First Uranium announces results of pre-feasibility study for the Buffelsfontein Tailings Recovery Project



    All amounts are in US dollars unless otherwise noted.

    NPV increases by 71% to $505 million - IRR increases from 69% to 151%
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    TORONTO, Dec. 19 /CNW/ - First Uranium Corporation (TSX:FIU, JSE:FUM)
(ISIN:CA33744R1029) ("First Uranium" or "the Corporation") today announced the
results of its pre-feasibility study (the "Buffels Report") on its
Buffelsfontein Tailings Recovery Project (the "Project") in South Africa.
Based on the Buffels Report, which was prepared by Minxcon Pty. Ltd., First
Uranium intends to immediately start construction for the expansion of the
existing gold plant and the initial modules of a new uranium plant at the
Project, with commissioning expected in November 2008.
    The most significant changes identified in the Buffels Report from the
previously announced May 22, 2007 preliminary assessment report for the
Project, in order of their impact on the economics of the Project, are:

    
    -   a decision to increase price assumptions for gold and uranium (see
        Table 1);
    -   an increase in the capital investment in the Project due to the
        escalation in the cost of construction materials and the expanded
        scope of the Project;
    -   a decision to implement an atmospheric leach process in the initial
        year of operation and a subsequent change to a pressure leach process
        that is expected to yield higher recovery rates and boost production;
    -   an increase in the recovery rate of uranium in the flotation process;
    -   the conversion of the Project's mineral resources to mineral reserves
        (see Tables 3,4 and 5);

    The impact of these changes is summarized below (see Table 2).

    Table 1: CHANGES TO PROJECT ASSUMPTIONS
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                                                                      Beyond
                                         Mar     Mar     Mar     Mar     Mar
    Years ending                Unit    2009    2010    2011    2012    2012
    -------------------------------------------------------------------------
    Previous   Gold price     ($/oz.)   $500    $500    $500    $500    $500
    May 2007   --------------------------------------------------------------
               Uranium price  ($/lb.)    $50     $50     $50     $50     $50
               --------------------------------------------------------------
               Exchange rate  (ZAR/$)    7.4     7.4     7.4     7.4     7.4
    -------------------------------------------------------------------------
    Current    Gold price     ($/oz.)   $737    $734    $683    $627    $635
    Dec 2007   --------------------------------------------------------------
               Uranium price  ($/lb.)   $104    $104     $91     $78     $45
               --------------------------------------------------------------
               Exchange rate  (ZAR/$)    7.4     7.4     7.4     7.4     7.4
    -------------------------------------------------------------------------
    Note:
    The current real term commodity price assumptions are based on the
    consensus of the nominal forecasts by the investment research analysts at
    13 North American-based brokerage firms, adjusted downward by the US
    inflation rate for the period covering the construction of the Project.

    Table 2: SUMMARY OF CHANGES TO BUFFELS PROJECT
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                                  Units of   Previous     Current
                                   measure   May 2007    Dec 2007     Change
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           Gold Plant
    -------------------------------------------------------------------------
    Design capacity of gold plant:  Tonnes
      Module 1                         per    600,000     633,000         6%
      Module 2                       month    600,000     650,000         8%
      Module 3                                600,000     650,000         8%
    Total                                   1,800,000   1,933,000         7%
    -------------------------------------------------------------------------
    Average annual gold
     production                    000 oz.        128         126        -2%
    -------------------------------------------------------------------------
    Peak annual gold production    000 oz.        165         182        10%
    -------------------------------------------------------------------------
    Total LOM(1) gold production   000 oz.      2,054       2,024        -1%
    -------------------------------------------------------------------------
    Average LOM(1) gold recovery         %      67.2%       66.0%   -120 bps
    -------------------------------------------------------------------------
           Uranium Plant
    -------------------------------------------------------------------------
    Design capacity of uranium
     plant(2):
      Module 1                      Tonnes     60,000      63,000         5%
      Module 2                         per     60,000      65,000         8%
      Module 3                       month     60,000      65,000         8%
    Total                                     180,000     193,000         7%
    -------------------------------------------------------------------------
    Average annual uranium
     production                    000 lb.        922       1,339        45%
    -------------------------------------------------------------------------
    Peak annual uranium
     production                    000 lb.      1,595       2,231        44%
    -------------------------------------------------------------------------
    Total LOM(1) uranium
     production                    000 lb.     14,748      20,078        36%
    -------------------------------------------------------------------------
    Average LOM(1) uranium
     recovery                            %      28.8%       33.0%    420 bps
    -------------------------------------------------------------------------
           Financial Measures
    -------------------------------------------------------------------------
    Net present value (NPV)(3)  $ millions        295         505        71%
    -------------------------------------------------------------------------
    Internal rate of return
     (IRR)                               %        69%        151%   8200 bps
    -------------------------------------------------------------------------
    Capital investment          $ millions        148         260        76%
    -------------------------------------------------------------------------
    Peak funding                $ millions         83          67       -19%
    -------------------------------------------------------------------------
    Life of Mine                     Years         16          16          -
    -------------------------------------------------------------------------
    Cash cost - gold                 $/oz.        220         264        20%
    -------------------------------------------------------------------------
    Cash cost - uranium              $/lb.         22          24         9%
    -------------------------------------------------------------------------
    Total operating cost           $/tonne       2.55        3.10        22%
    -------------------------------------------------------------------------
    Notes:
        1. LOM is the abbreviation of 'life of mine'.
        2. The tonnes to be processed in the uranium plant are included in,
           not additional to, the tonnes to be processed in the gold plant.
        3. NPV is calculated using an 8% real discount rate.
    

