First Uranium reports financial results for the three and six months ended September 30, 2011.

Nov 14, 2011, 09:19 ET from First Uranium Corporation

All amounts are in US dollars unless otherwise noted.

For the Management Discussion & Analysis and Financial Statements please refer to the Company's website at

TORONTO AND JOHANNESBURG, Nov. 14, 2011 /PRNewswire/ - First Uranium Corporation (TSX:FIU), (JSE:FUM) (ISIN:CA33744R1029) ("First Uranium" or "the Company") today released its results for the three and six months ended September 30, 2011, being Q2 2012 and 2012 YTD, respectively.

Highlights for Q2 2012

  • Consolidated gross profit of $5.2 million up from the consolidated gross loss of $4.7 million in Q2 2011 and $8.9 million in Q1 2012;
  • Consolidated proceeds from gold sold up 62% and 30%, respectively, from gold sold in Q2 2011 and Q1 2012;
  • Gold sold ounces up 20% and 18%, respectively, from gold ounces sold in Q2 2011 and Q1 2012;
  • Gross profit from Mine Waste Solutions ("MWS") improves 129% and 89%, respectively, from Q2 2011 and Q1 2012;
  • Capital spending reduced significantly with completion of MWS gold plant expansion ;
  • Gross loss from the Ezulwini Mine decreased by 3% and 34%, respectively, from Q2 2011 and Q1 2012;

Commenting on the quarterly results, Deon van der Mescht, President and CEO of First Uranium said: "We are pleased with the results which were produced under difficult circumstances. Mine Waste Solutions had a very good quarter, despite the issues raised by the Department of Mineral Resources around its mining right. The success of the Franco-Nevada Technical Completion Test and the conclusion of the capital program mean that MWS is well-positioned to establish itself as a low cost producer.

"At the Ezulwini Mine, where production was constrained in the period under review following two tragic accidents, we have bolstered the management team to improve our ability to address the challenges inherent in an underground operation of this nature. Despite this, it is with deep regret that we reported on a fall of ground this morning (14 November 2011) that claimed the life of an underground worker. Our condolences go out to the family, friends and colleagues of the deceased employee. Safety remains our number one priority and we are working with the Department of Mineral Resources to determine the circumstances of the accident."

Higher gold prices along with the increase in gold ounces sold in Q2 2012 (40,529 ounces) compared to Q2 2011 (33,809 ounces) and Q1 2012 (34,439 ounces) resulted in the much improved consolidated proceeds from gold sold of $54.9 million in Q2 2012. Costs fell 3% quarter on quarter, but were 29% higher compared to Q2 2011. The increase in revenue, however, was sufficient to generate a gross profit of $5.2 million in Q2 2012 representing a significant improvement from the gross losses of $4.7 million in Q2 2011 and $8.9 million in Q1 2012. Despite the marked improvement in the Q2 2012 results, the lower than expected gold production and consequent higher costs in Q1 2012 meant that the 2012 YTD gross loss of $3.7 million was only 16% lower than that of 2011 YTD ($4.4 million).

The consolidated pre-tax loss for Q2 2012 of $51.7 million was marginally lower than the consolidated loss in the comparative period (Q2 2011: $52.8 million), while the consolidated pre-tax loss of $91.5.million for 2012 YTD was a significant improvement (28%) on the $126.3 million loss in the comparative period (2011 YTD).

Cash utilized in the Corporation's operating activities amounted to $3.2 million for Q2 2012 (Q2 2011: $13.9 million) and $9.9 million for 2012 YTD (2011 YTD: $28.4 million), respectively. The capital spending in the periods under review were significantly lower compared to their respective comparative periods, primarily reflecting the close-out of the major capital projects at MWS. In Q2 2012, $6.6 million was spent on the completion of the third gold module ("Phase 2") and the new tailings storage facility at Kareerand ("TSF"), including adjoining infrastructure at MWS, compared to $23.8 million in Q2 2011. For 2012 YTD, $22.4 million ($57.6 million: 2011 YTD) was spent on capital projects.

As at September 30, 2011, current assets were $34.9 million (March 31, 2011: $73.4 million) and included cash and cash equivalents of $15.1 million (March 31, 2011: $49.6 million).

