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financial results for the three months ended June 30, 2012.
F irst Urani um Co r po rati on
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
August 14, 2012
First Uranium announces financial results for the three months ended June 30,
2012.
For the Management Discussion & Analysis and Financial Statements please refer to
the Corporation’s website at www.firsturanium.com.
Toronto and Johannesburg – First Uranium Corporation (TSX:FIU.UN) (JSE:FUU)
(ISIN:CA33744R5047) (“First Uranium” or “the Corporation”) today announced its
financial results for the three month period ended June 30, 2012.
Summary of Recent Developments
- On July 20, 2012, the Implementation Date, as defined in the 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
Corporation’s tailings recovery project in South Africa, to AngloGold Ashanti
Limited (“AGA”) for US$335 million in cash (the “AGA Transaction”), occurred
with the discharge of the security held for the benefit of the 7% secured
convertible notes due March 31, 2013 (the “Canadian Notes”) issued by First
Uranium, the 11% secured convertible notes due March 31, 2013 (the “Rand
Notes”) issued by MWS, and the US$10 million loan facility (the “Gold One
Loan”) with Gold One International Limited ("Gold One").
- Of the proceeds from the AGA Transaction, US$25 million (the “AGA Deferred
Payment”) will be held in escrow until January 20, 2013 at which time, the
AGA Deferred Payment, less any claims made and payable in accordance with
the AGA Agreement, if any, will be paid to First Uranium.
- The US$10 million Gold One Loan plus accrued interest of US$220,643 was
repaid in full.
- The termination fee under the Vulisango management agreement of ZAR9.6
million (US$1,181,030) was paid in full.
- The Canadian Notes, principal amount of Cdn$110 million (US$109,040,444)
and the Rand Notes, principal amount of ZAR418.6 million (US$51,498,431),
were redeemed in full on July 31, 2012.
- August 1, 2012, was the Implementation Date, as defined in the agreement
(the “Gold One Agreement”) dated March 30, 2012, as amended, of the sale
of First Uranium Limited, a wholly-owned subsidiary of the Corporation which
owns all of the shares of Ezulwini Mining Company (Proprietary) Limited, to
Gold One for US$70 million.
- Of the proceeds from the Gold One Transaction, US$5 million (the “Gold One
Deferred Payment”) will be held in escrow until February 1, 2013 at which
time, the Gold One Deferred Payment, less any claims made and payable in
accordance with the AGA Agreement, if any, will be paid to First Uranium.
- On August 13, 2012, the Corporation paid to the Indenture Trustee for
distribution to holders of 4.25% unsecured convertible debentures (the
“Debentures”) issued by the Corporation, Cdn$142.5 million
(US$142,957,464) representing 95% of the principal amount of the
Debentures owing as of April 30, 2012 together with the unpaid interest on
100% of the principal amount the Debentures accruing from December 31,
2011 to March 2, 2012 (inclusive) in the amount of Cdn$1,100,343
(US$1,103,875)(together the 95% Payment Amount). It is expected that the
registered holder, the Canadian Depository for Securities, will complete the
payment to Debentureholders on August 15, 2012.
- In addition to the 95% Payment Amount, on August 13, 2012, the Corporation
paid to the Indenture Trustee, Cdn$3 million (US$3,009,630) representing 2%
of the principal amount of the Debentures owing as of April 30, 2012, for
distribution on a pro rata basis to those Debenture holders who agreed on or
before May 30, 2012, to vote in favour of the extraordinary resolution to
approve the amendments to the Debenture indenture. It is expected that the
Indenture Trustee will complete the payment of this amount on August 15,
2012.
- The Debentures no longer meet the listing requirements of the Toronto Stock
Exchange (the “TSX”) and the Debentures were delisted at the close of
business on August 13, 2012. The Corporation applied to list the Debentures
on the NEX Board of TSX Venture Exchange ("NEX"). However, the NEX
declined to accept the Debentures for listing, as following payment of 97% of
the principal amount, the Debentures do not meet the minimum listing
requirements of the NEX.
- Both the senior management team and the board of directors of the
Corporation have been reduced in size.
