| Mon 15 Nov 2010, 8:30 | | FUM - First Uranium Corporation - First Uranium announces financial results for |
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FUM
FIU
FUM - First Uranium Corporation - First Uranium announces financial results for
the three and six months ended September 30, 2010
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 announces financial results for the three and six months ended
September 30, 2010
For Management Discussion & Analysis and Financial Statements please refer to
the Company`s website at www.firsturanium.com.
Summary*
First Uranium announces a second successive quarter of operating profits
Total gold production for the three months ended September 30, 2010 of 33,418
ounces
Business optimization initiative has resulted in general expenditures being
significantly reduced
Subsequent to quarter-end, Ezulwini Mine achieved record production in the month
of October 2010
Cash reserves totaled $67.6 million at September 30, 2010
* All amounts are expressed in US dollars unless otherwise noted
Toronto and Johannesburg - November 15, 2010 - First Uranium Corporation
(TSX:FIU, JSE:FUM) ("First Uranium" or "the Company") today announced that for
the three-month period ended September 30, 2010 ("Q2 2011") the Company recorded
a consolidated loss for the quarter of $27.1 million, or $0.12 per share, as
compared with the consolidated loss of $18.4 million, or $0.11 per share, in the
same quarter of the prior year ("Q2 2010").
The higher consolidated loss in Q2 2011 compared to Q2 2010 was primarily
attributable to the foreign exchange loss on translation in Q2 2011, along with
the higher interest and accretion expenses resulting from the convertible notes
issued in April 2010. This was partially offset by additional profits generated
at the Mine Waste Solutions tailings recovery operation ("MWS") and reduced
losses from the underground Ezulwini Mine, compared to Q2 2010.
Table 1 - Key Consolidated Financial Results for the Q2 2011 and the six
months ended September 30, 2010 ("2011 YTD") compared to its comparative periods
for the 2010 financial year
Q2 2011 Q2 % Change 2011 YTD 2010 YTD % Change
2010
Mine Waste
Solutions
Average gold 1,051 1,007 4% 1,058 959 10%
selling price
per ounce
Average cash (537) (467) 15% (491) (406) 21%
cost per ounce
of gold sold (a)
Ezulwini Mine
Average gold 1,236 1,022 21% 1,217 1,001 22%
selling price
per ounce
Average cash (1,710) (2,689) (36%) (1,577) (2,966) (47%)
cost per ounce
of gold sold (a)
Revenue 38,315 19,025 101% 77,976 31,920 144%
MWS 19,696 11,823 67% 42,053 21,485 96%
Ezulwini Mine 18,619 7,202 159% 35,923 10,435 244%
Gross profit 108 (6,733) 102% 6,861 (10,658) 164%
(loss)
MWS 8,173 6,089 34% 19,705 11,824 67%
Ezulwini Mine (8,065) (12,822) (37%) (12,844) (22,482) (43%)
Operating (8,995) (14,813) (39%) (11,817) (25,257) 147%
loss(b)
Loss for the (21,891) (18,441) 19% (33,916) (51,705) (166%)
period
Loss per common (0.12) (0.11) 9% (0.19) (0.32) (41)%
share
Cash flows (10,249) (13,514) (24%) (25,597) (47,626) (46%)
utilized in
operating
activities
Cash flows (24,803) (70,310) (65%) (58,463) (117,837 (50%)
utilized in )
investing
activities
Table 2 - Key Consolidated Financial Results for the Q2 2011 compared to Q1
2011
Q2 2011 Q1 2011 % Change
Mine Waste Solutions
Average gold selling price per ounce 1,051 1,064 (1%)
Average cash cost per ounce of gold (537) (449) 20%
sold (a)
Ezulwini Mine
Average gold selling price per ounce 1,236 1,197 3%
Average cash cost per ounce of gold (1,710) (1,430) 20%
sold (a)
Revenue 38,315 39,661 (3%)
MWS 19,696 22,357 (12%)
Ezulwini Mine 18,619 17,304 8%
Gross profit 108 6,753 (98%)
MWS 8,173 11,532 (29%)
Ezulwini Mine (8,065) (4,779) 69%
Operating loss(b) (8,995) (2,822) 219%
Loss for the period (21,891) (12,025) 82%
Loss per common share (0.12) (0.07) 71%
Cash flows utilized in operating (10,249) (15,348) (33%)
activities
Cash flows utilized in investing (24,803) (33,660) (26%)
activities
Please refer to the Management`s Discussion & Analysis and Financial Statements
for more detailed information.
Notes:
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 Financial Statements.
This is a non-GAAP measurement. Operating loss is loss before interest income,
interest and accretion expenses, fair value gain or loss on derivative
liability, foreign exchange gain or loss and income tax charges.
At MWS, the overall increase in revenues and cost of sales for Q2 2011 compared
to Q2 2010 was mainly attributable to additional production through the second
gold plant module that was commissioned in Q2 2010 along with an improvement in
recovery. The operation achieved all planned metrics despite lower revenues
compared to Q1 2011, which were driven by lower planned grades. Costs were
higher mainly as a result of higher power costs over the winter period.
At the Ezulwini Mine, gold sales for Q2 2011 increased by 159% compared to Q2
2010, reflecting the increase in production at the mine as well as the
improvement in mining efficiencies quarter on quarter. The cost of production
did not increase in direct correlation to the revenue increases compared to Q2
2010, due to the mine`s fixed operating costs being spread over higher
production compared to Q2 2010 as indicated by the decrease in Cash Costs
compared to Q2 2010. This resulted in the losses at the mine in Q2 2011
decreasing by 37% compared to Q2 2010. The increase in costs from Q1 2011 was
due to higher power costs over the winter period and the impact of a seismic
event that occurred at the Ezulwini Mine on August 20, 2010, which resulted in
additional labour costs and lost production time. Although the anticipated rate
of the Ezulwini Mine`s production build-up was impacted by this event, the mine
was able to increase production by 5% from Q1 2011.
