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First Uranium reports results for year ended March 31, 2009

Posted on: Wednesday, 17 June 2009, 07:23 CDT

All amounts are in US dollars unless otherwise noted. For a full discussion of financial and operating results, the Financial Statements and Management Discussion & Analysis, please see the Company's website, www.firsturanium.com under "Investor Centre / Annual Reports"

TORONTO and JOHANNESBURG, June 17 /PRNewswire-FirstCall/ - First Uranium Corporation (TSX:FIU, JSE:FUM) (ISIN:CA33744R1029) ("First Uranium" or "the Company") today announced its financial results for the three- and twelve-month periods ended March 31, 2009 ("Q4 2009" and "FY 2009", respectively). References to "Q4 2008" and "FY 2008" respectively refer to the three- and twelve-month periods ended March 31, 2008. References to "Q1 2010" refer to the Company's three-month period ending June 30, 2009.

During FY2009, the Company recorded a consolidated loss of $16.3 million, compared to a consolidated loss of $22.3 million in FY 2008. The year-over-year change was primarily a result of the significant foreign exchange gain on translation in the value of Canadian and South African assets, liabilities, revenues and expenses converted to US dollars, which strengthened against the South African rand and the Canadian dollar during the year. The higher revenue from increased gold sales also contributed to reducing the size of the consolidated loss in FY 2009. The gain on translation more than offset the decrease in interest income during the year.

Production increased in FY 2009 relative to FY 2008, as the gold plant at the Ezulwini Mine commenced gold production in Q3 2009 and the processing of tailings at Mine Waste Solutions ("MWS") continued to improve. Notwithstanding the progress made, neither the Ezulwini Mine nor MWS were operating at full production capacity during FY 2009.

Revenue for FY 2009 was generated from the sale of gold from the MWS operations and, beginning in Q3 2009, also included a limited amount of revenue from the sale of gold from the Ezulwini Mine. Prior to Q3 2009, the Ezulwini Mine was still in a ramp-up phase and did not achieve commercial levels of production. Consequently, results from the mining operations at the Ezulwini Mine were only included in the consolidated results for the second half of FY 2009, but since the mine had not yet achieved full production capacity, this operation generated a substantial loss due to the mine's fixed operating costs being spread over a limited amount of early-stage production. Gross profit from MWS increased year over year by 309% as a result of increased throughput and gold sales, but was not sufficient to offset the negative operating results from the Ezulwini Mine. The Company had no uranium production during FY 2008 or FY 2009.

Gordon Miller, First Uranium's President and Chief Executive Officer commented, "While not yet recording positive cash flow and earnings, we are encouraged that our financial performance is headed in the right direction and reflects our status as a gold producer at both operations and that, with the startup of uranium production, the majority of our capital expenditures at the Ezulwini Mine are now behind us. We expect that operating profit and cash flow will benefit from the completion of the significant capital expenditure programs at the Ezulwini Mine in FY 2009 and at MWS in FY 2010."

