First Uranium reports results for the three and nine months ended December 31, 2007



    All amounts are in US dollars unless otherwise noted.

    First Uranium commits to commissioning Uranium production despite
    electrical power supply issues

    TORONTO and JOHANNESBURG, Feb. 13 /CNW/ - First Uranium Corporation
(TSX:FIU, JSE:FUM) (ISIN:CA33744R1029) ("First Uranium" or "the Company")
today announced that it recorded a net loss of $4.1 million for the three
months ended December 31, 2007 ("Q3 2008") (Q3 2007: $3.8 million), which was
primarily the result of ongoing expenditures incurred in preparation of the
uranium and gold projects for production, along with general and
administrative expenses. Net income for the nine months ending December 31,
2008 ("2008 YTD") was $4.5 million (2007 YTD: $5.2 million) primarily the
result of foreign exchange gains on translation of net assets held in Canadian
dollars and South African rand into US dollars offset by ongoing expenditures.
As the Ezulwini Mine is still in a ramp-up phase and has not yet achieved
commercial levels of production, the revenue less cost of production from its
mining operations of $2.4 million during both Q3 2008 and 2008 YTD has been
capitalized against Mine infrastructure costs in Property, Plant and
Equipment.

    Recent Highlights

    
    During Q3 2008, First Uranium:
    -   toll-treated 27,951 tonnes of ore from the Ezulwini Mine (see
        Definitions 2) at a recovered grade of 5.6 grams of gold per tonne,
        producing 5,055 ounces of gold at a Cash Cost (see Definitions 1) of
        $348 per ounce
    -   started drilling specific targets related to the possible expansion
        of the existing Ezulwini Mine (the "Ezulwini Expansion Program")
    -   completed construction of the pump station at MWS (see Definitions 2)
        and the 10.5-kilometre pipeline to the MWS gold plant at a total cost
        of $11.7 million
    -   completed the clean up and processing of the remaining tailings of
        the MWS No. 2 tailings dam and commenced hydraulic mining and pumping
        of material from the Buffelsfontein No. 2 dam to the MWS gold plant
        for processing during mid-December
    -   processed a total of 832,208 tonnes of tailings through the MWS gold
        plant at a recovered grade of 0.275 grams of gold per tonne,
        producing a total of 7,357 ounces of gold at a Cash Cost of $674 per
        ounce
    -   completed a pre-feasibility study of MWS incorporating higher average
        uranium and gold price assumptions and increased capital investment,
        which projected the project's expected net present value ("NPV")
        increasing by 71% to $505 million and its internal rate of return
        ("IRR") increasing from 69% to 151%
    -   entered into an interim off-take agreement with a third party
        pursuant to which the third party will purchase yellowcake from First
        Uranium from June 2008 until January 2009 at rates based upon the
        then prevailing spot prices
    -   issued 6.1 million First Uranium shares to Waterpan Mining Consortium
        ("Waterpan") in connection with the acquisition of the remaining 10%
        interest in Ezulwini Mining Company (Proprietary) Limited ("EMC")
        which owns and operates the Ezulwini Mine, resulting in EMC becoming
        wholly-owned by First Uranium (the "Waterpan Transaction")
    -   ended the period with $215.2 million in cash and cash equivalents

    Subsequent to the end of Q3 2008, First Uranium:
    -   was granted an unconditional prospecting right for 6,843 hectares of
        additional property adjacent to the Company's Ezulwini Mine
    -   filed the technical report for the pre-feasibility study of MWS, as
        announced on December 19, 2007
    -   due to the significantly reduced supply of electrical power currently
        available in South Africa, its national power utility ("Eskom")
        developed concerns about its ability to supply power in the short and
        medium term. As a result, First Uranium has had to impose voluntary
        shut-downs of mine development and hoisting activity at the Ezulwini
        Mine. Most recently, Eskom has implemented compulsory cut-backs of
        power consumption on businesses and mining companies generally. The
        specific effects of these measures mandated by Eskom on First
        Uranium's operations and development projects and any modifications
        thereto (the "Power Situation") have been and continue to be
        analyzed. (see 'Preliminary Assessment of the Impact of the Power
        Situation')

    During Q4 2008, and prior to the Power Situation, First Uranium had
planned to:
    -   commence the upgrading of the MWS gold plant to increase the design
        capacity from 500,000 tonnes per month to 630,000 tonnes per month,
        with completion scheduled in Q4 2008
    -   upgrade MWS No. 5 tailings dam to enable a deposition rate of 630,000
        tonnes of material per month. The upgrade is expected to be completed
        during Q4 2008.
    -   start on-site preparation for the construction of the additional gold
        plant module and the two uranium plant modules at MWS
    

    Gordon Miller, President and Chief Executive Officer of First Uranium
said, "We have, so far, been able to accomplish all the significant objectives
we have set out to do. While power supply reductions threaten our ability to
continue to do that, we have several alternatives to adjust our uses and
sources of power with the intent to start uranium production as close to plan
as the Power Situation will allow."

    Preliminary Assessment of the Impact of the Power Situation

    After a preliminary review of the feasibility of the Corporation
generating its own power, First Uranium's Board has concluded that the
Corporation's two projects are sufficiently robust to continue development as
planned based on the addition of power generation capacity.

    
    The initial impact of this decision is as follows:

    For the Ezulwini Mine:
    -   given the uncertainty of power supply at a third-party gold plant to
        toll-treat the Corporation's ore, the Board has decided to postpone
        the ramp-up of the underground production and to accelerate the shaft
        refurbishment program
    -   the weekly operating plan to date has been to focus on mine
        development and hoisting for three days and on shaft rehabilitation
        for four days; henceforth the intention is to focus entirely on shaft
        refurbishment until the operation's gold plant is commissioned in
        April 2008
    -   the first 50,000 tonne per month module of the gold plant is on
        schedule for commissioning in April 2008 using existing generator
        capacity; should Eskom power not be forthcoming, the Ezulwini Mine
        has existing generator capacity of 13 MVA ("1 Megavolt Ampere
        = 1 Mega Watt") which will be utilized
    -   the first 50,000 tonne per month module of the uranium plant remains
        on schedule for commissioning in June 2008; a feasibility study of
        power generation options is underway to reduce power reliance on
        Eskom
    -   commissioning of the remaining modules of the gold and uranium plant
        will be deferred by approximately a year to January 2010 to coincide
        with the corresponding mine development plan

    For MWS:
    -   the current MWS operation is at present unaffected by the Power
        Situation as it has been drawing additional power from Buffelsfontein
        Gold Mines Limited ("BGM")
    -   upgrading of the MWS gold plant to increase the design capacity to
        630,000 tonnes per month remains on schedule for completion in Q4
        2008
    -   the expansion of the current operations, however, will require
        additional power; a power generation feasibility study has been
        initiated with the expected result that the expansion will be delayed
        by approximately three months

    The decision to invest in generating our own power is a temporary measure
until the Power Situation has normalized which may take several years. It is
expected that the Corporation will be able to monetize a significant portion
of its investment in owner generated power at that time.

    Financial Highlights

    -------------------------------------------------------------------------
                                       Q3         Q3        2008       2007
    (thousands of dollars)            2008       2007       YTD        YTD
    -------------------------------------------------------------------------
    Revenue                           6,623          -     15,069          -
    -------------------------------------------------------------------------
    Operating loss                   (4,484)    (1,575)    (9,838)    (4,225)
    -------------------------------------------------------------------------
    Net income (loss) for
     the period                      (3,998)    (3,787)     4,524     (5,239)
    -------------------------------------------------------------------------
    

    Revenue

    During Q3 2008, a total of 12,412 ounces of gold were produced and sold
from the Ezulwini Mine and MWS, at an average price of $873 per ounce.
Combined production during 2008 YTD totaled 25,956 ounces of gold, which were
sold at an average price of $742 per ounce.
    Revenue during Q3 2008 and 2008 YTD as presented above was generated from
the processing of MWS tailings material and sale of the related gold.
    As the Ezulwini Mine is still in a ramp-up phase and has not yet achieved
commercial levels of production, the revenue less cost of production from its
mining operations of $2.4 million has been capitalized against Mine
infrastructure costs in Property, Plant and Equipment.

