| Tue 23 Mar 2010, 8:15 | | FUM - First Uranium Updates MWS Technical Report |
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FUM
FIU
FUM - First Uranium Updates MWS Technical Report
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 UPDATES MWS TECHNICAL REPORT
All amounts are in US dollars unless otherwise noted.
MWS Updated NPV (8%) $211M, IRR 34%
Toronto and Johannesburg - First Uranium Corporation (TSX:FIU, JSE:FUM)
(ISIN:CA33744R1029) ("First Uranium" or the "Company") has updated the technical
report for the Mine Waste Solutions tailings recovery operation ("MWS") in South
Africa.
The updated technical report was developed as a consequence of the uncertainties
and delays precipitated by the withdrawal of the environmental authorization for
the MWS tailings storage facility ("TSF") and the resultant financial pressure
placed on the Company. On February 25, 2010, the Company announced the
reinstatement of the environmental authorization. Also, on March 12, 2010, the
Company announced a refinancing package of up to $150 million. The economic
model for the updated technical report was used to calculate the peak funding
requirements disclosed in regard to the financing discussed above.
The updated economic valuation for MWS yields a net present value ("NPV") of
$211 million, at an 8% discount rate, and an internal rate of return ("IRR") of
34.2% based on the following broad assumptions:
- Operations being scaled back from the two currently operating gold plants
to one gold plant at the end of March 2010 with an expected throughput of
600,000 tonnes per month, which will enable use of the existing tailings
deposition site, MWS 5 dam, until December 2011;
- Construction of the new TSF commencing in November 2010 for commissioning
by May 2011;
- Restart of the second gold plant and the commissioning of the third gold
plant in May 2011 at an expected throughput of 1.83 million tonnes per
month;
- Operation of the uranium plant modules and all three flotation plants
commencing in August 2011; and
- Construction of the pressure leach circuit of the uranium plant by April
2013, which is expected to increase gold recovery from 58% to 68% and
uranium leach efficiency from 75% to 82%.
The updated technical report for MWS has been filed on SEDAR.
Economic and Commodity Price Assumptions
The following tables show the Company`s commodity price assumptions for March
2008 (the date of the previous technical report for MWS) and March 2010 (the
current assumptions). The March 2010 assumptions are based on an average
nominal consensus forecast from equity research analysts, adjusted downward by
the US inflation rate for the period covering the construction of the projects.
Table 1: MARCH 2008 ECONOMIC AND COMMODITY PRICE ASSUMPTIONS
Technical report 2010 2011 2012 2013 2014 2015
March 2008
Gold (US$/oz) 907 874 797 711 711 711
Uranium (US$/lb) 92 79 75 50 50 50
ZAR/US$ 7.36 7.50 7.45 7.57 7.57 7.57
Table 2: MARCH 2010 ECONOMIC AND COMMODITY PRICE ASSUMPTIONS
Technical report 2010 2011 2012 2013 2014 2015
March 2010
Gold (US$/oz) 1105 1080 1129 1011 984 820
Uranium (US$/lb) 42 50 63 63 63 56
ZAR/US$ 7.57 7.55 8.44 8.52 8.53 9.33
Revised Project Economics
The following table summarizes the revised mine plan for MWS. More details of
the project economics from the financial models upon which the information in
Table 3 is based, will be posted to the Company`s web site
(www.firsturanium.com) in due course.
Table 3: REVISED PROJECT ECONOMICS FOR MWS
March 2008 March
2010
Life of mine average co-product
operating costs
Gold operating cost/tonne $2.12 $2.53
reclaimed ($/tonne)
Uranium operating cost/ $9.82 $17.25
concentrate tonne ($/tonne)
Uranium cash costs ($/pound) $22 $33
Gold cash cost ($/ounce) $347 $427
Capital expenditures ($ $241 $188
millions)
Average annual life of mine
production
Uranium (pounds) 1,317,000 916,000
Gold (ounces) 130,000 109,000
NPV ($ millions) $419 $211
IRR 75% 34%
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 real discount rate of 8%.
3. Uranium operating cost/concentrate tonne has increased compared to the
March 2008 technical report due to a general increase in operating costs,
mainly reagents, water, power and general administration costs.
