Financial Results

First Uranium Corporation 

(Continued under the laws of Ontario, Canada) 

(Registration number 2082276) 


(South African registration number 2007/009016/10) 

Share code: FUU ISIN: CA33744R5087 

 


FIRST URANIUM ANNOUNCES FINANCIAL RESULTS FOR THE THREE AND 
TWELVE MONTHS ENDED MARCH 31, 2012 

 


All amounts are in US dollars unless otherwise noted. 

 


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

 


Toronto and Johannesburg  First Uranium Corporation (TSX:FIU.UN, (JSE:FUU) 
(ISIN:CA33744R5087) (First Uranium or the Corporation) today announced total gold 
sales for its financial year ended March 31, 2012 (FY 2012) of 146,445 ounces of gold 
- a marginal increase on the 142,630 ounces sold at the end of March 31, 2011 (FY 
2011). This was primarily due to the 21% decrease in gold production out of the Ezulwini 
Mine, which off-set the 19% increase in gold sales out of Mine Waste Solutions (MWS). 
Total uranium sales rose sharply from 20,500 pounds in FY 2011 to 82,862 pounds in FY 
2012 following the re-commissioning of the uranium plant at Ezulwini Mine in April 2011. 

 

RECENT DEVELOPMENTS 

 


The Corporation has entered into definitive agreements for the sale of its principal 
assets. The Corporation entered into a definitive agreement (the AGA Agreement) 
dated March 2, 2012 for the sale, indirectly, of all of the shares of Mine Waste Solutions 
(Proprietary) Limited (MWS), owner of the tailings recovery project in South Africa, to 
AngloGold Ashanti Limited (AGA) (the AGA Transaction). Under the terms of the AGA 
Agreement AGA will pay $335 million in cash (the Purchase Price) for all of the shares 
and associated claims of First Uranium (Proprietary) Limited (FUSA), which holds, 
indirectly, the MWS tailings recovery project, subject to the fulfillment of a number of 
conditions precedent. In addition, the Corporation entered into a definitive agreement 
(the Gold One Agreement) for the sale of First Uranium Limited (FUL), a wholly-
owned subsidiary of the Corporation which owns all of the shares of Ezulwini Mining 
Company (Proprietary) Limited (EMC) to Gold One International Limited (Gold One) 
for $70 million in cash (the Gold One Transaction). Gold One also provided a loan 
facility to the Corporation for an amount of up to $10 million available for drawdown in 
accordance with the loan agreement between the parties (the Gold One Loan Facility) 
which has been fully drawn subsequent to year-end. 

 


The proceeds from the sale of First Uraniums principal assets will enable it to settle the 
4.25% senior unsecured convertible debentures (the Debentures), the 7% secured 
convertible notes (the Canadian Notes) issued by the Corporation and the 11% secured 
convertible notes (the Rand Notes) issued by MWS (together, the Notes) and the 
Gold One Loan Facility under the terms agreed to with the Debenture holders, Note 
holders and Gold One on June 13, 2012. 


On June 25, 2012, all of the conditions precedent to the AGA Transaction had been 
satisfied or waived. Each of the parties have confirmed such in writing and the Closing 
Date, as defined in the AGA Agreement, is scheduled to occur on July 3, 2012. On the 



Closing Date, all of the documents required to conclude the AGA Transaction will be 
delivered to Edward Nathan Sonnenbergs as Closing Document Stakeholder, the 
purchase price, in accordance with the AGA Agreement, will be delivered to 
Computershare Trust Company of Canada (CTTC) and Computershare Investor 
Services (Proprietary) Inc. (CIS), each a Purchase Price Stakeholder, and certain 
documents (Discharge Documents) relating to the discharge of the security held for the 
benefit of the Note holders and the Gold One Loan Facility will be lodged with the 
appropriate deeds office. On the Closing Date, CTTC will convert sufficient US dollars to 
Canadian dollars so that CTTC holds an amount in Canadian dollars to pay the principal 
amount (C$110 million) of the Canadian Notes outstanding and CIS will convert sufficient 
US dollars to South African Rand in order for CIS to pay the principal amount (ZAR418.6 
million) of the Rand Notes outstanding. 

 


Upon registration of the Discharge Documents releasing all security in the MWS assets, 
the Closing Document Stakeholder will release the remaining closing documents from 
escrow and the Purchase Price Stakeholders will pay: (i) to BNY Trust Company of 
Canada, as trustee for the Canadian Notes, C$110 million, and to or to the order of GMG 
Trust Company (SA) Pty Limited, as trustee for the Rand Notes (together the Note 
Trustees), ZAR418.6 million, (ii) to Gold One, $10 million plus accrued interest to the 
date of payment; (iii) $25 million (the AGA Deferred Payment) to the warranty escrow 
agent; and (iv) the balance shall be paid to FUL. The Corporation has been advised that 
it could take up to three weeks for the Discharge Documents to be registered, 
accordingly, the AGA Transaction is expected to be implemented by July 24, 2012, or on 
an earlier date depending on the date the Discharge Documents are registered. 