    
    Operating loss

    Operating loss includes the following:
    -   in Q3 2008, gold was produced at average Cash Costs of $348 and
        $674 per ounce at the Ezulwini Mine and MWS, respectively. The
        relatively high average cash costs at MWS can be attributed to the
        diminishing resources taken from the MWS No. 2 tailings dam, which
        necessitated a low-volume, high-cost mechanical load and placement
        operation.
    -   for Q3 2007 and 2007 YTD, employee compensation costs, consulting and
        professional fees were $0.6 million and $2.6 million, respectively
    -   higher general, consulting and administrative expenses in Q3 2008 and
        2008 YTD primarily reflect the higher project development activities,
        the costs of corporate offices in Johannesburg and Toronto and other
        expenses of operating a public company, which were not applicable in
        Q3 2007 and 2007 YTD.
    -   the Q3 2008 stock-based compensation expense reflects the amortized
        cost of 1,223,001 stock options granted during FY 2007 and the
        amortized cost of 325,715 stock options granted during 2008 YTD
    -   during Q3 2008, pumping costs not capitalized at the Ezulwini Mine
        were included in expenditures until hoisting commenced at the end of
        October 2007. As of November 2007, pumping costs are included in the
        cost of production, which has been capitalized to Mine infrastructure
        costs in Property, Plant and Equipment

    Non-operating income and expenses

    Non-operating income and expenses for the periods reported included:
    -   interest income in Q3 2008 and 2008 YTD represents interest earned on
        the net proceeds from the Offering and the Debentures.
    -   interest expense in Q3 2008 and 2008 YTD consists of the interest
        paid on the Debentures.
    -   foreign exchange gains on translation in Q3 2008 and for 2008 YTD
        reflect the strengthening of the Canadian dollar and the South
        African Rand against the US dollar
    

    Cash and Capital Expenditures

    Cash and cash equivalents at the end of Q3 2008 were $215.2 million as
compared with $154.6 million at the end of Q3 2007. The increase in cash was
primarily attributable to the net proceeds of $130.6 million received from the
sale of the Debentures in May 2007, offset by $28.0 million and $76.4 million
of cash utilized for capital expenditure at the Company's two mining
operations during Q3 2008 and 2008 YTD, respectively.
    The Company currently holds its funds in cash and bank-sponsored
guaranteed investment certificates. It has no exposure to asset-backed
commercial paper.

    Production Overview

    The build-up of production at the Ezulwini Mine during Q3 2008 resulted
in the toll-treatment of 27,951 tonnes of ore at a yield of 5.6 grams of gold
per tonne, producing 5,055 ounces of gold at a cash cost of $348 per ounce.
Production during the first two months of Q3 2008 was negatively influenced by
the lower than planned grades, but this was more than offset in December, when
Ezulwini's production exceeded the planned rate due to higher than expected
grades. During Q3 2008, 247.5 metres were developed, bringing the total metres
developed in the shaft pillar to 833 metres. Progressive grades encountered on
the MA and MB raises in the shaft pillar to date were 5.09 and 5.81 grams of
gold per tonne, respectively.
    Stoping for de-stressing of the 41 level MB raise has resulted in an area
of 712 square metres being mined at an in-situ stope grade of 4.74 grams per
tonne. In the Middle Elsburg ("ME") uranium and gold section, stope production
in the newly re-established 45 10B stope commenced in Q3 2008 and has resulted
in an area of 1,059 square metres being mined at an in-situ stope grade of
25.78 grams of gold per tonne.
    As of the end of December 2007, the clean-up process on surface and
underground has generated a stockpile in excess of 124,000 tonnes containing
an average grade of 1.1 grams per tonne of gold or approximately 2,800 ounces
of recoverable gold, assuming an average recovery rate of 64%. This stockpile
is expected to be utilized during mill commissioning, which is currently
scheduled for April 2008.
    At MWS, production activities during Q3 2008 were limited to hydraulic
mining using high pressure water cannons to slurry the tailings, clean up and
processing of material from the MWS No. 2 tailings dam. As a result of the
late commissioning of the production infrastructure at the Buffelsfontein No.
2 tailings dam it was necessary to continue hydraulic mining MWS No. 2
tailings dam until December rather than October, as previously anticipated.
    The project to construct the initial long-life pump station and 10.5-
kilometre pipeline was initiated in June 2007 and, while it was delayed due to
late delivery of slurry pumps and heavy rains that fell during October making
construction difficult, these new production facilities were commissioned in
mid-December.
    As the resources in the MWS No. 2 tailings dam neared exhaustion during
Q3 2008, it was necessary to use mechanical loading and placement of the
remnant material, in addition to hydraulic mining, which resulted in increased
handling costs relative to a normal reclamation operation in addition to the
reduced tonnages. As a result, only 770,436 tonnes of tailings (0.4 million
tonnes in Q1 2008 and 1.2 million tonnes in Q2 2008) were reclaimed from the
MWS No. 2 tailings dam during Q3 2008.
    The pump station and the pipeline between the Buffelsfontein property and
the MWS gold plant were completed and commenced operation during December 2007
which enabled the Company to stop mining from the MWS No. 2 tailings dam and
to initiate the hydraulic mining of the Buffelsfontein No. 2 tailings dam on
the Buffelsfontein property. The material from the Buffelsfontein No. 2
tailings dam is being transported via the pipeline to the MWS gold plant for
processing. Full commissioning of the introduction of the material from
Buffelsfontein No. 2 tailings dam to the plant is ongoing.
    The high pressure pump train located at Buffelsfontein No. 2 tailings dam
is performing as designed, despite having a low utilization of 75% during the
quarter. Once the second train of standby pumps is, the utilization is
expected to increase to 95%, which will sustain production at or better than
the planned rate of 20,800 tonnes per day. In the meantime, production rates
have reached 20,000 tonnes per day.
    During December, 61,772 tonnes of material from the Buffelsfontein No. 2
tailings dam were processed through the MWS gold plant. The initial lower
daily tonnages at the start of the hydraulic mining of the Buffelsfontein No.
2 tailings dam were the result of vegetation restricting the flow of material
to the pump station. By the end of December, the vegetation was sufficiently
removed to allow the daily tonnages to exceed 17,000 tonnes per day.
    To date, the achieved grade of 0.36 grams of gold per tonne mined from
the Buffelsfontein No. 2 tailings dam is in line with the resource estimates
for the initial mining benches, although lower than the planned 0.40 grams of
gold per tonne. The grade is expected to improve as the lower portion of the
dam is mined resulting in higher grade material being treated.

    
    Definitions

    1.  "Cash Costs" are costs directly related to the physical activities of
        producing gold, and include mining, processing and other plant costs,
        third-party refining and smelting costs, marketing expense, on-site
        general and administrative costs, royalties, in-mine drilling
        expenditures that are related to production and other direct costs.
        Sales of by-product metals are deducted from the above in computing
        cash costs. Cash costs exclude depreciation, depletion and
        amortization, corporate general and administrative expense,
        exploration, interest, and pre-feasibility costs and accruals for
        mine reclamation. Cash costs are calculated and presented using the
        "Gold Institute Production Cost Standard" applied consistently for
        all periods presented. Total cash costs per ounce is a non-GAAP
        measurement and investors are cautioned not to place undue reliance
        on it and are urged to read all GAAP accounting disclosures presented
        in the consolidated financial statements and accompanying footnotes.

    2.  First Uranium is currently focused on the rehabilitation and bringing
        into production of the Ezulwini underground uranium and gold mine
        (the "Ezulwini Mine") and the recovery of uranium and gold from the
        existing and future surface tailings at the Buffelsfontein mine
        through gold and uranium plants originally planned to be constructed
        near the tailings at the Buffelsfontein mine (the "Buffelsfontein
        Tailings Recovery Project"). In June 2007, the Company acquired Mine
        Waste Solutions (Proprietary) Limited ("MWS"), an existing tailings
        treatment company which had an operating gold recovery plant in
        place. As a result of the MWS purchase, First Uranium changed its
        plans for the Buffelsfontein Tailings Recovery Project so that the
        historical and future tailings from the Buffelsfontein mine (the
        "Buffelsfontein Tailings") will now be transported by pipeline to the
        MWS site and processed through MWS's existing gold plant and, subject
        to their completion, through the new uranium recovery plant and
        additional gold recovery facilities which are currently being
        constructed at the MWS site. For greater clarity, the Buffelsfontein
        Tailings Recovery Project, as enhanced and modified by the addition
        of MWS, will henceforth be referred to as MWS.
    

