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First Uranium Announces Financial Results For the Three Months Ended June 30, 2010

August 5, 2010
        Management Discussion & Analysis is appended to this release.
            For Financial Statements see the Company's website at
                            www.firsturanium.com.

               All amounts in US dollars unless otherwise noted

    Summary

    -   Mine Waste Solutions revenue increased 131% over Q1 2010
    -   Ezulwini Mine revenue increased 435% over Q1 2010
    -   Gross profit totaled $6.8 million, up from loss of $3.9 million in Q1
        2010
    -   Net loss totaled $12.0 million, versus loss of $33.3 million in Q1
        2010
    -   Cash reserves totaled $102.6 million at June 30, 2010

TORONTO and JOHANNESBURG, Aug. 5 /PRNewswire-FirstCall/ – First Uranium Corporation (TSX:FIU, JSE:FUM) (“First Uranium” or “the Company”) today announced it’s financial results for the three months ended June 30, 2010 (“Q1 2011″).

Revenue generated by the Company’s two operations in Q1 2011 totaled $39.7 million, up from $12.9 million during the three months ended June 30, 2009 (“Q1 2010″). The Mine Waste Solutions (“MWS”) tailings operation accounted for revenue of $22.4 million, an increase of 131% from Q1 2010. The gain principally resulted from a 65% increase in gold production made possible by a second gold plant module being in operation. At the Ezulwini underground mine, revenue increased by 435% to $17.3 million. This gain was driven by increased production, grades and improved efficiencies.

Table 1 summarizes financial results of Q1 2011. Data from Q1 2010 has been included for comparison.

    Table 1 - Consolidated Financial Results

    -------------------------------------------------------------------------
            Operational Summary                Q1 2011    Q1 2010    %Change
    -------------------------------------------------------------------------
    MWS
    Average gold selling price per ounce        $1,064       $905        18%
    Average cash cost per ounce of gold
     sold(a)                                      (449)      (338)      (33%)
    Average cost per ounce sold                   (515)      (367)      (40%)
    -------------------------------------------------------------------------
    Ezulwini Mine
    Average gold selling price per ounce         1,197        957        25%
    Average cash cost per ounce of gold
     sold(a)                                    (1,430)    (3,545)       60%
    Average cost per ounce of gold sold         (1,545)    (3,818)       60%
    Average uranium selling price per pound         41          -        n/a
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
             Financial Summary
    -------------------------------------------------------------------------
    Revenue                                     39,661     12,895       208%
    -------------------------------------------------------------------------
    MWS                                         22,357      9,662       131%
    Ezulwini Mine                               17,304      3,233       435%
    -------------------------------------------------------------------------
    Cost of sales (excluding amortization)     (29,946)   (15,584)       92%
    -------------------------------------------------------------------------
    MWS                                         (9,434)    (3,610)     (161%)
    Ezulwini Mine                              (20,512)   (11,974)      (71%)
    -------------------------------------------------------------------------
    Amortization                                (2,962)    (1,236)     (140%)
    -------------------------------------------------------------------------
    MWS                                         (1,391)      (312)     (346%)
    Ezulwini Mine                               (1,571)      (924)      (70%)
    -------------------------------------------------------------------------
    Gross profit (loss)                          6,753     (3,925)      272%
    -------------------------------------------------------------------------
    MWS                                         11,532      5,740       101%
    Ezulwini Mine                               (4,779)    (9,665)       51%
    -------------------------------------------------------------------------
    Other income                                   776        280       177%
    Other expenditures(b)                      (10,351)    (6,799)      (52%)
    -------------------------------------------------------------------------
    Operating loss(c)                           (2,822)   (10,444)       73%
    Investment income                              203        706       (71%)
    Foreign exchange gain (loss)                 3,891    (16,408)      124%
    Accretion expense on asset retirement
     obligations                                  (388)      (492)       21%
    Fair value loss on derivative liabilities   (4,022)      (477)     (742%)
    Interest and accretion expenses             (8,605)    (3,558)     (142%)
    -------------------------------------------------------------------------
    Loss before income taxes                   (11,743)   (30,673)       62%
    Income tax charge                             (282)    (2,591)       89%
    -------------------------------------------------------------------------
    Loss for the period                        (12,025)   (33,264)       64%
    Other comprehensive loss                       (32)         -        n/a
    -------------------------------------------------------------------------
    Comprehensive loss for the period          (12,057)   (33,264)       64%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Loss per common share                       $(0.07)    $(0.22)       68%
    -------------------------------------------------------------------------

    Notes:

    (a) 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 Financial
        Statements.
    (b) Other expenditures include general, consulting and administrative
        expenditures, pumping feasibility and rehabilitation costs, stock-
        based compensation and non-production related amortization. See page
        3 to the Financial Statements for detail.
    (c) This is a non-GAAP measurement. Operating loss is loss before
        interest income, interest and accretion expenses, fair value gain or
        loss on derivative liability, foreign exchange gain or loss on
        translation and income tax charges. See page 3 to the Financial
        Statements for more detail.

First Uranium’s gross profit from operations totaled $6.8 million, a substantial improvement over the loss of $3.9 million in Q1 2010. The turnaround was primarily attributable to additional profits generated from the second gold module at MWS, together with reduced losses at Ezulwini resulting from improved gold production during the ramp-up phase.

The Comprehensive loss for Q1 2011 was $12.1 million (7 cents/share), compared to a loss of $33.3 million (22 cents per share) in Q1 2010.

First Uranium ended the quarter with cash and cash equivalents totaling $102.6 million, up from $10.2 million at March 31, 2010. The increase resulted from the Company’s recapitalization initiative, concluded during Q1 2011. The initiative saw a total of $141.5 million of cash raised (net of transaction costs) through an offering of secured convertible notes due March 31, 2013. Debt at June 30, 2010 totaled $308.7 million, up from $169.5 million at March 31, 2010.

In addition to the Cdn$150 million Notes issued, the Company settled its $22.6 million outstanding facility with Simmer & Jack (including accrued and unpaid interest) with the issue of 167,812 Rand Notes to Simmer & Jack and also settled the completion penalty obligation to GW pursuant to the MWS Gold Stream Transaction with the issuance of 14 million common shares in First Uranium valued at $18.2 million to GW and a commitment by the Corporation to complete construction of the third gold plant module at MWS and satisfaction of the technical completion tests prior to September 1, 2011.

Correction

Subsequent to the news release of First Uranium’s Q1 2011 production dated July 29, 2010, an error was found in the indicative Net Present Value (NPV) reported in Table 3 of the release. The error was in the calculation of the updated NPV for the indicative Ezulwini LOM at both sets of commodity prices. The NPV using a discount rate of 8% for the Ezulwini LOM under the column titled “March 2010” was correctly stated at $437 million. The updated NPV for the indicative Ezulwini LOM plan under the column titled “July 2010 at March 2010 consensus commodity prices” should have been $331 million, and in the last column the NPV should have been $586 million using the latest consensus commodity prices. This error did not have an impact on any other information provided in the news release or updated LOM. We apologize for any inconvenience, and an amended spread sheet is available on our website.

