First Uranium Update on Environmental Authorization
Wednesday, Feb 03, 2010
Company Commences a Project Restructuring at MWS, Revises Ezulwini Mine Plan and Undertakes Strategic Review
TORONTO and JOHANNESBURG, Feb. 2 /PRNewswire-FirstCall/ -- First Uranium Corporation (TSX:FIU, JSE:FUM) (ISIN:CA33744R1029) ("First Uranium" or "the Company") today announced that the Company has been engaged in intensive discussions at the most senior levels with officials of the North West Provincial government, including the Department of Agriculture, Conservation, Environment and Rural Development ("NWDACE") regarding its decision to withdraw the Company's environmental authorization ("EA") for the new Tailings Storage Facility ("TSF"). The TSF was designed to accommodate future tailings deposition at the Mine Waste Solutions ("MWS") tailings recovery project in South Africa. While the EA has not yet been reinstated, based on these recent discussions, the Company is cautiously optimistic that the EA will be reinstated.
Gordon Miller, President and CEO of First Uranium, commented, "As a result of the circumstances that have been precipitated by the unexpected withdrawal of the environmental authorization for our future tailings deposition site at MWS, management's key priorities are to resolve this authorization issue as quickly as possible, seek strategic alternatives for financing and the immediate restructuring of our operations."
Strategic Review, Project Restructuring and Capital Limitations
The announcement of the withdrawal of the EA has not only delayed construction of the TSF, it has also disrupted certain well-advanced corporate financing opportunities, which, along with the slower than expected production buildup at the Ezulwini Mine, would, if alternative financing is not obtained, severely compromise the Company's financial position. The Company is now reviewing strategic alternatives, and is engaged in discussions with respect to alternative financing opportunities.
Notwithstanding progress at its operations discussed below, the continuing discussions regarding the EA and the continuing financing discussions, the Company has taken action to delay future development expenditures, particularly at its MWS tailings recovery operation as part of a company-wide program to conserve capital.
The construction of the first uranium plant module will be concluded by the end of February 2010, at which time commissioning will commence. The plant is expected to commence production of ammonium diuranate ("yellowcake") during the second half of calendar year 2010. While the construction of the third gold plant was progressing ahead of schedule and due for completion in May 2010, as a result of the apparent withdrawal of the environmental authorization for the TSF, construction and commissioning of the third gold plant have been suspended.
Production at MWS will be scaled back from two gold plants to one at the end of March 2010. The reduced production will enable the Company to maximize the availability of its current deposition capacity until the permitting issue has been resolved, but will also result in lower revenues and increase the amount of financing required by the Company.
Under the revised construction schedule the MWS # 5 Dam will provide sufficient tailings deposition capacity for the one gold plant until the end of December 2011. Subject to re-instatement of the EA and the receipt of additional capital in the near term, the project will be able to continue along its originally planned production trajectory of 35,000 ounces per quarter.
In addition, the Ezulwini Mine development plan is ahead of schedule, however, the mine production forecast has been revised in response to slower than expected mine production ramp up to date and the capital constraints.
Source: PR Newswire
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