| Mon 6 Jun 2011, 13:14 | | FUM - First Uranium Corporation - First Uranium announces financial results |
|
FUM
FIU
FUM - First Uranium Corporation - First Uranium announces financial results
for the three and twelve months ended March 31, 2011.
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 twelve months
ended March 31, 2011.
For the Management Discussion & Analysis and Financial Statements please
refer to the Company`s website at www.firsturanium.com.
Toronto and Johannesburg - First Uranium Corporation (TSX:FIU), (JSE:FUM)
(ISIN:CA33744R1029) ("First Uranium" or "the Company") today announced total
gold sales for its financial year ended March 31, 2011 ("FY 2011") of
142,630 ounces of gold, which is a significant increase over the 91,657
ounces sold at the end of March 31, 2010 ("FY 2010").
FINANCIAL YEAR ENDED MARCH 31, 2011
The Company`s consolidated revenue of $172 million for FY 2011, an increase
of 86% from $93 million in revenue for FY 2010, resulted in the Company
reflecting a $20 million gross profit margin from operations in FY 2011
compared to a loss of $18 million in FY 2010. Remembering that First Uranium
remains in a capital development and growth phase, the consolidated pre-tax
loss for the year was $76 million, which is a 19% improvement over the pre-
tax loss of $94 million in FY 2010.
During FY 2011, Mine Waste Solutions ("MWS"), which is a large tailings
retreatment operation that is currently extracting gold from 15 tailings
dams, produced and sold 82,941 (FY 2010: 62,019) ounces of gold generating
$93 million (FY 2010: $61 million) in revenue at an average Cash Cost* of
$483 (FY 2010: $392) per ounce of gold sold. The 34% increase in gold sold
for FY 2011 from FY 2010 was mainly attributable to the additional
production from the second gold plant module, along with the 8% improvement
in gold recoveries. The 13.4 million tonnes processed in FY 2011 was 21%
higher compared to FY 2010. The 65% overall increase in costs, year-on-year,
was mainly driven by the increase in production in Q2 2010, combined with
the impact of the stronger South African Rand in FY 2011.
The Ezulwini Mine, which is an underground gold and uranium producer that is
currently in a production build-up phase, produced and sold 59,689 (FY 2010:
29,638) ounces of gold generating $78 million (FY 2010: $31 million) in
revenue at an average Cash Cost* of $1,691 (FY 2010: $2,600) per ounce of
gold. The 150% increase in revenue reflects the overall increase in
throughput, grade and gold price over the comparative periods. Although
costs increased by 31% year-on-year, the costs did not increase in direct
correlation to the revenue increases, due to the mine`s fixed operating
costs being spread over higher production than the comparative periods,
resulting in the decrease in Cash Cost* compared to FY 2010. Consequently
the mine`s gross losses in FY 2011 decreased by 47% compared to FY 2010.
Only 20,500 pounds of uranium was sold in FY 2011, as a result of a failure
of two Ion Exchange ("IX") columns in the uranium plant in August 2010,
which resulted in the manufacturing of two new columns and a $1.5 million
impairment of the two failed columns. The uranium plant has since been
successfully re-commissioned.
During FY 2011, First Uranium utilized $48 million (FY 2010: $49 million) of
its cash resources to fund its operating activities. The Company spent $103
million (FY 2010: $215 million) on capital projects in FY 2011 comprising
mainly the construction and successful commissioning of MWS`s third gold
plant module, including adjoining infrastructure ("Phase 2") and its new
tailings storage facility ("TSF"). As at March 31, 2011, the Company`s
remaining cash and cash equivalents amounted to $50 million.
On April 26, 2010, First Uranium raised $142 million in net proceeds through
a private placement offering of Cdn$150 million in secured convertible notes
due March 31, 2013.
On March 1, 2011, the Company concluded a public offering of 46 million
common shares at a price of Cdn$1.00 per share. The agents to the offering
exercised in full their over-allotment option to acquire an additional 6
million common shares at the same price, resulting in First Uranium selling
an aggregate of 52 million common shares for total gross proceeds of $53
million.
Deon van der Mescht commented, "This capital raising was concluded shortly
before the devastating series of earthquakes and the accompanying tsunami
that hit the Japanese island of Honshu during March 2011. The unfolding
events at the Fukushima nuclear plant continue and the impact on physical
uranium demand had a destructive effect on most uranium stocks. While there
has been a level of recovery for most uranium operators, we remain under
pressure. This is ironic when one considers that First Uranium is largely a
gold producer, having only recently recommenced uranium production at the
Ezulwini Mine".
First Uranium`s total gold sales from its two operations for the year ended
March 31, 2012 are forecast to be in the range of 215,000 to 250,000 ounces,
whilst anticipated uranium sales are forecast to be in the range of 250,000
to 300,000 pounds. The uranium plant at MWS is largely complete.
Commissioning of this plant will involve significant upfront working capital
investment in in-process inventory. Management is considering a temporary
deferral in the commissioning of the uranium plant in light of currently
depressed uranium prices and its objectives of focusing cash resources
towards the maturity of the 4.25% convertible debentures in June 2012 and
the ramp up of the Ezulwini Mine.