Financial Overview ------------------ ------------------------------------------------------------------------- Q4 2009 Q4 2008 FY 2009 FY 2008 ------------------------------------------------------------------------- The Ezulwini Mine Tonnes hoisted (000s) 29 - 127 - Tonnes milled (000s) 109 18 233 46 Ounces of gold sold(a) 4,267 2,680 10,802 7,735 Average selling price per ounce ($) 917 940 910 869 Average cost per ounce produced and sold 2,069 - 1,933 - Average Cash Cost per ounce(b) 2,032 - 1,919 - ------------------------------------------------------------------------- MWS Tonnes reclaimed (000s) 1,693 1,592 6,995 4,053 Average gold recovery grade (grams/tonne) 0.19 0.28 0.19 0.22 Total ounces of gold reclaimed 10,513 7,289 43,099 28,192 Total ounces of gold sold 10,417 7,263 42,857 28,094 Average selling price per ounce ($)(b) 948 876 881 763 Average cost per ounce reclaimed ($) 412 489 418 590 Average Cash Cost per ounce reclaimed ($)(c) 379 458 397 535 ------------------------------------------------------------------------- Summary of Consolidated Financial Results (in thousands of dollars, except per share amounts) Revenue - Ezulwini Mine(a) 3,915 - 9,825 - - MWS(c) 9,872 6,360 37,771 21,429 ------------------------------------------- 13,787 6,360 47,596 21,429 ------------------------------------------- Cost of sales (including amortization) - Ezulwini Mine(a) (8,829) - (20,883) - - MWS(c) (4,288) (3,550) (17,933) (16,580) ------------------------------------------- (13,117) (3,550) (38,816) (16,580) ------------------------------------------- Gross (loss) profit - Ezulwini Mine (4,914) - (11,058) - - MWS 5,584 2,810 19,838 4,849 ------------------------------------------- 670 2,810 8,780 4,849 ------------------------------------------- Operating loss(d) (5,668) (8,512) (17,247) (18,454) Loss for the period (10,722) (26,871) (16,342) (22,347) Basic and diluted loss per common share (0.08) (0.21) (0.12) (0.18) Cash flow (utilized in) generated from operations 411,005 (313,897) (11,745) 6,007 Cash outflow from investing activities (36,913) (36,795) (211,896) (111,806) Cash inflow from financing activities 120,907 215 170,907 131,624 ------------------------------------------------------------------------- Notes: (a) As of Q3 2009, the gold processing plant at the Ezulwini Mine was regarded as ready for commercial use from an accounting perspective, notwithstanding the fact that the plant was operating at considerably less than capacity during these early days of production. Accordingly, from the beginning of Q3 2009, the revenues and related costs derived from the gold processing plant were included in the Company's financial results. Prior to Q3 2009, the costs of production from the Ezulwini Mine were capitalized and related proceeds of sales credited against capital. (b) Pursuant to an agreement entitling Gold Wheaton (Barbados) Corporation to purchase 25 percent of the MWS gold production (the "Gold Stream Transaction"), as further described in the Management's Discussion and Analysis for the period ending March 31, 2009 ("FY 2009 MD&A)", the ounces delivered by MWS into the Gold Stream Transaction during Q4 2009 were accounted for in revenue at the gold spot rate per ounce at the time of delivery. (c) Cash cost per ounce is defined as cost of sales divided by ounces of gold sold. Total cash costs exclude amortization expense and inventory purchase accounting adjustments. For further information on this non-GAAP performance measure see page 8 of the Company's FY 2009 MD&A. (d) This is a non-GAAP measurement. Operating loss is loss before interest income, interest and accretion expenses, foreign exchange gains and income tax charges. -------------------------------------------------------------------------

The Ezulwini Mine generated revenue of $3.9 million from 4,267 ounces of gold sold at an average selling price of $917 per ounce during Q4 2009. During FY 2009 the Ezulwini Mine generated revenue of $9.8 million from 10,802 ounces of gold sold at an average selling price of $910 per ounce. The revenues and related costs derived from the gold processing plant were included in the Company's financial results beginning Q3 2009.

As mine production was in the early stages of development and management had decided to focus on the completion of the refurbishment of the shaft, the time available for active mining was limited so that the Ezulwini Mine recorded reduced tonnages and higher than planned Cash Costs (as defined in note (b) to the table above) of $2,032 per ounce in Q4 2009 and $1,919 per ounce in FY 2009. Consequently the Ezulwini Mine incurred a gross loss of $4.9 million in Q4 2009 and $11.1 million in FY 2009, respectively. It is anticipated that the high unit costs will decrease and operating and financial performance will improve significantly as the underground mining, development and production activities increase.

In Q4 2009, the Ezulwini Mine sold 4,267 ounces of gold, contributing to the 10,082 ounces of gold sold during FY 2009, compared to a plan of 19,001 ounces. The lower than planned gold sales were primarily due to limited mining activity and the processing of the low-grade surface stockpiles, while the shaft rehabilitation work was being completed.

At MWS, the Company achieved 94.3% of its gold sales forecast during FY 2009 and showed significant improvement in its financial results. Gold sold by MWS in FY 2009 was 42,857 ounces compared to a plan of 45,461 ounces. Decreased throughput, grade and recovery during Q4 2009 compared to Q3 2009 were primarily the result of lower feed grade and higher clay content, combined with intermittent work stoppages due to unusually severe thunderstorms during the rainy season.

MWS generated $9.9 million of revenue from 10,417 ounces of gold sold at an average selling price of $948 per ounce in Q4 2009 compared to $6.4 million from 7,263 ounces of gold sold at an average selling price of $876 per ounce in Q4 2008. During FY 2009, MWS generated $37.8 million of revenue from 42,857 ounces of gold sold at an average selling price of $881 per ounce compared to $21.4 million from 28,094 ounces of gold sold at an average selling price of $874 per ounce in FY 2008. Pursuant to the Gold Stream Transaction, the ounces delivered by MWS into the contract during Q4 2009 were accounted for in revenue at the gold spot rate per ounce at the time of delivery and the proceeds from these ounces were used to settle against a derivative liability. If the ounces delivered into the Gold Stream Transaction were recognized at $400 per ounce as per the agreement, then the average selling price would have been $815 per ounce.

