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First Uranium announces financial results for the three and six months ended September 30, 2010

November 15, 2010

For Management Discussion & Analysis and Financial Statements please
refer to the Company’s website at
www.firsturanium.com.

Summary*

  • First Uranium announces a second successive quarter of operating profits
  • Total gold production for the three months ended September 30, 2010 of
    33,418 ounces
  • Business optimization initiative has resulted in general expenditures
    being significantly reduced
  • Subsequent to quarter-end, Ezulwini Mine achieved record production in
    the month of October 2010
  • Cash reserves totaled $67.6 million at September 30, 2010

* All amounts are expressed in US dollars unless otherwise noted

TORONTO and JOHANNESBURG, Nov. 15 /PRNewswire-FirstCall/ – First Uranium Corporation
(TSX:FIU, JSE:FUM) (“First Uranium” or “the Company”) today announced
that for the three-month period ended September 30, 2010 (“Q2 2011“) the Company recorded a consolidated loss for the quarter of $27.1
million, or $0.12 per share, as compared with the consolidated loss of
$18.4 million, or $0.11 per share, in the same quarter of the prior
year (“Q2 2010“).

The higher consolidated loss in Q2 2011 compared to Q2 2010 was
primarily attributable to the foreign exchange loss on translation in
Q2 2011, along with the higher interest and accretion expenses
resulting from the convertible notes issued in April 2010.  This was
partially offset by additional profits generated at the Mine Waste
Solutions tailings recovery operation (“MWS“) and reduced losses from the underground Ezulwini Mine, compared to Q2
2010.

Table 1 - Key Consolidated Financial Results for the Q2 2011 and the six months
ended September 30, 2010 (“2011 YTD”) compared to its comparative
periods for the 2010 financial year
                   
       Q2

2011

Q2

2010

%

Change

2011

YTD

2010

YTD

%

Change

 
  Mine Waste Solutions                
  Average gold selling price per ounce   1,051 1,007 4% 1,058 959 10%  
  Average cash cost per ounce of gold sold ((a))   (537) (467) 15% (491) (406) 21%  
  Ezulwini Mine                
  Average gold selling price per ounce   1,236 1,022 21% 1,217 1,001 22%  
  Average cash cost per ounce of gold sold ((a))   (1,710) (2,689) (36%) (1,577) (2,966) (47%)  
  Revenue   38,315 19,025 101% 77,976 31,920 144%  
  MWS   19,696 11,823 67% 42,053 21,485 96%  
  Ezulwini Mine   18,619 7,202 159% 35,923 10,435 244%  
  Gross profit (loss)   108 (6,733) 102% 6,861 (10,658) 164%  
  MWS   8,173 6,089 34% 19,705 11,824 67%  
  Ezulwini Mine   (8,065) (12,822) (37%) (12,844) (22,482) (43%)  
  Operating loss((b))   (8,995) (14,813) (39%) (11,817) (25,257) 147%  
  Loss for the period   (21,891) (18,441) 19% (33,916) (51,705) (166%)  
  Loss per common share   (0.12) (0.11) 9% (0.19) (0.32) (41)%  
  Cash flows utilized in operating activities   (10,249) (13,514) (24%) (25,597) (47,626) (46%)  
  Cash flows utilized in investing activities   (24,803) (70,310) (65%) (58,463) (117,837) (50%)  
Table 2 - Key Consolidated Financial Results for the Q2 2011 compared to Q1 2011
             
       Q2 2011 Q1 2011 %

Change

 
  Mine Waste Solutions          
  Average gold selling price per ounce   1,051 1,064 (1%)  
  Average cash cost per ounce of gold sold ((a))   (537) (449) 20%  
  Ezulwini Mine          
  Average gold selling price per ounce   1,236 1,197 3%  
  Average cash cost per ounce of gold sold ((a))   (1,710) (1,430) 20%  
  Revenue   38,315 39,661 (3%)  
  MWS   19,696 22,357 (12%)  
  Ezulwini Mine   18,619 17,304 8%  
  Gross profit   108 6,753 (98%)  
  MWS   8,173 11,532 (29%)  
  Ezulwini Mine   (8,065) (4,779) 69%  
  Operating loss((b))   (8,995) (2,822) 219%  
  Loss for the period   (21,891) (12,025) 82%  
  Loss per common share   (0.12) (0.07) 71%  
  Cash flows utilized in operating activities   (10,249) (15,348) (33%)  
  Cash flows utilized in investing activities   (24,803) (33,660) (26%)  

Please refer to the Management’s Discussion & Analysis and Financial
Statements for more detailed information.

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)  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.

At MWS, the overall increase in revenues and cost of sales for Q2 2011
compared to Q2 2010 was mainly attributable to additional production
through the second gold plant module that was commissioned in Q2 2010
along with an improvement in recovery. The operation achieved all
planned metrics despite lower revenues compared to Q1 2011, which were
driven by lower planned grades. Costs were higher mainly as a result of
higher power costs over the winter period.

