21st June 2010
By: Loni Prinsloo
source: www.miningweekly.com
JOHANNESBURG (miningweekly.com) - South Africa's Water Affairs Department has granted First Uranium a new order water use licence for its Mine Waste Solutions (MWS) operation, the TSX- and JSE-listed company announced on Monday.
"This effectively gives the green light to accelerate the expansion programme of this profitable operation," said newly appointed CEO Deon van der Mescht.
A key environmental authorisation (EA) for the new tailings storage facility at MWS, which the North West Department of Agriculture, Conservation, Environment and Rural Development withdrew in January, had also been reinstated, and it had concluded a C$150-million recapitalisation programme.
First Uranium's share price jumped by 19% on the JSE to R9,53 a share on Monday, despite reporting a financial loss.
First Uranium posted a $92-million loss in the financial year ended March 31, 2010, compared with a $16-million loss in the 2009 financial year.
The gold and uranium miner said that its fourth quarter loss widened to $26-million in the March quarter, compared with a loss of $10,7-million in the fourth quarter of the 2009 year.
The company said that the financial crisis during the reporting period was precipitated by the unexpected withdrawal of the EA for the new tailings storage facility at the MWS project at Buffelsfontein.
Van der Mescht commented that while the quarter got off to a disappointing start, the company was satisfied that the initial problems had largely been resolved thanks to the recapitalisation programme and the fact that two key permits for MWS were reinstated and granted.
Although the withdrawal of the EA had a negative impact on gold production at MWS, the company said that gold recoveries continued to improve through the year, allowing the operation to return in excess of 100% cash operating margins.
During the 2010 financial year, 62 019 oz of gold were sold from MWS.
Van der Mescht said that the company had decided to continue using two gold plant modules with two-stream deposition at the MWS project, albeit at reduced throughput of 975 000 t/m until the end May 2011.
Under the two-stream deposition plan, the previously communicated one-stream production run rate would increase by 56% from about 11 500 oz/m to about 18 000 oz/m. Van der Mescht said that this should contribute significantly towards mitigating corporate peak funding risk.
On the expected completion of a third gold plant module and tailings storage facility by May 2011, MWS would start with the technical completion tests, which must be satisfied prior to September 1, 2011, to avoid paying any further penalties.
Subsequent to the completion test, MWS would commission the first two modules of the uranium plant.
However, Van der Mescht pointed out that future expansion and production activities would be subject to capital availability.
He also reported that the Department of Mineral Resources had registered the transfer of the new order mining right for the Ezulwini mine from Simmer & Jack Mines to the Ezulwini Mining Company.
Post the recapitalisation, the Ezulwini mine continued to ramp up production.
During the company's 2010 financial year, 26 965 oz of gold were sold from the Ezulwini mine and its first shipment of 22 500 pounds of uranium was sold in fourth quarter of 2010.
"To ensure that the build-up and production ramp-up is realistic and achievable at the mine, we are currently reviewing a detailed ‘bottom-up' production plan, expected to be completed by the end of June," explained Van der Mescht.
In addition to initiatives at the company's operations, First Uranium had also initiated a cost-cutting exercise across the corporation. Van der Mescht said that the key focus would be to reduce corporate and noncore costs to ensure that First Uranium's overall cost base could be reduced to enhance operational margins.
"This exercise was also intended to create flexibility with respect to cash flow and ensure that the company was able to execute on its future plans.
"Now that different uncertainties have been addressed, we will be able to focus on near-term production goals, with careful control of the costs," concluded Van der Mescht.
