First Uranium Announces Production Results For First Quarter of Fiscal 2011

Company provides update on Ezulwini mine plan, updated guidance on cash flow to execute on capital programs and achieve business milestones

    
             * All amounts in US dollars unless otherwise noted

    Summary*

    -   Ezulwini Mine gold production increased 88% over Q4 2010
    -   MWS gold recovery exceeded Q1 2011 planned production by 65%
    -   South African government approved Water Use License for MWS
    -   New Ezulwini management in place; ramp-up plan finalized
    -   Confirmed stability of MWS No.5 tailings dam is sufficient to support
        planned production increase in October 2010
    -   Ezulwini Mine to be cash flow positive before capital by
        December 2010, cash flow positive after capital by March 2011
    -   Current cash reserves sufficient to meet funding requirements at
        planned economic assumptions.
    

TORONTO and JOHANNESBURG, July 29 /CNW/ - First Uranium Corporation (TSX:FIU, JSE:FUM) ("First Uranium" or "the Company") today announced that during the three months ended June 30, 2010 ("Q1 2011") 14,120 ounces of gold were produced from the Ezulwini Mine and 20,215 ounces of gold from the Mine Waste Solutions ("MWS") tailings recovery project in South Africa. The Ezulwini Mine also produced 19,764 pounds of uranium in the form of ammonium diuranate ("yellowcake").

First Uranium has also completed the new Ezulwini Mine ramp-up plan and the restructuring and optimization of costs across the Company. These initiatives are aimed at preserving First Uranium's cash reserves, enabling the Company to execute on its capital program and achieve business milestones.

"I am confident that the revised plans we have developed are both reasonable and achievable," said Deon van der Mescht, President and CEO. "Management is firmly committed to executing the plans."

Table 1 summarizes production from each operation during Q1 2011. Production from the previous four quarters has been included for comparison.

Table 1 - Quarterly Production Results

    
    -------------------------------------------------------------------------
                             Q1 2010   Q2 2010   Q3 2010   Q4 2010   Q1 2011
    -------------------------------------------------------------------------
    MWS
    Tonnes of ore reclaimed
     (000s)                    1,835     2,476     3,528     3,232     3,104
    Average gold head grade
     (g/t)                      0.42      0.36      0.34      0.34      0.36
    Gold plant recovery (%)      44%       47%       58%       56%       56%
    Gold produced (oz)        11,007    13,422    21,891    19,693    20,215
    -------------------------------------------------------------------------
    Ezulwini Mine
    Tonnes of ore hoisted     64,965    98,831   117,164   130,822   135,009
    Tonnes of ore milled      92,468    94,599   108,503   129,532   132,963
    Average gold recovery
     grade (g/t)                 1.3       2.5       2.8       2.4       3.3
    Gold produced (oz)         3,794     7,952    10,685     7,526    14,120
    Uranium produced (lb)          -    13,098    15,351    22,488    19,764
    Uranium Sold (lb)              -         -    23,761    20,638         -
    -------------------------------------------------------------------------
    

Mine Waste Solutions

During Q1 2011, MWS increased gold production by 65% compared to the updated technical report released on March 19, 2010, which was based upon the assumption that MWS continued as a one-stream operation due to tailings deposition constraints. The MWS No. 5 tailings dam maintained its structural integrity during Q1 2011. This enabled MWS to continue to run as a two-stream operation, at a reduced tonnage profile of 975 ktpm, which resulted in a 3% increase in gold production from Q4 2010.

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 License ("WUL"), enables management to further improve the operation's production outlook. First Uranium now expects MWS to increase production from the previous level of 975 ktpm to 1,200 ktpm, starting in October 2010. The increased output is expected to remain in effect until the commissioning of the new Tailing Storage Facility ("TSF") and the third module of the gold plant, at which point production is planned to increase from 1,200 ktpm to 1,800 ktpm.

Management anticipates the remaining capital program, comprising the third gold plant module and the new TSF 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.

Key findings of optimization review - MWS

MWS is performing substantially better than plan, primarily due to the improved stability of its current tailings facility and the South African government's granting of the WUL, which has allowed a significantly higher deposition rate than planned for in March 2010. The aim is to reduce peak funding requirements without compromising project sustainability or efficiency.

