Production update for the three months ended September 30, 2011

All amounts are in US dollars unless otherwise noted.

TORONTO AND JOHANNESBURG, Oct. 11, 2011 /PRNewswire/ – First Uranium Corporation (TSX:FIU), (JSE:FUM) (ISIN:CA33744R1029)
(“First Uranium” or “the Company”) today released its production
results for the three months ended September 30, 2011 (“Q2 2012″) and
provided an update on the permitting situation at Mine Waste Solutions.

The Company reported an increase in gold sales compared to the first
quarter of FY 2012, with gold sales up 17.7% from 34,438 ounces in Q1
2012 to 40,529 ounces in Q2 2012. In addition, uranium production was
up 76.8% from 20,361 pounds in Q1 2012 to 36,006 pounds in Q2 2012.

Said CEO Deon van der Mescht: “The unexpected and unwarranted action of
purporting to withdraw the New Order Mining Right for Mine Waste
Solutions (“MWS”) and the two unfortunate and regrettable accidents at
Ezulwini Mine have eclipsed otherwise positive developments that took
place this quarter.

“The successful completion of the long-awaited Franco-Nevada Technical
Completion Test was a defining moment for MWS, but was overshadowed by
the news that the South African Department of Mineral Resources (“DMR”)
purported to withdraw the New Order Mining Right for MWS. Our legal
position remains that a New Order Mining Right is not required and
accordingly MWS has continued to operate, however, this announcement by
the DMR is a disappointment for our shareholders who were looking
forward to a new phase in the development of MWS.

“While MWS does not require a New Order Mining Right under current South
African legislation, we believe that operating under a New Order Mining
Right provides significant benefits to all stakeholders, specifically
to the local community, and we continue to work actively towards the
resolution of this matter.

“At Ezulwini Mine, we are confident that we have put the right people
and processes in place to reduce one of the most significant risks to
our operation, namely serious and fatal accidents. In addition, the
effect of management’s focus on costs and clean mining is beginning to
show results, and I believe that the turnaround process for this
operation remains on track.”

EZULWINI MINE

The quarter under review was one of mixed fortunes for Ezulwini Mine. In
July the plant milled 70,058 tonnes, which is a record for the
operation and indicated that the production ramp-up was on track. This
achievement and the associated upward trends in production were
derailed, sadly, by two fatal accidents; one which occurred on August
11, 2011 and the other on September 13, 2011. The August accident
resulted in all development ends being stopped on the mine for an
extended period of time and the September accident resulted in all
activities in the reef horizons being stopped for a similar period of
time. The impact of the accidents went far beyond the mandatory
stoppages enforced by the DMR as production teams struggled to regain
the momentum they had established during July.

Gold and uranium production for Q2 2012 was constrained by the
aforementioned accidents. A total of 13,076 ounces of gold was sold for
Q2 2012, which represents an improvement on the 12,893 ounces of gold
sold in Q1 2012. In terms of uranium, Ezulwini Mine produced 36,006
pounds of uranium in Q2 2012 compared to 20,361 pounds produced in Q1
2012, a 77% improvement quarter on quarter. The uranium bearing Middle
Elsburg ore body remains well understood and management is confident
that they can sustain the progressive quarter on quarter improvements
in this section. As previously reported, management  continues to focus
on improving development rates through-out the mine, but more
specifically in the Upper Elsburg ore body. A record of 908 development
meters was achieved in July but was unfortunately not sustained into
August and September due to the accidents and the associated stoppages.
Indications are however that, for the October production period,
Ezulwini Mine is achieving an average of 40 meters of development per
production shift, which is within the planning parameters set for the
month.

As is evident from the production metrics, one of the most significant
risks to Ezulwini Mine’s ability to meet and/or exceed its targets are
stoppages that result from serious accidents. Management has therefore
reinforced its efforts to attain a safe working environment. This
includes adopting a zero-tolerance approach to unsafe conduct with a
number of non-negotiable rules having been defined and enforced during
the quarter. In addition, management imposed an audit-driven “stop and
fix” campaign across all working places, with a view to preventing any
further accidents. The impact of this proactive safety drive has been a
record number of “white flag” or incident-free shifts in September, a
performance metric that management will continue to drive vigorously.

Ezulwini Mine also welcomed a new general manager, Sizwe Mthethwa, to
the team in early September. An experienced deep-level gold miner
formerly of Harmony Gold Limited, Mr. Mthethwa’s passion for safe
production has been evident in his first month on the mine and
management look forward to supporting him in this regard. Mr Mthethwa’s
appointment and a simultaneous reshuffle in the First Uranium corporate
office has enabled Deon van der Mescht, who was acting general manager
of Ezulwini Mine and CEO of First Uranium since April 2011, to refocus
his efforts on his role as CEO of the Company.

Notwithstanding the production constraints in Q2 2012, Ezulwini Mine
remains on track to achieve its stated annual target of between 70,000
to 80,000 ounces of gold sold and uranium sales of between 110,000 and
130,000 pounds for FY 2012.

In previous updates, Ezulwini Mine reported on various business
development initiatives aimed at leveraging the available capacity of
the gold and uranium plant infrastructure, including the uranium
concentrate float plant project and possible toll treatment of third
party ore. These initiatives remain on track and management hopes to be
able to successfully implement these initiatives before the end of FY
2012. The current production forecasts exclude any potential benefits
that may be derived from the successful implementation of these
projects.