Outlook

First Uranium’s new management and board of directors, which were appointed in April, 2010, are implementing a low-cost growth strategy that seeks to profitably expand output at both the Company’s operations. The strategy was approved following the completion of a wide-ranging initiative aimed at optimization of costs across the Company. This new strategy is focused on preserving First Uranium’s cash reserves, while enabling the Company to execute on its capital program and achieve business milestones.

At MWS, management anticipates that remaining capital program, comprising the third gold plant module and new tailings storage facility plus adjoining infrastructure, will be concluded by May 2011. Certain construction contracts have been restructured to fixed price contracts with fixed timelines to manage project costs and schedules.

“The aim of our growth plan at MWS is to continue profitable growth while reducing peak funding requirements, and to meet the GW completion tests without compromising project sustainability or efficiency,” said Deon van der Mescht, President and CEO.

First Uranium has also completed a new ramp-up plan for the Ezulwini Mine. The program calls for incremental production build-up of approximately 320 ounces (10 kilograms) of gold per month until the end of FY 2013, requiring development of an additional three panels available for production per month to be added to production.

On the basis of the plan for year one (FY 2011), management expects Ezulwini to be cash flow positive after the completion of capital expenditures in Q4 2011 at current economic assumptions.

“While our plan for Ezulwini is ambitious and challenging,” said Mr. van der Mescht. “we believe it’s also realistic and achievable, and it’s a top priority for the Company.”

He added that current operations and capital programme are expected to be funded with a combination of operating cash flow and cash reserves.

Technical Disclosure

All technical disclosure in this news release relating to the Ezulwini Mine has been prepared in accordance with National Instrument 43-101 by or under the supervision of Mark Glasspool, an employee of the Company who is a professional engineer and is a “qualified person” under NI 43-101.

All technical disclosure in this news release relating to MWS has been prepared in accordance with National Instrument 43-101 by or under the supervision of Jim Fisher, an employee of the Company, who is a Chartered Engineer and is a “qualified person” under NI 43-101.

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 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 including, without limitation, statements regarding the timing and amount of estimated future production, processing and development plans and future plans and objectives of First Uranium are forward-looking statements (or forward-looking information) that involve various estimates, assumptions, risks and uncertainties. For more details on these estimates, assumptions, risks and uncertainties, see the Company’s most recent Annual Information Form 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

    FIRST URANIUM CORPORATION

    MANAGEMENT'S DISCUSSION AND ANALYSIS
    of the financial results
    for the three months ended
    June 30, 2010

Management’s discussion and analysis of the unaudited consolidated financial condition and results of operations for the three months ended June 30, 2010

This Management’s Discussion and Analysis (“MD&A”) of the consolidated financial position and results of operations reviews the activities, unaudited consolidated results of operations and financial condition of First Uranium Corporation and its subsidiaries (“First Uranium” or the “Corporation”) as at and for the three months ended June 30, 2010, together with certain trends and factors that are expected to have an impact in the future. The following abbreviations are used to describe the periods under review throughout this MD&A:

    -------------------------------------------------------------------------
    Abbreviation   Period                 Abbreviation   Period
    -------------------------------------------------------------------------
    Q1 2010        April 1, 2009 -        Q1 2011        April 1, 2010 -
                    June 30, 2009                         June 30, 2010
    Q2 2010        July 1, 2009 -
                    September 30, 2009
    Q3 2010        October 1, 2009 -      FY 2010        April 1, 2009 -
                    December 31, 2009                     March 31, 2010
    Q4 2010        January 1, 2010 -      FY 2011        April 1, 2010 -
                    March 31, 2010                        March 31, 2011
    -------------------------------------------------------------------------

This MD&A is intended to supplement and complement the unaudited consolidated financial statements for the three months ended June 30, 2010 and the notes thereto (collectively the “Financial Statements”) which have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”). Information contained in this MD&A is current as at August 5, 2010, unless otherwise indicated.

The reporting currency for the Corporation is the US dollar, and all amounts in the following discussion are in US dollars (“$”), except where otherwise indicated.

This MD&A includes certain forward-looking statements. Please read the cautionary note at the end of this document.

Business Overview

First Uranium Corporation has been focused on becoming a significant, low- cost producer of gold and uranium. Both the Ezulwini Mine and MWS are located in South Africa.

On April 26, 2010, the Corporation concluded a private placement offering (the “Offering”) of Cdn$150 million in secured convertible notes due March 31, 2013 (the “Notes”). The Notes consist of Cdn$40 million in South African Rand (“ZAR”) denominated Notes issued by MWS (the “Rand Notes”) and Cdn$110 million in Canadian dollar (“Cdn$”) denominated Notes issued by First Uranium (the “Canadian Notes”).

In connection with the Offering and in addition to the Cdn$150 million Notes issued, Simmer and Jack Mines, Limited (“Simmer & Jack”) exchanged the $22.6 million outstanding facility with Simmer & Jack (including accrued and unpaid interest) for an equivalent value of Rand Notes (see Related Party Transactions section in this MD&A).

Also in connection with the Offering, the Corporation settled the completion penalty obligation to GW pursuant to the MWS Gold Stream Transaction with the issuance of 14 million common shares in First Uranium valued at $18.2 million to GW and a commitment by the Corporation to complete construction of the third gold plant module at MWS and satisfaction of the technical completion tests prior to September 1, 2011 (see Commitments and Contingencies section in this MD&A).

Changes to management and the board of directors were conditions of the Offering. These changes included the appointment of Deon van der Mescht, formerly CEO of Simmer & Jack, as Interim President and Chief Executive Officer (“CEO”) on March 16, 2010. The board was restructured on closing of the Offering with the resignation of three incumbent directors and the appointment of three nominees of Simmer & Jack and one nominee from GW.

The Corporation’s common shares and 4.25% senior unsecured convertible debentures (the “Debentures”) are listed on the Toronto Stock Exchange (the “TSX”). In addition, the common shares are listed on the Johannesburg Stock Exchange (the “JSE”). The Corporation has applied to list the Canadian Notes on the TSX after the expiry of a four-month hold period dating from the closing in escrow of the Notes on April 8, 2010. No assurance can be given that the TSX will accept the Canadian Notes for listing on the exchange.

Summary of Quarterly Results

The table below sets out selected financial data for the periods indicated (as derived from First Uranium’s consolidated financial statements):

    -------------------------------------------------------------------------
                                               Basic &
    Fiscal Quarters                   (Loss)   diluted
    Ended (thousands             income for      (loss)            Long-term
    of dollars, except            the three   earnings      Total      liabi-
    per share amounts)   Revenue     months  per share     assets     lities
    -------------------------------------------------------------------------
    June 30, 2010         39,661    (12,025)     (0.07)   783,847   (429,531)
    March 31, 2010        28,561    (26,041)     (0.14)   684,643   (287,785)
    December 31, 2009     31,979    (14,432)     (0.09)   695,581   (264,446)
    September 30, 2009    19,025    (18,441)     (0.11)   658,989   (252,591)
    June 30, 2009         12,895    (33,264)     (0.22)   640,672   (245,800)
    March 31, 2009        13,787    (10,722)     (0.08)   566,472   (239,162)
    December 31, 2008     16,458      1,281       0.01    439,721   (159,396)
    September 30, 2008    10,546     (1,106)     (0.01)   395,188   (132,817)
    -------------------------------------------------------------------------

Market Overview

Gold

Gold price volatility remained high in Q1 2011, with the price ranging between $1,124 – $1,261 per ounce during the quarter. The average market price per ounce for Q1 2011 was $1,196.74 compared to $1,109 for Q4 2010. The gold spot price per ounce was $1,244 at the end of Q1 2011 and $1,192.5 at August 5, 2010.