A total of 43,099 ounces of gold were produced at MWS in FY 2009 at an average Cash Cost of $397 per ounce compared to 28,192 ounces of gold produced during FY 2008 at an average Cash Cost of $535 per ounce. The increased revenues as well as the reduction in operating costs at MWS (despite the inclusion of $1.7 million of costs related to the Gold Stream Transaction) resulted in the significant increase in gross profit from tailings processed at MWS from $4.8 million in FY 2008 to $19.8 million in FY 2009.

At the end of FY 2009, First Uranium had total assets of $566.5 million, total liabilities of $296.4 million and shareholders' equity of $270.1 million. The Company had cash and cash equivalents of $112.0 million compared to $164.7 million at the end of FY 2008. The Company currently holds its funds in cash and bank-sponsored guaranteed investment certificates with Canadian and South African banks. The decrease in cash and cash equivalents from the end of FY 2008 to the end of FY 2009 was the net result of $211.3 million of cash utilized during FY 2009 on capital expenditures for the ongoing development of the Company's two mining operations partially offset by the $170.9 million from financing activities.

The cash utilized in operating activities during FY 2009 was primarily attributable to the overall increase in operating costs, which more than offset the cash generated from gold sales. The cash generated from operating activities during FY 2008 was mainly the result of the net interest earned on cash balances during the year and the payment by associate company, Simmer and Jack Mine, Limited, of an outstanding receivable.

In February 2009, the Company raised net proceeds of $47.6 million from a private placement of 20.5 million units at Cdn$3.00 per unit, each unit comprised of one common share and one-half of a common share purchase warrant. In March, 2009, the Company also received the gross amount of $75 million as the second tranche payment pursuant to the Gold Stream Transaction.

Operational Overview -------------------- During Q4 2009, First Uranium: - at the Ezuwlini Mine, milled 108,622 tonnes of ore at an average recovered grade of 1.22 grams of gold per tonne, producing 4,267 ounces of gold; - at MWS treated a total of 1.7 million tonnes of tailings through the gold plant at an average recovered grade of 0.19 grams of gold per tonne, producing a total of 10,513 ounces of gold at a Cash Cost of $379 per ounce; - installed and connected 10 MW of diesel-fired electrical power generators at the Ezulwini Mine and installed a 30 MW power plant at MWS; and - in line with the accelerated schedule, completed key elements of the rehabilitation of the Ezulwini Mine shaft, which allowed the shaft to be dedicated entirely to the development and mining of the Middle Elsburg and Upper Elsburg ore bodies. Since the beginning of FY 2009, First Uranium focused on: - operating safely; - rehabilitating the Ezulwini Mine main shaft, with full utilization by Q4 2009; - improving the confidence in the Ezulwini Mine's estimated mineral resource; - hoisting of uranium ("U(3)O(8)") and gold ("Au") ore from underground; - constructing and commissioning the Ezulwini Mine's gold plant by Q2 2009; - constructing and commissioning the Ezulwini Mine's uranium plant by Q1 2010; - implementing solutions to more effectively mine the clay content in the MWS tailings; - permitting of a single site for tailings deposition at MWS; - completing the upgrade to the existing MWS gold plant to increase its capacity; - commencing the construction of the second gold plant module and the first two uranium plant modules at MWS; - installing stand-by power generation at the Ezulwini Mine and a power plant at MWS to ensure a backup supply of electrical power; - updating technical reports for both operations; - completing financings to fund the Company's capital expenditures, accelerate the implementation of a pressure leach circuit at MWS and for potential consolidation opportunities; and - exploring growth opportunities in North America and South Africa. Subsequent to the end of FY 2009: - the uranium plant at the Ezulwini Mine completed its final commissioning process and began to produce ammonium diuranate ("yellowcake"), with the intent to make the first shipment to the local calcining plant enroute to conversion and enrichment, and - the Company completed a bought deal equity financing (the "Bought Deal") on June 1, 2009 and raised gross proceeds of Cdn$106.8 million on the issuance of 15,250,000 common shares at a price per share of Cdn$7.00. The Company also granted an over-allotment option to purchase an additional 2,287,500 common shares at Cdn$7.00 exercisable in whole or in part, within 30 days of the closing of the Bought Deal. Outlook -------

"Our primary focus is to develop more working areas and increase the amount of ore hoisted from underground at the Ezulwini Mine and to commission the remaining gold and uranium plants at Mine Waste Solutions," added Gordon Miller. "Although we have made solid progress from when we went public at the end of 2006, we have a significant amount of work to do to complete our current mine plan to produce 7.9 million ounces of gold and 35.8 million pounds of uranium over the life of these two operations."

