First Uranium recovers some lost ground

[] — FIRST Uranium shares staged a partial recovery yesterday on both the Johannesburg and Toronto stock exchanges in response to the company’s June quarter production results.

These showed welcome increases in production from both the Ezulwini mine near Randfontein and the Mine Waste Solutions (MWS) dump retreatment operation near Klerksdorp.

First Uranium shares jumped 20% to C$0.94 on the TSX which compares with the recent all-time low of C$0.77.

On the JSE the shares were up 12% at 650c at yesterday’s close ahead of the release of the production results. During the preceding fortnight First Uranium shares had slumped from 858c on July 15 to a low of 545c on July 27.

In the latest report First Uranium CEO Deon van der Mescht also laid out the new management strategy which he was confident would pull the company through.

He said the new Ezulwini ramp-up plan and the plan to restructure and optimize costs across the company had been completed.

Key points included that Ezulwini is expected to be cash flow positive before capital by December and cash flow positive after capital by March 2011.

Van der Mescht added that current cash reserves were sufficient to meet funding requirements at planned economic assumptions.

He commented, “I am confident that the revised plans we have developed are both reasonable and achievable. Management is firmly committed to executing the plans.’

Major change to the capital programme is that the proposed pressure leach process costing about R451m at MWS has been delayed by two years. Construction was previously scheduled to start in January 2012.

Van der Mescht said MWS increased gold production by 65% in the June quarter against the estimate made in the revised March technical report because it was able to continue running as a two stream operation.

He commented, “the ongoing improvement in the structural integrity of the MWS No 5 tailings dam combined with the South African government’s awarding of the integrated water use licence enables management to further improve the operation’s production outlook.

“Management anticipates the remaining capital programme, comprising the third gold plant module and the new tailings storage facility plus related infrastructure will be concluded by May 2011.

“Integral to this scheduling is the expectation that the restructured Gold Wheaton completion test can be satisfied prior to September 1, 2011.’

Turning to Ezulwini, Van der Mescht said the revised production ramp-up called for the production of 81,000oz of gold and 117,000 pounds of uranium in the 2011 financial year.

He added, “while gold production reflects a substantive quarter-on-quarter improvement it is significantly less than the production ramp-up originally envisaged for the Ezulwini mine.

“The performance of Ezulwini is key to the success of First Uranium as the company relies in part on the cash generated from the gold and uranium output at Ezulwini to fund its business plan.

“While the emphasis at Ezulwini has been on creating an achievable ramp-up plan, the focus at MWS has been on optimising capital expenditure and production programmes.’