    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
availability of electrical power, the possible addition of owner-operated
power generation, 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, title
disputes or claims and limitations on insurance coverage and the timing and
possible outcome of pending litigation. In certain cases, forward-looking
statements can be identified by the use of words such as "goal", "objective",
"plans", "expects" or "does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates", or "does not anticipate",
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) unless otherwise indicated, forward-looking
statements indicate the Company's expectations as at November 9, 2007; (ii)
actual results may differ materially from the Company's expectations if known
and unknown risks or uncertainties affect its business, or if estimates or
assumptions prove inaccurate; (iii) the Company 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
(iv) the Company 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) consistent supply of sufficient power will be
available to develop and operate the projects as planned; (ii) approvals to
transfer or grant, as the case may be, mining rights will be obtained; (iii)
metal prices, exchange rates and discount rates applied in the preliminary
economic assessments are achieved; (iv) mineral resource estimates are
accurate; (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 Black
Economic Empowerment ("BEE") investors will maintain their interest in the
Company and their investment in the Company's common shares to a sufficient
level to continue to support the Company's compliance with 2014 BEE
requirements; and (viii) 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 Mine, and the
construction of the Mine Waste Solutions tailings recovery facility. First
Uranium also plans to grow production by pursuing acquisition and joint
venture opportunities.

    First Uranium Corporation
    1240-155 University Avenue, Toronto, ON Canada M5H 3B7
    www.firsturanium.com



    
                 CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
            for the three and nine months ended December 31, 2007

    The interim consolidated financial statements contained herein have not
    been audited by the Corporation's independent auditors.


    First Uranium Corporation
    Consolidated Balance Sheets (unaudited)
    (in United States Dollars)
                                                    December 31     March 31
                                                           2007         2007
                                              Notes     US$'000      US$'000
    -------------------------------------------------------------------------

    ASSETS

    Current assets
    Cash and cash equivalents                           215,216      138,914
    Amounts receivable                          5        14,038        1,713
    Inventories                                 6         2,461          292
    Receivables from related party             21             -        6,763
    -------------------------------------------------------------------------
                                                        231,715      147,682
    -------------------------------------------------------------------------

    Non-current assets
    Property, plant and equipment               7       166,677       30,954
    Asset retirement funds                      8         5,144        2,791
    Loan to related party                      21         1,019            -
    -------------------------------------------------------------------------
                                                        172,840       33,745
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Total assets                                        404,555      181,427
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    Current liabilities
    Accounts payable and accrued
     liabilities                               10        19,112        5,702
    Payables to related party                  21           832            -
    -------------------------------------------------------------------------
                                                         19,944        5,702
    -------------------------------------------------------------------------

    Non-current liabilities
    Senior unsecured convertible
     debentures                                11       103,668            -
    Future tax liability                       15        10,342            -
    Asset retirement obligations               12        14,172        5,377
    -------------------------------------------------------------------------
                                                        128,182        5,377
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Share capital                              13       215,637      182,673
    Equity portion of senior unsecured
     convertible debentures                    11        46,504            -
    Contributed surplus                        14         4,549        2,460
    Accumulated deficit                                 (10,261)     (14,785)
    -------------------------------------------------------------------------
                                                        256,429      170,348
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Total equity and liabilities                        404,555      181,427
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to the Consolidated Financial Statements



    First Uranium Corporation
    Consolidated Statements of Operations and Deficit and
    Comprehensive Income (unaudited)
    (in United Stated Dollars)

                                Three months ended         Nine months ended
                                       December 31               December 31
                                 2007         2006         2007         2006
                    Notes     US$'000      US$'000      US$'000      US$'000
    -------------------------------------------------------------------------

    Revenue                     6,633            -       15,069            -
    Cost of sales              (5,433)           -      (13,030)           -
    -------------------------------------------------------------------------

                                1,200            -        2,039            -

    Other Income                1,379            -        2,276            -

    Expenditures
    General,
     consulting and
     administrative
     expenditures              (4,058)        (706)      (8,548)      (3,356)
    Stock-based
     compensation     14       (1,079)        (519)      (2,513)        (519)
    Pumping,
     feasibility and
     rehabilitation
     costs                     (1,880)        (350)      (2,948)        (350)
    Amortization of
     property, plant
     and equipment     7          (46)           -         (144)           -
    -------------------------------------------------------------------------
                               (7,063)      (1,575)     (14,153)      (4,225)
    -------------------------------------------------------------------------

    Operating loss             (4,484)      (1,575)      (9,838)      (4,225)
    Interest income             4,467          529       12,840          422
    Interest expense           (1,629)           -       (4,087)        (101)
    Accretion expense
     on convertible
     debentures       11       (3,724)           -       (8,103)           -
    Foreign exchange
     gains            16        1,245       (2,741)      13,636       (1,335)
    -------------------------------------------------------------------------

    Net income (loss)
     before income
     taxes                     (4,125)      (3,787)       4,448       (5,239)
    Provision for
     income taxes     15          127            -           76            -
    -------------------------------------------------------------------------
    Net income (loss)
     for the period            (3,998)      (3,787)       4,524       (5,239)
    Accumulated
     deficit at the
     beginning of
     the period                (6,263)      (8,309)     (14,785)      (6,857)
    -------------------------------------------------------------------------
    Accumulated
     deficit at the
     end of the
     period                   (10,261)     (12,096)     (10,261)     (12,096)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted
     (loss) income
     per common
     share ($)        17        (0.03)       (0.04)        0.04        (0.06)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net (loss)
     income                    (3,998)      (3,787)       4,524       (5,239)
    Adjustments                     -            -            -            -
    -------------------------------------------------------------------------
    Comprehensive
     (loss) income     3       (3,998)      (3,787)       4,524       (5,239)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to the Consolidated Financial Statements



    First Uranium Corporation
    Consolidated Statements of Cash Flows (unaudited)
    (in United Stated Dollars)

                                Three months ended         Nine months ended
                                       December 31               December 31
                                 2007         2006         2007         2006
                    Notes     US$'000      US$'000      US$'000      US$'000
    -------------------------------------------------------------------------

    Net (loss)
     income before
     taxes                     (4,125)      (3,787)       4,448       (5,239)
    Changes not
     affecting cash:
      - Interest
         income      18.1         (48)        (414)        (146)           -
      - Interest
         expense     18.2           -            -            -         (101)
      - Accretion
         expense on
         convertible
         debentures   11        3,724            -        8,103            -
      - Amortization
         on property,
         plant and
         equipment                524            -        1,483            -
      - Stock-based
         compensation 14        1,079          519        2,648          519
    -------------------------------------------------------------------------
    Net income (loss)
     after interest
     and non-cash
     items                      1,154       (3,682)      16,536       (4,821)
    Movement in
     working capital:
      - (Increase)/
         decrease in
         inventories              448            -         (759)           -
      - Increase in
         accounts
         receivable            (5,848)           -      (11,079)           -
      - Increase in
         net
         (receivables
         from)/
         payables to
         related
         parties     18.3        (460)     (13,682)       6,576       (7,498)
      - Increase/
         (decrease)
         in accounts
         payable and
         accrued
         liabilities           (7,835)       2,057       (1,951)       3,461
    -------------------------------------------------------------------------
    Cash flows
     (utilized in)
     generated from
     operating
     activities               (12,541)     (15,307)       9,323       (8,858)
    -------------------------------------------------------------------------

    Additions to
     property, plant
     and equipment   18.4     (28,035)     (11,726)     (76,395)     (16,945)
    Rehabilitation
     costs incurred                 -            -         (272)           -
    Net cash movement
     on acquisition
     of MWS          18.5           -            -        1,249            -
    -------------------------------------------------------------------------
    Cash flows from
     investing
     activities               (28,035)     (11,726)     (75,419)     (16,945)
    -------------------------------------------------------------------------

    Issuance of
     senior unsecured
     convertible
     debentures       11            -      177,696      130,561      178,470
    Bridging loan
     to facilitate
     Waterpan
     transaction      13       43,618            -       43,618            -
    Repayment of
     bridging loan
     pursuant to
     Waterpan
     transaction      14      (43,618)           -      (43,618)           -
    Proceeds from
     shares           13          506            -          848            -
    -------------------------------------------------------------------------
    Cash flows from
     financing
     activities                   506      177,696      131,409      178,470
    -------------------------------------------------------------------------

