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First Uranium Corporation announced the successful completion of the Mine Waste Solutions Technical Completion Test and its financial and operating results for the three months ended June 30, 2011.
Gold sales for the three months ended June 30, 2011 amounted to 34,439 ounces, which is 1% lower than the 34,761 ounces sold for the three months ended June 30, 2010 and 3% higher than the 33,543 ounces sold during the three months ended March 31, 2011. The Company also sold 31,407 pounds of uranium in Q1 2012 compared to 20,500 pounds in Q1 2011. No uranium was sold in Q4 2011. Total proceeds from gold and uranium sold by the Company’s two operations increased to $42.3 million in Q1 2012 (Q1 2011: $34.2 million; Q4 2011: $36.7 million), which is a 24% and 15% increase, respectively, compared to Q1 2011 and Q4 2011. First Uranium is pleased to announce the successful conclusion of the MWS Technical Completion Test, as defined in the MWS Gold Purchase Agreement. The Technical Completion Test required MWS to achieve consistent production over three consecutive months, where the tonnage processed and or re-processed through the project is within 85% of the 1.933 million tonnes of tailings per month in respect of the project. In addition, MWS had to satisfy certain key criteria with respect to tonnes of material processed, average feed grade to the plant and gold recovery for a minimum, continuous, period of 14 days. First Uranium Chief Executive Officer, Deon van der Mescht said, “The test was successfully concluded at 22:00 on Wednesday, August 24, 2011 and was subsequently confirmed by Franco-Nevada on Monday, August 29, 2011. The successful completion is a defining moment for what is already a world class project and improves the risk profile of the Company substantially.” Financial and Operating Results Mine Waste Solutions generated $26.6 million (Q1 2011: $21.4 million; Q4 2011: $25.1 million) in proceeds from 21,546 ounces of gold sold (Q1 2011: 21,008 ounces; Q4 2011: 22,150 ounces) at a Cash Cost of $663 per ounce (Q1 2011: $454 per ounce; Q4 2011: $435 per ounce). The 24% increase in gold proceeds compared to this time last year was as a result of the 21% higher average gold selling prices received over the comparative period, along with the 3% increase in gold ounces sold. The respective 46% and 52% increases in Cash Costs compared to Q1 2011 and Q4 2011 is largely driven by the additional infrastructure costs of the recently-commissioned third gold stream, which is yet to be fully optimized. Other factors that led to an increase in costs were higher labour and power charges. The commissioning of the third gold plant expansion at MWS commenced on April 1, 2011 and, together with the commissioning of the life-of-mine Tailings Storage Facility on April 5, 2011, resulted in the operations processing capacity increasing from an average of 1.2 million tonnes per month to 1.8 mtpm. MWS reported a 58% and 35% higher tonnage throughput compared to Q1 2011 and Q4 2011, respectively. This was despite minor commissioning constraints and the introduction of new resources into the mining mix. The third gold circuit modifications are largely complete and management is pursuing further enhancements to improve performance. The commissioning of these projects concludes the final gold expansion phase at MWS and enabled the operation to start the first phase of the (Franco-Nevada) technical completion test at the end of April 2011, despite a temporary suspension to the MWS operation after South Africa’s National Nuclear Regulator issued a directive for MWS to suspend operations. The suspension was lifted on 29 July 2011 and the Company then proceeded with the second phase of the completion test, which was successfully completed on August 24, 2011. The Ezulwini Mine generated $13.8 million (Q1 2011: $11.9 million Q4 2011: $11.6 million) in proceeds from 12,893 ounces of gold sold (Q1 2011: 13,753 ounces: Q4 2011: 11,393 ounces) at a Cash Cost of $2,344 per ounce (Q1 2011: $1,467 per ounce: Q4 2011: $2,227 per ounce). The 24% increase in tonnage throughput for Q1 2011 compared to Q1 2010 was largely offset by a 15% decrease in the average gold recovery grade, which resulted in the gold ounces sold decreasing by 6%. The Ezulwini Mine’s costs increased by 53% compared to Q1 2011 and 27% from Q4 2011, primarily as a result of higher labour, power, stores and material charges. Power costs increased as a result of the annual increase in electricity rates in South Africa as well as an increase in usage due to the mine’s increased shaft and plant activity. Stores and material costs reflect the higher tonnage profile. Following the recent successful re-commissioning of the uranium plant, the Ezulwini Mine sold 31,407 pounds of uranium (Q1 2011: 20,500 pounds) during the quarter generating $1.9 million in revenue (Q1 2010: $0.8 million). Deon van der Mescht, commented, “The Ezulwini Mine’s uranium plant has been operating above planned targets with recoveries in excess of 80%, which is 5% higher than design. The re-designed Ion Exchange columns have been inspected and we are pleased that they are operating to design parameters”. In late July, the Company successfully commissioned a pilot float plant that has been established to confirm the validity of laboratory scale test work on the commercial viability of the treatment of external third party uranium bearing material. Additional confirmatory work is required before the Company will be able to determine whether it is able to leverage the opportunity of spare capacity at the Ezulwini Mine’s uranium plant. While the Ezulwini Mine’s shaft maintenance program has progressed well, with completion of the first phase of the program achieved, gold production was constrained by the earlier impact of this program and a fatal accident that occurred in March 2011. Key phases of the maintenance program have now been successfully concluded and the shaft is now operating continuously at the requisite man and material hoisting speeds. This has enabled the mine to migrate back to conventional mining methods and, while this has proven to be more difficult than anticipated, it has now largely been concluded and delivery into the ramp-up is improving month-on-month. The Company’s higher production costs, primarily as a result of the issues at the Ezulwini Mine, exceeded the increase in proceeds from gold and uranium sold by the operations, resulting in a loss of $14.9 million, compared to the loss Q4 2011 of $7.0 million, and a profit of $11.4 million in Q1 2011. First Uranium’s consolidated pre-tax loss for Q1 2012 of $39.8 million improved compared to the loss in the comparative period (Q1 2011: $73.5 million; Q4 2011: $79.5 million). Cash utilized in the Company’s operating activities amounted to $5.9 million for Q1 2012 (Q1 2011: $11.0 million; Q4 2011: $9.7 million), and First Uranium spent $15.9 million in Q1 2012 (Q1 2011: $33.6 million; Q4 2011: $12.8 million) on capital project, which included the completion of MWS’ third gold module and the new TSF and adjoining infrastructure. As at June 30, 2011, current assets were $51.4 million (March 31, 2011: $73.4 million) and included cash and cash equivalents of $26.8 million (March 31, 2011: $49.6 million). |