At the Ezulwini Mine, gold sales for Q2 2011 increased by 159% compared
to Q2 2010, reflecting the increase in production at the mine as well
as the improvement in mining efficiencies quarter on quarter. The cost
of production did not increase in direct correlation to the revenue
increases compared to Q2 2010, due to the mine’s fixed operating costs
being spread over higher production compared to Q2 2010 as indicated by
the decrease in Cash Costs compared to Q2 2010. This resulted in the
losses at the mine in Q2 2011 decreasing by 37% compared to Q2 2010.
The increase in costs from Q1 2011 was due to higher power costs over
the winter period and the impact of a seismic event that occurred at
the Ezulwini Mine on( )August 20, 2010, which resulted in additional labour costs and lost
production time. Although the anticipated rate of the Ezulwini Mine’s
production build-up was impacted by this event, the mine was able to
increase production by 5% from Q1 2011.

During August 2010, the Ezulwini Mine closed its uranium plant to
replace two columns in the Ion Exchange section, following a structural
failure on a loading column. The two columns are being manufactured,
with installation and commissioning expected to be completed in Q4
2011. The cost of the two failed columns that have to be replaced has
been written off and expensed in Q2 2011.

Commenting on the results, First Uranium’s Chief Executive Officer, Deon
van der Mescht, said: “MWS’s production build-up remains on-track and
all projects are on schedule for completion in May 2011, as expected,
while gold production at the Ezulwini Mine, which was marginally higher
quarter on quarter, is expected to benefit significantly from the
successful commissioning of an upgraded backfill plant in September
2010″.

Partially as a result of the successful commissioning of an upgraded
backfill plant, the Ezulwini Mine has achieved a record-breaking
October month.

Deon van der Mescht said: “It is pleasing to report that shaft
production records were achieved at the Ezulwini Mine for October 2010.
Our intern
al targeted threshold of milling over 50,000 tonnes a month was
comfortably exceeded and gold production is in excess of 200kg (6,430
ounces) for the month. Even more pleasing, is that November is
following a similar trend”.

The commissioning of the Ezulwini Mine’s backfill plant, which has
already enabled an improvement in mining rates in the high grade shaft
pillar, will allow a further increase in production, while
simultaneously reducing costs, and will also create a safer work
environment due to a reduction in the risk of future seismic activity.

The operating loss for Q2 2011 decreased by 102% compared to Q2 2010
primarily due to the improvement at mine operating level. Despite the
improvement at both operations, the Company’s loss for Q2 2011
increased by 19% compared to Q2 2010, primarily as a result of the
additional interest and accretion expense resulting from the debenture
notes issued in April 2010, along with a foreign exchange loss on
translation of $6.4 million incurred during the quarter.

The operating loss for Q2 2011 increased compared to Q1 2011 largely due
to lower profits from operations along with higher stock-based
compensation and the $1.4 million impairment of the two uranium plant
loading columns. The general, consulting and administration expense
decreased by 11% compared to Q1 2011 as cost reduction opportunities
identified by management were implemented and savings were realized
during the quarter. Further reductions are anticipated in Q3 2011.

The 24% and 33% decrease in cash flows utilized in operating activities
for Q2 2011 compared to Q2 2010 and Q1 2011, respectively, were
attributable mainly to increased profits generated by MWS, reduced
losses incurred at the Ezulwini Mine and various cost saving
initiatives implemented at corporate level.

Cash utilized in investing activities has reduced significantly compared
to Q2 2010 primarily due to the expected completion of most of the
Company’s capital expansion projects towards the end of the 2010
calendar year. MWS is continuing its capital program, which is on
schedule, and includes the construction of the third gold plant module
and a new tailings storage facility (“TSF”).

The Company ended the quarter with cash and cash equivalents totaling
$67.6 million. 

Deon van der Mescht concluded: “First Uranium remains a company that is
in a development phase, but I am exceptionally pleased with the
progress made recently to ensure that we achieve our overall growth
ambitions. Despite the seismic event and the uranium plant column
failure, significant progress has been made over the last two months to
ensure that our targeted production levels of 80,000 ounces at the
Ezulwini Mine remain intact. MWS has delivered its third successive
quarter of achieving, or improving upon its market guidance”.

Outlook

The Company continues to identify initiatives at operational and
corporate level that will enhance production and reduce costs with the
aim of preserving First Uranium’s cash reserves, thereby enabling the
Company to conclude its capital program.

MWS: During Q2 2011, MWS resumed its remaining capital program comprising the
third gold plant module and the new TSF, including adjoining
infrastructure and construction is on schedule to be completed by May
2011, which should allow for the re-structured Gold Wheaton completion
test to be satisfied prior to September 1, 2011. The commissioning of
the uranium plant will commence immediately following the successful
conclusion of the Gold Wheaton completion test.

Ezulwini Mine: The increased backfill capacity at the Ezulwini Mine will improve panel
availability, allowing management to deploy additional stoping crews.
Due to the structural failure of the Ion Exchange columns, the uranium
plant has been closed, and this potentially limits the production of
yellowcake through the uranium plant to the 32,517 pounds produced
during the year to date. Management expects Ezulwini to be cash flow
positive after capital expenditures by the end of Q4 2011 at current
commodity prices.

Technical Disclosure

All technical disclosure in this news release relating to Ezulwini Mine
has been prepared in accordance with National Instrument 43-101 by or
under the supervision of Daan van Heerden, an employee of Minxcon, an
independent mining consultant company. Mr van Heerden 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 Daan van Heerden, an employee of Minxcon, an independent
mining consultant company. Mr van Heerden 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 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 Management Discussion and Analysis and 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

SOURCE First Uranium Corporation


Source: newswire



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