 


In order to provide sufficient time for the AGA Transaction to be implemented, Gold One 
and the Corporation have agreed to extend the date to satisfy the conditions precedent 
to the Gold One Transaction to July 31, 2012. Other than the conditions precedent 
associated with the implementation of the AGA Transaction, the material conditions 
precedent to the Gold One Transaction have been satisfied or waived subsequent to 
year-end, including all of the regulatory approvals to the extent required. 


FINANCIAL YEAR ENDED MARCH 31, 2012 

 


The Corporations consolidated revenue of $195 million for FY 2012, an increase of 30% 
from $151 million for FY 2011, resulted in the Corporation reflecting a $7 million gross 
profit from operations in FY 2012 compared to a consolidated gross loss of $6 million in 
FY 2011. The consolidated pre-tax loss narrowed by 24% from a pre-tax loss of $236 
million in FY 2011 to $179 million, driven primarily by the impairment of the Ezulwini 
Mines assets in FY 2012. 

 


These results are prepared in accordance with IFRS. Previously, First Uranium prepared 
its annual and interim consolidated financial statements in accordance with Canadian 
GAAP. From January 2011 however, the Canadian Institute of Chartered Accountants 
(CICA) required companies to incorporate IFRS. The financial statements for FY 2011 
have therefore been restated in accordance with IFRS and will, accordingly, differ from 
the financial statements previously posted for FY 2011. 

 


During FY 2012, MWS produced and sold 99,003 (FY 2011: 82,941) ounces of gold, in 
line with the downgraded forecast issued in Q3 2012 of between 98,000 ounces and 
100,000 ounces for FY 2012. In the process, MWS generated $132 million (FY 2011: 
$89 million) in revenue at an average Cash Cost* of $687 (FY 2011: $516) per ounce of 
gold sold. The 19% increase in gold sold for FY 2012 from FY 2011 was mainly 
attributable to the completion of the third gold module and the Tailings Storage Facility, 
which boosted processing capacity. As a result, tonnes reclaimed rose 48% year on 
year. This achievement was unfortunately offset by challenges encountered around the 
composition of the mining mix that saw an 11% drop in recovered grade during the 
period under review. 

 


The 33% overall increase in Cash Costs, year-on-year, was mainly driven by the 
increase in processing capacity, running costs and teething problems associated with the 
newly completed infrastructure, largely as a result of increased fuel, water and power 
usage. 


FY 2012 proved a particularly challenging year from a safety and production perspective 
at Ezulwini Mine, with 4 fatal accidents during calendar 2011, 3 of which occurred in the 
latter half of the calendar year, having a significant negative impact on employee morale 
and productivity of the mine. 

 


Despite an intensive change management process implemented in Q1 2012, the 
anticipated improvements at Ezulwini Mine were not forthcoming and at the end of Q3 
2012, a restructuring of Ezulwini Mine was announced that resulted in approximately 
50% of the workforce being retrenched by the end of Q4 2012. 

 



One of the very few highlights of the year for Ezulwini Mine occurred at the end of Q3 
2012 with the settlement of the final quarterly guaranteed ounces requirement to Franco-
Nevada pursuant to the Ezulwini Gold Stream Transaction (effectively 64% of the gold 
sold during Q3 2012 at $400 per ounce of gold). As of January 2012, the mine reverted 
to delivering only 7% of its gold production to Franco-Nevada at $400 per ounce of gold. 

 


Ezulwini produced and sold 47,442 (FY 2011: 59,689) ounces of gold generating $63 
million (FY 2011: $61 million) in revenue at an average Cash Cost* of $2,155 (FY 2011: 
$1,605) per ounce of gold. As a result of lower than anticipated gold production, 
combined with a 34% increase in the average Cash Cost per ounce of gold sold, the 
mines gross losses in FY 2012 ($48 million) were up 4% compared to FY 2011 ($46 
million). Revenue from uranium sold increased dramatically, from $1 million in FY 2011 
to $5 million in FY 2012 following the successful re-commissioning of the Ezulwini 
Uranium plant in April 2011 after a hiatus of 8 months following the failure of two Ion 
Exchange (IX) columns in August 2010. The mine sold 82,862 pounds of uranium in FY 
2012, which was in line with the revised forecast of 82,000 pounds. 

