First Uranium gets key permit

[] — FIRST Uranium Corporation shares rose 9% to 873c in early trading on the JSE on Monday on news that the key water use licence for the Mine Waste Solutions (MWS) operation has finally been granted.

First Uranium has also completed a critical recapitalisation programme, which has brought in another C$150m.

Other positive factors included the settlement of the $42m penalty payment (for non-completion of the third gold plant module at MWS by a deadline of June 1) it owed to Gold Wheaton through the issue of First Uranium stock.

The total amount raised by First Uranium since it first listed on the Toronto Stock Exchange (TSE) in 2006 now amounts to more than $780m (about R5.8bn).

According to newly-appointed CEO Deon van der Mescht, First Uranium is now “in a position to fund its operations under the revised plans’.

However, he said: “To reduce the risk of requiring further funding going forward, the corporation is currently undergoing a detailed review of all areas within the business to optimise cash flow.

“At the Ezulwini mine, management is reviewing the historical performance of the mine in detail with the intention of understanding the reasons for the underperformance against past plans.

“The mine plan is also being reviewed, using a bottom-up approach to ensure buy-in from production staff and to identify critical activities which need to be addressed in a timely manner to meet planned objectives.

“At MWS, the operations are being optimised to ensure maximum cash generation while the remaining capital programme is being restructured to manage peak funding risk.’

The detailed review of the Ezulwini mine plan is to be completed by July. In the year to end-March, Ezulwini sold 26,965 ounces of gold and made its first shipment of 22,500 pounds of uranium during the March quarter.

Despite all the caveats, Van der Mescht is upbeat.

He said: “While the quarter got off to a disappointing start, I am pleased to report that the initial problems have largely been resolved thanks to the successful recapitalisation programme and the fact that two key permits for MWS – namely the environmental authorisation and the water use licence – were reinstated and granted, respectively.

“This effectively gives the green light to accelerate the expansion programme of this highly profitable operation.

“Now that these uncertainties have been addressed, we will be able to deliver value to our shareholders by meeting our near-term production goals with careful control of our costs.’

Van der Mescht replaced former CEO Gordon Miller , whose departure was linked to the C$150m capital raising. A condition of this offering involved changes to management and the board of directors.

But Miller has not been required to pay back to First Uranium the C$1m loan which was extended to him to cover the purchase of a house in Toronto when he relocated from South Africa to Canada.

According to the First Uranium results statement, “at the resignation of the CEO in March 2010 and as part of his severance package, the board agreed to forgive this loan in full. The outstanding amount of C$1m was therefore written off.

“In addition, a tax amount related to this transaction of C$0.4m was also incurred by the corporation.’