MINE WASTE SOLUTIONS

The successful conclusion of the critically important Franco-Nevada
Technical Completion Test on August 24, 2011 was a significant
milestone for MWS and removes serious commercial risk for this project.

During Q2 2012 MWS also improved the performance of the
recently-commissioned third gold plant module such that overall gold
recoveries improved from 44% of Q1 2012 to 51% in Q2 2012. This also
resulted in a 27% improvement in gold sales of 27,453 ounces compared
to 21,546 ounces of gold sold in Q1 2012.

The targeted commissioning of MWS’s uranium plant remains unchanged for
June 2012, subject to continued progress being made at Ezulwini Mine.
Consequently, the annualized gold guidance for FY 2012 remains
unchanged between 105,000 and 115,000 ounces.

MWS PERMITTING

On September 15, 2011, MWS received a letter from the South African
Minister of Mineral Resources purporting to “withdraw” the New Order
Mining Right for MWS, in terms of Section 23 of the Mineral and
Petroleum Resources Development Act 28 of 2002 (“the MPRDA”). MWS’s
external legal counsel is of the very clear opinion that under current
South African mining legislation, reclamation activities such as the
MWS tailings recovery project are not classified as a mining operation
and therefore do not require a mining right. Notwithstanding this, and
in anticipation of the MPRDA Amendment Act being promulgated in the
future, MWS has and will continue to pro-actively engage with the DMR
and the Ministry with the aim of securing a New Order Mining Right. In
the interim, operations continue unimpeded. Should the DMR issue a Stop
Order Notice, MWS will take the necessary legal action to safeguard its
rights to allow operational continuity.

MWS’s Integrated Water Use Licence (“Water Use Licence”) was issued in
June 2010 by the South African Department of Water Affairs (“DWA”) for
the water usage associated with the development of its new tailings
facility, or TSF. An appeal was filed by the Federation for a
Sustainable Environment (“FSE”) on March 6, 2011 with the South African
Water Tribunal against MWS’s Water Use Licence. In response, MWS filed
its affidavit with the Water Tribunal on October 4, 2011. As previously
disclosed, on the advice of its external legal counsel, the Company
considers the FSE appeal to be legally invalid and consequently has
continued to operate.

CASH RESOURCES

As at September 30, 2011, the cash position of the Company was US$15.2
million.

SUMMARY OF PRODUCTION RESULTS 

The following table summarizes the production from each operation during
Q2 2012, against the previous two quarters:

     ___________________________________________________________________
    |                                 |2012 YTD| Q2 2012|Q1 2012|Q4 2011|
    |_________________________________|________|________|_______|_______|
    |MWS                              |        |        |       |       |
    |_________________________________|________|________|_______|_______|
    |Tonnes of ore reclaimed (000s)   |   9,725|   4,822|  4,903|  3,625|
    |Average gold head grade (g/t)    |   0.328|   0.348|  0.309|   0.34|
    |Gold plant recovery (%)          |     48%|     51%|    44%|    55%|
    |Gold sold (oz)                   |  48,999| 27, 453|21, 546| 22,150|
    |_________________________________|________|________|_______|_______|
    |Ezulwini Mine                    |        |        |       |       |
    |_________________________________|________|________|_______|_______|
    |Tonnes of ore milled             |326, 842|162, 577|164,265|153,021|
    |Average gold recovery grade (g/t)|    2.66|    2.53|   2.79|   2.62|
    |                                 |        |        |       |       |
    |Gold sold (oz)                   | 25, 968| 13, 076|12, 892| 11,393|
    |Uranium produced (lbs)           |  56,366|  36,006| 20,361|      0|
    |_________________________________|________|________|_______|_______|

     _____________________________________________________________________
    |Abbreviation|Period               |Abbreviation|Period               |
    |____________|_____________________|____________|_____________________|
    |Q1 2012     |April 1, 2011 - June |Q1 2011     |April 1, 2010 - June |
    |Q2 2012     |30, 2011             |Q2 2011     |30, 2010             |
    |Q3 2012     |July 1, 2011 -       |Q3 2011     |July 1, 2010 -       |
    |Q4 2012     |September 30, 2011   |Q4 2011     |September 30, 2010   |
    |2012 YTD    |October 1, 2011 -    |            |October 1, 2010 -    |
    |FY 2012     |December 31, 2011    |FY 2011     |December 31, 2010    |
    |            |January 1, 2012 -    |            |January 1, 2011 -    |
    |            |March 31, 2012       |            |March 31, 2011       |
    |            |April 1, 2011 -      |            |                     |
    |            |September 30, 2011   |            |April 1, 2010 - March|
    |            |April 1, 2011 - March|            |31, 2011             |
    |            |31, 2012             |            |                     |
    |____________|_____________________|____________|_____________________|

The financial results for Q2 2012 are expected to be released in
mid-November 2011.

CONFERENCE CALL

Conference Call

First Uranium will conduct a conference call with investors to discuss
the information in this news release on Wednesday, October 12, 2011 at
09h00 (Toronto time) and 15h00 (South African time).

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 gold and uranium plants
at Ezulwini Mine and the ramp-up of production at the Mine Waste
Solutions (MWS) tailings recovery facility following the completion of
a significant gold capital expansion program in May 2011.  Both
operations are located in South Africa.

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

 

 

 

 

SOURCE First Uranium Corporation