- The Corporation no longer meets the original listing requirements of the TSX,
and has voluntarily applied to delist from the TSX and applied for a listing of
its units on the NEX. The Corporation has received conditional approval from
the NEX to list the units. The conditions are customary and the Corporation
believes that it will be able to satisfy such conditions which will allow for an
orderly transition from the TSX to the NEX and no interruption in trading.
- Subject to listing the Corporation’s units on the NEX and meeting the
requirements for notice of record dates and payment dates of the NEX and
the JSE Limited, the Corporation expects that it would be in a position to pay
an initial distribution to shareholders in the amount of Cdn$0.125 per unit
within four weeks of listing the units on the NEX. The Corporation will provide
a further update when the date for listing on the NEX has been finalized.
- The lower initial distribution amount compared to the estimate of Cdn$0.22
per unit as of June 6, 2012, is due substantially to changes in the Cdn/USD
and ZAR/USD exchange rates (approx. Cdn$0.065 per unit), lower than
expected production and higher costs at the operations and gold price
fluctuations (approx. Cdn$0.02 per unit), and taxes (approx. Cdn$0.01 per
unit).
- In addition, following the release of the AGA Deferred Payment and the Gold
One Deferred Payment, 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, from
the amounts available from escrow, for the second distribution to the holders
of the Units.
Results for Q1 2013
Gold sales for the three months ended June 30, 2012 (“Q1 2013”) of 30,636 ounces,
which is 11% lower than the 34,439 ounces sold for the three months ended June 30,
2011 (“Q1 2012”), and 7% lower than the 32,931 ounces sold during the three
months ended March 31, 2012 (“Q4 2012”). The Corporation also sold 26,733 pounds
of uranium in Q1 2013 compared to 31,407 pounds in Q1 2012 and 23,675 pounds in
Q4 2012.
Total proceeds* (refer to note at end) from gold and uranium sold by the
Corporation’s two operations was US$44.2 million in Q1 2013 (Q1 2012: US$42.3
million; Q4 2012: US$48.0 million), which is 4% higher and 8% lower compared to Q1
2012 and Q4 2012, respectively.
Mine Waste Solutions (“MWS”) generated US$26.7 million (Q1 2012: US$26.6
million; Q4 2012: US$33.9 million) in proceeds from 20,295 ounces of gold sold (Q1
2012: 21,546 ounces; Q4 2012: 24,862 ounces) at a Cash Cost** (refer to note at end)
of US$847 per ounce (Q1 2012: US$663 per ounce; Q4 2012: US$790 per ounce).
Even though MWS’s tonnage throughput for Q1 2013 was 7% lower compared to Q1
2012 with a resultant 6% drop in gold ounces sold, gold revenues improved slightly
(1%) quarter-on-quarter due to on-average higher gold selling prices.
Since Q3 2012, MWS has experienced some challenges with the introduction of new
material into the mining mix which resulted in lower average grade delivered to its
gold circuits. Towards the end of Q4 2012, MWS’s performance was further impacted
negatively by recalcitrant clay levels at the Buffelsfontein No.3 tailings dam that
reduced volumes and hence content of feed material delivered to and extracted by
the plant infrastructure. Consequently, the tonnage throughput (9%) and gold
recoveries (13%) for Q1 2013 were lower compared to that of Q4 2012, resulting in a
reduction of 18% in gold ounces sold. The lower ounces sold combined with on-
average gold selling prices in Q1 2013 compared to Q4 2012 resulted in the 21%
decrease in gold revenues from MWS.
The 20% increase in costs in Q1 2013 compared to Q1 2012 was due to a number of
factors, including additional power costs of operating the new TSF, additional water
costs and substantial increases to the cost of certain key reagents. The 13% increase
in costs compared to Q4 2012 was driven by labour increases which was effective
from the start of the quarter along with higher power costs due to tariff increases
and winter rates taking effect during Q1 2013.
Due to the Corporation’s 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
since the start of the 2012 calendar year.
The 7% higher gross profit in Q1 2013 compared to Q1 2012 was primarily
attributable to the fact that no amortization was provided for in Q1 2013. The 33%
lower gross profit compared to Q4 2012 was attributable to the lower revenues
along with higher costs in Q1 2013 as discussed above.
