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FUM - First Uranium Corporation - Production update for the three months ended
September 30, 2011
First Uranium Corporation
(Continued under the laws of British Columbia, Canada)
(Registration number C0777384)
(South African registration number 2007/009016/10)
Share code: FUM ISIN: CA33744R1029
October 11, 2011
PRODUCTION UPDATE FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2011
All amounts are in US dollars unless otherwise noted.
Toronto and Johannesburg - First Uranium Corporation (TSX:FIU), (JSE:FUM)
(ISIN:CA33744R1029) ("First Uranium" or "the Company") today released its
production results for the three months ended September 30, 2011 ("Q2 2012") and
provided an update on the permitting situation at Mine Waste Solutions.
The Company reported an increase in gold sales compared to the first quarter of
FY 2012, with gold sales up 17.7% from 34,438 ounces in Q1 2012 to 40,529 ounces
in Q2 2012. In addition, uranium production was up 76.8% from 20,361 pounds in
Q1 2012 to 36,006 pounds in Q2 2012.
Said CEO Deon van der Mescht: "The unexpected and unwarranted action of
purporting to withdraw the New Order Mining Right for Mine Waste Solutions
("MWS") and the two unfortunate and regrettable accidents at Ezulwini Mine have
eclipsed otherwise positive developments that took place this quarter.
"The successful completion of the long-awaited Franco-Nevada Technical
Completion Test was a defining moment for MWS, but was overshadowed by the news
that the South African Department of Mineral Resources ("DMR") purported to
withdraw the New Order Mining Right for MWS. Our legal position remains that a
New Order Mining Right is not required and accordingly MWS has continued to
operate, however, this announcement by the DMR is a disappointment for our
shareholders who were looking forward to a new phase in the development of MWS.
"While MWS does not require a New Order Mining Right under current South African
legislation, we believe that operating under a New Order Mining Right provides
significant benefits to all stakeholders, specifically to the local community,
and we continue to work actively towards the resolution of this matter.
"At Ezulwini Mine, we are confident that we have put the right people and
processes in place to reduce one of the most significant risks to our operation,
namely serious and fatal accidents. In addition, the effect of management`s
focus on costs and clean mining is beginning to show results, and I believe that
the turnaround process for this operation remains on track."
EZULWINI MINE
The quarter under review was one of mixed fortunes for Ezulwini Mine. In July
the plant milled 70,058 tonnes, which is a record for the operation and
indicated that the production ramp-up was on track. This achievement and the
associated upward trends in production were derailed, sadly, by two fatal
accidents; one which occurred on August 11, 2011 and the other on September 13,
2011. The August accident resulted in all development ends being stopped on the
mine for an extended period of time and the September accident resulted in all
activities in the reef horizons being stopped for a similar period of time. The
impact of the accidents went far beyond the mandatory stoppages enforced by the
DMR as production teams struggled to regain the momentum they had established
during July.
Gold and uranium production for Q2 2012 was constrained by the aforementioned
accidents. A total of 13,076 ounces of gold was sold for Q2 2012, which
represents an improvement on the 12,893 ounces of gold sold in Q1 2012. In terms
of uranium, Ezulwini Mine produced 36,006 pounds of uranium in Q2 2012 compared
to 20,361 pounds produced in Q1 2012, a 77% improvement quarter on quarter. The
uranium bearing Middle Elsburg ore body remains well understood and management
is confident that they can sustain the progressive quarter on quarter
improvements in this section. As previously reported, management continues to
focus on improving development rates through-out the mine, but more specifically
in the Upper Elsburg ore body. A record of 908 development meters was achieved
in July but was unfortunately not sustained into August and September due to the
accidents and the associated stoppages. Indications are however that, for the
October production period, Ezulwini Mine is achieving an average of 40 meters of
development per production shift, which is within the planning parameters set
for the month.
As is evident from the production metrics, one of the most significant risks to
Ezulwini Mine`s ability to meet and/or exceed its targets are stoppages that
result from serious accidents. Management has therefore reinforced its efforts
to attain a safe working environment. This includes adopting a zero-tolerance
approach to unsafe conduct with a number of non-negotiable rules having been
defined and enforced during the quarter. In addition, management imposed an
audit-driven "stop and fix" campaign across all working places, with a view to
preventing any further accidents. The impact of this proactive safety drive has
been a record number of "white flag" or incident-free shifts in September, a
performance metric that management will continue to drive vigorously.
Ezulwini Mine also welcomed a new general manager, Sizwe Mthethwa, to the team
in early September. An experienced deep-level gold miner formerly of Harmony
Gold Limited, Mr. Mthethwa`s passion for safe production has been evident in his
first month on the mine and management look forward to supporting him in this
regard. Mr Mthethwa`s appointment and a simultaneous reshuffle in the First
Uranium corporate office has enabled Deon van der Mescht, who was acting general
manager of Ezulwini Mine and CEO of First Uranium since April 2011, to refocus
his efforts on his role as CEO of the Company.
