First Uranium announces financial results for the three and twelve months ended March 31, 2012.
All amounts are in US dollars unless otherwise noted.
For the Management Discussion & Analysis and Financial Statements please
refer to the Corporation’s website at www.firsturanium.com.
TORONTO and JOHANNESBURG, June 29, 2012 /CNW/ – First Uranium Corporation (TSX:FIU), (JSE:FUM) (ISIN:CA33744R1029)
(“First Uranium” or “the Corporation”) today announced total gold sales
for its financial year ended March 31, 2012 (“FY 2012″) of 146,445
ounces of gold – a marginal increase on the 142,630 ounces sold at the
end of March 31, 2011 (“FY 2011″). This was primarily due to the 21%
decrease in gold production out of the Ezulwini Mine, which off-set the
19% increase in gold sales out of Mine Waste Solutions (“MWS”). Total
uranium sales rose sharply from 20,500 pounds in FY 2011 to 82,862
pounds in FY 2012 following the re-commissioning of the uranium plant
at Ezulwini Mine in April 2011.
The Corporation has entered into definitive agreements for the sale of
its principal assets. The Corporation entered into a definitive
agreement (the “AGA Agreement”) dated March 2, 2012 for the sale,
indirectly, of all of the shares of Mine Waste Solutions (Proprietary)
Limited (“MWS”), owner of the tailings recovery project in South
Africa, to AngloGold Ashanti Limited (“AGA”) (the “AGA Transaction”).
Under the terms of the AGA Agreement AGA will pay $335 million in cash
(the “Purchase Price”) for all of the shares and associated claims of
First Uranium (Proprietary) Limited (“FUSA”), which holds, indirectly,
the MWS tailings recovery project, subject to the fulfillment of a
number of conditions precedent. In addition, the Corporation entered
into a definitive agreement (the “Gold One Agreement”) for the sale of
First Uranium Limited (“FUL”), a wholly-owned subsidiary of the
Corporation which owns all of the shares of Ezulwini Mining Company
(Proprietary) Limited (“EMC”) to Gold One International Limited (“Gold
One”) for $70 million in cash (the “Gold One Transaction”). Gold One
also provided a loan facility to the Corporation for an amount of up to
$10 million available for drawdown in accordance with the loan
agreement between the parties (the “Gold One Loan Facility”) which has
been fully drawn subsequent to year-end.
The proceeds from the sale of First Uranium’s principal assets will
enable it to settle the 4.25% senior unsecured convertible debentures
(the “Debentures”), the 7% secured convertible notes (the “Canadian
Notes”) issued by the Corporation and the 11% secured convertible notes
(the “Rand Notes”) issued by MWS (together, the “Notes”) and the Gold
One Loan Facility under the terms agreed to with the Debenture holders,
Note holders and Gold One on June 13, 2012.
On June 25, 2012, all of the conditions precedent to the AGA Transaction
had been satisfied or waived. Each of the parties have confirmed such
in writing and the Closing Date, as defined in the AGA Agreement, is
scheduled to occur on July 3, 2012. On the Closing Date, all of the
documents required to conclude the AGA Transaction will be delivered to
Edward Nathan Sonnenbergs as Closing Document Stakeholder, the purchase
price, in accordance with the AGA Agreement, will be delivered to
Computershare Trust Company of Canada (“CTTC”) and Computershare
Investor Services (Proprietary) Inc. (“CIS”), each a Purchase Price
Stakeholder, and certain documents (“Discharge Documents”) relating to
the discharge of the security held for the benefit of the Note holders
and the Gold One Loan Facility will be lodged with the appropriate
deeds office. On the Closing Date, CTTC will convert sufficient US
dollars to Canadian dollars so that CTTC holds an amount in Canadian
dollars to pay the principal amount (C$110 million) of the Canadian
Notes outstanding and CIS will convert sufficient US dollars to South
African Rand in order for CIS to pay the principal amount (ZAR418.6
million) of the Rand Notes outstanding.