During August 2010, the Ezulwini Mine closed its uranium plant to replace two
columns in the Ion Exchange section, following a structural failure on a loading
column. The two columns are being manufactured, with installation and
commissioning expected to be completed in Q4 2011. The cost of the two failed
columns that have to be replaced has been written off and expensed in Q2 2011.
Commenting on the results, First Uranium`s Chief Executive Officer, Deon van der
Mescht, said: "MWS`s production build-up remains on-track and all projects are
on schedule for completion in May 2011, as expected, while gold production at
the Ezulwini Mine, which was marginally higher quarter on quarter, is expected
to benefit significantly from the successful commissioning of an upgraded
backfill plant in September 2010".
Partially as a result of the successful commissioning of an upgraded backfill
plant, the Ezulwini Mine has achieved a record-breaking October month.
Deon van der Mescht said: "It is pleasing to report that shaft production
records were achieved at the Ezulwini Mine for October 2010. Our internal
targeted threshold of milling over 50,000 tonnes a month was comfortably
exceeded and gold production is in excess of 200kg (6,430 ounces) for the month.
Even more pleasing, is that November is following a similar trend".
The commissioning of the Ezulwini Mine`s backfill plant, which has already
enabled an improvement in mining rates in the high grade shaft pillar, will
allow a further increase in production, while simultaneously reducing costs, and
will also create a safer work environment due to a reduction in the risk of
future seismic activity.
The operating loss for Q2 2011 decreased by 102% compared to Q2 2010 primarily
due to the improvement at mine operating level. Despite the improvement at both
operations, the Company`s loss for Q2 2011 increased by 19% compared to Q2 2010,
primarily as a result of the additional interest and accretion expense resulting
from the debenture notes issued in April 2010, along with a foreign exchange
loss on translation of $6.4 million incurred during the quarter.
The operating loss for Q2 2011 increased compared to Q1 2011 largely due to
lower profits from operations along with higher stock-based compensation and the
$1.4 million impairment of the two uranium plant loading columns. The general,
consulting and administration expense decreased by 11% compared to Q1 2011 as
cost reduction opportunities identified by management were implemented and
savings were realized during the quarter. Further reductions are anticipated in
Q3 2011.
The 24% and 33% decrease in cash flows utilized in operating activities for Q2
2011 compared to Q2 2010 and Q1 2011, respectively, were attributable mainly to
increased profits generated by MWS, reduced losses incurred at the Ezulwini Mine
and various cost saving initiatives implemented at corporate level.
Cash utilized in investing activities has reduced significantly compared to Q2
2010 primarily due to the expected completion of most of the Company`s capital
expansion projects towards the end of the 2010 calendar year. MWS is continuing
its capital program, which is on schedule, and includes the construction of the
third gold plant module and a new tailings storage facility ("TSF").
The Company ended the quarter with cash and cash equivalents totaling $67.6
million.
Deon van der Mescht concluded: "First Uranium remains a company that is in a
development phase, but I am exceptionally pleased with the progress made
recently to ensure that we achieve our overall growth ambitions. Despite the
seismic event and the uranium plant column failure, significant progress has
been made over the last two months to ensure that our targeted production levels
of 80,000 ounces at the Ezulwini Mine remain intact. MWS has delivered its third
successive quarter of achieving, or improving upon its market guidance".
Outlook
The Company continues to identify initiatives at operational and corporate level
that will enhance production and reduce costs with the aim of preserving First
Uranium`s cash reserves, thereby enabling the Company to conclude its capital
program.
MWS: During Q2 2011, MWS resumed its remaining capital program comprising the
third gold plant module and the new TSF, including adjoining infrastructure and
construction is on schedule to be completed by May 2011, which should allow for
the re-structured Gold Wheaton completion test to be satisfied prior to
September 1, 2011. The commissioning of the uranium plant will commence
immediately following the successful conclusion of the Gold Wheaton completion
test.
Ezulwini Mine: The increased backfill capacity at the Ezulwini Mine will improve
panel availability, allowing management to deploy additional stoping crews. Due
to the structural failure of the Ion Exchange columns, the uranium plant has
been closed, and this potentially limits the production of yellowcake through
the uranium plant to the 32,517 pounds produced during the year to date.
Management expects Ezulwini to be cash flow positive after capital expenditures
by the end of Q4 2011 at current commodity prices.
Technical Disclosure
All technical disclosure in this news release relating to Ezulwini Mine has been
prepared in accordance with National Instrument 43-101 by or under the
supervision of Daan van Heerden, an employee of Minxcon, an independent mining
consultant company. Mr van Heerden is a "qualified person" under NI 43-101.
All technical disclosure in this news release relating to MWS has been prepared
in accordance with National Instrument 43-101 by or under the supervision of
Daan van Heerden, an employee of Minxcon, an independent mining consultant
company. Mr van Heerden is a "qualified person" under NI 43-101.
About First Uranium Corporation
First Uranium Corporation (TSX:FIU, JSE:FUM) is focused on its goal of becoming
a 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 located in South Africa.
Contact Information
Julian Gwillim: julian@aprio.co.za
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 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
Management Discussion and Analysis and 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.
www.firsturanium.com
15 November 2010
Sponsor: Investec Bank Limited
Date: 15/11/2010 08:30:01 Produced by the JSE SENS Department.
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