    Net effect of
     exchange rate
     changes on cash
     held in foreign
     currencies                   954        2,741       10,989        1,335

    -------------------------------------------------------------------------

    Net (decrease)
     increase in cash
     and cash
     equivalents for
     the period               (39,116)     153,404       76,302      154,002

    Cash and cash
     equivalents at
     beginning of
     the period               254,332        1,158      138,914          560
    -------------------------------------------------------------------------
    Cash and cash
     equivalents at
     end of
     the period               215,216      154,562      215,216      154,562
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to the Consolidated Financial Statements



    First Uranium Corporation
    Notes to the Consolidated Financial Statements (unaudited)
    December 31, 2007

    1.  NATURE OF OPERATIONS AND BASIS OF PRESENTATION

        First Uranium Corporation ("First Uranium" or "the Corporation") is a
        Canadian resource company focused on the development of uranium and
        gold projects in South Africa. See Note 7 "Property, Plant and
        Equipment" for a description of the projects. The Corporation has a
        primary listing on the Toronto Stock Exchange ("TSX") and a secondary
        listing on the Johannesburg Stock Exchange ("JSE"). First Uranium
        owns 100% of First Uranium Limited ("FUL"), which in turn holds 100%
        of First Uranium (Proprietary) Limited ("FUSA") and 100% of Ezulwini
        Mining Company (Proprietary) Limited ("EMC"), which owns and operates
        the Ezulwini Mine.

        During the three months ending June 30, 2007, the Corporation
        acquired all the issued and outstanding shares of Mine Waste
        Solutions (Proprietary) Limited and its subsidiary, Chemwes
        (Proprietary) Limited (collectively "MWS"), an existing tailings
        treatment company which had an operating gold recovery plant in
        place. As a result of the MWS purchase, First Uranium changed its
        plans for the Buffelsfontein Tailings Recovery Project so that the
        historical and future tailings from the Buffelsfontein mine (the
        "Buffelsfontein Tailings") will now be transported by pipeline to the
        MWS site and processed through MWS's existing gold plant and, subject
        to their completion, through the new uranium recovery plant and
        additional gold recovery facilities which are currently being
        constructed at the MWS site. For greater clarity, the Buffelsfontein
        Tailings Recovery Project, as enhanced and modified by the addition
        of MWS, will henceforth be referred to as MWS.

        During the three months ending December 31, 2007, First Uranium
        issued 6.1 million shares to Waterpan Mining Consortium ("Waterpan")
        completing the purchase of the remaining 10% interest in EMC as
        contemplated in the Corporation's initial public offering in December
        2006 ("the Offering") (the "Waterpan transaction") and as disclosed
        in the Offering documents and in the annual financial statements for
        the year ending March 31, 2007 and the interim financial statements
        for the three months ending June 30, 2007 and September 30, 2007.
        This transaction resulted in EMC becoming wholly-owned by First
        Uranium. First Uranium and Waterpan collaborated to effect this
        transaction considering the terms of the Offering and as such the
        acquisition of the remaining 10% interest in EMC is accounted for
        under Canadian GAAP as a continuity of interests. Certain adjustments
        have been reflected in the financial statements to reflect the
        acquisition as if the share exchange had been effective for the
        period from inception to December 31, 2007.

        The reporting currency of the Corporation is the US dollar, and all
        amounts in these financial statements are in US dollars (US$), except
        where otherwise indicated.

    2.  SIGNIFICANT ACCOUNTING POLICIES

        The unaudited interim consolidated financial statements have been
        prepared by First Uranium in accordance with Canadian generally
        accepted accounting principles ("Canadian GAAP") for preparation of
        the interim financial statements. The preparation of the unaudited
        interim consolidated financial statements is based on the same
        accounting policies and practices as those disclosed in Note 1
        "Nature of operations" and Note 2 "Significant accounting policies"
        to the Corporation's audited consolidated financial statements for
        the year ended March 31, 2007, except for changes as described in
        Note 3 "Changes in accounting policies". These unaudited interim
        consolidated financial statements do not include all disclosures
        required by GAAP for annual financial statements, and accordingly
        should be read in conjunction with the Corporation's audited
        consolidated financial statements for the year ended March 31, 2007.

    2.1 Financial instruments

        Transaction costs for financial assets and liabilities

        For a financial asset or financial liability classified other than as
        held for trading, the Corporation has added the transaction costs
        that are directly attributable to the acquisition or issue of a
        financial asset or financial liability to the fair value of the asset
        or liability established at the recognition of the asset or
        liability.

    2.2 Inventories

        Inventories include ore stockpiles, gold in process and supplies and
        spares, and are recorded at the lower of cost or net realizable
        value. The cost of ore stockpiles and gold produced is determined
        principally by the weighted average cost method using related
        production costs. Costs of gold produced inventories include costs
        such as milling costs, mining costs and mine general and
        administration costs but excluding transport, refining and taxes. Net
        realizable value is determined with reference to current market
        prices. Stockpiles consist of ore to be processed through the
        processing plant. The stockpiles have been sampled and evaluated and
        are on surface. All ore is expected to be fully processed within the
        life of mine. Spares and consumable stores are valued at weighted
        average cost after appropriate impairment of redundant and slow
        moving items.

    2.3 Revenue recognition

        Revenue from sales is recognized when significant risks and rewards
        of title and ownership of the goods are transferred upon delivery to
        the final refiner.

        Interest income is recognized on a time proportion basis, taking
        account of the principal outstanding and the effective rate over the
        period of maturity, when it is determined that such income will
        accrue to the Corporation.

    2.4 Earnings or loss per share

        Basic earnings or loss per share is computed by dividing earnings or
        loss available to common shareholders by the weighted average number
        of common shares outstanding during the period. The treasury stock
        method is used to calculate diluted earnings or loss per share.
        Diluted earnings or loss per share is similar to basic earnings or
        loss per share, except that the denominator is increased to include
        the number of additional common shares that would have been
        outstanding assuming that options with an average market price for
        the period greater than their exercise price are exercised and the
        proceeds used to repurchase common shares. In applying the treasury
        stock method, options with an exercise price greater than the average
        quoted market price of the common shares are not included in the
        calculation of diluted earnings per share, as the effect is anti-
        dilutive.

    3. CHANGES IN ACCOUNTING POLICIES

        Effective April 1, 2007, the Corporation adopted two new accounting
        standards that were issued by the Canadian Institute of Chartered
        Accountants ("CICA"):
        -  Handbook Section 1530 - Comprehensive Income
        -  Handbook Section 3855 - Financial Instruments - Recognition and
           Measurement

        As provided under the standards, the comparative interim consolidated
        financial statements have not been restated. There were no
        transitional effects and as a result no adjustments have been
        recorded to deficit as at April 1, 2007.

        Section 1530 - Comprehensive income

        This section describes the reporting and disclosure standards with
        respect to comprehensive income and its components. Comprehensive
        income is composed of net income and other comprehensive income. At
        this time the Corporation has none of the elements that will give
        rise to comprehensive income.

        Section 3855 - Financial instruments - recognition and measurement

        This section establishes standards for recognizing and measuring
        financial assets, financial liabilities and non-financial
        derivatives. It requires that financial assets and liabilities
        including derivatives be recognized on the balance sheet when the
        Corporation becomes a party to the contractual provisions of the
        financial instrument or a non-financial derivative contract. All
        financial instruments should be measured at fair value on initial
        recognition except for certain related party transactions. Fair value
        is the amount at which an item could be exchanged between willing
        parties. Measurement in subsequent periods depends on whether the
        financial instruments have been classified as held for trading,
        available-for-sale, held-to-maturity, loans and receivables, or other
        liabilities.

        The Corporation designated certain financial assets and liabilities
        and adopted the following new accounting policies:

        Cash and cash equivalents

        Cash and cash equivalents are classified as "assets available-for-
        sale" and are measured at fair value at each balance sheet date. Any
        changes in fair value are recognized in net income in the period in
        which the change arises. Fair value is calculated using published
        price quotations in an active market, where applicable. The carrying
        values for cash and cash equivalents at March 31 2007 approximated
        their fair values because of their short terms of maturity; no
        adjustments were made to the opening values.