Upon registration of the Discharge Documents releasing all security in
the MWS assets, the Closing Document Stakeholder will release the
remaining closing documents from escrow and the Purchase Price
Stakeholders will pay: (i) to BNY Trust Company of Canada, as trustee
for the Canadian Notes, C$110 million, and to or to the order of GMG
Trust Company (SA) Pty Limited, as trustee for the Rand Notes (together
the “Note Trustees”), ZAR418.6 million, (ii) to Gold One, $10 million
plus accrued interest to the date of payment; (iii) $25 million (the
“AGA Deferred Payment”) to the warranty escrow agent; and (iv) the
balance shall be paid to FUL. The Corporation has been advised that it
could take up to three weeks for the Discharge Documents to be
registered, accordingly, the AGA Transaction is expected to be
implemented by July 24, 2012, or on an earlier date depending on the
date the Discharge Documents are registered.
In order to provide sufficient time for the AGA Transaction to be
implemented, Gold One and the Corporation have agreed to extend the
date to satisfy the conditions precedent to the Gold One Transaction to
July 31, 2012. Other than the conditions precedent associated with the
implementation of the AGA Transaction, the material conditions
precedent to the Gold One Transaction have been satisfied or waived
subsequent to year-end, including all of the regulatory approvals to
the extent required.
FINANCIAL YEAR ENDED MARCH 31, 2012
The Corporation’s consolidated revenue of $195 million for FY 2012, an
increase of 30% from $151 million for FY 2011, resulted in the
Corporation reflecting a $7 million gross profit from operations in FY
2012 compared to a consolidated gross loss of $6 million in FY 2011.
The consolidated pre-tax loss narrowed by 24% from a pre-tax loss of
$236 million in FY 2011 to $179 million, driven primarily by the
impairment of the Ezulwini Mine’s assets in FY 2012.
These results are prepared in accordance with IFRS. Previously, First
Uranium prepared its annual and interim consolidated financial
statements in accordance with Canadian GAAP. From January 2011 however,
the Canadian Institute of Chartered Accountants (“CICA”) required
companies to incorporate IFRS. The financial statements for FY 2011
have therefore been restated in accordance with IFRS and will,
accordingly, differ from the financial statements previously posted for
During FY 2012, MWS produced and sold 99,003 (FY 2011: 82,941) ounces of
gold, in line with the downgraded forecast issued in Q3 2012 of between
98,000 ounces and 100,000 ounces for FY 2012. In the process, MWS
generated $132 million (FY 2011: $89 million) in revenue at an average
Cash Cost* of $687 (FY 2011: $516) per ounce of gold sold. The 19%
increase in gold sold for FY 2012 from FY 2011 was mainly attributable
to the completion of the third gold module and the Tailings Storage
Facility, which boosted processing capacity. As a result, tonnes
reclaimed rose 48% year on year. This achievement was unfortunately
offset by challenges encountered around the composition of the mining
mix that saw an 11% drop in recovered grade during the period under
The 33% overall increase in Cash Costs, year-on-year, was mainly driven
by the increase in processing capacity, running costs and teething
problems associated with the newly completed infrastructure, largely as
a result of increased fuel, water and power usage.
FY 2012 proved a particularly challenging year from a safety and
production perspective at Ezulwini Mine, with 4 fatal accidents during
calendar 2011, 3 of which occurred in the latter half of the calendar
year, having a significant negative impact on employee morale and
productivity of the mine.
Despite an intensive change management process implemented in Q1 2012,
the anticipated improvements at Ezulwini Mine were not forthcoming and
at the end of Q3 2012, a restructuring of Ezulwini Mine was announced
that resulted in approximately 50% of the workforce being retrenched by
the end of Q4 2012.
One of the very few highlights of the year for Ezulwini Mine occurred at
the end of Q3 2012 with the settlement of the final quarterly
guaranteed ounces requirement to Franco-Nevada pursuant to the Ezulwini
Gold Stream Transaction (effectively 64% of the gold sold during Q3
2012 at $400 per ounce of gold). As of January 2012, the mine reverted
to delivering only 7% of its gold production to Franco-Nevada at $400
per ounce of gold.
Ezulwini produced and sold 47,442 (FY 2011: 59,689) ounces of gold
generating $63 million (FY 2011: $61 million) in revenue at an average
Cash Cost* of $2,155 (FY 2011: $1,605) per ounce of gold. As a result
of lower than anticipated gold production, combined with a 34% increase
in the average Cash Cost per ounce of gold sold, the mine’s gross
losses in FY 2012 ($48 million) were up 4% compared to FY 2011 ($46
million). Revenue from uranium sold increased dramatically, from $1
million in FY 2011 to $5 million in FY 2012 following the successful
re-commissioning of the Ezulwini Uranium plant in April 2011 after a
hiatus of 8 months following the failure of two Ion Exchange (“IX”)
columns in August 2010. The mine sold 82,862 pounds of uranium in FY
2012, which was in line with the revised forecast of 82,000 pounds.