    
    -   Production to increase from 975 ktpm to 1,200 ktpm as of October 2010
    -   New TSF to be commissioned by May 2011, enabling production increase
        from 1,200 ktpm to 1,800 ktpm
    -   Certain construction contracts restructured to fixed price and fixed
        timeline to ensure production certainty
    -   Outcome of corporate rationalization and relocation resulted in an
        improvement in net income of US$20/oz
    

Table 2 - Estimated capital requirements to complete MWS capital program

    
    -------------------------------------------------------------------------
                   Total
                 spent at
    (Thousands    June 30,  Remainder
     of ZAR)        2010      FY 2011  FY 2012   FY 2013  FY 2014     Total
    -------------------------------------------------------------------------
    Phase 1B     1,508,387     35,629   19,361         -        -  1,563,139
    Phase 2        577,835    310,873   91,364         -        -    980,071
    New TSF        136,624     92,297        -         -   66,695    295,617
    On-mine
     capital        14,976     24,620    9,600     9,600    9,600     68,396
    Eskom
     substations         -     11,200        -         -        -     11,200
    -------------------------------------------------------------------------
    Total in ZAR
     (000)       2,237,822    474,619  120,325     9,600   76,295  2,918,423
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

The implementation of the pressure leach process, costing an estimated ZAR451 million (approximately $56 million) has been delayed by 24 months. Construction of the project was previously scheduled to commence in January 2012.

Ezulwini Mine

The decision to mine better quality gold ore was put into effect by applying a 4.5 g/t cut-off grade in the Upper Elsburg gold-only section and a 3.0 g/t cut-off grade in the Middle Elsburg gold and uranium section. This change has resulted in an overall improvement of 44% in recovered grades and an 88% improvement in gold bullion quantity produced in Q1 2011 compared to Q4 2010.

The average recovered grade of 3.30 g/t compares to a planned average recovery grade of 3.36 g/t, planned for during Q4 2010. Similarly, blasted grades were 0.07 g/t lower than expected. These results suggest that while recoveries are not yet at an optimal level, factors affecting the mine call factor are now better understood and can be addressed going forward.

Key findings of optimization review - Ezulwini Mine

On the basis of the plan for year one (FY 2011), management expects the Ezulwini Mine to be cash flow positive after capital expenditures in Q4 2011 at planned economic assumptions. The revised production ramp-up plan includes:

    
    -   Production of 81,000 ounces of gold and 117,000 pounds of uranium in
        FY 2011
    -   Capital expenditures of R125 million in FY2011
    -   Average unit cash costs of $1,182/oz for FY2011 and $857/oz for Q4
        2011
    -   Incremental production build-up of approximately 320 ounces
        (10 kilograms) per month from FY 2012 to FY 2013, requiring an
        additional three panels per month
    -   Production ramp-up of two panels per month from FY2014 onward
    -   Peak production of 309,000 oz gold planned for FY2019 and 909,000 lb
        uranium in FY2018
    

Table 3 - Revised project economics for Ezulwini Mine

    
    -------------------------------------------------------------------------
                                        March 2010    July 2010    July 2010

                                                        (at
                                                      March 2010  (at latest
                                                      consensus    consensus
                                                      commodity    commodity
                                                        prices)      prices)
    -------------------------------------------------------------------------
    Life of Mine average operating
     costs
    -------------------------------------------------------------------------
    Operating cost per tonne milled
     ($/tonne)                             $106.42       $93.13       $74.88
    -------------------------------------------------------------------------
    Gold cash cost ($/ounce)
     - co-product in 2009; net of
     uranium credit in 2010 (by-product)      $619         $573         $423
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Capital expenditures ($ millions)         $246         $448         $364
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Average annual Life of Mine
     production
    -------------------------------------------------------------------------
    Uranium (pounds)                       781,000      709,000      709,000
    -------------------------------------------------------------------------
    Gold (ounces)                          283,000      261,000      261,000
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    NPV ($ millions)                          $437         $470         $843
    -------------------------------------------------------------------------
    Notes:
    1.  In the January 2009 technical report gold and uranium unit costs were
        calculated as co-product costs which assume that operating cash costs
        are split in proportion to the revenue earned from each product.
    2.  In the March 2010 technical report the gold unit cost was calculated
        with uranium as a by-product as uranium is only expected to represent
        approximately 14% of the revenue over LOM. Uranium unit costs were
        not shown as uranium will be assumed as a by-product of the gold
        production.
    3.  NPV is calculated using a real discount rate of 8%.
    