FOURTH QUARTER ENDED MARCH 31, 2011
The consolidated revenue from First Uranium`s two operations for the three
months ended March 31, 2011 ("Q4 2011") was $43 million, compared to $29
million for the three months ended March 31, 2010 ("Q4 2010"), which is a
49% improvement quarter-on-quarter. Gross profits from the operations were
$6 million for Q4 2011 (Q4 2010: loss of $8 million), while the consolidated
pre-tax loss for Q4 2011 of $18 million improved by 41% compared to the pre-
tax loss in the comparative period (Q4 2010: $31 million).
During Q4 2011, the Company utilized $19 million (Q4 2010: cash inflow of
$0.004 million) of cash resources in its operating activities and spent $12
million (Q4 2010: $18 million) on capital projects, mainly at MWS. The cash
profits generated by the mining operations during Q4 2011 were not yet
sufficient to cover the cash costs related to all of its mining costs as
well as other costs for various corporate activities. The limited cash
outflow along with $20.6 million in value added tax and income tax refunds
received by the Company towards the end of Q4 2010, resulted in the small
cash inflow from operating activities in Q4 2010.
Mine Waste Solutions
MWS successfully commissioned the final phase of its gold expansion program
(Phase 2 and the new TSF) one month ahead of schedule and also exceeded its
operating guidance for the fifth successive quarter. The earlier
commissioning of the final phase of the expansion program allowed MWS to
operate all three gold plant modules at full capacity as of May 1, 2011.
First Uranium President and CEO, Deon van der Mescht, commented, "This past
year has marked the achievement of many key milestones at MWS. We have
advanced significantly over the last eight months to the extent that the
commissioning of Phase 2 commenced on April 1, 2011, while MWS`s new TSF was
commissioned during May 2011, with deposition of tailings material onto the
new TSF commencing on April 5, 2011."
By mid-April 2011 the rate of deposition onto the new TSF increased from an
average of 1.2 million tons per month (mtpm) to 1.8 mtpm. Deposition of
material onto the previously used tailings storage facility (MWS No.5
tailings dam) was subsequently stopped and that dam is now in the process of
being decommissioned.
During Q4 2011, MWS produced and sold 22,150 (Q4 2010: 18,505) ounces of
gold, generating $26 million in revenue (Q4 2010: $16 million) at an average
Cash Cost* of $471 (Q4 2010: $402) per ounce of gold. The 61% increase in
revenues is the result of a 20% increase in ounces of gold sold together
with higher gold selling prices compared to Q4 2010. The 20% increase in
gold sold is mainly attributable to higher tonnage throughput quarter-on-
quarter. The increase in Q4 2011 costs compared to the previous quarter was
driven by a combination of higher tonnage throughput, higher labour and
power costs as well as the impact of costs in US dollar terms resulting from
the significantly stronger South African Rand in Q4 2011.
Pursuant to the terms of the MWS Gold Stream Transaction with a company that
is now known as Franco-Nevada (Barbados) Corporation ("FN"), formally Gold
Wheaton (Barbados) Corporation, MWS must satisfy certain technical
completion tests upon the successful completion of construction of Phase 2
by September 1, 2011. The technical completion test requires MWS to achieve
consistent production over three consecutive months where the tonnage
processed is within 85% of the 1.933 million tonnes of tailings per month in
respect of the project ("Steady State"). In addition, MWS must satisfy
certain key criteria with respect to tonnes of material processed, average
feed grade to the plant and gold recovery for a minimum continuous period of
14 days, either during the Steady State production period or within the 90
period after achieving Steady State production. The testing process
commenced in May 2011 and is scheduled for completion by August 2011.
Management remains confident that these targets will be achieved.
At MWS, production levels are expected to continue increasing and management
expects the annualized gold production of 110,000 to 125,000 ounces and
annualized uranium sales of 140,000 to 170,000 pounds.
Ezulwini Mine
During Q4 2011, the Ezulwini Mine produced and sold 11,393 (Q4 2010: 10,898)
ounces of gold, generating $16 million (Q4 2010: $12 million) in revenue at
a Cash Cost* of $2,178 (Q4 2010: $2,276) per ounce of gold. Revenue
increased by 33%, reflecting the overall increase in throughput and gold
price over the comparative periods. The average Cash Cost* decreased by 4%
as a result of the mine`s fixed operating costs being spread over higher
production in Q4 2011 compared to Q4 2010.
Gold production for Q4 2011 was severely constrained by the impact of the
shaft maintenance program that commenced towards the end of Q3 2011. The
Ezulwini Mine`s shaft hoisting capacity was restricted due to lateral
pressures being placed on the shaft sidewall, creating pinch points along
the hanging tower structure. The Company immediately implemented a program
to moil (clear) the pinch points, which resulted in the hoisting capacity of
the mine being temporarily constrained.
