Quantcast
Last updated on April 23, 2014 at 12:08 EDT

First Uranium Corporation – Production update for the three months ended March 31, 2012

April 19, 2012

All amounts are in US dollars unless otherwise noted.

TORONTO AND JOHANNESBURG, April 19, 2012 /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 March 31, 2012 (“Q4 2012″) .

     _____________________________________________________________________
    |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   |
    |FY 2012     |October 1, 2011 -    |FY 2011     |October 1, 2010 -    |
    |FY 2013     |December 31, 2011    |Q1 2013     |December 31, 2010    |
    |            |January 1, 2012 -    |            |January 1, 2011 -    |
    |            |March 31, 2012       |            |March 31, 2011       |
    |            |April 1, 2011 - March|            |April 1, 2010 - March|
    |            |31, 2012             |            |31, 2011             |
    |            |April 1, 2012 - March|            |April 1, 2012 - June |
    |            |31, 2013             |            |30, 2012             |
    |____________|_____________________|____________|_____________________|

For Q4 2012, the Company sold 32,923 ounces of gold, a 15% decrease on
the 38,548 ounces of gold sold in Q3 2012. Only 86 pounds of uranium
was produced in Q4 2012, compared to 30,887 pounds in Q3 2012.

The following table summarizes the production from each operation during
Q4 2012, compared to the previous quarters in FY 2012:

     _____________________________________________________________________
    |                             |FY 2012|Q4 2012|Q3 2012|Q2 2012|Q1 2012|
    |_____________________________|_______|_______|_______|_______|_______|
    |MWS                          |       |       |       |       |       |
    |_____________________________|_______|_______|_______|_______|_______|
    |Tonnes of ore reclaimed      | 19,813|  4,981|  5,107|  4,822|  4,903|
    |(000s)                       |  0.324|  0.321|  0.319|  0.348|  0.309|
    |Average gold head grade (g/t)|    49%|    48%|    51%|    51%|    44%|
    |Gold plant recovery (%)      | 99,003| 24,862| 25,142| 27,453| 21,546|
    |Gold sold (oz)               |       |       |       |       |       |
    |_____________________________|_______|_______|_______|_______|_______|
    |Ezulwini Mine                |       |       |       |       |       |
    |_____________________________|_______|_______|_______|_______|_______|
    |Tonnes of ore milled         |566,216| 91,302|148,072|162,577|164,265|
    |Average gold recovery grade  |   2.66|   3.11|   2.40|   2.53|   2.79|
    |(g/t)                        | 47,435|  8,061| 13,406| 13,076| 12,892|
    |Gold sold (oz)               | 87,340|     86| 30,887| 36,006| 20,361|
    |Uranium produced (lbs)       |       |       |       |       |       |
    |_____________________________|_______|_______|_______|_______|_______|

EZULWINI MINE

At Ezulwini Mine, a total of 8,061 ounces of gold was sold in Q4 2012,
compared to 13,406 ounces of gold sold in Q3 2012. Although the
Ezulwini Mine only produced 86 pounds of uranium in Q4 2012, the sale
of 23,756 pounds of uranium produced in Q3 2012, is reflected in this
quarter’s revenue. The decline in both gold and uranium production for
Q4 2012 is primarily a result of the restructuring of Ezulwini as
announced in December 2011 and reflects both the reduction in the
workforce and the limited number of working areas available as a result
of the new mine plan. Indications are that production is beginning to
stabilise.

The planned restructuring in accordance with Section 189a of The South
African Labour Relations Act has now been concluded. Following
consultation and negotiations with organized labour, the staff
complement was reduced by 1,320 employees, with many being offered
alternative positions at neighbouring operations. As at April 1, 2012,
the Ezulwini Mine employed 1,980 employees.

In Q4 2012, the on-going drive to improve safety performance resulted in
a significant improvement in key safety metrics. On March 14, 2012, the
mine reached 250,000 fatality free shifts, which is the first important
milestone towards the operation’s goal of 1,000,000 fatality free
shifts by the end of FY 2013.

