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First Uranium says won't catch contagion Posted: Wed, 14 Nov 2007 [miningmx.com] -- THE precipitous decline in Uranium One’s share price, down 33% from October 30 to November 13, appears at face value to be a typical case of growing pains. While promising production, much of it through aggressive, headline-grabbing acquisition, Uranium One was the poster company for all exploration firms. When it announced in October that uranium oxide production would be lower in 2007 – and considerably lower next year – investors were brought firmly down to earth. The stock was down another 11% on November 11 alone, the day before the group announced operational and financial results. It'll be interesting to see how management responds: whether it has the mettle, so to speak. But one also wonders what the future holds for that other expectant uranium producer, First Uranium. Its share price has moved the other way, gaining 7% over the same period that Uranium One was shedding value. But unlike Uranium One, First Uranium isn’t yet producing uranium. However, president and CEO Gordon Miller says First Uranium is a different kettle of fish. “There have been five uranium plants built in the area where we’re building two new ones,” says Miller of the history the Buffelsfontein (Buffels) operation has in uranium production. “We’re not doing anything fancy. We’re building the same plants, although obviously we can optimise them.” First Uranium also has gold production. Its Ezulwini operation, near Randfontein on the West Rand, is delivering concentrate to Harmony Gold’s Doornkop plant quicker than projected. That obviously sends a good message about management and also provides welcome cash flow. Uranium output from Ezulwini isn’t far behind either, says Miller. “We’re already in the stopes. We’re pretty confident we can produce the first uranium in about eight months’.” Miller built First Uranium through Simmer & Jack Mines, the Johannesburg-listed parent company, which in turn was ultimately a Roger Kebble reincarnation. As such there’s been some reticence concerning its ability to deliver, a conclusion based solely on the historic track records of some things from the Kebble stable. Unfair? Maybe, but the signs look good for First Uranium. The root problem with regard to Uranium One’s lower than expected production was the unavailability of acid, crucial in uranium oxide production. Miller says that owing to the production of pyrite at Buffels, acid production won’t be a problem. (Pyrite can be manufactured into acid.) In any event, Miller says First Uranium is considering – as another option – a joint venture to build an acid production plant with other acid producers. Click Here to subscribe to our daily newsletter
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