4. Uranium operating cost/lb has increased due to the aforementioned operating
cost increase as well as fewer uranium pounds recovered due to an average
of 4% lower resource grade compared to the 2008 technical report, as well
as 94% MCF applied to the uranium resource based on reconciled modifying
factors as well as the average pressure leach theoretical leach recovery
being reduced from 90% to 81.75% due to hybrid pressure leach circuit.
5. Fewer concentrate tonnes get processed as the third uranium module will not
be commissioned resulting in the average life of mine mass pull being
reduced from 13% to 8% when processing 3 streams.
6. Gold operating cost increase is in line with annual RSA inflation rate in
the years 2008 through 2010.
7. The average annual life of mine production reflects the longer mine life
which has been extended from 2023 to 2026.
8. The effective date of the technical report is January 1, 2010.
MWS Water Use License
MWS held a water license (No. 23050323), which was valid until October 20, 2008.
As required in terms of the National Water Act 1998, MWS submitted an amended
Integrated Water Use License ("IWULA") application to the Department of Water
and Environment ("DWAE") in January of 2009. The application incorporated all
defined `water uses` associated with the extended activities of MWS as addressed
in the EMP. The application submitted was evaluated by the regional office of
DWAE with a positive recommendation and forwarded to the national office of DWAE
for processing and issuing. Preliminary indications are that the license should
be issued in May 2010.
Estimated Mineral Reserves
The differences between the estimated Mineral Reserves declared in March 2008
and the updated declaration are due to the following factors:
1. Tonnage and gold content differences for Buffels 2 dam due to depletion.
2. Additional tonnage for the Buffels 3 dam due to the updated allocation of
the Reserve between Buffels 3 and Buffels 4 where the two dams abut.
3. Lower tonnage and gold content on Buffels 4 due to depletion, as well as 4.
the updated allocation of the Reserve between Buffels 3 and Buffels 4 dams.
4. Conversion of Probable to Proven Reserves for Harties 1 and Harties 2 dams
and an updated allocation of the Reserve between these two dams where they
abut.
5. Tonnage differences on Harties 5 and 6 dams due to the updated allocation
of the Reserve between these two dams where they abut.
6. Lower tonnages for Buffels 5 dam as a result of a much more detailed
survey.
7. Increased tonnage for MWS 4 dam as a result of more accurate perimeter
modelling by means of sub-celling in the resource models.
8. Increased tonnage on MWS 5 deposited from the re-mining of the Buffels 2,
Buffels 4, MWS 2 and NKGE dams.
9. The additional gold content on the MWS 5 dam is also attributed to this
additional material that was added to the dam.
10. Gold mine call factor ("MCF") of 106% was applied to all Resources
converting to Reserves other than the Buffels 2 and Buffels 4 dams where
the actual reconciliation to the end of December 2010 was applied. A
tonnage factor of 97% was applied to all Resource tonnage in the process of
converting to Reserves. The MCF applied for uranium based on historical
reconciliation was 94%.
11. The gold content variance for MWS 4 dam is due to the entire dam having
been converted to Reserves in 2010, whereas only the Domain 2 portion of
MWS 4 was converted in 2008, with the other portion having been considered
below the pay limit.
Table 4: MWS MARCH 2008 MINERAL RESERVES STATEMENT
Tonnage Gold Uranium
Surface
Reclaimed Grade Content Grade Content
Category Dam (Mt) (g/t) (000 (kg/t) (000
ozs) lbs)
Proven Buffels 2 23.2 0.36 267 0.09 4,608
Buffels 3 24.9 0.30 280 0.10 5,437
Buffels 4 14.1 0.37 170 0.10 3,172
Harties 5 23.9 0.21 163 0.06 3,261
Harties 6 13.3 0.20 85 0.06 1,850
Total Proven 99.4 0.30 965 0.08 18,327
Mineral Reserve
Probable Buffels 5 47.6 0.24 360 0.06 6,616
Harties 1 74.4 0.26 624 0.06 10,166
Harties 2 43.8 0.26 369 0.06 5,789
Harties 7 1.3 0.27 11 0.16 465
NKGE 1.2 0.50 19 0.18 472
MWS 4 17.4 0.28 157 0.13 5,119
MWS 5 40.3 0.31 402 0.09 7,811
Total Probable 226.0 0.27 1,941 0.07 36,440
Mineral Reserve
Grand Total 325.4 0.28 2,907 0.08 54,767
Notes:
1. Mineral Reserves are quoted as fully diluted delivered to plant estimates.
2. Based on assumptions of a gold price of $711 per ounce, a uranium price of
$49 per pound and ZAR/$ exchange rate of 7.57, which are long-term forecast
figures.