The Ezulwini Mine

While uranium and gold sales were restricted in the early stages of this mine as a result of delays in the commissioning of the gold and uranium plants and limited mining due to the decision to focus on shaft rehabilitation, the critical elements of that project are now complete and the focus has shifted back to underground mine development and ramping up underground production of mineral-rich ore.

The increase in mine production is expected to be gradual over several years. Until full underground production is reached, the spare plant capacity should allow gold production shortfalls in FY 2009 and uranium production shortfalls caused by the delay in plant commissioning to be recovered by processing ore stockpiles and ore already loaded in the system during commissioning.

MWS

At MWS, management previously estimated that the second gold plant module and the first two uranium plant modules would commence commissioning in Q1 2010 to be completed in Q2 2010. Consistent with that commissioning schedule, the second gold plant module is expected to produce gold on carbon by the end of Q2 2010. Production of yellowcake from the first two uranium modules at MWS, however, is now not expected to commence until Q3 2010 due to delays in project design, which in turn postponed the procurement of construction materials.

In addition, other events have impacted the economics of MWS including: - the revised outlook for metal prices and foreign exchange rates; - the Gold Stream Transaction; and - the decision to accelerate the implementation of the pressure leach circuit.

For the final phase of construction, management has decided to delay portions of the third uranium plant module until such time that higher uranium prices are expected to occur. Management plans to reconfigure the plant design and change the mine plan to achieve approximately 91% of the previously planned life of mine uranium production resulting in a more efficient capital investment program and optimized cash flow profile. The new plan requires an immediate start to the construction of the third gold plant module as well as the third stream of the uranium flotation plant, which will be used to optimize flotation mass pull and thereby uranium grades delivered to the plant. Inception of the third stream of the uranium flotation plant is expected to ensure that planned life of mine gold production will be realized in all material respects. Management also plans to accelerate the change from an atmospheric leach process to a pressure leach process concurrent with the commissioning of the third gold plant module. The acceleration of the pressure leach process is expected to enhance gold recoveries and reduce operating costs significantly.

For the construction and operation of this final phase of the MWS plants management has recently received updated capital and operating cost estimates which were higher than were originally estimated two years ago. The total capital cost of the MWS plants, inclusive of the accelerated pressure leach process and final completion of the third uranium plant is expected to be approximately $451.6 million, of which $129.6 million has been spent to date and $322 million remains to be spent. The consent of South Africa's national power utility, Eskom, to supply power to MWS has reduced the projected operating costs in the short term by reducing the need to generate power on site with diesel generators. However, this has been offset by unexpected price increases, notably cyanide, projected over the life of the project. As a result, the operating cash cost for MWS on a co-product basis is expected to average $319 per ounce of gold and $25 per pound of uranium over the life of the project.

Uranium contracts

Contracts to sell uranium to nuclear utilities are expected to be negotiated by the end of FY 2010, once management is sufficiently satisfied that the Company's uranium plants can produce enough uranium to fulfill these contracts.

Acid

First Uranium's consideration in FY 2009 to construct an acid plant at one of its operations, was prompted by rising prices for sulphuric acid. Recent declines in acid prices have prompted the Company to defer its decision to build an acid plant for the foreseeable future. On May 11, 2009, management entered into a 36-month strategic supply agreement with Petronex (Pty) Ltd for the guaranteed supply of sulphuric acid.

Power

In FY 2010, First Uranium expects to be able to run its operations, including the additional mill at the Ezulwini Mine and the MWS plants that are yet to be commissioned without having to run its backup power system of diesel generators, as power supply from Eskom is sufficient due to the decline in demand by other heavy power consumers in South Africa. The 10 MW leased generators and the four 3.5 MW legacy generators at the Ezulwini Mine are connected and ready to use at a moment's notice. Although tested regularly, the mine has not yet had to use these backup units. Similarly, a 30 MW power plant has been installed at MWS.

Cost expectations

While acid and power costs are expected to be lower than plan in FY 2010, other costs have risen substantially including the cost of other re-agents.

Growth opportunities

First Uranium's primary focus is on the completion of the capital projects and increasing production at its existing operations. Beyond that, the Company has identified several avenues of growth including acquisition of uranium mines in North America and regional consolidation in South Africa. In North America, the Company continues to assess uranium projects based on certain criteria including being within two to three years of commencing production, low-cost and accretive. In South Africa, the Company is seeking and assessing synergistic and/or strategic acquisitions and/or partnerships. At the same time, several South African projects in close proximity to the Company's operations are becoming more attractive, thus shifting the emphasis of First Uranium's growth agenda.