        Accounts receivable and receivables from related party

        These assets are classified as "loans and receivables" and are
        recorded at amortized cost, which upon their initial measurement is
        equal to their fair value. Subsequent measurements are recorded at
        amortized cost using the effective interest rate method. The carrying
        values for these assets at March 31 2007 approximated their fair
        values because of their short terms of maturity; no adjustments were
        made to the opening values.

        Asset retirement funds

        The asset retirement funds are classified as "assets available-for-
        sale" and are measured at fair value at each balance sheet date. Any
        changes in fair value are recognized in net income in the period in
        which the change arises. Fair value is calculated using the quoted
        prices of South African equities in an active market, with interest
        and dividends recognized in net income; unrealized gains or losses
        are recognized in Other Comprehensive Income. Any equities without
        market quotes are carried using the cost method. The carrying values
        for the asset retirement funds at March 31 2007 approximated their
        fair values; no adjustments were made to the opening values.

        Accounts payable and accrued liabilities and payable to related party

        These liabilities are classified as "other financial liabilities" and
        are initially measured at their fair values. Subsequent measurements
        are recorded at amortized cost using the effective interest rate
        method. The carrying values for these liabilities at March 31 2007
        approximated their fair values; no adjustments were made to the
        opening values.

        Senior unsecured convertible debentures

        The sum of the carrying amounts assigned to the liability and equity
        components of the convertible debenture on initial recognition is
        always equal to the carrying amount that would be ascribed to the
        instrument as a whole. No gain or loss arises from recognizing and
        presenting the components of the instrument separately. The relative
        fair value method is used to determine the value of the option
        directly either by reference to the fair value of a similar option,
        if one exists, or by using an option pricing model. The value
        determined for each component is then adjusted on a pro rata basis to
        the extent necessary to ensure that the sum of the carrying amounts
        assigned to the components equals the amount of the consideration
        received for the convertible debenture.

        Accounting Changes

        In July 2006, the Canadian Institute of Chartered Accountants (CICA)
        issued a new version of Section 1506 of the CICA Handbook,
        "Accounting Changes". This new standard establishes criteria for
        changing accounting policies, together with the accounting treatment
        and disclosure of changes in accounting policies and estimates, and
        correction of errors. This new section was adopted by the Company on
        January 1, 2007 with no impact on results.

        Accounting policy choice for transaction costs

        On June 1, 2007, CICA Emerging Issues Committee issued Abstract
        no. 166, "Accounting Policy Choice for Transaction Costs"
        (EIC - 166). This EIC addresses the accounting policy choice of
        expensing or adding transaction costs related to the acquisition of
        financial assets and financial liabilities that are classified as
        other than held-for-trading. Specifically, it requires the same
        accounting policy choice be applied to all similar financial
        instruments classified as other than held-for-trading, but permits a
        different policy choice for financial instruments that are not
        similar. EIC - 166 requires retroactive application to all
        transaction costs accounted for in accordance with Section 3855. The
        current recognition policy for transaction costs is consistent with
        this guidance.

        Future accounting standards

        The CICA has issued the following new sections which are effective
        for interim periods beginning on or after October 1, 2007. These new
        standards relate only to disclosure and presentation and will have no
        impact on the Company's results.

        Financial instruments - disclosures

        Section 3862, "Financial Instruments - Disclosures", describes the
        required disclosure for the assessment of the significance of
        financial instruments for an entity's financial position and
        performance and of the nature and extent of risk arising from
        financial instruments to which the entity is exposed and how the
        entity manages those risks.

        Financial instruments - presentation

        Section 3863, "Financial Instruments - Presentation", establishes
        standards for presentation of the financial instruments and non-
        financial derivatives. It carries forward the presentation related
        requirement of Section 3861, "Financial Instruments - Disclosure and
        Presentation".

        Capital disclosures

        Section 1535, "Capital Disclosures", establishes standards for
        disclosing information about an entity's capital and how it is
        managed. It describes the disclosure of the entity's objectives,
        policies and processes for managing capital, the quantitative data
        about what the entity regards as capital, whether the entity has
        complied with any capital requirements, and, if it has not complied,
        the consequences of such non compliance.

    4.  BUSINESS ACQUISITION

        Acquisition of Mine Waste Solutions (Proprietary) Limited

        First Uranium, through its wholly-owned subsidiary FUSA, acquired all
        of the issued and outstanding shares of MWS. MWS owns and operates an
        existing gold mine tailings and re-processing facility adjacent to
        First Uranium's Buffelsfontein Tailings Recovery Project in South
        Africa.

        The MWS acquisition closed on June 6, 2007 (effective date of
        acquisition), at which point First Uranium assumed management control
        of MWS. For accounting purposes, net income from MWS operations of
        US$1.9 million for the period from April 1, 2007 to June 6, 2007 has
        been applied to reduce the cost of the MWS acquisition.

        A total consideration of US$32.3 million was paid for the MWS
        acquisition in the form of an issuance of 3.1 million First Uranium
        common shares valued at US$31.6 million and US$0.7 million in cash
        for transaction costs.

        The table below sets out the preliminary allocation of the purchase
        price to the assets acquired and liabilities assumed, based on
        preliminary estimates of fair value. Final valuations of the assets
        and liabilities have not been completed. Furthermore, the future
        income tax assets and liabilities are not yet complete due to the
        inherent complexity associated with these valuations. The preliminary
        purchase price allocation is subject to adjustments.

        The acquisition was accounted for by the purchase method of
        accounting and the estimated allocation of fair value to the assets
        acquired and liabilities assumed as at June 6, 2007 was:

                                       Reported at               Reported at
                                       December 31,             September 30,
                                              2007  Adjustments         2007
                                           US$'000      US$'000      US$'000
        ---------------------------------------------------------------------
        Current assets                       4,608            -        4,608
        Asset retirement fund                1,950            -        1,950
        Property, plant and equipment       40,430            -       40,430
        ---------------------------------------------------------------------
        Total assets acquired               46,988            -       46,988
        ---------------------------------------------------------------------

        Current liabilities                  1,476            -        1,476
        Lease obligations                       28            -           28
        Asset retirement obligation          2,777            -        2,777
        Future tax liability                10,445            -       10,445
        ---------------------------------------------------------------------
        Total liabilities assumed           14,726            -       14,726
        ---------------------------------------------------------------------

        ---------------------------------------------------------------------
        Net assets acquired                 32,262            -       32,262
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Current assets include cash and cash equivalents of US$1.3 million
        (net of transaction costs) (see Note 18.5).

        Although the estimated allocation of fair value to the assets
        acquired and liabilities assumed is subject to changes as additional
        information becomes available, the final allocation is not expected
        to differ materially from the estimated allocation.

        The excess of the purchase consideration over the net book value of
        MWS of US$35.2 million was attributed to the tailings for processing
        of US$29.5 million and US$5.6 million adjustment of the fair value of
        property, plant and equipment obtained with the MWS acquisition less
        the related future tax liability arising on these assets.

    5.  AMOUNTS RECEIVABLE

                                                    December 31     March 31
                                                           2007         2007
                                                        US$'000      US$'000
        ---------------------------------------------------------------------
        Trade receivables                                 5,017           99
        Value Added Tax and Goods and Services Tax        8,866        1,463
        Prepayments and advances                             73          144
        Deposits and guarantees                              82            7
        ---------------------------------------------------------------------
                                                         14,038        1,713
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
    6.  INVENTORIES

                                                    December 31     March 31
                                                           2007         2007
                                                        US$'000      US$'000
        ---------------------------------------------------------------------
        Gold work-in-progress                               751            -
        Spares and consumables                              835          292
        Stockpiles                                          875            -
        ---------------------------------------------------------------------
                                                          2,461          292
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    7.  PROPERTY, PLANT AND EQUIPMENT

                                                    Accumulated Net carrying
                                              Cost amortization       amount
        December 31, 2007                  US$'000      US$'000      US$'000
        ---------------------------------------------------------------------
        Land and buildings                   3,826          (32)       3,794
        Mine infrastructure                 27,558            -       27,558
        Mining assets                       64,127            -       64,127
        Tailings for processing             29,642       (1,108)      28,534
        Mining rights                           82            -           82
        Plant and equipment                 41,191         (135)      41,056
        Motor vehicles                         862          (74)         788
        Office furniture and equipment         366          (15)         351
        Computer equipment and software        476          (89)         387
        ---------------------------------------------------------------------
        Total                              168,130       (1,453)     166,677
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------


                                                    Accumulated Net carrying
                                              Cost amortization       amount
        March 31, 2007                     US$'000      US$'000      US$'000
        ---------------------------------------------------------------------
        Land and buildings                     863            -          863
        Mine infrastructure                  3,710            -        3,710
        Mining assets                       16,942            -       16,942
        Mining rights                           13            -           13
        Plant and equipment                  9,000            -        9,000
        Motor vehicles                         179           (8)         171
        Office furniture and equipment          56           (1)          55
        Computer equipment and software        205           (5)         200
        ---------------------------------------------------------------------
        Total                               30,968          (14)      30,954
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Included in the above are mining related assets with a net carrying
        value of US$101.4 million (March 31, 2007: US$29.0 million) related
        to the Ezulwini Mine and US$64.3 million (March 31, 2007:
        US$0.8 million) related to MWS.