Uranium

According to an industry source, the Ux Consulting Company, LLC (“UxC”), the spot price per pound for uranium ranged between $40.75 and $41.50 during Q1 2010 and the term price, that at which most supply contracts are completed, started Q1 2011 at $58 per pound and ended the quarter at $58 per pound. As of August 5, 2010, the uranium spot price per pound was $46 and the term price was $60. The Corporation currently does not have any medium to long-term uranium contracts in place and therefore sells uranium at the spot price per pound on date of delivery.

Currency exchange rates

During Q1 2011, in US dollar terms the ZAR traded in a range of $0.13 – $0.14 per ZAR, averaging $0.13 and closed at $0.13. Relative to the US dollar, the Cdn$ traded in a range of Cdn$0.93 – Cdn$1.00, averaging Cdn$0.97 and closed weaker at Cdn$0.95. In Cdn$ terms the ZAR traded in a range of Cdn$0.13 – Cdn$0.14, averaging Cdn$0.14 and maintained its position at the end of Q1 2011.

At June 30, 2010, First Uranium held 72% of its cash in Cdn$, 25% in ZAR and the balance in US dollars. The funds are primarily held in cash and bank- sponsored guaranteed investment certificates with Canadian and South African banks. As a substantial portion of the cash will be utilized in ZAR to fund the outstanding commitments relating to the capital program at MWS, the movement in the relative values of the currencies continues to have a significant impact on the funding available to finance capital projects and operations.

In Q1 2011, the impact of the US dollar value on the ZAR and Cdn$ denominated costs and on assets and liabilities reported in US dollar terms resulted in a foreign exchange gain on translation, primarily unrealized. The foreign exchange gain on translation in Q1 2011 reflects the significant strengthening of the US dollar against both the Cdn$ and the ZAR over the last two months of the quarter.

Inflation

The Corporation’s operations are subject to inflation. The South Africa inflation rate (Consumer Price Index) declined from 5.1% at the beginning of Q1 2011 to 4.2% at the end of Q1 2011.

Operations Overview

Mine Waste Solutions

The 69% increased tonnage throughput for Q1 2011 compared to Q1 2010 is primarily attributable to the additional production from the second gold plant module. The 84% increased gold production for Q1 2011 compared to Q1 2010 is attributable to the additional production from the second gold plant module along with the improvement in grade and percentage of gold recovered out of the tailings produced from the Buffelsfontein #2 and #4 tailings dams.

During Q1 2011, MWS showed a 65% improvement in gold production compared to the updated technical report released on March 19, 2010, which was based upon the assumption that MWS continued as a one-stream operation due to deposition constraints. The MWS # 5 tailings dam maintained its structural integrity during Q1 2011, enabling MWS to continue to run as a two-stream operation but at a reduced tonnage profile of 975 ktpm. Even at the reduced tonnage profile, MWS increased gold production by 3% compared to the 19,693 ounces of gold produced in Q4 2010 as a result of improved recovery and grades.

The ongoing improvement in the structural integrity of the MWS # 5 tailings dam combined with the Department of Water Affair’s (“DWA”) awarding of the Water User License (“WUL”) to MWS enables further improvement on the production outlook as MWS will increase its production profile from the previously communicated 975 ktpm to 1,200 ktpm, at the start of October 2010. The increased production profile is expected to remain in effect until the commissioning of the TSF and the third module of the gold plant, at which point production will increase from 1,200 ktpm to 1,800 ktpm.

It is anticipated that the remaining capital program comprising the third gold plant module and the new Tailings Storage Facility (“TSF”) at MWS plus adjoining infrastructure, will be concluded by May 2011.

Ezulwini Mine

Q1 2010 was the first quarter during which the mine was 100% focused on underground mine development to accelerate the amount of ore being fed to the gold and uranium plants as the mine only completed its capital intensive projects towards the end of Q4 2009. The mine continued its focus on development, opening-up and equipping throughout FY 2010 to make available additional panels for stoping which allowed production to ramp-up gradually from Q1 2010 to date. During this period the mining crews were more productive and efficient.

The 44% increased tonnes milled for Q1 2011 compared to Q1 2010 indicates the mine’s gradual ramp-up from Q1 2010 to Q1 2011. The significant improvement in ounces produced in Q1 2011 compared to Q1 2010 reflects the increase in tonnes milled, along with the 154% increase in grade as production crews became more productive and new mining areas with better grades were opened up.

While the mine achieved the planned stoping volumes during Q1 2011, the stope-width was undercut by 13cm. This resulted in less tonnes being blasted than planned. Of the tonnes blasted, 17,871 tonnes were not hoisted during the quarter.

The decision to mine better quality gold ore was put into effect by applying a 4.5 g/t cut-off grade in the Upper Elsburg gold-only section and a 3.0 g/t cut-off grade in the Middle Elsburg gold and uranium section. This change, along with the 3% increase in tonnes milled, has resulted in an overall improvement of 44% in recovered grades and an 88% improvement in gold bullion quantity produced in Q1 2011 compared to Q4 2010.

The average recovered grade of 3.30 g/t compares to a planned average recovery grade of 3.36 g/t planned for during Q4 2010. Similarly, blasted grades were 0.07 g/t lower than expected. These results suggest that while recoveries are not yet at an optimal level, factors affecting the mine call factor are now better understood and can be addressed going forward.

The uranium plant was idle during April 2010 due to failure of the rubber liners on the uranium leach tank and the CCD thickeners, at the end of the Q4 2010, which had to be repaired during April 2010 and resulted in the 12% decrease in production of yellowcake in Q1 2011 compared to the 22,488 pounds of yellowcake produced in Q4 2010. The uranium plant resumed production at the beginning of May 2010, resulting in the production of yellowcake during Q1 2011. The uranium plant was only commissioned in Q2 2010, therefore no yellowcake was produced during Q1 2010. No yellowcake was calcined during either Q1 2011 or Q1 2010.

Financial Review

At MWS, the overall increase in revenues and cost of sales for Q1 2011 compared to Q1 2010 was mainly attributable to additional production through the second gold plant module that was commissioned in Q1 2010 along with an improvement in gold grades and recovery.

