Gordon Miller, CEO, Simmer & Jack Mines and First Uranium Corporation.
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First Uranium ups ante in U race
David McKay
Posted: Thu, 10 May 2007

[miningmx.com] -- FIRST Uranium, the Toronto-listed uranium exploration company, said returns from its South African project Ezulwini would improve if it succeeded in accelerating production.

"We are on track to meet our revised production deadlines and consequently we expect a better than planned return on this project," said Gordon Miller, president and CEO of First Uranium.

Mining at the Ezulwini underground mine is planned to begin in October with the first gold plant module scheduled three months earlier than planned in April, 2008. The first uranium plant module is pencilled in for June 2008.

Average annual production at Ezulwini for the life of the project, from 2007 to 2024, is expected to be 290,000 oz of gold and 888,000 pounds of uranium. First Uranium has traded between C$12 and C$13/share this week.

The net present value of the Ezulwini project would be 29% higher, First Uranium said. This was based on a higher long-term price assumption of $50/lb (from $40/lb previously) and investment in preproduction quicker than first anticipated. "[This] results in an accelerated schedule for planned uranium and gold production," it said in an announcement.

The interest in accelerating production gives foundation to a growing view the uranium price may not stay at its current elevated levels. Uranium oxide currently sells for about $120/lb from about $50/lb last year.

The improvement in the spot price has triggered a number of project startups, including South African gold producers who want to recommission old uranium workings. In the last six to 12 months, Gold Fields, DRDGOLD and Harmony Gold said they were studying uranium expansion plans.

AngloGold Ashanti has already increased uranium production and first commercial production from Dominion Reefs, a project in South Africa owned by Uranium One, is due before the year-end.

"Our primary objective is to put both of our mining projects into production at the earliest opportunity, while remaining diligent about creating a safe environment and achieving the best return on our investment," Miller said.

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On April 4, First Uranium said it would buy South Africa's Mine Waste Solutions (MWS) for R200m in an all-share transaction in an attempt to accelerate its uranium and gold production plans at its other project, Buffelsfontein.

"The acquisition is positive for Buffelsfontein. It brings production in a year ahead of schedule and the first uranium production eight months ahead of schedule and at double the rate,” Miller told Miningmx at the time.

First Uranium also said inflation had had an effect on its production plans at Ezulwini. Projected metallurgical plant would cost $24.2m more or $112.8m in total. This was owing to increased steel and cement costs.

The budget for contingency costs had fallen, however, owing to more confidence on pricing levels, the company said.

First Uranium had also recommended an additional exploration programme which could result in a possible expansion of Ezulwini.