        Included in the US$64.3 million net carrying value related to the
        MWS, is US$28.5 million relating to the Tailings for processing
        acquired with the MWS acquisition as well as US$5.4 million
        adjustment of the fair value of property, plant and equipment
        obtained with the MWS acquisition (see Note 4).

        As at December 31, 2007, all property, plant and equipment were owned
        by the Corporation, except for motor vehicles with a net carrying
        value of US$0.02 million which are held under capitalized lease
        contracts.

        As at March 31, 2007, all property, plant and equipment were owned by
        the Corporation.

        Ezulwini Mine

        The Ezulwini Mine project involves the recommissioning of an
        underground uranium and gold mining operation located on the
        outskirts of the town of Westonaria in Gauteng Province, South
        Africa. The Corporation has substantially completed the
        re-commissioning of the Ezulwini Mine and has been in the process of
        ramping up underground production. The development of the Ezulwini
        Mine includes the rehabilitation and re-engineering of the main mine
        shaft through the installation of a floating steel tower, de-
        stressing the area where the shaft pillar intersects the shaft
        barrel, and the construction of uranium and gold processing
        facilities.

        EMC purchased certain surface and underground assets relating to the
        Ezulwini Mine for a total consideration of US$7.8 million, effective
        December 22, 2006.

        As part of the Ezulwini acquisition, the related environmental
        rehabilitation trust fund amounting to US$2.7 million (see Note 8 -
        Asset retirement funds) was transferred into the Ezulwini trust fund
        and EMC took over the related environmental rehabilitation provision
        of US$5.1 million (see Note 12 - Asset retirement obligations) as
        determined by the South African Department of Minerals and Energy
        (the "DME"). The difference of US$2.4 million between the
        environmental rehabilitation trust fund and the environmental
        rehabilitation provision has been capitalized as part of mining
        infrastructure.

        On December 8, 2006 the Ezulwini mining right was awarded to Simmer &
        Jack by the DME. On December 20, 2006, EMC and Simmer & Jack entered
        into an agreement (the "Ezulwini Mining Right Agreement") pursuant to
        which Simmer & Jack agreed to take all necessary steps to obtain all
        ministerial approvals in order to effect the transfer of the Ezulwini
        mining right from Simmer & Jack to EMC.

        MWS

        MWS is a uranium and gold tailings recovery operation located in the
        western portion of the Witwatersrand Basin. With the MWS acquisition
        (see Note 4), the Corporation acquired an existing operating gold
        mine tailings re-processing facility and an historic uranium plant,
        adjacent to the Buffelsfontein property, where the Buffelsfontein
        Tailings are now being treated. The Corporation commissioned the pump
        station and 10.5-kilometre pipeline between the MWS property and the
        Buffelsfontein property during December 2007 and hydraulic mining of
        the Buffelsfontein tailings dams commenced. MWS is also in the
        process of expanding the plant facilities on the MWS property.

        During December 2006, FUSA entered into an agreement to acquire
        surface tailings from Buffelsfontein Gold Mines Limited ("BGM"), a
        subsidiary of Simmer & Jack (the "Buffelsfontein Tailings and Rights
        Agreement"). It was originally contemplated that the transaction
        would be recognized upon the satisfaction of the conditions precedent
        in the Buffelsfontein Tailings and Rights Agreement. While the
        conditions have not yet been satisfied, MWS commenced processing the
        material from the Buffelsfontein tailings dams and receiving the
        benefits thereof, in December 2007 and consequently MWS assumed the
        asset retirement obligation related to the Buffelsfontein tailings
        dams (see Note 12 - Asset retirement obligations). The corresponding
        asset of US$6.2 million associated with the Buffelsfontein tailings
        dams is capitalized as part of tailings for processing and amortized
        over the estimated life of the Buffelsfontein tailings dams.

    8.  ASSET RETIREMENT FUNDS
                                                    December 31     March 31
                                                           2007         2007
                                                        US$'000      US$'000
        ---------------------------------------------------------------------
        Balance, beginning of the period                  2,791            -
        Trust fund assumed on acquisition of
         Ezulwini mine                                        -        2,686
        Trust fund assumed on acquisition of MWS
         (see Note 4)                                     1,950            -
        Investment income                                   146           82
        Contributions in respect of guarantee                 -          103
        Costs incurred                                        -          (80)
        Foreign exchange differences                        257            -
        ---------------------------------------------------------------------
        Balance, closing of the period                    5,144        2,791
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The asset retirement funds consisting of environmental rehabilitation
        trust funds are under the Corporation's control and are to be used to
        fund the respective mining operation's rehabilitation liabilities.
        Funds in the trust consist primarily of cash held in interest bearing
        accounts, together with investments in South African equities. An
        accredited South African financial institution manages the trust
        funds under the direction of the trustees. The trust deed limits the
        trustees' investments to institutions and investment vehicles as
        referred to in section 37A of the South African Income Tax Act.

    9.  GUARANTEES

        The following guarantees have been issued:
                                                             Guarantee value
        To                       Regarding                           US$'000
        ---------------------------------------------------------------------
                                 Ezulwini environmental
        DME                       rehabilitation provision             5,427
        Murray and Roberts       Ezulwini shaft
         Cementation (Pty) Ltd    rehabilitation project               2,174
        Eskom Holdings Ltd       Electricity accounts                  1,228
        ---------------------------------------------------------------------

        The Ezulwini rehabilitation trust funds included in the asset
        retirement funds (see Note 8) have been pledged as security against
        the guarantees.

    10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

                                                    December 31     March 31
                                                           2007         2007
                                                        US$'000      US$'000
        ---------------------------------------------------------------------
        Trade payables                                   17,083        5,302
        Accruals                                          2,029          400
        ---------------------------------------------------------------------
                                                         19,112        5,702
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The trade payables primarily relate to committed purchases for
        capital expenditure of US$11.5 million and US$2.4 million at the
        Ezulwini Mine and MWS, respectively.


    11. SENIOR UNSECURED CONVERTIBLE DEBENTURES

        On May 3, 2007 First Uranium issued senior unsecured convertible
        debentures (the "Debentures") in denominations of Cdn $1,000 in the
        principal amount of US$135.1 million (Cdn$150 million). The interest
        rate on the Debentures is 4.25% per annum. The Debentures pay
        interest semi-annually in arrears on June 30th and December 31st and
        have a maturity date of June 30, 2012. The Debentures are convertible
        at the option of the holder into common shares at any time prior to
        the maturity date at an exchange price of Cdn$16.42 per share.

        The Debentures may not be redeemed by the Corporation prior to
        June 30, 2010. On or after June 30, 2010 and prior to the maturity
        date, the Debentures may be redeemed by the Corporation, in whole or
        in part from time to time, provided that the weighted average trading
        price of the Common Shares on the TSX for the 20 consecutive trading
        days ending five trading days prior to the date on which notice of
        redemption is provided is at least 130% of the exchange price of
        Cdn$16.42.

        First Uranium has the option, subject to regulatory approval, to
        satisfy its obligations to repay the principal amount of the
        Debentures upon redemption or at maturity by issuing and delivering
        that number of freely tradable Common Shares obtained by dividing the
        principal amount of the Debentures by 95% of the weighted average
        trading price of the Common Shares on the TSX for the twenty
        consecutive trading days ending five trading days before the date
        fixed for the redemption or maturity.