The Q1 2011 ounces of gold sold increased compared to Q1 2010, however, the ounces delivered to GW in Q1 2011 were lower compared to Q1 2010 due to MWS having to settle 2,460 ounces of gold under delivered in relation to the Q4 2009 guaranteed ounces along with the Q1 2010 ounces during Q1 2010. For Q1 2011, the revenue related to ounces delivered into the MWS Gold Stream Transaction comprised of revenue from the ounces delivered at $400 per ounce plus deferred revenue amortized for the quarter. For Q1 2010, MWS delivered the required ounces to settle the 2009 Guaranteed Ounces, which was reflected as settlement of the Derivative Liability at the gold spot price at the time of delivery (see Note 11 to the Financial Statements). The difference in revenue recognition over the comparative periods resulted in lower gold revenue for Q1 2011 compared to Q1 2010 and was also the reason for the average gold selling price per ounce of gold in Q1 2011 being much lower than the average gold spot price per ounce over the comparative period. The average cash received per ounce of gold was $1,017 for Q1 2011 (Q1 2010: $565).

MWS started amortizing the capital costs relating to the second gold plant module at the start of Q4 2010 resulting in higher amortization for Q1 2011 compared to Q1 2010. Although the costs and amortization in Q1 2011 more than offset the increased revenues, the operating margin at MWS still increased by 101% compared to Q1 2010.

At the Ezulwini Mine, gold sales for Q1 2011 increased by 307% compared to Q1 2010 reflecting the increase in production on the mine as well as the improvement in mining efficiencies quarter over quarter. Although the cost of production remains high, it did not increase in direct correlation to revenue for Q1 2011 compared to Q1 2010 due to the mine’s fixed operating costs being spread over higher production compared to Q1 2010 and also resulting in the 51% reduction in losses at the mine for Q1 2011 compared to Q1 2010.

The ounces delivered by the Ezulwini Mine to settle the 2010 Guaranteed Ounces during Q1 2011 were reflected as settlement of the Derivative Liability at the gold spot price at the time of delivery (see Note 11 to the Financial Statements). The average cash received per ounce of gold was $930 per ounce for Q1 2011.

The additional profits generated by MWS from the second gold plant module along with the much lower losses resulting from the activities at the Ezulwini Mine for Q1 2011 compared to Q1 2010 resulted in a consolidated gross profit from operations in Q1 2011 compared to the consolidated loss from operations in Q1 2010.

    Consolidated Operational and Financial Results
    -------------------------------------------------------------------------
    Production Summary                             Q1 2011  Q1 2010  %Change
    -------------------------------------------------------------------------
    MWS
    Tonnes reclaimed (000s)                          3,105    1,835      69%
    Average gold recovery grade (grams/tonne)         0.20     0.18      11%
    Percentage gold recovered                          56%      44%      27%
    Ounces of gold produced                         20,215   11,007      84%
    Ounces of gold sold (total)                     21,008   10,676      97%
    Ounces of gold delivered into MWS Gold Stream
     Transaction                                     4,770    7,460     (36%)
    Average gold selling price per ounce ($)         1,064      905      18%
    Average Cash Cost per ounce of gold sold ($)(a)   (449)    (338)    (33%)
    Average cost per ounce sold ($)                   (515)    (367)    (40%)
    -------------------------------------------------------------------------
    Ezulwini Mine
    Tonnes milled                                  132,963   92,468      44%
    Average gold recovery grade (grams/tonne)          3.3      1.3     154%
    Ounces of gold produced                         14,120    3,794     272%
    Ounces of gold sold (total)                     13,753    3,378     307%
    Ounces of gold delivered into Ezulwini
     Gold Stream Transaction                         5,666        -        -
    Average gold selling price per ounce ($)         1,197      957      25%
    Average Cash Cost per ounce of gold sold ($)(a) (1,430)  (3,545)     60%
    Average cost per ounce sold ($)                 (1,545)  (3,818)     60%
    Pounds of ammonium diuranate ("yellowcake")
     produced                                       19,764        -        -
    Pounds of uranium sold                          20,500        -        -
    Average uranium selling price per pound ($)         41        -        -
    -------------------------------------------------------------------------
    Revenue                                         39,661   12,895     208%
    -------------------------------------------------------------------------
    MWS                                             22,357    9,662     131%
    Ezulwini Mine                                   17,304    3,233     435%
    -------------------------------------------------------------------------
    Cost of sales (excluding amortization)         (29,946) (15,584)     92%
    -------------------------------------------------------------------------
    MWS                                             (9,434)  (3,610)   (161%)
    Ezulwini Mine                                  (20,512) (11,974)    (71%)
    -------------------------------------------------------------------------
    Amortization                                    (2,962)  (1,236)    140%
    -------------------------------------------------------------------------
    MWS                                             (1,391)    (312)   (346%)
    Ezulwini Mine                                   (1,571)    (924)    (70%)
    -------------------------------------------------------------------------
    Gross profit (loss)                              6,753   (3,925)    272%
    -------------------------------------------------------------------------
    MWS                                             11,532    5,740     101%
    Ezulwini Mine                                   (4,779)  (9,665)     51%
    -------------------------------------------------------------------------
    Other income                                       776      280     177%
    Other expenditures(b)                          (10,351)  (6,799)    (52%)
    -------------------------------------------------------------------------
    Operating loss(c)                               (2,822) (10,444)     73%
    Investment income                                  203      706     (71%)
    Foreign exchange gain (loss)                     3,891  (16,408)    124%
    Accretion expense on asset retirement
     obligations                                      (388)    (492)     21%
    Fair value loss on derivative liabilities       (4,022)    (477)   (742%)
    Interest and accretion expenses                 (8,605)  (3,558)   (142%)
    -------------------------------------------------------------------------
    Loss before income taxes                       (11,743) (30,673)     62%
    Income tax charge                                 (282)  (2,591)     89%
    -------------------------------------------------------------------------
    Loss for the period                            (12,025) (33,264)     64%
    Other comprehensive loss                           (32)       -        -
    -------------------------------------------------------------------------
    Comprehensive loss for the period              (12,057) (33,264)     64%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Loss per common share                            (0.07)   (0.22)     68%
    -------------------------------------------------------------------------

    Notes:
    (a) "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
        Corporation's Financial Statements.
    (b) Other expenditures include general, consulting and administrative
        expenditures, pumping feasibility and rehabilitation costs, stock-
        based compensation and non-production related amortization. See page
        3 to the Financial Statements for detail.
    (c) This is a non-GAAP measurement. Operating loss is loss before
        interest income, interest and accretion expenses, fair value gain or
        loss on derivative liability, foreign exchange gain or loss and
        income tax charges. See page 3 to the Financial Statements for more
        detail.

Other income consisted primarily of fees for sludge pumping services to a third party, scrap sales and rental income at the Ezulwini Mine and varies from period to period relative to the pumping activity, sales and occupation (see Note 18 to the Financial Statements).

Other expenditures (as defined in Note (b) to the Consolidated Results of Operations table on page 6) in Q1 2011 were 52% higher compared to Q1 2010 and were mainly attributable to increased pumping costs from increased mining activities at the Ezulwini Mine along with an increase in stock-based compensation resulting from the 5,368,000 stock options and 826,000 restricted stock units granted during Q1 2011 (see Note 16 to the Financial Statements).