Aligned to the restructuring of the Ezulwini Mine, management has
completed a new ten-year operating plan which includes more detailed
analysis of the Upper Elsburgs (“UEs”, a gold-only massive ore body)
and plans for further technical work to be conducted, in order to
define a four-year mineral reserve and a corresponding production plan
which yields sustainable and profitable results. In terms of the new
four-year plan, mining of all marginal production panels has ceased. As
a consequence, mining in the Middle Elsburgs (“MEs”, a gold and uranium
ore body with relatively low gold grades) has been temporarily halted
and the operation of the uranium plant suspended due to the combination
of low uranium prices and the high costs associated with mining the
MEs. The MEs are on average 1,500 metre further from the shaft and 300
metre deeper than the UE orebody which adds significantly to the cost
of mining this area. The lower gold grades and persistently low uranium
prices do not generate sufficient revenue per tonne mined to off-set
the high cost per tonne. This is further exacerbated by the high cost
per tonne associated with operating the under-utilized uranium plant
and the Company’s limited cash reserves. As a result and as part of
the restructuring, the Ezulwini uranium plant was placed on care and
maintenance at the end of February 2012.

Notwithstanding the restructured operation at Ezulwini, and the
reduction in the required delivery of gold to Franco-Nevada Barbados
Corporation to 7% of gold production, the turnaround in operations at
Ezulwini has not yet been realized or yielded the expected results.
While the quantity and grade of the blasted tonnes is substantially
in-line with the new operating plan, a fall of ground on one of the
major ore transfer levels has required that the underground production
be trammed at a much greater distance to the shaft. The mobile
trackless equipment on this major ore transfer level, is currently not
sufficiently robust to sustain the required rate of transport of ore to
the shaft. As a result, the operation continues to lose money and
consume cash at a greater rate than planned despite the fact that all
efforts continue to resolve this issue. In order to address these
issues, management is in the process of implementing a detailed action
plan, which includes clearing the fall of ground, correcting the
trackless section operating conditions and addressing the mechanical
condition of the trackless equipment on the level. These actions are
expected to yield the desired results as early as May 2012.

MINE WASTE SOLUTIONS

During Q3 2012, management downgraded its FY 2012 guidance from a range
of between 105,000 and 115,000 ounces to a range of between 98,000 and
100,000 ounces. MWS achieved 99,003 ounces. Quarter on quarter gold
sales remained stable with a marginal 1% decrease from Q3 2012 to Q4
2012. The throughput which decreased marginally in aggregate across the
three gold modules was offset by a slight improvement in aggregate feed
grade delivered to the three gold modules.

Gold circuit one (Phase 1A) saw a 7% drop in grade and an associated
drop in recovery. As previously reported, the drop off in grade was
anticipated as the resources from the high grade Buffelsfontein # 2
tailings dam diminish and the proportion of the mining mix from the
lower grade Buffelsfontein # 3 tailings dam increases. As previously
reported, process optimisation test work has been undertaken in an
effort to try and improve recoveries and mitigate the production
impacts of a reduced feed grade. As a result of the test work, an
extended leach circuit (utilising existing infrastructure) will be
commissioned during Q1 2013 targeting improved recoveries.

The second gold circuit (Phase 1B) continues to perform well, the feed
grade delivered to the plant during Q4 2012 increased by 9%, largely
due to the proportion of high grade floor material from Buffelsfontein
# 4 tailings dam which is approaching the end of its life. Despite
the increase in feed grade compared to Q3 2012, there was no
commensurate increase in recoveries. Management attribute this to the
recent clay intersections on Buffelsfontein # 3 tailings dam and
anticipate that the clay will continue to impact on recovery
performance. In addition, management anticipate that throughput
performance will be diminished as a result of the increased difficulty
of handling clay bearing material. Historical experience from
reclamation activities on Buffelsfontein # 2 tailings dam suggest
that throughput rates will reduce by approximately 10%, however this
will largely depend upon the extent of the clay.

While a certain quantity of clay was anticipated in processing the
Buffelsfontein # 3 tailings dam, the performance for March was
negatively affected by the unexpected exposure of material with a high
clay content (approximately 70% compared to an anticipated 20%). The
Buffelsfontein # 3 tailings dam supplies 90% of the tonnes processed
in the Phase 1A and Phase 1B, and the high clay content negatively
impacted the tonnage as well as the recovery and consequently the
revenue of these two phases. Management has made immediate adjustments
to the MWS mining sequence to reduce the amount (percentage) of clay
material delivered to the plant for processing. Early indications are
that these adjustments are having a positive impact on throughput and
recoveries in the first and second gold circuits (Phase 1A and 1B).