During the shaft maintenance programme, Room and Pillar mining, a mining
method that requires less logistical support, was initiated. The strategy
proved successful, in that approximately 30% of production was derived from
the Room and Pillar sections prior to a tragic fatality on March 12, 2011
with subsequent loss in production from requisite safety stoppages.
The successful completion of the moiling program at the end of April 2011
has unconstrained the hoisting capacity of the shaft, particularly with
respect to the man and material handling capacity. The winding speeds of the
man and material conveyances were reduced to between 2.5 and 4.0 meters per
second during December 2010 due to the pinch points which reduced the amount
of material that could be conveyed down the shaft per day as well as having
a negative impact on the travelling time of the underground workforce to
their working places. The winding speeds of the man and material conveyances
have been increased to 7 meters per second as of the beginning of May 2011
which has increased the material handling capacity of the shaft by at least
23% as well as reducing the travelling time of the underground workforce
resulting in a minimum of an additional 45 minutes spent at the "rock face"
per shift. The hoisting capacity of the shaft is currently 97,000 tons per
month and capable of meeting the current production requirements. The
remaining engineering work in the shaft can comfortably be concluded in
parallel with the mine ramp-up requirements.
During Q4 2011, the Ezulwini Mine replaced the two new IX columns that
failed in August 2010; consequently no uranium was produced during the last
quarter. The uranium plant was successfully re-commissioned in March 2011 at
a cost of $1.5 million, enabling the Company to return to uranium
production. During the shutdown period, several elements of the plant were
upgraded and re-designed to improve performance and recovery rates. At the
end of Q4 2011, the mine had 31,000 pounds of uranium in stock which was
calcined from ammonium diurinate that had been produced at the mine before
the failure of the IX columns. The uranium was shipped and sold during April
2011.
Deon van der Mescht added, "Following the two fatal accidents that occurred
over the financial year, and the subsequent Section 54 suspension notices
served on the mine, as well as the various other events which impacted
production in the last quarter, Ezulwini is now showing progressive
improvement in its fundamentals with underground mining development and
metres advanced returning to planned levels. In particular, the increase in
winding speeds in key conveyances has impacted positively on production
volumes in the month of May 2011 with record throughput levels of 62,992
tonnes achieved. The increased speed of key conveyances is expected to
continue to impact positively on the ramp up of Ezulwini Mine."
While production levels at Ezulwini for Q1 2012 are expected to be lower
than the planned quarterly average production for FY 2012, management still
expects annualized gold production of 105,000 to 125,000 ounces and
annualized uranium sales of 110,000 to 130,000 pounds.
Deon van der Mescht concluded, "Ezulwini may have encountered some
challenges over the last few months, however these challenges are now better
understood, manageable and considered to be short-term. Fundamentally the
long-term value of the operation remains as was confirmed by an independent
technical review completed in January 2011. At MWS, we can look forward to a
new chapter in the year ahead with the conclusion of the technical
completion test anticipated in Q2 2012. I am convinced that an already
impressive project will graduate to its full potential".
*Cash Costs are costs directly related to the physical activities of
producing gold and uranium 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 such as uranium and silver 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 Company`s Financial Statements.
Conference Call
First Uranium will conduct a conference call with investors to discuss the
information in this news release at 08:30a.m local Toronto time and 2:30pm
local Johannesburg time on Monday, June 6, 2011.
Conference Call Numbers:
Canada & USA Toll Free Dial In: 1-800-319-4610
South Africa Toll Free Dial In: 0800-981-705
Other International Locations Dial In: +1-604-638-5340
Callers should dial in 5 - 10 min prior to the scheduled start time and
simply ask to join the First Uranium call.
Conference Call Replay Numbers:
Canada & USA Toll Free: 1-800-319-6413
Outside Canada & USA Call: +1-604-638-9010
Code: 2128, followed by the # sign
Duration: Available for 30 days
About First Uranium Corporation
First Uranium Corporation (TSX:FIU, JSE:FUM) is focused on its goal of
becoming a low-cost producer of gold and uranium 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 (MWS) 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:
Julian Gwillim, julian@aprio.co.za, or Gail Strauss, gailstrauss@mweb.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 are forward-looking statements (or
forward-looking information). The Company`s plans involve various estimates
and assumptions and its business and operations are subject to various risks
and uncertainties, including without limitation, the outcome of the appeal
of the Water Use License by FSE. For more details on these estimates,
assumptions, risks and uncertainties, see the Company`s most recent Annual
Information Form and most recent Management Discussion and Analysis 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
Non-GAAP Measures
The Company believes that in addition to conventional measures prepared in
accordance with Canadian GAAP, the Company and certain investors and
analysts use certain other non-GAAP financial measures to evaluate the
Company`s performance including its ability to generate cash flow and
profits from its operations. The Company has included certain non-GAAP
measures in this document. Non-GAAP measures do not have any standardized
meaning prescribed under Canadian GAAP, and therefore they may not be
comparable to similar measures employed by other companies. The data is
intended to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with Canadian GAAP. Readers are advised to read all GAAP
accounting disclosures presented in the Company`s financial statements for
more detail.
Date: 06/06/2011 13:14:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