Mine Waste Solutions (MWS)

During Q2 2012, MWS generated $38.6 million (Q2 2011: $18.9 million; Q1 2012: $26.6 million) of proceeds from 27,453 ounces of gold sold (Q2 2011: 18,743 ounces; Q1 2012: 21,546 ounces) at a Cash Cost* of $682 per ounce (Q2 2011: $554 per ounce; Q1 2012: $663 per ounce). During 2012 YTD, MWS generated $65.2 million (2011 YTD: $40.3 million) in proceeds from 48,999 ounces of gold sold (2011 YTD: 39,751 ounces) at a Cash Cost* of $673 per ounce (2011 YTD: $501 per ounce), representing an increase in gross profit of 47% compared to 2011 YTD.

The 52% and 55% higher tonnage throughput in Q2 2012 and 2012 YTD compared to Q2 2011 and 2011 YTD, respectively, was driven primarily by the commissioning of the new TSF, which along with the third gold plant module in April 2011, increased processing capacity from an average of 1.2 mtpm to 1.8 mtpm. Overall gold recoveries also improved from 44% in Q1 2012 to 51% in Q2 2012 following successful modifications to the plant infrastructure to accommodate three new resources that came on line during Q1 2012.

Ezulwini Mine

The Ezulwini Mine generated $16.3 million in Q2 2012 (Q2 2011: $14.9 million; Q1 2012: $15.7 million) of proceeds from 13,076 ounces of gold sold (Q2 2011: 15,066 ounces; Q1 2012: 12,893 ounces) at a Cash Cost* of $2,040 per ounce (Q2 2011: $1,727 per ounce; Q1 2012: $2,344 per ounce). The Ezulwini Mine generated $30.1 million during 2012 YTD (2011 YTD: $26.8 million) of proceeds from 25,968 ounces of gold sold (2011 YTD: 28,819 ounces) at a Cash Cost* of $2,191 per ounce (2011 YTD: $1,603 per ounce).

The Ezulwini Mine also sold 31,407 pounds of uranium during 2012 YTD (2011 YTD: 20,500 pounds) generating $1.9 million in proceeds (2011 YTD: $0.8 million). No uranium was sold in Q2 2012 or Q2 2011.

While tonnage throughput for Q2 2012 and 2012 YTD increased by 11% and 17%, respectively, compared to Q2 2011 and 2011 YTD, this achievement was largely offset by the 19% and 17% decrease in the average gold recovery grade over the comparative periods. As a result, gold ounces sold declined by 13% and 10%, respectively. Consequently the proceeds from gold ounces sold only increased by 9% and 16%, respectively, primarily due to the higher gold price attained.

Costs increased by 3% and 25%, respectively, compared to Q2 2011 and 2011 YTD, reflecting increased labour, power and stores and material costs as well as the resumption of uranium production at the start of Q1 2012. For most of 2011 YTD the uranium plant did not operate at the same levels as 2012 YTD.

Costs for Q2 2012 decreased by 17% compared to Q1 2012 reflecting the various cost controls and initiatives implemented by management in the first half of the year in order to reduce costs. This will only translate into lower costs per unit once production ramps up to acceptable levels.


The MWS reclamation and rehabilitation operation is spread over a large geographic area and is regulated by a host of legislation. The operation is governed principally by the National Water Act, National Environmental Management Act ("NEMA"), and the National Nuclear Regulator Act.  MWS is of the opinion that it holds all the necessary licences and permits in order to conduct its operations in terms of the current legislative regime.

Notwithstanding this, MWS is contesting two challenges to its permitting status. The first is from the South African Minister of Mineral Resources who, as previously disclosed, issued the purported withdrawal of the New Order Mining right on September 15, 2011. However, since MWS does not require a mining right in order to operate, the withdrawal has no basis in law. MWS continues to operate unabated and has respectfully informed the Minister of its rights in this regard and will take legal action, if necessary, to protect its right to operate. MWS continues to pro-actively engage with the Minister and the DMR to resolve the issue and is optimistic of being able to resolve this situation in order to provide certainty to investors.

The second permitting issue is as a result of an appeal by a local environmental pressure group, the Federation for a Sustainable Environment, to the South African Water Tribunal to have MWS's valid Water Use Licence set aside. The matter has been set down for hearing by the Tribunal on December 1, 2011. MWS continues in its attempts to engage with the FSE with a view to understanding and resolving the FSE's objections to the project, which MWS nevertheless believes have no legal basis.


While previous guidance of annualized gold production for FY 2012 of between 105,000 and 115,000 ounces of gold for MWS remains unchanged, the Corporation also announced today that a fatal accident occurred at the Ezulwini Mine from a fall of ground. While management is unable at this time to accurately assess the possible impact of the accident on its currently stated annual target for the Ezulwini Mine of between 70,000 to 80,000 ounces of gold sold and uranium sales of between 110,000 and 130,000 pounds for FY 2012, it is anticipated that there will be some negative effect due to the Section 54 order, which is normal in these circumstances and has resulted in the temporary stoppage of the underground operations while the investigation of the accident is underway.