 


During FY 2012, First Uranium utilized $16 million (FY 2011: $50 million) of its cash 
resources to fund its operating activities. The Corporation spent $29 million (FY 2011: 
102 million) on capital projects in FY 2012 comprising mainly the closing out of 
construction and successful commissioning of MWSs third gold plant module, including 
adjoining infrastructure (Phase 2) and its new tailings storage facility (TSF). 

 


As at March 31, 2012, current assets, including current assets from discontinued 
operations, were $22 million (March 31, 2011: $73 million) and included cash and cash 
equivalents of $7 million (March 31, 2011: $50 million). The Corporations current assets, 
excluding current assets from discontinued operations, were $4 million as at March 31, 
2012 and included cash equivalents of $4 million. 

SALE OF ASSETS 

 


On June 13, 2012, First Uranium shareholders, Note holders and Debenture holders 
voted overwhelmingly in favour of the disposal of the Ezulwini Mine and MWS to Gold 
One and AGA, for a consideration of $70 million and $335 million, respectively. Gold One 
also provided a loan facility to the Corporation for an amount of up to $10 million, which 
has been fully drawn subsequent to year-end. The background to these transactions and 
developments is detailed in the Management Information Circular for the Special Meeting 
of Shareholders, dated May 4, 2012 (filed on SEDAR on May 8, 2012). 

 


The proceeds from the sale of First Uraniums principal assets will enable it to settle the 
Debentures, the Notes and the Gold One Loan Facility under the terms agreed to with 
the Debenture holders, Note holders and Gold One on June 13, 2012. 

 

FOURTH QUARTER ENDED MARCH 31, 2012 

 


The consolidated revenue from First Uraniums two operations for the three months 
ended March 31, 2012 (Q4 2012) was $48 million, compared to $37 million for the three 
months ended March 31, 2011 (Q4 2011), which is a 31% improvement quarter-on-
quarter. A 433% rise in gross profits from the operations led to a gross profit of $9 million 
for Q4 2012 compared to from a loss of $3 million in Q4 2011 and a consolidated pre-tax 
profit for Q4 2012 of $23 million compared to the pre-tax loss in the comparative period 
(Q4 2011: $80 million). 



During Q4 2012, the Corporation utilized $10 million (Q4 2011: $20 million) of cash 
resources in its operating activities. Capital expenditure was minimal (Q4 2011: $12 
million), reflecting the close out of the capital projects at MWS. 

 

Mine Waste Solutions 

 


During Q4 2012, MWS generated $34 million in proceeds (Q4 2011: $25 million) from 
24,862 ounces of gold sold (Q4 2011: 22,150 ounces) at a Cash Cost of $790 per ounce 
(Q4 2011: $553 per ounce). The tonnage throughput increased by 37% from Q4 2011 to 
Q4 2012, as a result of the additional plant module that came into production during FY 
2012. This was offset by a 16% drop in the average gold recovery grade which limited 
gold production during Q4 2012 to an increase of only 12% in gold ounces sold 
compared to Q4 2011. This, combined with the increase in average gold selling price, 
resulted in a 35% increase in revenues in Q4 2012 compared to Q4 2011. 

 


The 61% increases in Cash Costs in Q4 2012 were driven by the high unit cost of 
operating the Hartebeesfontein No. 7 satellite dam (including trucking) as well as 
additional power and water costs associated with operating the new TSF and a 
substantial increase in certain key reagent costs in Q4 2012 (resulting in the 27% 
increase compared to Q3 2012). 

 


Due to the Corporations decision to dispose of its principal assets at the start of Q4 
2012, no amortization for the MWS assets was provided for on a consolidated basis 
during Q4 2012. The increase in amortization year-over-year is driven by the 48% higher 
tonnage throughput for FY 2012 compared to FY 2011. 

 


The higher revenues in both Q4 2012 and FY 2012 more than offset the higher costs in 
the respective periods and resulted in the 31% and 38% increases in gross profits 
generated by MWS compared to Q4 2011 and FY 2011, respectively. 

 


Going forward, there is an opportunity to improve recovery performance for the first gold 
module and circuit modifications aimed at improving leach time are expected to be 
concluded by the end of Q1 2013 with the intention of commissioning in early Q2 2013. 
Economically viable opportunities for the second and third gold modules have not 
emerged thus far. Notwithstanding the modifications that can be made to gold module 
one, the relative proportion of clay compared to clean material is expected to increase as 
the availability of clean sources of material on Buffelsfontein No. 3 tailings dam continues 
to diminish and, and with it, mining mix flexibility. The performance of gold module one 
and two will therefore continue to diminish until such time as alternative clay handling 
mechanisms with the ability to improve the reclamation rate as well as the quality of the 
material delivered to the plant are sourced. The impact could range from 15% to 25% off 
current levels dependent upon the relative extent of clay to clean material on 
Buffelsfontein No. 3 tailings dam. 