Notwithstanding the production constraints in Q2 2012, Ezulwini Mine remains on
track to achieve its stated annual target 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.
In previous updates, Ezulwini Mine reported on various business development
initiatives aimed at leveraging the available capacity of the gold and uranium
plant infrastructure, including the uranium concentrate float plant project and
possible toll treatment of third party ore. These initiatives remain on track
and management hopes to be able to successfully implement these initiatives
before the end of FY 2012. The current production forecasts exclude any
potential benefits that may be derived from the successful implementation of
these projects.
MINE WASTE SOLUTIONS
The successful conclusion of the critically important Franco-Nevada Technical
Completion Test on August 24, 2011 was a significant milestone for MWS and
removes serious commercial risk for this project.
During Q2 2012 MWS also improved the performance of the recently-commissioned
third gold plant module such that overall gold recoveries improved from 44% of
Q1 2012 to 51% in Q2 2012. This also resulted in a 27% improvement in gold sales
of 27,453 ounces compared to 21,546 ounces of gold sold in Q1 2012.
The targeted commissioning of MWS`s uranium plant remains unchanged for June
2012, subject to continued progress being made at Ezulwini Mine. Consequently,
the annualized gold guidance for FY 2012 remains unchanged between 105,000 and
115,000 ounces.
MWS PERMITTING
On September 15, 2011, MWS received a letter from the South African Minister of
Mineral Resources purporting to "withdraw" the New Order Mining Right for MWS,
in terms of Section 23 of the Mineral and Petroleum Resources Development Act 28
of 2002 ("the MPRDA"). MWS`s external legal counsel is of the very clear opinion
that under current South African mining legislation, reclamation activities such
as the MWS tailings recovery project are not classified as a mining operation
and therefore do not require a mining right. Notwithstanding this, and in
anticipation of the MPRDA Amendment Act being promulgated in the future, MWS has
and will continue to pro-actively engage with the DMR and the Ministry with the
aim of securing a New Order Mining Right. In the interim, operations continue
unimpeded. Should the DMR issue a Stop Order Notice, MWS will take the necessary
legal action to safeguard its rights to allow operational continuity.
MWS`s Integrated Water Use Licence ("Water Use Licence") was issued in June 2010
by the South African Department of Water Affairs ("DWA") for the water usage
associated with the development of its new tailings facility, or TSF. An appeal
was filed by the Federation for a Sustainable Environment ("FSE") on March 6,
2011 with the South African Water Tribunal against MWS`s Water Use Licence. In
response, MWS filed its affidavit with the Water Tribunal on October 4, 2011. As
previously disclosed, on the advice of its external legal counsel, the Company
considers the FSE appeal to be legally invalid and consequently has continued to
operate.
CASH RESOURCES
As at September 30, 2011, the cash position of the Company was US$15.2m.
SUMMARY OF PRODUCTION RESULTS
The following table summarizes the production from each operation during Q2
2012, against the previous two quarters:
2012 YTD Q2 2012 Q1 2012 Q4 2011
MWS
Tonnes of ore reclaimed (000s) 9,725 4,822 4,903 3,625
Average gold head grade (g/t) 0.328 0.348 0.309 0.34
Gold plant recovery (%) 48% 51% 44% 55%
Gold sold (oz) 48,999 27, 453 21, 546 22,150
Ezulwini Mine
Tonnes of ore milled 326, 842 162, 577 164,265 153,021
Average gold recovery grade (g/t) 2.66 2.53 2.79 2.62
Gold sold (oz) 25, 968 13, 076 12, 892 11,393
Uranium produced (lbs) 56,366 36,006 20,361 0
Abbreviation Period Abbreviation Period
Q1 2012 April 1, 2011 - Q1 2011 April 1, 2010 -
June 30, 2011 June 30, 2010
Q2 2012 July 1, 2011 - Q2 2011 July 1, 2010 -
September 30, September 30,
2011 2010
Q3 2012 October 1, 2011 - Q3 2011 October 1, 2010
December 31, 2011 - December 31,
2010
Q4 2012 January 1, 2012 - Q4 2011 January 1, 2011
March 31, 2012 - March 31, 2011
2012 YTD April 1, 2011 -
September 30,
2011
FY 2012 April 1, 2011 - FY 2011 April 1, 2010 -
March 31, 2012 March 31, 2011
The financial results for Q2 2012 are expected to be released in mid-November
2011.
CONFERENCE CALL
First Uranium will conduct a conference call with investors to discuss the
information in this news release on Wednesday, October 12, 2011 at 09h00
(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.
For further information, please contact:
Deon van der Mescht - CEO
+27 82 807 0160
deon.vdmescht@firsturanium.com
Gail Strauss - communications
+27 82 936 8481
gailstrauss@mweb.co.za
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 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
Date: 12/10/2011 07:22:29 Supplied by www.sharenet.co.za
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