Investment income primarily related to interest income earned on cash and cash equivalents invested in short-term deposits with the Corporation’s bankers until required for capital projects or to fund operating costs. The overall lower interest income in Q1 2011 reflected the on average lower cash balances compared to Q1 2010, as well as lower interest rates.

The foreign exchange gain (loss), which was primarily unrealized, resulted from the translation of the value of Canadian and South African denominated assets, liabilities, revenues and expenses into US dollars. The foreign exchange gain on translation in Q1 2011 reflects primarily the strengthening of the US dollar against the Cdn$ and ZAR during the respective period. During Q1 2010 the US dollar weakened against both the ZAR and Cdn$ resulting in the significant foreign exchange loss during this period.

The accretion expense on Asset Retirement Obligations in Q1 2011 mainly decreased compared to its comparative periods as a result of the weaker ZAR compared to the US dollar.

The fair value loss on the derivative liabilities in Q1 2011 related to the movement in fair value on the derivative liability related to the Ezulwini Mine, while the fair value loss in Q1 2010 related to the movement in fair value on the derivative liability related to MWS. In both quarters the fair value loss was driven by a higher gold price at the end of the quarter compared to the gold price at the end of the preceding quarter.

The substantial increase in interest and accretion expenditures compared to Q1 2010 was primarily due to the additional interest and accretion expenses charged on the Notes issued on April 26, 2010 pursuant to the Offering (see Note 20 to the Financial Statements).

The income tax charge in Q1 2011 was derived from the taxable profits generated by MWS during the respective periods offset by the decrease in net deferred tax liability from MWS. The income tax charge in Q1 2010 was attributable to the increase in the profitability from the MWS operations and the net deferred tax liability arising from it.

The lower consolidated loss in Q1 2011 compared to Q1 2010 was attributable to the foreign exchange gain on translation in Q1 2011 compared to a substantial foreign exchange loss in Q1 2010 along with improved results from the operations, partially offset by increased other expenditures and interest and accretion expenditures.

Other comprehensive loss in Q1 2011 was comprised of unrealized losses resulting from decreases in the value of investments included in the asset retirements funds from the end of the previous reporting period.

    Consolidated Financial Position
    Summary Balance Sheet and Key financial ratios
    -------------------------------------------------------------------------
    (thousands of dollars)                     FY 2011    FY 2010   % Change
    -------------------------------------------------------------------------
    Cash and cash equivalents                  102,621     10,177       908%
    Other current assets(a)                     18,611     17,345         7%
    Current liabilities                         55,172    123,728        55%
    Total assets                               783,847    684,643        15%
    Total liabilities                          484,703    411,513       (18%)
    Debt(b)                                    308,709    169,462       (82%)
    Total shareholders' equity                 299,144    273,130        10%
    -------------------------------------------------------------------------
    Key financial ratios:
    Current ratio(c)                            2.20:1     0.22:1
    Debt-to-equity(d)                           1.03:1     0.62:1
    -------------------------------------------------------------------------

    Notes:
    (a) Other current assets include accounts receivable and inventories.
    (b) The liabilities relating to the Debentures and the Notes translated
        to US dollar at the exchange rate at the end of the reporting period
        plus Facility with Simmer & Jack at the end of the reporting period.
    (c) Current assets divided by current liabilities at the end of the
        reporting period.
    (d) Debt divided by total shareholder's equity at the end of the
        reporting period.

Balance sheet review

Total assets were comprised of property, plant and equipment, cash and cash equivalents, inventories, accounts receivable and asset retirement funds.

The 15% increase in total assets since FY 2010 was primarily attributable to the $141.5 million net cash proceeds raised from the Notes issued pursuant to the Offering on April 26, 2010, increase in property, plant and equipment resulting mainly from capital expenditures at MWS and increase in inventories due to increased mining activities at the Ezulwini Mine.

The 18% increase in total liabilities since FY 2010 represented the net movement relating to the $143.6 million debt portion of the Notes issued offset by the settlement of the GW penalty and the Facility with Simmer & Jack pursuant to the terms of the Offering, decreased accounts payable and accrued liabilities due to the settlement of MWS capital commitments and other long outstanding accounts and an increase in future tax liability arising from the increased asset base at MWS during the period.

Off-Balance Sheet Arrangements

The Corporation does not have any off-balance sheet arrangements.

Cash Flows

Cash flows for the three months ended June 30, 2010 are summarized below:

    -------------------------------------------------------------------------
    (thousands of dollars)                     Q1 2011    Q1 2010   % Change
    -------------------------------------------------------------------------
    Cash flows utilized in operating
     activities                                (15,303)   (32,028)       52%
    Cash flows utilized in investing
     activities                                (33,705)   (49,611)       32%
    Cash flows from financing activities       141,452     92,616        52%
    -------------------------------------------------------------------------
    Net increase in cash and cash equivalents
     for the period                             92,444     10,977       742%
    Cash and cash equivalents at beginning
     of period                                  10,177    112,005        91%
    -------------------------------------------------------------------------
    Cash and cash equivalents at end of period 102,621    122,982       (17%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------

The decreased in cash utilized compared to Q1 2010 was primarily due to increased profits generated by MWS and reduced losses incurred by the Ezulwini Mine as discussed under the Financial Review section of this MD&A. The cash utilized in operating activities for Q1 2010 was mainly attributable to the Ezulwini Mine which had limited production during the quarter that was not sufficient to cover the quarter’s operating costs.

During Q1 2011, capital expenditures of $27.5 million were incurred at MWS and $6.1 million at the Ezulwini Mine, respectively. During Q1 2010 capital expenditures of $37.8 million and $11.2 million were incurred at MWS and the Ezulwini Mine, respectively.

The cash from financing activities during Q1 2011 was attributable to $141.5 million net cash received pursuant to the Offering in April 2010. During Q1 2010 $92.6 million net proceeds were raised from a bought deal private placement in June 2009.

Liquidity and Capital Resources

At June 30, 2010, the Corporation had sufficient resources to fund its outstanding commitments, current operational and capital activities and corporate overhead expenses. The Corporation plans to rely, in part, on cash flows generated from the operations to fund the capital expenditure obligations to complete construction and commissioning of the remaining capital projects at MWS.

Use of Proceeds

Inclusive of the initial public offering in December 2006, First Uranium has raised over $784.5 million to date. At the end of Q1 2011, $246.4 million of the funds raised had been utilized at the Ezulwini Mine on the rehabilitation and re-engineering of the mine’s main shaft, the building of the gold and uranium plant and pre-production costs, and $364.0 million of the funds raised had been utilized at MWS primarily on the MWS capital expansion project. The Corporation used $71.5 million to fund costs relating to operating activities at the Ezulwini Mine, which currently still exceeds its cash revenues generated, and general and working capital requirements.

Financial Instruments

First Uranium uses a mixture of cash, long-term debt and shareholders’ equity to maintain an efficient capital structure and ensure adequate liquidity exists to meet the cash needs of its operations. In the normal course of business, the Corporation is inherently exposed to currency and commodity price risk. The Corporation does not currently hedge its exposure to currency or commodity price risk. The Corporation does hold certain derivative instruments that do not qualify for hedge accounting. These non-hedge derivatives are described in note 11 of the Financial Statements. For a discussion of certain risks and assumptions that relate to the use of derivatives, including market risk, market liquidity risk and credit risk, refer to note 26 of the Financial Statements. For a discussion of the methods used to value financial instruments, refer to note 2 of the financial statements for the year ended March 31, 2010.