Technical Disclosure

All updates to the technical disclosure in this news release relating to the MWS operation has been reviewed and approved by James Fisher, EVP Corporate Development of First Uranium. Mr. Fisher is a Chartered Engineer, a Fellow of The Institute of Materials, Minerals and Mining, a member of the South African Institute of Mining and Metallurgy and a "qualified person" under NI 43-101 with regard to these updates.

Financial Results: Release and Conference Call

First Uranium will conduct a conference call with investors to discuss the information in this news release at 10 a.m. local Toronto time and 4 p.m. local Johannesburg time on Wednesday, June 17, 2009. The conference call will be available simultaneously to all interested analysts, investors and media.

Callers may dial 1 800 319-4610 (Canada and the US) or 0800 981 705 (South Africa). Callers from other international locations may call +1 604 638-5340. The call will be webcast at http://services.choruscall.com/links/firsturanium090617.html and available for replay shortly after the call for 90 days.

A telephone replay of the conference call will be available for 30 days. To access the replay, callers may dial 1 800 319-6413 (Canada and the US). Callers from other international locations may access the replay by dialing +1 604 638-9010 (Canada). Access to the replay will require the code 2128, followed by the number sign.

Cautionary Language Regarding Forward-Looking Information

This news release contains certain forward-looking statements. Forward-looking statements include but are not limited to those with respect to costs of production, capital expenditures, price of uranium and gold, supply and price of sulphuric acid, the availability and price of electrical power, the estimation of mineral resources and reserves, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs and timing of development of new deposits, success of exploration activities, permitting time lines, currency fluctuations, requirements for additional capital, availability of financing on acceptable terms, government regulation of mining operations, environmental risks, unanticipated reclamation expenses and title disputes or claims and limitations on insurance coverage. In certain cases, forward-looking statements can be identified by the use of words such as "goal", "objective", "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", or "believes" or variations of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of First Uranium to be materially different from any future results, performance or achievement expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, the actual results of current exploration activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, possible variations in grade and ore densities or recovery rates, failure of plant, equipment or processes to operate as anticipated, accidents, labour disputes or other risks of the mining industry, delays in obtaining government approvals or financing or in completion of development or construction activities, risks relating to the integration of acquisitions, to international operations, to prices of uranium and gold. Although First Uranium has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. It is important to note, that: (i) unless otherwise indicated, forward-looking statements indicate the Company's expectations as at the date of this news release; (ii) actual results may differ materially from the Company's expectations if known and unknown risks or uncertainties affect its business, or if estimates or assumptions prove inaccurate; (iii) the Company cannot guarantee that any forward-looking statement will materialize and, accordingly, readers are cautioned not to place undue reliance on these forward-looking statements; and (iv) the Company disclaims any intention and assumes no obligation to update or revise any forward-looking statement even if new information becomes available, as a result of future events or for any other reason. In making the forward-looking statements in this news release, First Uranium has made several material assumptions, including but not limited to, the assumption that: (i) operating and capital cost estimates, metal prices, exchange rates and discount rates applied in the preliminary economic assessment for the Ezulwini Mine and the prefeasibility study for MWS are achieved; (ii) approvals to transfer or grant, as the case may be, mining rights or prospecting rights will be obtained; (iii) consistent supply of sufficient power will be available to develop and operate the projects as planned; (iv) mineral reserve and resource estimates are accurate; (v) the technology used to develop and operate its two projects has, for the most part, been proven and will work effectively; (vi) that labour and materials will be sufficiently plentiful as to not impede the projects or add significantly to the estimated cash costs of operations; (vii) that Black Economic Empowerment ("BEE") investors will maintain their interest in the Company and their investment in the Company's common shares to a sufficient level to continue to support the Company's compliance with 2014 BEE requirements; and (viii) that the innovative work on stabilizing the main shaft at the Ezulwini Mine will be successful in maintaining a safe and uninterrupted working environment until 2024.

About First Uranium Corporation

First Uranium Corporation (TSX:FIU, JSE:FUM) is focused on its goal of becoming a significant 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 in South Africa. First Uranium also plans to grow production by pursuing value-enhancing acquisition and joint venture opportunities in South Africa and elsewhere.

First Uranium Corporation 1240-155 University Avenue, Toronto, ON Canada M5H 3B7 www.firsturanium.com

SOURCE First Uranium Corporation

Source: PR Newswire

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