and
uncertainties, and actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking statements
that are included herein, except in accordance with applicable securities
laws.
02 February 2010
Sponsor:Investec Bank Limited
Date: 02/02/2010 07:48:03 Produced by the JSE SENS Department.
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