Commitments and Contingencies

At the end of Q1 2011, the Corporation had $9.8 million of commitments, of which $0.5 million related to the Ezulwini Mine and $9.3 million to MWS. The existing commitments at MWS included $0.9 million relating to the construction and commissioning of the second gold module and the first two uranium modules, $7.3 million relating to the construction of the third gold module, $0.1 million for the construction of the new TSF and $1.0 million on- mine capital requirements.

Pursuant to the Offering, the Corporation settled the completion penalty obligation penalty to GW in respect of the MWS Gold Stream Transaction with the issuance of 14 million common shares in First Uranium valued at $18.2 million to GW and a commitment by the Corporation to complete construction of the third gold plant module at MWS and satisfaction of the technical completion tests prior to September 1, 2011. In the event that the construction and tests are not met by such date, a $1.5 million payment shall be payable by the Corporation to GW on the first day of each of September, October, November and December 2011 unless such tests have been met prior to such date. In the event that these commitments to construction and technical completion are not met prior to December 1, 2011, a remaining penalty of $30 million will be payable, such sum to be settled in cash or in common shares of First Uranium at the election of GW (at the lowest issue price permitted by the rules of the TSX).

On August 4, 2009, Aberdeen International Inc. (“Aberdeen”) filed a claim for $11.4 million against Simmer & Jack and First Uranium (Proprietary) Limited (“FUSA”), a subsidiary of First Uranium, alleging certain breaches of a loan agreement dated March 30, 2006 and as amended by agreement on November 30, 2006 (together the “Loan Agreement”). FUSA was not a party to the Loan Agreement. Simmer & Jack, FUSA and Aberdeen entered into an arrangement agreement (the “Arrangement Agreement”) dated December 20, 2006. Also see Related Party Transactions section in this MD&A in connection with the sale of the Buffelsfontein Tailings by Simmer & Jack to FUSA. The Arrangement Agreement provides for FUSA to pay to Simmer & Jack an amount equal the royalty payable to Aberdeen by Simmer & Jack under the Loan Agreement in respect of the gold produced from the Buffelsfontein Tailings. Of the total amount claimed, Aberdeen asserts that an additional royalty was payable by FUSA for the period October 16, 2008 to December 31, 2008 in the amount of approximately $400,000. FUSA has fulfilled or has caused its obligations to be fulfilled under the Arrangement Agreement and the agreement explicitly states that Aberdeen shall have no recourse to FUSA. Management believes that the claim against FUSA has no merit and that Aberdeen has no recourse to First Uranium or FUSA and as such the Corporation has not made any provision in this regard.

At June 30, 2010, First Uranium had the following contractual obligations:

    -------------------------------------------------------------------------
                                         Payments due by date
    -------------------------------------------------------------------------
                                         3 Months  Between
                                Within 3       to      1-3  After 3
    (thousands of dollars)        Months   a Year    Years    Years    Total
    -------------------------------------------------------------------------
    Debentures                         -    6,081  149,164        -  155,245
    Notes                          6,390    7,006  193,564        -  206,960
    Asset retirement obligations     304      911    2,783   22,517   26,515
    Derivative liabilities         3,492   11,710    8,229        -   23,431
    Purchase obligations           9,777        -        -        -    9,777
    Capital leases                    55      178      584    1,163    1,980
    Operating leases                  48      144      528        -      720
    -------------------------------------------------------------------------
    Total contractual obligations 20,100   23,081  291,916   23,680  358,777
    -------------------------------------------------------------------------

Outlook

During Q1 2011, the Corporation initiated a cost cutting exercise, reducing corporate and non-core costs, to reduce the Corporation’s overall cost base. At the end of July 2010, the Corporation also completed the new Ezulwini Mine ramp-up plan. These initiatives are aimed at preserving First Uranium’s cash reserves, enabling the Company to execute on its capital program and achieve business milestones.

As part of this exercise, management are in the process of moving its corporate office in Johannesburg to the Ezulwini Mine premises. This move will also ensure that management will be able to closely monitor the Ezulwini Mine’s progress on achieving its newly disclosed plan.

Key findings of optimization review – MWS

MWS is performing substantially better than plan, primarily due to the improved stability of its current tailings facility combined with the DWA’s granting of the WUL, which has allowed a significantly higher deposition rate than planned for in March 2010. The aim is to reduce peak funding requirements without compromising project sustainability or efficiency.

    -   Production to increase from 975 ktpm to 1,200 ktpm at the start of
        October 2010
    -   New TSF to be commissioned by May 2011, enabling production increase
        from 1,200 ktpm to 1,800 ktpm
    -   Certain construction contracts restructured to fixed price and fixed
        timeline to manage project costs and schedules

Estimated capital requirements to complete MWS capital program

    -------------------------------------------------------------------------
                                         Total spent   Remainder
                                          at June 30,         of
    (thousands of ZAR)                          2010     FY 2011     FY 2012
    -------------------------------------------------------------------------
    Construction of the second gold and
     uranium plant modules                 1,508,387      35,629      19,361
    Construction of the third gold
     plant module                            577,835     310,873      91,364
    New TSF                                  136,624      92,297           -
    On-mine capital                           14,976      24,620       9,600
    Eskom substations                              -      11,200           -
    -------------------------------------------------------------------------
    Total in ZAR000                        2,237,822     474,619     120,325
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    (thousands of ZAR)                       FY 2013     FY 2014       Total
    -------------------------------------------------------------------------
    Construction of the second gold and
     uranium plant modules                         -           -   1,563,377
    Construction of the third gold
     plant module                                  -           -     980,072
    New TSF                                        -      66,695     295,616
    On-mine capital                            9,600       9,600      68,396
    Eskom substations                              -           -      11,200
    -------------------------------------------------------------------------
    Total in ZAR000                            9,600      76,295   2,918,661
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

The implementation of the pressure leach process is subject to further review.

Key findings of optimization review – Ezulwini Mine

On the basis of the plan for year one (FY 2011), management expects the Ezulwini Mine to be cash flow positive after capital expenditures in Q4 2011 at current commodity prices. The revised production ramp-up plan includes:

    -   Production of 81,000 ounces of gold and 117,000 pounds of uranium in
        FY 2011
    -   Capital expenditures of $15.8 million in FY 2011
    -   Average unit cash costs is anticipated to decrease to $857/oz of gold
        in Q4 2011, averaging at $1,182/oz of gold for FY 2011
    -   Incremental production build-up of approximately 320 ounces
        (10 kilograms) per month from FY 2012 to FY 2013, requiring
        development of an additional three panels per month to be put into
        production
    -   Production ramp-up of two panels per month from FY 2014 onward
    -   Peak production of 309,000 oz gold planned for FY 2019 and
        909,000 lbs uranium in FY 2018

Technical Disclosure

All technical disclosure in this MD&A relating to Ezulwini Mine has been prepared in accordance with National Instrument 43-101 by or under the supervision of Mark Glasspool, an employee of the Company who is a professional engineer and is a “qualified person” under NI 43-101.