    Schedule for construction

    With the acquisition of Mine Waste Solutions ("MWS") effective June 6,
2007, the Project effectively was in operation with a design capacity to
process 500,000 tonnes of tailings per month through the gold plant. In
September 2007, the Corporation's Board of Directors approved an expansion of
the capacity of the gold plant to process 633,000 tonnes of tailings per
month. This expansion is expected to be completed by January 2008.
    Also in September 2007, the Board of Directors approved the construction
of a monitoring station and pipelines to transport the tailings that would be
hydraulically mined from the Buffels and Harties tailings dams. The monitoring
station and pipelines are now in production.
    The further expansion of the MWS gold plant to double its capacity and
the construction of the first two modules of the Project's uranium plant are
to begin immediately, for commissioning in November 2008. The third and final
modules of the gold plant and the uranium plant are to be commissioned in
November 2009.

    Increase in uranium recovery from the flotation process

    First Uranium believes that the effective recovery rate from mill feed to
uranium production for the Project will be better than previously determined
due to the expected results of further test work. The effective recovery rate
is the combination of recoveries in the flotation process and in the plant.
The preliminary assessment for the Project published in May 2007, reported a
30% recovery in the flotation process and a 90% recovery in the plant for a
blended recovery rate of 27%.
    Recent tests lead the Corporation to expect a 36.8% recovery from the
flotation process. Plant recovery rates, however, will initially be less than
the previously reported 90% rate as management has decided to refine the
pressure leach process and intends to commission the first two modules of the
uranium plant as planned in November 2008 with an atmospheric leach process.
Initially the plant is expected to achieve a yield of 75% using an atmospheric
leach process. The economic model in the Buffels Report is based on the
assumption that by November 2009 the Corporation will have completed
sufficient testing in advance of the implementation of a pressure leach
process. Although still in the pre-feasibility stage, the pressure leach
process is expected to increase the plant recovery rate back to 90% for an
effective recovery rate of 33% and, hence, yield a higher uranium production.
The pressure leach process will also contribute an acid by-product for the
gold circuit to improve gold recovery.
    Earlier plans for the Project to currently be at the feasibility stage
are being postponed until further testing of the pressure leach process is
completed and land optioning for the farms covering the preferred site for the
new tailings dam are concluded. Conversion of resources to reserves
    Recent geological work at the Project, which included drilling 66 new
bore holes on the tailings dams and the remodelling of all the dams, increased
the level of confidence in the mineral resources. The subsequent conversion of
most of the Project's mineral resources to proven and probable reserves
resulted in a reduction in the number of tonnes, ounces and pounds on some
tailings dams, but this was more than offset by the confirmation of a portion
of the Mine Waste Solutions ("MWS") No.5 dam as a proven reserve. Although it
was hoped that the conversion of the MWS No. 5 dam would extend the life of
the Project, the life of the Project will remain at approximately 16 years due
to the higher monthly feed capacity of the gold plant and the changes between
the previously stated resources (see Table 3) and the mineral reserves (see
Table 5).