The Ezulwini Mine generated US$16.1 million (Q1 2012: US$13.8 million; Q4 2012:
US$12.9 million) in proceeds from 10,341 ounces of gold sold (Q1 2012: 12,893
ounces; Q4 2012: 8,069 ounces) at a Cash Cost of US$1,614 per ounce (Q1 2012:
US$2,344 per ounce; Q4 2012: US$2,217 per ounce).
Although the gold ounces sold was 20% lower compared to Q1 2012, gold revenues
improved by 17%. The improvement in revenue was primarily due to on-average
higher gold selling prices compared to Q1 2012, and further aided by the reduction in
the ounces of gold delivered to Franco Nevada (“FN”) at US$400 per ounce pursuant
to the Ezulwini Gold Stream Transaction from effectively 40% of total gold production
in Q1 2012 to 7% as of January 2012. Costs were significantly lower compared to Q1
2012 due to the restructuring process that was implemented towards the end of Q4
2012 along with various cost cutting initiatives that were implemented over the
course of FY 2012.
The mine started to realize the benefits from the restructuring process that was
implemented during Q4 2012 as can be seen by the 13% improvement in tonnes
milled and a 2% improvement in gold recoveries that resulted in a 27% increase in
gold ounces sold compared to Q4 2012. Consequently, gold revenues were also higher
compared to Q4 2012, although the increase was slightly lower due to the on-average
lower gold selling prices compared to the previous quarter. Costs were only 6% lower
compared to Q4 2012 primarily as a result of labour increases that became effective
at the start of Q1 2013, as well as higher power costs due to tariff increases and
winter rates taking effect in during the quarter.
Due to the Corporation’s decision to dispose of its principal assets at the start of Q4
2012, no amortization for the Ezulwini Mine assets was provided for on a consolidated
basis since the start of the 2012 calendar year.
The improvement in revenues and the reduction in costs in Q1 2013 compared to Q1
2012 and Q4 2012 resulted in gross losses from the Ezulwini Mine decreasing
substantially, by 97% and 89%, respectively.
The Corporation reported consolidated gross profits for Q1 2013 compared to
consolidated gross losses for Q1 2012, primarily as a result of the improvement in
performance and reduction in costs by the Ezulwini Mine quarter-on-quarter. The
poor performance by MWS in Q1 2013 compared to Q4 2012 more than offset the
improved performance and cost reductions from the Ezulwini Mine and resulted in a
marginal decrease in gross profits compared to the previous quarter.
First Uranium’s consolidated pre-tax profit of US$30.7 million in Q1 2013 showed a
US$70.5 million improvement compared to the consolidated pre-tax loss of Q1 2012
(Q1 2012: US$39.8 million; Q4 2012: US$22.7 million). The primary driver for the
improvement was the derivative income related to the Gold Stream Transactions of
US$34.9 million recognized in Q1 2013 compared to a derivative expense of US$22.3
million recognized in Q1 2012.
The Corporation (including discontinued operations) generated US$4.1 million cash
from its operations in Q1 2013, compared to cash utilized of US$5.4 million in Q1
2012. The Corporation utilized US$2.7 million during Q1 2013 (Q1 2012: US$15.9
million) on capital projects at the operations. The much lower capital expenditure in
Q1 2013 compared to Q1 2012 reflects the completion of the major capital projects at
MWS which occurred during Q3 2012.
As at June 30, 2012, current assets, including current assets from discontinued
operations, were US$25.5 million (March 31, 2012: US$21.9 million) and included cash
and cash equivalents of US$11.7 million (March 31, 2012: US$6.7 million). First
Uranium’s current assets, excluding current assets from discontinued operations,
were US$3.0 million as at June 30, 2012 and included cash equivalents of US$2.3
million.
NOTES:
*Proceeds are non-IFRS measurements and investors are cautioned not to place undue reliance on it
and are advised to read all IFRS accounting disclosures presented in the Corporation’s Financial
Statements.
**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 Corporation’s Financial Statements.
Non-IFRS Measures
The Corporation believes that in addition to conventional measures prepared in accordance with IFRS,
the Corporation and certain investors and analysts use certain other non-IFRS 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-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 Corporation’s Financial Statements for more detail.
For further information, please contact:
Mary Batoff, +1 416 306 3072 or 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. 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
Page 7
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