First Uranium shares mark time

[miningmx.com] — SHARES in First Uranium Corporation (First Uranium) remained unchanged at 560c on the JSE on Wednesday morning, as it reported lower gold production for the September quarter.

At that price, the shares remain close to the 12-month low of 545c and have lost nearly all the ground gained in July, when they reached 720c on the back of favourable June quarter production results.

Total gold production dipped to 33,418 ounces (June quarter – 34,335oz) as production dropped at the Mine Waste Solutions (MWS) plant and the anticipated production build-up at the Ezulwini mine was constrained.

Production from MWS dropped to 18,598oz (20,215oz) while Ezulwini increased output by only 5% to 14,820oz (14,120oz) because of a seismic event that took place on August 20.

Blasting activities on the Upper Elsburg reef were cut back for five weeks to allow for the opening up and support work required in areas affected by the seismic event.

Following the seismic event, management decided to upgrade the capacity of the mine’s backfill plant by 500% to improve support, using backfill in all the conventional mining panels in the Ezulwini shaft pillar. This will underpin the mine’s ramp-up plan.

First Uranium CEO Deon van der Mescht said management was maintaining its guidance on gold production for the year to end-March 2011 at an annualised 80,000oz for Ezulwini and 72,000oz for MWS.

He said MWS had delivered its third successive quarter of “achieving or improving on its market guidance’.

He added the remaining MWS capital programme for the third gold plant module and the new tailings storage facility would be completed on schedule by May next year. This “should allow for the restructured Gold Wheaton completion test to be satisfied prior to September 1 2011.’

Gold Wheaton provided funding to First Uranium in advance through a royalty scheme, in terms of which First Uranium committed to deliver specific volumes of gold to Gold Wheaton.

The success of that plant test is crucial for the restructuring of the $42m penalty payment due to Gold Wheaton because of construction delays experienced so far at MWS.

If the test is not completed successfully by September 1 next year, First Uranium has to pay $1.5m each month until December.

If the plant fails to meet requirements by December 1, the remaining penalty of $30m will be payable.