    
    Table 3: RE

SOURCE ESTIMATE (as per the May 22 technical report) ------------------------------------------------------------------------- Resource Category Gold Uranium ------------------------------------------------------------------------- Place Dam Tonnes Grade Content Tonnes Content ------------------------------------------------------------------------- (millions) (g/t) (oz 000s) (kg/t) (Mlb) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Measured ------------------------------------------------------------------------- Buffels 2 23.7 0.40 301 0.087 4.54 ------------------------------------------------------------------------- Buffels 3 29.4 0.35 335 0.103 6.67 ------------------------------------------------------------------------- Buffels 4 16.4 0.38 202 0.102 3.68 ------------------------------------------------------------------------- Total Measured 69.5 0.38 838 0.097 14.90 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Indicated ------------------------------------------------------------------------- Buffels 5 45.6 0.21 306 0.062 6.23 ------------------------------------------------------------------------- Harties 1 92.6 0.32 941 0.061 12.45 ------------------------------------------------------------------------- Harties 2 35.6 0.31 354 0.058 4.56 ------------------------------------------------------------------------- Harties 5 23.1 0.31 228 0.053 2.70 ------------------------------------------------------------------------- Harties 6 14.6 0.22 105 0.059 1.90 ------------------------------------------------------------------------- MWS 2 2.6 0.45 38 0.080 0.46 ------------------------------------------------------------------------- MWS 4 14.4 0.29 134 0.140 4.45 ------------------------------------------------------------------------- Total Indicated 228.6 0.29 2,106 0.065 32.74 ------------------------------------------------------------------------- Total Meas. & Indicated 298.0 0.31 2,944 0.073 47.64 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Inferred ------------------------------------------------------------------------- Harties 7 1.7 0.54 30 0.243 0.93 ------------------------------------------------------------------------- Harties Flanagan 0.04 0.80 1 0.229 0.02 ------------------------------------------------------------------------- Harties Ellaton 1.5 0.52 25 0.087 0.29 ------------------------------------------------------------------------- Harties NKGE 0.7 0.41 9 0.158 0.24 ------------------------------------------------------------------------- MWS 5 60.7 0.29 566 0.093 12.44 ------------------------------------------------------------------------- Total Inferred 64.7 0.30 631 0.098 13.92 ------------------------------------------------------------------------- Notes: 1 CIM definitions were followed for mineral resources. 2 A zero grade cutoff grade was used. 3 Rows and columns may not add exactly due to rounding. 4 Preliminary metallurgical test results indicated that recoveries would be approximately 27% for uranium and 68% for gold. 5 Mineral resources that are not mineral reserves do not have demonstrated economic viability. The Buffels Report includes a new mineral resource estimate that includes mineral reserves as shown below (see Table 4). Unlike underground mines, virtually all of the resources in a tailings recovery operation sit above ground and there is a greater certainty of what can or can not be categorized as reserves. Table 4: MINERAL RE