During FY 2012, First Uranium utilized $16 million (FY 2011: $50
million) of its cash resources to fund its operating activities. The
Corporation spent $29 million (FY 2011: 102 million) on capital
projects in FY 2012 comprising mainly the closing out of 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, 2012, current assets, including current assets from
discontinued operations, were $22 million (March 31, 2011: $73 million)
and included cash and cash equivalents of $7 million (March 31, 2011:
$50 million). The Corporation’s current assets, excluding current
assets from discontinued operations, were $4 million as at March 31,
2012 and included cash equivalents of $4 million.
SALE OF ASSETS
On June 13, 2012, First Uranium shareholders, Note holders and Debenture
holders voted overwhelmingly in favour of the disposal of the Ezulwini
Mine and MWS to Gold One and AGA, for a consideration of $70 million
and $335 million, respectively. Gold One also provided a loan facility
to the Corporation for an amount of up to $10 million, which has been
fully drawn subsequent to year-end. The background to these
transactions and developments is detailed in the Management Information
Circular for the Special Meeting of Shareholders, dated May 4, 2012
(filed on SEDAR on May 8, 2012).
The proceeds from the sale of First Uranium’s principal assets will
enable it to settle the Debentures, the Notes and the Gold One Loan
Facility under the terms agreed to with the Debenture holders, Note
holders and Gold One on June 13, 2012.
FOURTH QUARTER ENDED MARCH 31, 2012
The consolidated revenue from First Uranium’s two operations for the
three months ended March 31, 2012 (“Q4 2012″) was $48 million, compared
to $37 million for the three months ended March 31, 2011 (“Q4 2011″),
which is a 31% improvement quarter-on-quarter. A 433% rise in gross
profits from the operations led to a gross profit of $9 million for Q4
2012 compared to from a loss of $3 million in Q4 2011 and a
consolidated pre-tax profit for Q4 2012 of $23 million compared to the
pre-tax loss in the comparative period (Q4 2011: $80 million).
During Q4 2012, the Corporation utilized $10 million (Q4 2011: $20
million) of cash resources in its operating activities. Capital
expenditure was minimal (Q4 2011: $12 million), reflecting the close
out of the capital projects at MWS.
Mine Waste Solutions
During Q4 2012, MWS generated $34 million in proceeds (Q4 2011: $25
million) from 24,862 ounces of gold sold (Q4 2011: 22,150 ounces) at a
Cash Cost of $790 per ounce (Q4 2011: $553 per ounce). The tonnage
throughput increased by 37% from Q4 2011 to Q4 2012, as a result of the
additional plant module that came into production during FY 2012. This
was offset by a 16% drop in the average gold recovery grade which
limited gold production during Q4 2012 to an increase of only 12% in
gold ounces sold compared to Q4 2011. This, combined with the increase
in average gold selling price, resulted in a 35% increase in revenues
in Q4 2012 compared to Q4 2011.
The 61% increases in Cash Costs in Q4 2012 were driven by the high unit
cost of operating the Hartebeesfontein # 7 satellite dam (including
trucking) as well as additional power and water costs associated with
operating the new TSF and a substantial increase in certain key reagent
costs in Q4 2012 (resulting in the 27% increase compared to Q3 2012).
Due to the Corporation’s decision to dispose of its principal assets at
the start of Q4 2012, no amortization for the MWS assets was provided
for on a consolidated basis during Q4 2012. The increase in
amortization year-over-year is driven by the 48% higher tonnage
throughput for FY 2012 compared to FY 2011.