 


Ezulwini Mine 

 


The Ezulwini Mine generated $13 million in proceeds during Q4 2012 (Q4 2011: $12 
million) from 8,068 ounces of gold sold (Q4 2011: 11,393 ounces) at a Cash Cost of 
$2,218 per ounce (Q4 2011: $2,227). The Ezulwini Mine also sold 23,675 pounds of 
uranium during Q4 2012, generating $1 million in proceeds in Q4 2012. No uranium was 
sold in Q4 2011. 

 


Notwithstanding the restructured operation at the Ezulwini Mine, and the reduction in the 
required delivery of gold to FN to 7% of gold production, the turnaround in operations at 
Ezulwini had not yet realized the expected results. While the quantity and grade of the 
blasted tonnes was substantially in-line with the new operating plan, the mine was 
unable to meet its tonnage targets, due mainly to a number of tramming constraints, 
including a fall of ground on one of the major ore transfer levels. As a result, the 
operation continued to lose money in Q4 2012 and consume cash at a greater rate than 
planned. 

 


As a consequence, tonnage throughout fell 40% in Q4 2012 compared to Q4 2011. This 
was offset by improved gold recovery grades, resulting in a 29% decline in gold ounces 
sold in Q4 2012, compared to Q4 2011. Consequently the proceeds from gold ounces 
sold also decreased, although at lower rates, primarily due to the higher gold price over 
the comparative period. 

 


In order to address these issues, mine management are in the process of implementing 
a detailed action plan, which includes clearing the fall of ground, correcting the trackless 
section operating conditions and addressing the mechanical condition of the trackless 
equipment on the level. 

 


Going forward, the current mine plan is targeting a gold output of approximately 50,000 
ounces for FY 2013 from an average monthly production of 44,000 tonnes. Despite the 
uranium sections of the mine having been closed and the uranium plant put onto care 
and maintenance, the Ezulwini Mine will realize revenue from uranium sales in Q1 2013 
related to the sale of the 25,000 pounds of uranium carried over from uranium production 
in FY 2012, prior to halting the uranium mining operations. As at the end of Q1 2013, 
Ezulwini Mine is beginning to see the results of the restructuring process that was begun 
in December 2011, with gold sold in Q1 2013 in excess of 9,500 ounces. Cash costs are 
in line with budget and, assuming production ramps up to the expected levels, Ezulwini is 
well placed to begin breaking even by the end of Q2 2013. 

 

OUTLOOK 

 


As discussed under the Recent Developments section of this news release, the 
Corporation expects to conclude and implement the AGA Transaction by July 24, 2012, 
following which the Gold One Transaction is expected to be concluded by July 31, 2012. 

 


On the implementation of the AGA Transaction, BNY and GMG, the Indenture Trustees 
for the Canadian Notes and the Rand Notes, respectively, will be paid the respective 
principal amounts owing to the Canadian and Rand Note holders and the Gold One Loan 
will also be repaid. 


The Board will determine an amount for an initial distribution to shareholders, following 
completion of both the AGA Transaction and the Gold One Transaction, and the 



repayment of all current obligations to the Debenture holders, settlement of all 
outstanding obligations to the Note holders and reserving an amount for any continuing 
and contingent obligations. Following release of the escrow funds held for claims under 
the AGA Agreement and the Gold One Agreement, the settlement of all remaining 
obligations to the Debenture holders and the establishment of a reserve for any 
continuing and contingent obligations, the Board will determine an additional amount to 
be distributed to the shareholders. The Corporation may then proceed to be wound up 
and dissolved. However the Board has not made any decisions with respect to the 
windup and dissolution at this time. 

 


*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 Corporations Financial 
Statements. 

 

About First Uranium Corporation 

 


First Uranium Corporation (TSX:FIU, JSE:FUM) is a Canadian resource company which operates 
the Ezulwini mine, an underground gold and uranium operation and Mine Waste Solutions 
(MWS), a tailings recovery facility. Both operations are situated in South Africa. 

 

For further information: 


Mary Batoff: +1(416) 306-3072, mary@firsturanium.ca 

 


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 Corporation's plans involve various estimates and 
assumptions and its business and operations are subject to various risks and uncertainties. For more details 
on these estimates, assumptions, risks and uncertainties, see the Corporation'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, including without limitation, the statements regarding 
the proposed transactions with Gold One International Limited and AngloGold Ashanti Limited. 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: 02/07/2012 08:48:00 Supplied by www.sharenet.co.za                     
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