SOURCE ESTIMATE 2007 (includes mineral reserves) ------------------------------------------------------------------------- Resource Category Gold Uranium ------------------------------------------------------------------------- Place Dam Tonnes Grade Content Tonnes Content ------------------------------------------------------------------------- (millions) (g/t) (oz 000s) (kg/t) (Mlb) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Measured ------------------------------------------------------------------------- Buffels 2 24.1 0.40 309 0.086 4.58 ------------------------------------------------------------------------- Buffels 3 24.9 0.35 280 0.099 5.44 ------------------------------------------------------------------------- Buffels 4 14.1 0.37 170 0.102 3.17 ------------------------------------------------------------------------- Harties 5 23.9 0.21 163 0.062 3.26 ------------------------------------------------------------------------- Harties 6 13.3 0.20 85 0.063 1.85 ------------------------------------------------------------------------- Total Measured 100.3 0.31 1,008 0.083 18.30 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Indicated ------------------------------------------------------------------------- Buffels 5 47.6 0.24 360 0.063 6.62 ------------------------------------------------------------------------- Harties 1 74.4 0.26 624 0.062 10.17 ------------------------------------------------------------------------- Harties 2 43.8 0.26 369 0.060 5.79 ------------------------------------------------------------------------- Harties 7 1.3 0.27 11 0.164 0.46 ------------------------------------------------------------------------- Harties NGKE 1.2 0.50 19 0.182 0.47 ------------------------------------------------------------------------- MWS 2 0.6 0.45 9 0.082 0.11 ------------------------------------------------------------------------- MWS 4 (Dom 1) 9.7 0.14 43 0.047 1.00 ------------------------------------------------------------------------- MWS 4 (Dom 2) 17.4 0.28 157 0.133 5.12 ------------------------------------------------------------------------- MWS 5 Indicated 40.3 0.31 402 0.088 7.81 ------------------------------------------------------------------------- Total Indicated 236.3 0.26 1,993 0.072 37.55 ------------------------------------------------------------------------- Total Meas. & Indicated 336.6 0.28 3,001 0.075 55.85 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Inferred ------------------------------------------------------------------------- Harties Ellaton 1.3 0.39 16 0.147 0.41 ------------------------------------------------------------------------- Harties Flanagan 0.0 - - - - ------------------------------------------------------------------------- MWS 5 Inferred 15.2 0.30 146 0.095 3.17 ------------------------------------------------------------------------- MWS 5 (from 2) 4.7 0.18 26 0.102 1.05 ------------------------------------------------------------------------- Total Inferred 21.2 0.28 188 0.099 4.63 ------------------------------------------------------------------------- Notes: 1. Mineral resources are quoted as in-situ mineral resources. 2. No cutoff grades were applied. 3. Rows and columns may not add exactly due to rounding. 4. Effective date: November 1, 2007. 5. Mineral resources include mineral reserves. Resources which are not reserves do not have demonstrated economic viability. 6. Table reflects depletion of 1.5 million tonnes from July through October 2007 for MWS No. 2 Dam. Previously no reserves were estimated for the Project. Subsequent to the drilling and metallurgical test work that has been conducted on the dams and the completion of the Buffels Report, the following mineral reserves have been signed off. Table 5: MINERAL RESERVE ESTIMATE 2007 ------------------------------------------------------------------------- Reserve Classification Gold Uranium ------------------------------------------------------------------------- Place Dam Tonnes Grade Content Tonnes Content ------------------------------------------------------------------------- (millions) (g/t) (oz 000s) (kg/t) (Mlb) ------------------------------------------------------------------------- Proven ------------------------------------------------------------------------- Buffels 2 24.1 0.40 309 0.086 4.58 ------------------------------------------------------------------------- Buffels 3 24.9 0.35 280 0.099 5.44 ------------------------------------------------------------------------- Buffels 4 14.1 0.37 170 0.102 3.17 ------------------------------------------------------------------------- Harties 5 23.9 0.21 163 0.062 3.26 ------------------------------------------------------------------------- Harties 6 13.3 0.20 85 0.063 1.85 ------------------------------------------------------------------------- Total Proven 100.3 0.31 1,008 0.083 18.30 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Probable ------------------------------------------------------------------------- Buffels 5 47.6 0.24 360 0.063 6.62 ------------------------------------------------------------------------- Harties 1 74.4 0.26 624 0.062 10.17 ------------------------------------------------------------------------- Harties 2 43.8 0.26 369 0.060 5.79 ------------------------------------------------------------------------- Harties 7 1.3 0.27 11 0.164 0.46 ------------------------------------------------------------------------- Harties NKGE 1.2 0.50 19 0.182 0.47 ------------------------------------------------------------------------- MWS 2 0.6 0.45 9 0.082 0.11 ------------------------------------------------------------------------- MWS 4 (Dom 2) 17.4 0.28 157 0.133 5.12 ------------------------------------------------------------------------- MWS 5 Indicated 40.3 0.31 402 0.088 7.81 ------------------------------------------------------------------------- Total Probable 226.6 0.27 1,950 0.073 36.55 ------------------------------------------------------------------------- Total Proven & Probable 326.9 0.28 2,958 0.076 54.85 ------------------------------------------------------------------------- Notes: 1. Mineral reserves are quoted as fully diluted delivered to mill estimates. 2. Effective date: November 1, 2007. 3. Based on assumptions of a gold price of $635 per ounce, a uranium price of $45 per pound and and ZAR/$ exchange rate of 7.40. 4. A reserve cutoff grade of 0.28 grams per tonne gold equivalent was used, uranium grades were converted to gold equivalent using a conversion factor of 1 gram per tonne, which equals 0.503 kilograms per tonne on an extracted metal basis. 5. Rows and columns may not add exactly due to rounding. 6. The gold recovery applied was 66%. 7. The uranium recovery used was based on an atmospheric leach process of 27%. 