The higher revenues in both Q4 2012 and FY 2012 more than offset the
higher costs in the respective periods and resulted in the 31% and 38%
increases in gross profits generated by MWS compared to Q4 2011 and FY
Going forward, there is an opportunity to improve recovery performance
for the first gold module and circuit modifications aimed at improving
leach time are expected to be concluded by the end of Q1 2013 with the
intention of commissioning in early Q2 2013. Economically viable
opportunities for the second and third gold modules have not emerged
thus far. Notwithstanding the modifications that can be made to gold
module one, the relative proportion of clay compared to clean material
is expected to increase as the availability of clean sources of
material on Buffelsfontein # 3 tailings dam continues to diminish
and, and with it, mining mix flexibility. The performance of gold
module one and two will therefore continue to diminish until such time
as alternative clay handling mechanisms with the ability to improve the
reclamation rate as well as the quality of the material delivered to
the plant are sourced. The impact could range from 15% to 25% off
current levels dependent upon the relative extent of clay to clean
material on Buffelsfontein # 3 tailings dam.
The Ezulwini Mine generated $13 million in proceeds during Q4 2012 (Q4
2011: $12 million) from 8,068 ounces of gold sold (Q4 2011: 11,393
ounces) at a Cash Cost of $2,218 per ounce (Q4 2011: $2,227). The
Ezulwini Mine also sold 23,675 pounds of uranium during Q4 2012,
generating $1 million in proceeds in Q4 2012. No uranium was sold in Q4
Notwithstanding the restructured operation at the Ezulwini Mine, and the
reduction in the required delivery of gold to FN to 7% of gold
production, the turnaround in operations at Ezulwini had not yet
realized the expected results. While the quantity and grade of the
blasted tonnes was substantially in-line with the new operating plan,
the mine was unable to meet its tonnage targets, due mainly to a number
of tramming constraints, including a fall of ground on one of the major
ore transfer levels. As a result, the operation continued to lose
money in Q4 2012 and consume cash at a greater rate than planned.
As a consequence, tonnage throughout fell 40% in Q4 2012 compared to Q4
2011. This was offset by improved gold recovery grades, resulting in a
29% decline in gold ounces sold in Q4 2012, compared to Q4 2011.
Consequently the proceeds from gold ounces sold also decreased,
although at lower rates, primarily due to the higher gold price over
the comparative period.
In order to address these issues, mine management are 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
Going forward, the current mine plan is targeting a gold output of
approximately 50,000 ounces for FY 2013 from an average monthly
production of 44,000 tonnes. Despite the uranium sections of the mine
having been closed and the uranium plant put onto care and maintenance,
the Ezulwini Mine will realize revenue from uranium sales in Q1 2013
related to the sale of the 25,000 pounds of uranium carried over from
uranium production in FY 2012, prior to halting the uranium mining
operations. As at the end of Q1 2013, Ezulwini Mine is beginning to see
the results of the restructuring process that was begun in December
2011, with gold sold in Q1 2013 in excess of 9,500 ounces. Cash costs
are in line with budget and, assuming production ramps up to the
expected levels, Ezulwini is well placed to begin breaking even by the
end of Q2 2013.
As discussed under the Recent Developments section of this news release,
the Corporation expects to conclude and implement the AGA Transaction
by July 24, 2012, following which the Gold One Transaction is expected
to be concluded by July 31, 2012.
On the implementation of the AGA Transaction, BNY and GMG, the Indenture
Trustees for the Canadian Notes and the Rand Notes, respectively, will
be paid the respective principal amounts owing to the Canadian and Rand
Note holders and the Gold One Loan will also be repaid.
The Board will determine an amount for an initial distribution to
shareholders, following completion of both the AGA Transaction and the
Gold One Transaction, and the repayment of all current obligations to
the Debenture holders, settlement of all outstanding obligations to the
Note holders and reserving an amount for any continuing and contingent
obligations. Following release of the escrow funds held for claims
under the AGA Agreement and the Gold One Agreement, the settlement of
all remaining obligations to the Debenture holders and the
establishment of a reserve for any continuing and contingent
obligations, the Board will determine an additional amount to be
distributed to the shareholders. The Corporation may then proceed to
be wound up and dissolved. However the Board has not made any decisions
with respect to the windup and dissolution at this time.
*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-IFRS measurement and investors are cautioned not to place undue reliance on it and are
advised to read all IFRS accounting disclosures presented in the
Corporation’s Financial Statements.
About First Uranium Corporation
First Uranium Corporation (TSX:FIU, JSE:FUM) is a Canadian resource
company which operates the Ezulwini mine, an underground gold and
uranium 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
Corporation’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 Corporation’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.
SOURCE First Uranium Corporation