3. A Reserve COG of 0.28g/t gold equivalent was used. Uranium grades were
converted to gold equivalent using a conversion factor of 1 gram per tonne,
which equals 0.503 kilograms per tonne on an extracted metal basis.
4. Rows and columns may not add exactly due to rounding.
5. The average life of mine gold recovery applied was 68%and 34% effective
recovery for uranium.
Table 5: MWS JANUARY 2010 MINERAL RESERVES STATEMENT
Tonnage Gold Uranium
Surface
Reclaimed Grade Content Grade Content
Category Dam (Mt) (g/t) (000 (kg/t) (000
ozs) lbs)
Proven Buffels 2 10.4 0.41 137 0.08 1,940
Buffels 3 29.1 0.39 362 0.10 6,171
Buffels 4 11.6 0.35 131 0.09 2,376
Harties 1 80.7 0.26 680 0.07 11,600
Harties 2 32.3 0.21 216 0.07 4,779
Harties 5 22.2 0.21 153 0.06 3,172
Harties 6 9.8 0.23 73 0.07 1,455
Total Proven 196.0 0.28 1,751 0.07 31,494
Mineral Reserve
Probable Buffels 5 37.7 0.28 335 0.07 5,512
MWS 4 26.0 0.25 209 0.10 5,554
MWS 5 60.9 0.30 578 0.09 11,488
Harties 7 1.3 0.29 12 0.16 439
NKGE 0.9 0.60 17 0.18 336
Total Probable 126.8 0.28 1,150 0.08 23,328
Mineral Reserve
Grand Total 322.8 0.28 2,901 0.08 54,822
Notes:
1. Mineral Reserves are quoted as fully diluted delivered to plant estimates.
2. Based on assumptions of a gold price of $820 per ounce, a uranium price of
$56 per pound and ZAR/$ exchange rate of 9.33, which are long-term forecast
figures.
3. A Reserve COG of 0.221g/t to 0.300g/t gold equivalent was used. Uranium
grades were converted to gold equivalent using a conversion factor of 1
gram per tonne which equals 0.650 kilograms per tonne on an extracted metal
basis.
4. The Mineral Reserves gold ounces exceed the Mineral Resource gold ounces
due to the use of a 106% mine call factor.
5. Rows and columns may not add exactly due to rounding.
6. The average life of mine gold recovery applied was 65.38% and 23.14% for
uranium. Gold recovery achieves steady state from April 2013 onward at 68%
when pressure leach incepts.
7. March 2010 Resources have considered depletion from Buffels dam 2, Buffels
dam 4 and NKGE for 2008 and 2009.
For more information, see the Technical Report on the Mine Waste Solutions
Tailings Recovery Project, North West Province, South Africa, dated 1 January
2010 and filed on SEDAR on 19 March 2010.
Technical Disclosure
All technical disclosure in this news release relating to the Mine Waste
Solutions tailings recovery project, formerly named the Buffelsfontein tailings
recovery project, has been prepared in accordance with National Instrument 43-
101 ("NI 43-101") by Daan van Heerden, B.Sc. (Min. Eng.), M.Comm. (Bus.Admin),
Charles Muller, B.Sc, Hons. (Geol) Pr.Sci.Nat, and Johan Odendaal, B.Sc. (Geol),
B.Sc. (Hons) (Min. Econ.), M.Sc. (Min.Eng.), Pr.Sci.Nat. all of Minxcon Pty Ltd.
("Minxcon"), each of whom 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.
23 March 2010
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 refinancing transaction, capital project timelines, operating and
capital cost estimates, reserve and resource estimates, metal prices, exchange
rates, discount rates, the timing and receipt of required permits, 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 and
Management`s Discussion and Analysis on file with the Canadian provincial
securities regulatory authorities on SEDAR at www.sedar.com. No assurance can be
given that the refinancing transaction will be concluded. 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.
Date: 23/03/2010 08:15:10 Produced by the JSE SENS Department.
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