The targeted completion of construction and commissioning of MWS's uranium plant remains unchanged for June 2012, subject to continued progress being made at the Ezulwini Mine.

The Ezulwini Mine is however expected to benefit from the fact that as of December 31, 2011 (the start of Q4 2012), it will revert to delivering only 7% of its gold production to Franco-Nevada pursuant to the Ezulwini Gold Stream Transaction. This will have a significant impact on the cash proceeds received by the Ezulwini Mine for its gold sold, especially at current gold prices, given that Ezulwini mine has to date been obliged to deliver between 30% and 40% of its gold ounces sold to Franco-Nevada at $400 per ounce in order to meet the guaranteed ounces requirement pursuant to the Ezulwini Gold Stream Transaction.

Ezulwini is also expected to benefit from the optimization initiatives underway in both the gold and uranium plants, the most significant of which is the re-commissioning of the elution circuit, which is expected to be commissioned by the end of December 2011. The successful completion of the project will mean that Ezulwini's gold plant will no longer need to toll treat its carbon at MWS, which will yield a number of benefits to the operation, including shorter time frame to produce doré and reduced handling and transportation costs.

*Cash Costs are costs directly related to the physical activities of producing gold and uranium and include mining, processing and other plant costs; third-party refining and smelting costs; marketing expense, on-site general and administrative costs; royalties; on-mine drilling expenditures that are related to production and other direct costs. Sales of by-product metals such as uranium and silver are deducted from the above in computing cash costs. Cash costs exclude depreciation, depletion and amortization, corporate general and administrative expense, exploration, interest, and pre-feasibility costs and accruals for mine reclamation. Cash costs are calculated and presented using the "Gold Institute Production Cost Standard" applied consistently for all periods presented. The Gold Institute was a non-profit industry association comprised of leading gold producers, refiners, bullion suppliers and manufacturers. This institute has now been incorporated into the National Mining Association. The guidance was first issued in 1996 and revised in November 1999. Total cash costs per ounce is a non-IFRS measurement and investors are cautioned not to place undue reliance on it and are advised to read all IFRS accounting disclosures presented in the Company's financial statements.


Conference Call
First Uranium will conduct a conference call with investors to discuss the information in this news release on Tuesday, November 15, 2011 at 08h00 (Toronto time) and 15h00 (South African time).

Conference Call Numbers:
Canada & USA Toll Free Dial In: 1-800-319-4610
South Africa Toll Free Dial In: 0800-981-705
Other International Locations Dial In: +1-604-638-5340
Callers should dial in 5 - 10 min prior to the scheduled start time and simply ask to join the First Uranium call.
Conference Call Replay Numbers:

Canada & USA Toll Free: 1-800-319-6413
Outside Canada & USA Call: +1-604-638-9010
Code: 2128, followed by the # sign
Duration: Available for 30 days

About First Uranium Corporation

First Uranium Corporation (TSX:FIU, JSE:FUM) is focused on its goal of becoming a low-cost producer of gold and uranium through the expansion of the underground development to feed the new gold and uranium plants at Ezulwini Mine and the ramp-up of production at the Mine Waste Solutions (MWS) tailings recovery facility following the completion of a significant gold capital expansion program in May 2011.  Both operations are 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 are forward-looking statements (or forward-looking information). The Company's plans involve various estimates and assumptions and its business and operations are subject to various risks and uncertainties, including without limitation, the outcome of the appeal of the Water Use License by FSE. For more details on these estimates, assumptions, risks and uncertainties, see the Company's most recent Annual Information Form and most recent Management Discussion and Analysis on file with the Canadian provincial securities regulatory authorities on SEDAR at 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.

Non-IFRS Measures

The Company believes that in addition to conventional measures prepared in accordance with International Financial Reporting Standards ("IFRS"), the Company and certain investors and analysts use certain other non-IFRS financial measures to evaluate the Company's performance including its ability to generate cash flow and profits from its operations. The Company has included certain non-IFRS measures in this document. Non-IFRS measures do not have any standardized meaning prescribed under IFRS, 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 IFRS. Readers are advised to read all IFRS accounting disclosures presented in the Company's financial statements for more detail.

SOURCE First Uranium Corporation