        The equity component of the Debentures was valued on issuance at
        US$46.5 million which is recorded as a separate component of
        shareholders' equity. The conversion option was valued using the
        Black-Scholes pricing model with the following assumptions: Expected
        dividend yield 0%, expected volatility 56%, risk free interest rate
        4.2% and expected life of five years.

        The liability component of the Debentures is being accreted such that
        the liability at maturity will equal the gross proceeds of
        US$135.1 million (Cdn$150 million) less conversions. The amounts
        accreted during the three and nine months ending December 31, 2007
        were US$3.7 million and US$8.1 million respectively. The cost of
        issuing the Debentures amounted to US$4.5 million.

        As at December 31, 2007, no portion of the Debenture had been
        converted. Interest paid for the three and nine months ending
        December 31, 2007 amounted to US$1.6 million and US$ 4.1 million.

    12. ASSET RETIREMENT OBLIGATIONS

                                                    December 31     March 31
                                                           2007         2007
                                                        US$'000      US$'000
        ---------------------------------------------------------------------
        Balance, beginning of the period                  5,377            -
        Provision assumed on acquisition of the
         Ezulwini Mine                                        -        5,133
        Provision assumed on acquisition of MWS
         (see Note 4)                                     2,777            -
        Provision assumed with commencement of
         hydraulic mining of the  Buffelsfontein
         tailings dams                                    6,231            -
        Accretion expense                                    59          244
        Rehabilitation costs                               (272)           -
        ---------------------------------------------------------------------
        Balance, closing of the period                   14,172        5,377
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The environmental rehabilitation provision assumed by EMC as part of
        the acquisition of the Ezulwini assets was determined by the DME as
        at November 2006. During March 2007 an independent review was
        performed by Johan Fourie & Associates on the Ezulwini assets
        relating to environmental rehabilitation provision that confirmed the
        provision at March 31, 2007 was sufficient.

        The environmental rehabilitation provision assumed as part of the MWS
        acquisition is to be partly funded by its rehabilitation trust fund
        (see Note 8). During April 2007, an independent valuation of the
        rehabilitation provision was completed by GCS (Proprietary) Limited,
        a water environmental engineering and science consultancy company.
        The provision was based on the estimated net cost to rehabilitate the
        mine.

        The environmental rehabilitation provision associated with the
        Buffelsfontein tailings dams was assumed with the commencement of the
        hydraulic mining of the Buffelsfontein tailings dams in December
        2007. Management estimated the respective environmental
        rehabilitation provision assumed at US$ 6.2 million (see Note 7).

    13. SHARE CAPITAL

        Number of shares
                          December 31     March 31  December 31     March 31
                                 2007         2007         2007         2007
        Ordinary shares          '000         '000      US$'000      US$'000
        ---------------------------------------------------------------------
        Balance, beginning
         of period            121,686       87,536      206,726        4,176
        Shares issued
         pursuant to the
         Waterpan
         transaction            6,141            -            -            -
        ---------------------------------------------------------------------
        Balance adjusted
         with shares issued
         to Waterpan          127,827       87,536      206,726        4,176
        Shares issued in
         public or private
         offering                   -       33,350            -      201,795
        Shares issued in
         respect of
         acquisition
         (see Note 4)           3,094            -       31,557            -
        Exercise of stock
         options                  123          800          848          728
        Contributed surplus
         relating to stock
         options exercised          -            -          559           27
        ---------------------------------------------------------------------
                              131,044      121,686      239,690      206,726
        Less: Share issue
         costs                      -            -      (24,053)     (24,053)
        ---------------------------------------------------------------------
        Balance, closing
         of period            131,044      121,686      215,637      182,673
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Authorized

        The authorized share capital of First Uranium consists of an
        unlimited number of common shares.

        Issued and outstanding

        On June 1, 2006, 800,000 stock options were exercised for proceeds of
        US$0.7 million.

        During December 2006, First Uranium issued 33.35 million shares
        pursuant to the Offering at Cdn$7 per share for gross proceeds of
        US$201.8 million;

        On June 6, 2007, First Uranium issued 3,093,980 shares valued at
        US$31.6 million relating to the acquisition of MWS (see Note 4).

        On December 14, 2007, First Uranium issued 6.1 million shares
        pursuant to the Offering (see Note 1).

        During the three and nine months ending December 31, 2007, 71,430 and
        122,525 stock options were exercised respectively, at an exercise
        price of Cdn$7 per share.

    14. CONTRIBUTED SURPLUS - STOCK-BASED COMPENSATION

        The Corporation maintains a stock-option plan (the "Option Plan") for
        employees, officers, directors and for certain consultants who
        provide ongoing support to First Uranium and its subsidiaries. Under
        the Option Plan, options typically are granted for a period of up to
        ten years following the date of grant. The amounts granted usually
        reflect the level of responsibility of the particular optionee and
        his or her contributions to First Uranium.

        The Board of Directors has discretion to set the terms of any vesting
        schedule of each option granted. Except in specified circumstances,
        options are not assignable and non-transferable, and terminate 90
        days after the optionee ceases to be employed or associated with
        First Uranium.

        The terms of the Option Plan further provide that the price at which
        shares may be issued under the Option Plan shall not be less than the
        volume weighted average trading price of the shares on the TSX for
        the five trading days immediately preceding the day the option is
        granted.

        The following table details the movements of contributed surplus
        during the period:

                                                    December 31     March 31
                                                           2007         2007
                                                        US$'000      US$'000
        ---------------------------------------------------------------------
        Balance, beginning of period                      2,460           27
        Transfer to share capital relating to
         stock options exercised                           (559)         (27)
        Stock options granted during the period           2,648        2,460
        ---------------------------------------------------------------------
        Balance, end of period                            4,549        2,460
        ---------------------------------------------------------------------

        Assumptions

        The fair value of shares used to calculate the compensation expense
        was determined as the share price on the grant date adjusted by the
        probability of the recipients remaining employed or associated with
        the Corporation until the vesting date.

        For purposes of stock-based compensation, the fair values of these
        stock options were estimated using the Black-Scholes option pricing
        model with the assumptions used for the grants as follows:

                          December 31 September 30      June 30     March 31
                                 2007         2007         2007         2007
        ---------------------------------------------------------------------
        Expected dividend
         yield                     0%           0%           0%           0%
        Expected volatility
         of the
         Corporation's
         share price              63%          63%          56%          85%
        Risk free interest
         rate - Canadian
         rates                  4.75%        4.75%        4.81%        3.90%
        Expected life         3 years      3 years      3 years      3 years
        ---------------------------------------------------------------------

        Due to the short history of First Uranium trading on the TSX, changes
        in the subjective input assumptions can materially affect the fair
        value estimate, and therefore, the existing model does not
        necessarily provide a reliable measure of the fair value of First
        Uranium's stock options.

        During the 2007 fiscal year, 1,223,001 stock options were granted for
        a period of 10 years following the date of the grant and are subject
        to vesting within 2 years from the date of grant.

        During the three and nine months ending December 31, 2007, 209,286
        and 325,715 stock options were granted respectively for a period of
        10 years following the date of the grant and are subject to vesting
        within 2 years from the date of grant.

        The following table is a summary of the Corporation's options granted
        under its stock-based compensation plan:

                                                        Weighted average
                              Number of options       exercise price (Cdn$)
                          December 31     March 31  December 31     March 31
                                 2007         2007         2007         2007
        ---------------------------------------------------------------------
        Outstanding
         options at
         beginning of
         period             1,223,001      800,000         7.30         1.00
        Granted during
         the period           325,715    1,223,001        10.48         7.30
        Exercised during
         the period          (122,525)    (800,000)       (7.00)       (1.00)
        Forfeited during
         the period           (76,192)           -        (7.00)           -
        ---------------------------------------------------------------------
        Outstanding options
         at end of period   1,349,999    1,223,001         8.73         7.30
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The stock-based compensation expense recognized in the statements of
        operations and deficit was US$1.1 million and US$2.5 million for the
        three and nine months ending December 31, 2007. respectively. For
        both the three and nine months ending December 31, 2006, the stock-
        based compensation expense was US$0.5 million. During the three and
        nine months ending December 31, 2007 US$0.06 and US$0.2 million
        stock-based compensation was capitalized to the projects. No stock-
        based compensation was capitalized to projects during the three and
        nine months ending December 31, 2006. As at December 31, 2007, the
        aggregate unexpensed and fair value of unvested stock options granted
        amounted to US$0.8 million (March 31, 2007: US$2.9 million).