8. Table reflects depletion of 1.5 million tonnes from July through October 2007 for MWS No. 2 Dam. Location of a new tailings dam site is being finalized Discussions are being concluded towards securing land access to locate a new tailings dam that is intended to contain all the processed tailings that will be discharged during the life of the Project. Due to new environmental requirements regarding the placement of any new tailings dams and the negotiations required with land owners, the new dam is likely to be located significantly further from the Project than originally planned. Once established, the resulting tailings dam would have less uranium, sulphur and pyrite and a superior design that mitigates erosion and, therefore, would be expected to have a significantly less environmental impact than the existing tailings that are about to be hydraulically mined at the Project. "As a result of all the technical work conducted during the past year, the overall confidence in the project has improved significantly," said Gordon Miller, President and Chief Executive Officer of First Uranium. "We will further refine the work done to date to determine the optimum NPV for the pressure leach process and to finalize the location for a new tailings dam, but we won't let any of this interfere with our priority to meet our delivery deadlines and ensure that the Project remains on track." First Uranium intends to file the new technical report in respect of the pre-feasibility study within 45 days from the date of this release. Technical Disclosure All technical disclosure in this news release relating to the Buffelsfontein tailings recovery project has been prepared in accordance with National instrument 43-101 ("NI 43-101) by Daan van Heerden, B.Sc., M.Comm., Charles Muller, B.Sc, Pr.Sci.Nat, and Johan Odendaal, B.Sc., M.Sc., Pr.Sci.Nat all of Minxcon Pty Ltd., Treavor Pearton, B.Sc Eng PhD, FGSA and Mike Valenta, Pr Eng, B.Sc., of Metallicon Process Consulting (Pty) Ltd. each of whom is a "qualified person" under NI 43-101 and is independent of First Uranium. Historical technical disclosure in this new release relating to the Project is extracted from a technical report entitled "Technical Report - Preliminary Assessment of the Buffelsfontein Project, North West Province, Republic of South Africa" originally submitted on November 8, 2006, revised on December 5, 2006, January 31, 2007 and May 22, 2007 prepared in accordance with NI 43-101 by R.Dennis Bergen, P.Eng and Wayne Valliant, P.Geo of Scott Wilson RPA, each of whom is a "qualified person" under NI 43-101 and is independent of First Uranium. The disclosure contained in this news release relevant to their respective contributions has been reviewed and approved by Messrs. Bergen, van Heerden, Muller, Odendaal, Pearton, Valliant and Valenta. Cautionary Language Regarding Forward-Looking Information This news release contains certain forward-looking statements. Forward- looking statements include but are not limited to those with respect to the price of uranium and gold, the estimation of mineral resources and reserves, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of development of new deposits, success of exploration activities, permitting time lines, currency fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses and title disputes or claims and limitations on insurance coverage. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", "likely" or "believes" or variations of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of First Uranium to be materially different from any future results, performance or achievement expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, the actual results of current exploration activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, possible variations in grade and ore densities or recovery rates, failure of plant, equipment or processes to operate as anticipated, accidents, labour disputes or other risks of the mining industry, delays in obtaining government approvals or financing or in completion of development or construction activities, risks relating to the integration of acquisitions, to international operations, to prices of uranium and gold. Although First Uranium has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. It is important to note, that: (i) actual results may differ materially from the Corporation's expectations if known and unknown risks or uncertainties affect its business, or if estimates or assumptions prove inaccurate; (ii) the Corporation cannot guarantee that any forward-looking statement will materialize and, accordingly, readers are cautioned not to place undue reliance on these forward-looking statements; and (iii) the Corporation disclaims any intention and assumes no obligation to update or revise any forward-looking statement even if new information becomes available, as a result of future events or for any other reason. In making the forward-looking statements in this news release, First Uranium has made several material assumptions, including but not limited to, the assumption that: (i) approvals to transfer or grant, as the case may be, mining rights will be obtained; (ii) metal prices, exchange rates and discount rates applied in the pre-feasiblity study or the preliminary economic assessment, as the case may be, are achieved; (iii) mineral resource and reserve estimates are accurate; (iv) the results of the testing of the pressure leach process will be positive and the process will be implemented; (v) the technology used to develop and operate its two projects has, for the most part, been proven and will work effectively; (vi) that labour and materials will be sufficiently plentiful as to not impede the projects or add significantly to the estimated cash costs of operations; (vii) that outstanding approvals for the completion of an acquisition, the transfer of mining rights and the approval of mining rights will be granted; (viii) that Black Economic Empowerment ("BEE") investors will maintain their interest in the Corporation and their investment in the Corporation's common shares to a sufficient level to continue to support the Corporation's compliance with 2014 BEE requirements; and (ix) that the innovative work on stabilizing the main shaft at the Ezulwini Mine will be successful in maintaining a safe and uninterrupted working environment until 2024. About First Uranium Corporation First Uranium Corporation is focused on the development of South African uranium and gold mines with the goal of becoming a significant producer through the re-opening and development of the Ezulwini underground mine, and the construction of the Buffelsfontein tailings recovery facility. First Uranium also plans to grow production by pursuing acquisition and joint venture opportunities.

For further information:

For further information: First Uranium Corporation, 1240-155 University
Avenue, Toronto, ON, Canada, M3H 3B7, www.firsturanium.com; Bob Tait, VP
Investor Relations at (416) 558-3858 or bob@firsturanium.com

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