All technical disclosure in this MD&A relating to MWS has been prepared in accordance with National Instrument 43-101 by or under the supervision of Jim Fisher, an employee of the Company, who is a Chartered Engineer and is a “qualified person” under NI 43-101.

Related Party Transactions

As of August 5, 2010 Simmer & Jack owned 34.35% of the common shares of First Uranium.

During Q1 2011 the Corporation paid $0.6 million to Simmer & Jack pursuant to the Shared Services Agreement (Q1 2010: $0.8 million). For Q1 2011 $0.4 million of the fees paid to Simmer & Jack were related to technical services provided to the operations that were capitalized (Q1 2010: $0.3 million). For a description of the Shared Services Agreement, see the Corporation’s most recently filed Annual Information Form (“AIF”).

At the end of Q1 2011, the amount payable to Simmer & Jack was $0.4 million compared to $2.5 million payable at the end of FY 2010.

First Uranium has agreed to reimburse Simmer & Jack for 50% of the fees that Simmer & Jack is required to pay to an empowerment company for consulting. During Q1 2011 the Corporation paid $0.06 million to Simmer & Jack in connection with such services (Q1 2010: $0.06 million).

Pursuant to the Buffelsfontein Tailings and Rights Agreement and the Aberdeen Arrangement (Refer to the Corporation’s AIF for more detail), MWS is liable to pay: (i) to Simmer & Jack, an amount equal to the royalty payable by Simmer & Jack to Aberdeen pursuant to the Aberdeen Loan Agreement in respect of gold produced from the Buffelsfontein Tailings, and (ii) to BGM a royalty of 1% of the gross revenue earned by MWS from the sale of uranium, gold, sulphur and other minerals recovered from the processing of the Buffelsfontein Tailings. During Q1 2011 the total royalties and payments, inclusive of the amounts due in respect of the Aberdeen Loan Agreement were $0.5 million (Q1 2010: $0.2 million).

On August 14, 2009, the Corporation finalized a one-year term credit facility of ZAR160 million (the “Facility”) with Simmer & Jack. The Corporation drew down the entire Facility during Q2 2010. The Facility carried interest at the three-month Johannesburg Interbank Agreed Rate (JIBAR) for ZAR denominated loans (currently 7.40%) plus 7% per annum. An arrangement fee of 3% was paid on the Facility amount and the Corporation paid for the legal and other costs relating to the Facility. As at March 31, 2010, the Facility with Simmer & Jack was $22.5 million. The interest accrued on the Facility during Q1 2011 until conclusion of the Offering was $0.2 million.

Pursuant to the Offering, Simmer & Jack subscribed to 296,084 Rand Notes for a cash consideration of Cdn$40 million on April 26, 2010. For Q1 2011, a $2.2 million interest and accretion expense was accrued for relating to Simmer & Jack related Rand Notes. Also pursuant to the Offering, the Facility with Simmer & Jack including the unpaid interest on the Facility ($22.5 million) was settled in full on April 26, 2010 with the issue of 167,812 Rand Notes to Simmer & Jack.

On September 27, 2007, the Board approved a loan in the amount of Cdn$1 million to the President and CEO of First Uranium for the purpose of facilitating his purchase of a family home. The loan was for a term of six years, was unsecured and bore interest at 4% per annum payable monthly in arrears. At the resignation of the CEO in March 2010 and as part of his severance package, the Board agreed to forgive this loan in full. The outstanding loan amount of Cdn$1 million was written off and recognized as an expense in Q4 2010. In addition, a tax amount related to this transaction of $0.4 million was also incurred by the Corporation and recognised as an expense in Q4 2010.

Disclosure Controls and Procedures and Internal Control over Financial Reporting

The CEO and Chief Financial Officer (“CFO”), together with other members of management, have designed the Corporation’s disclosure controls and procedures (“DC&P”) in order to provide reasonable assurance that material information relating to the Corporation and its consolidated subsidiaries would have been known to them and by others within those entities.

Additionally, they have designed internal controls over financial reporting (“ICFR”) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial reporting in accordance with Canadian GAAP. The control framework used in the design of both the DC&P and ICFR is the internal control integrated framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

There have been no significant changes in the design of the Corporation’s internal controls over financial reporting during the three months ending June 30, 2010 that would materially affect, or is reasonably likely to affect, the Corporation’s internal controls over financial reporting.

While the Officers of the Corporation have designed the Corporation’s DC&P and ICFP, they expect that these controls and procedures may not prevent all errors and fraud. A control system, no matter how well conceived or operated, can only provide reasonable, not absolute, assurance that the objectives of the control system are met.

Critical Accounting Policies and Estimates

The accounting policies used in the preparation of the accompanying unaudited consolidated financial statements are consistent with those used in the Corporation’s audited consolidated financial statements for the fiscal year ended March 31, 2010, and described in Note 2 therein, except for the changes in accounting policies described in the following section.

The preparation of these consolidated financial statements in accordance with Canadian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the year. Areas of judgement that have the most significant effect on the amounts recognized in the financial statements are estimation of asset lives, determination of ore reserve estimates, capitalization of exploration and evaluation costs, and identification of functional currencies. Key sources of estimation uncertainty that have a significant risk of causing material adjustments to the carrying amounts of assets and liabilities are the estimation of close-down and restoration costs and the timing of expenditures, the review of asset carrying values and impairment charges and reversals, the estimation of environmental clean-up costs and the timing of expenditures and the recoverability of potential future income taxes. Financial results as determined by actual events could differ from those estimated. Management estimates are also applied in arriving at the useful lives of items of property, plant and equipment and in determining the fair value of stock options.

Changes in accounting policies

There were no changes to the accounting polices used in the preparation of the Corporation’s audited consolidated financial statements for the year ended March 31, 2010.

Future and new accounting standards

The CICA issued the following amendments to the accounting standards for periods beginning on or after April 1, 2011:

Business Combinations/Consolidated Financial Statements/Non-Controlling Interests

In January 2009, the CICA adopted Sections 1582 – Business Combinations, 1601 – Consolidated Financial Statements, and 1602 – Non-Controlling Interests which superseded current Sections 1581 – Business Combinations and 1600 – Consolidated Financial Statement. Section 1625, Comprehensive Revaluations of Assets and Liabilities, has been amended as a result of issuing CICA 1582,1601 and 1602. These amendments will be effective prospectively for comprehensive revaluations of assets and liabilities occurring in years beginning on or after January 1, 2011. The Section 3251, Equity, has been amended as a result of issuing Section 1602 to be adopted by all entities that will adopt Section 1602,

These new sections replace existing guidance on business combinations and consolidated financial statements to harmonize Canadian accounting for business combinations with International Financial Reporting Standards. These sections will be applied prospectively to business combinations for which the acquisition date is on or after April 1, 2011. Earlier adoption is permitted. If the Corporation applies these sections before April 1, 2011, it is required to disclose that fact and apply each of the new sections concurrently. The Corporation is currently evaluating the impact of the adoption of these changes on its consolidated financial statements.