Gold circuit three (Phase 2) processes material from the relatively
lower grade Hartebeesfontein # 1 tailings dam. To preserve feed grade
delivered to the plant, the mining mix to date has been supplemented by
high grade material from the small satellite resources located on the
western perimeter of the project footprint. Throughput rates remained
fairly constant, however marginal quarter on quarter decreases in feed
grade to the plant coupled with decreased recovery performance impacted
negatively on Q4 2012 production compared to Q3 2012. The high grade
contribution to the mining mix from the satellite resources will
dissipate going forward and consequently the grade delivered to the
plant will reduce by approximately 15%. This is not a surprise, and in
previous disclosure management indicated that it was focusing on test
work to improve recovery performance. This test work is ongoing with no
definitive process modifications identified to date, consequently it is
anticipated that recovery performance will reduce in line with a lower
feed grade being delivered to the plant.

EFFECT ON PRO FORMA DISTRIBUTIONS FROM SALE PROCEEDS

As at March 31, 2012, the cash reserves of the Company, net of the
semi-annual interest paid on April 2, 2012 in respect of the secured
convertible notes due March 31, 2013, were US$6.7 million.

The Company announced on March 2, 2012, that it had entered into a
definitive agreement (the “AGA Agreement”) for the sale indirectly of
the MWS tailing recovery project to AngloGold Ashanti Limited (“AGA”)
(the “AGA Transaction”). Under the terms of the AGA Agreement, AGA will
pay $335 million in cash for all of the shares and associated claims of
First Uranium (Proprietary) Limited, which holds indirectly the MWS
tailings reprocessing project, subject to the fulfilment of a number of
conditions precedent. In a separate transaction, the Company also
announced that it entered into a binding letter agreement providing for
the sale of all of the shares of First Uranium Limited (a wholly owned
subsidiary of the Company), which owns all of the shares of Ezulwini,
to Gold One International Limited (“Gold One”) for $70 million in cash
(the “Gold One Transaction” and together with the AGA Transaction, the
“Transactions”) and a credit agreement with Gold One for a $10 million
loan facility (the “Gold One Loan”). On April 2, 2012, the Company
announced that it had entered into a definitive agreement with Gold One
to complete the Gold One Transaction subject to fulfilment of a number
of conditions precedent. (See news releases dated March 2, 2012 and
April 2, 2012.)

On the announcement of the Transactions on March 2, 2012, the Company
outlined the Pro Forma Use of Proceeds, including an approximate amount
expected to be available to shareholders on closing of $36.6 million.
The Pro Forma amounts were subject to change due to, among other
things, currency fluctuations (conversion rates were based on the Bank
of Canada noon rate as of March 1, 2012), results of operations and the
repayment at closing of the Transactions of any amount drawn under the
Gold One Loan.

The Company has accessed $5 million of the Gold One Loan and expects
that it will have to draw on the remaining $5 million to sustain
operations. As the Gold One Loan must be repaid at the closing of the
Gold One Transaction, the repayment of the loan will reduce the Pro
Forma Proceeds at closing by $10 million. In addition, under the terms
of the Transactions, the working capital of the operations acquired
must be positive, or at a minimum there must be at least sufficient
cash and other current assets to fund current liabilities. If there is
a further shortfall in operating performance, that may further reduce
the Pro Forma Proceeds and result in material reduction in the cash
available for distribution to Shareholders at the closing of the
Transactions.

MWS PERMITTING

As reported in the Company’s news release issued on February 14, 2012,
MWS received a notice of intention on February 10, 2012 to issue a
directive (“Pre-Directive”) in terms of section 31 A of the Environment
Conservation Act (# 73 of 1989) (“ECA”) and Section 28 of the
National Environmental Management Act (# 107 of 1998) from the
Department of Environmental Affairs (“DEA”). The Pre-Directive lists
certain concerns that the DEA has with the MWS reclamation project and
the environmental impact thereof. MWS submitted a formal response to
the DEA on February 24, 2012. Whilst no further communication has been
received from the DEA related to the submission, management is
confident that the issues raised have been materially addressed. MWS
continues to operate legally in terms of current authorizations and
legislation.

About First Uranium Corporation

First Uranium Corporation (TSX:FIU, JSE:FUM) operates the Ezulwini Mine,
an underground mining operation, and Mine Waste Solutions (MWS), a
tailings recovery facility. Both operations are situated 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.
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, including without
limitation, the statements regarding the proposed transactions with
Gold One International Limited and AngloGold Ashanti Limited.
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


Source: PR Newswire