The uranium plant was idle during Q1 2010 due to failure of the rubber lining on the uranium leach tank and the CCD thickeners at the end of Q4 2010. Repairs were completed during April 2010 and resulted in a 12% decrease in uranium production in Q1 2011 compared to Q4 2010. The plant resumed production at the beginning of May 2010.

Additional information is available in the company's website www.firsturanium.com

Conclusion

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.

Current cash reserves are expected to be sufficient to meet funding requirements at planned economic assumptions.

While the emphasis at Ezulwini has been on creating an achievable ramp-up plan, the focus at MWS has been on optimizing capital expenditures and production programs.

Additional information is available in the company's website www.firsturanium.com

Conference Call

First Uranium will conduct a conference call on Friday, July 30, 2010 at 10 am Toronto time (4 pm Johannesburg time).

The call will be available to analysts, investors and media. To access it, dial 1-800-319-4610 (Canada and U.S.) or 0800-981-705 (South Africa). Callers from other international locations dial 1-604-638-5340.

The call will be webcast at https://services.choruscall.com/links/firsturanium100730.html. An archived telephone replay of the conference call will be available for 30 days. It can be accessed by dialing 1-800-319-6413 (Canada and U.S.). From other international locations, it can be accessed by dialing 1-604-638-9010 (Canada). Enter passcode 2128 followed by the number sign.

Technical Disclosure

All technical disclosure in this news release relating to Ezulwini Mine has been prepared in accordance with National Instrument 43-101 by or under the supervision of Mark Glasspool, an employee of the Company who is a professional engineer and is a "qualified person" under NI 43-101.

All technical disclosure in this news release relating to MWS has been prepared in accordance with National Instrument 43-101 by or under the supervision of Jim Fisher, an employee of the Company, who is a Chartered Engineer and is a "qualified person" under NI 43-101.

The economic analysis for the Ezulwini Mine contained in this news release is based, in part, on inferred resources and is preliminary in nature. Inferred resources are considered too geologically speculative to have mining and economic considerations applied to them and to be categorized as Mineral Reserves. There is no certainty that the interpretations and conclusions of this Preliminary Assessment, or reserve development, production and economic forecasts on which this Preliminary Assessment is based, will be realized.

NON-GAAP MEASURES

The Company believes that in addition to conventional measures prepared in accordance with Canadian GAAP, the Company and certain investors and analysts use certain other non-GAAP financial measures to evaluate the Company's performance including its ability to generate cash flow and profits from its operations. The Company has included certain non-GAAP measures throughout this document. Non-GAAP measures do not have any standardized meaning prescribed under Canadian GAAP, and therefore they may not be comparable to similar measures employed by other companies.

The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with Canadian GAAP.

About First Uranium Corporation

First Uranium Corporation (TSX:FIU, JSE:FUM) is focused on its goal of becoming a significant low-cost producer of uranium and gold through the expansion of the underground development to feed the new uranium and gold plants at the Ezulwini Mine and through the expansion of the plant capacity of the Mine Waste Solutions tailings recovery facility, both located in South Africa.

Cautionary Language Regarding Forward-Looking Information

This news release contains and refers to forward-looking information based on current expectations. All other statements other than statements of historical fact included in this release including, without limitation, statements regarding the timing and amount of estimated future production, processing and development plans and future plans and objectives of First Uranium are forward-looking statements (or forward-looking information) that involve various estimates, assumptions, risks and uncertainties. For more details on these estimates, assumptions, risks and uncertainties, see the Company's most recent Annual Information Form on file with the Canadian provincial securities regulatory authorities on SEDAR at www.sedar.com. These forward-looking statements are made as of the date hereof and there can be no assurance that such statements will prove to be accurate, such statements are subject to significant risks and uncertainties, and actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements that are included herein, except in accordance with applicable securities laws.

www. firsturanium.com

SOURCE First Uranium Corporation

For further information: For further information: Jim Fisher, Executive Vice President, Corporate Development, 1-416-342-5636, 1240-155 University Avenue, Toronto, Ontario, Canada, M5H 3B7, jim@firsturanium.ca

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