International financial reporting standards (“IFRS”)

IFRS are premised on a conceptual framework similar to Canadian GAAP, however, significant differences exist in certain matters of recognition, measurement and disclosure. While adoption of IFRS will not change the cash flow of the Corporation, the adoption of IFRS will result in changes to the reported financial position and results of operations of the Corporation. The Corporation identified a number of key areas where differences between Canadian GAAP and IFRS exist and the Corporation reviews any new financial information on an ongoing basis to identify further areas of differences.

The key areas identified where the most substantial differences exist are as follows:

    -   the accounting treatment of the gold stream transactions;
    -   the valuation methods used for the debt and equity portions on
        convertible debentures;
    -   the discount rates and foreign exchange rates used to determine the
        value of the asset retirement obligations at the end of reporting
        periods; and
    -   the determination of functional currency and the treatment of foreign
        exchange differences resulting from the translation of functional
        currencies of the different reporting entities within the group to
        reporting currencies.

Management are in the process of quantifying the key differences identified and revising the Corporation’s accounting policy manual to incorporate these differences.

Management plans to have IFRS consolidated financial statements including first-time adoption reconciliations prepared by the end of Q2 2011. To maintain effective disclosure controls and procedures and internal controls over financial reporting throughout the IFRS project, management is also evaluating the impact of the conversion to IFRS on the Corporation’s control environment in order to identify the additional controls that need to be developed. Management plans to have the additional controls identified and developed by the end of Q2 2011 for the review of the IFRS comparative financial information.

Management is also reviewing the financial information systems to identify changes required by the transition date in order to setup processes to ensure that financial information is recorded under both Canadian GAAP and IFRS for comparative purposes.

Management analyzes the Corporation’s accounting policies on an ongoing basis to identify opportunities where alternatives are permitted including IFRS 1 exemptions, if required.

Outstanding Share Data

    -------------------------------------------------------------------------
                                                      Q1 2011        FY 2010
    -------------------------------------------------------------------------
    Common shares outstanding at beginning of
     the period                                   166,847,037    151,574,037
    Shares issued during the period                14,000,000     15,250,000
    Restricted share unit shares issued                     -         23,000
    -------------------------------------------------------------------------
    Common shares outstanding at end of the
     period                                       180,847,037    166,847,037
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Unexercised common share purchase warrants
     at end of the period                          10,250,000     10,250,000
    Unexercised restricted units outstanding at
     end of the period                              1,003,000        177,000
    Unexercised stock options outstanding at end
     of the period                                  8,435,622      3,204,622
    Average strike price of outstanding
     options (Cdn$)                                      5.34           7.74
    -------------------------------------------------------------------------

At August 5, 2010, First Uranium had 180,847,037 common shares outstanding and there were 7,837,620 unexercised stock options outstanding at an average strike price of Cdn$4.99 per share and 973,664 restricted stock units outstanding.

Each warrant is exercisable for one common share of First Uranium at a purchase price of Cdn$4.15 until February 11, 2011.

At June 30, 2010 and August 5, 2010, First Uranium had Cdn$150 million ($143.1 million as at June 30, 2010) principal amount of Debentures outstanding which are convertible into 60.9013 common shares for each Cdn$1,000 principal amount of Debentures, representing 9,135,195 common shares.

At June 30, 2010 and August 5, 2010, First Uranium had Cdn$110 million ($105.0 million as at June 30, 2010) principal amount of Canadian Notes outstanding which are convertible into 769.23 common shares for each Cdn$1,000 principal amount of Canadian Notes, representing 84,615,384 common shares.

At June 30, 2010 and August 5, 2010, First Uranium had R463.9 million ($60.6 million as at June 30, 2010) principal amount of Rand Notes outstanding which are convertible into 107.53 common shares for each R1,000 principal amount of Rand Notes, representing 49,882,736 common shares.

Risks and Uncertainties

Uncertainties

There are a number of uncertainties in the mining business of First Uranium, some of which are beyond First Uranium’s control:

    -   government legislation regarding mining companies in South Africa,
        including without limitation, securing authorizations and permits
        required thereunder within the timeframes required to achieve the
        Corporation's plans and objectives;
    -   the ability of the Corporation to provide financial assurance for
        rehabilitation liabilities to the satisfaction of the DMR;
    -   prices for the Corporation's future production of uranium and gold;
    -   foreign exchange and interest rates;
    -   the supply and cost of other re-agents, including sulphuric acid,
        used by the Corporation in the process to extract gold and uranium;
    -   the consistent supply of sufficient electrical power;
    -   the decisions and activities of the Corporation's competitors in the
        uranium and gold mining business, which impact the supply of uranium
        and the demand for available services, construction materials, labour
        and the rights for prospecting and mining;
    -   the continued endorsement of nuclear power as a preferred source for
        the world's growing energy needs;
    -   the decisions of investors to continue to buy and hold the securities
        of the Corporation;
    -   securities regulation regarding public listed companies in Canada and
        South Africa; and
    -   natural disasters, war or random occurrences or acts that could
        result in a material change to economic and market performance,
        business conditions or operations.

Risks

In addition, First Uranium’s mining properties are in the development stage and are subject to the risks and challenges similar to other companies in a comparable stage of development and production start-up. The risks include, but are not limited to, certain business, operational and market risks. For a detailed discussion of the Corporation’s risks please refer to the Corporation’s most recent AIF, which is available on the Corporation’s website www.firsturanium.com and on www.sedar.com or upon request from the Corporation.

Additional Information

Additional information relating to First Uranium is contained in the Corporation’s filings with the Canadian Securities regulator, including the AIF. These are available on SEDAR at www.sedar.com and on the Corporation’s website at www.firsturanium.com.

Forward-looking Information

This MD&A and consolidated financial statements for the three months ended June 30, 2010 contain certain forward-looking statements. Forward- looking statements include but are not limited to those with respect to the timing and amount of estimated future production, the timing and receipt of required permits, 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, 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 Corporation’s expectations as at the date of this MD&A; (ii) actual results may differ materially from the Corporation’s expectations if known and unknown risks or uncertainties affect its business, or if estimates or assumptions prove inaccurate; (iii) the Corporation 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 Corporation 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 MD&A, First Uranium has made several material assumptions, including but not limited to, the assumption that: (i) projected metal production, 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 and as updated by the Corporation in its continuous disclosure from time to time 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 BEE investors will maintain their interest in the Corporation and the Corporation will be able to secure additional BEE investment in the Corporation’s common shares to a sufficient level to maintain compliance with BEE requirements as required by applicable law; 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.

Non-GAAP Measures

The Corporation believes that in addition to conventional measures prepared in accordance with Canadian GAAP, the Corporation and certain investors and analysts use certain other non-GAAP financial measures to evaluate the Corporation’s performance including its ability to generate cash flow and profits from its operations. The Corporation 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 Corporation’s Financial Statements for more detail.

SOURCE First Uranium Corporation


Source: newswire



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