        The following table summarizes information about the First Uranium's
        outstanding stock options at December 31, 2007:

                        Options outstanding          Options exercisable
                              Weighted Weighted            Weighted Weighted
                               average  average Number of   average  average
    Exercise       Number of remaining exercise   options remaining exercise
    price            options      life    price  exercis-      life    price
    ranges Cdn$  outstanding    (years)   (Cdn$)     able    (years)   (Cdn$)
    -------------------------------------------------------------------------
    7.00 to 8.99     928,427      8.97     7.94   237,955      8.97     7.06
    9.00 to 11.99    361,572      9.67    10.05   120,523      9.67    10.05
    12.00 to 13.99    60,000      9.41    12.87    20,000      9.41    12.87
    -------------------------------------------------------------------------
                   1,349,999      9.18     8.73   378,478      9.22     8.32
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    15. TAXATION

        Provision for income taxes

        The reconciliation of income taxes attributable to operations
        computed at the statutory tax rates to income tax recovery, using a
        statutory tax rate of 35.47% for the three and nine months ending
        December 31, 2007 (three and nine months ending December 31, 2006:
        36.12%), is as follows:

                                Three months ended         Nine months ended
                                       December 31               December 31
                                 2007         2006         2007         2006
        ---------------------------------------------------------------------
        Net (loss) income
         before taxation       (4,125)         786        4,448       (1,452)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Income tax payable
         (receivable) at
         statutory rate        (1,463)         284        1,577         (525)
        Difference between
         Canadian rates and
         foreign jurisdiction    (300)         (95)        (345)          41
        Change in valuation
         allowance               (229)           -         (834)           -
        Adjustment for
         future tax rate
         difference             3,385         (170)       1,924          417
        Permanent differences  (1,419)         (19)      (2,514)          67
        Other                    (101)           -          116            -
        ---------------------------------------------------------------------
                                 (127)           -          (76)           -
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Future tax liability

                                                         Dec 31       Mar 31
                                                           2007         2007
                                                        US$'000      US$'000
        ---------------------------------------------------------------------
        Capital assets                                   11,043            -
        Non-capital loss carry-forwards                    (995)      (1,602)
        Share issue costs                                (7,405)      (6,629)
        Foreign resource expenses                        (1,136)      (1,099)
        Foreign exchange                                 (3,142)        (850)
        ---------------------------------------------------------------------
                                                         (1,635)     (10,180)
        Less: Valuation allowance                        11,977       10,180
        ---------------------------------------------------------------------
                                                         10,342            -
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        As at December 31, 2007, the Corporation had non-capital losses of
        approximately US$3.3 million that may be applied against earnings in
        future years. These losses are expected to expire in 2026.

        Due to uncertainties in the Corporation's ability to utilize its net
        operating losses in all of its operations, the Corporation has
        provided a valuation allowance against those future tax assets for
        which uncertainty exist.

    16. FOREIGN EXCHANGE GAINS

                                Three months ended         Nine months ended
                                       December 31               December 31
                                 2007         2006         2007         2006
                              US$'000      US$'000      US$'000      US$'000
        ---------------------------------------------------------------------
        Foreign exchange gains  1,245       (2,741)      13,636       (1,335)
        ---------------------------------------------------------------------

        The Corporation's assets are held in Canadian dollars ("Cdn$") and
        South African Rand ("ZAR"), while its accounts are presented in
        US dollars. The foreign exchange gains on translation during the
        three and nine months ending December 31, 2007 reflect the
        strengthening of the Canadian dollar and the South African Rand
        against the US dollar.

        The majority of the Corporation's funds are currently held in
        Canadian dollar denominated short-term deposits bearing interest at
        4.85% per annum. The approval of the South African Reserve Bank
        ("SARB"), which was required in connection with the issue of the
        Debentures, includes a condition that the Corporation transfers the
        net Debenture proceeds to bank accounts of the Corporation in South
        Africa and convert the funds to ZAR, by May 3, 2008.

    17. BASIC AND DILUTED (LOSS) EARNINGS PER SHARE

                                Three months ended         Nine months ended
                                       December 31               December 31
                                 2007         2006         2007         2006
        ---------------------------------------------------------------------

        Basic (loss)
         earnings per
         share of (US$)         (0.03)       (0.04)        0.04        (0.06)
        is calculated
         based on net
         (loss) income
         for the period
         of (US$'000)          (3,998)      (3,787)       4,524       (5,239)
        and a weighted
         average number
         of shares
         outstanding
         of ('000)            129,614       94,975      128,622       95,243
        ---------------------------------------------------------------------

        Diluted (loss)
         earnings per
         share of (US$)         (0.03)       (0.04)        0.04        (0.06)
        is calculated
         based on net
         (loss) income
         for the period
         of (US$'000)          (3,998)      (3,787)       4,524       (5,239)
        and a diluted
         weighted
         average number
         of shares
         outstanding
         of ('000)            129,993       93,048      128,642       89,393
        ---------------------------------------------------------------------

        The impact of the Debentures issued on May 3, 2007, has been excluded
        from the diluted shares computation because it was anti-dilutive for
        earnings per share purposes.

        The Waterpan transaction is accounted for under Canadian GAAP as a
        continuity of interests. As a result the weighted average number of
        shares outstanding has been adjusted to reflect the acquisition as if
        the share exchange had been effective for the period from inception
        to December 31, 2007 (see Note 1).

    18. NOTES TO THE CASH FLOW STATEMENT

    18.1 Non-cash interest income

                                Three months ended         Nine months ended
                                       December 31               December 31
                                 2007         2006         2007         2006
                              US$'000      US$'000      US$'000      US$'000
        ---------------------------------------------------------------------
        Total interest
         income                (4,467)        (529)     (12,840)        (422)
        Add back: Cash
         interest income        4,419          115       12,694          422
        ---------------------------------------------------------------------
                                  (48)        (414)        (146)           -
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    18.2 Non-cash interest expense

                                Three months ended         Nine months ended
                                       December 31               December 31
                                 2007         2006         2007         2006
                              US$'000      US$'000      US$'000      US$'000
        ---------------------------------------------------------------------
        Total interest
         expense               (1,629)           -       (4,087)        (101)
        Add back: Cash
         interest paid          1,629            -        4,087            -
        ---------------------------------------------------------------------
                                    -            -            -         (101)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    18.3 Decrease in net receivables from related parties

                                Three months ended         Nine months ended
                                       December 31               December 31
                                 2007         2006         2007         2006
                              US$'000      US$'000      US$'000      US$'000
        ---------------------------------------------------------------------
        Increase in
         receivables
         from related
         parties               (1,019)         457        5,744        1,052
        Increase in
         payable to
         related
         parties                  559        2,361          832        4,085
        Add back:
        - Interest
           income
           accrued
           on amounts
           receivable               -           63            -          133
        - Interest
           expense
           accrued on
           amounts
           payable                  -         (204)           -         (348)
        ---------------------------------------------------------------------
                                 (460)       2,677        6,576        4,922
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    18.4 Additions to property, plant and equipment

                                Three months ended         Nine months ended
                                       December 31               December 31
                                 2007         2006         2007         2006
                              US$'000      US$'000      US$'000      US$'000
        ---------------------------------------------------------------------
        Total additions
         to property,
         plant and
         equipment            (48,122)     (11,726)     (96,482)     (16,945)
        Add back:
        - Asset
           associated
           with
           Buffelsfontein
           tailings dams        6,231            -        6,231            -
        - Accrued
           capital
           expenditure         13,856            -       13,856            -
        ---------------------------------------------------------------------
                              (28,035)     (11,726)     (76,395)     (16,945)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    18.5 Net cash movement on acquisition of MWS

                                Three months ended         Nine months ended
                                       December 31               December 31
                                 2007         2006         2007         2007
                              US$'000      US$'000      US$'000      US$'000
        ---------------------------------------------------------------------
        Cash and cash
         equivalents taken
         over on date of
         acquisition                -            -        1,954            -
        Less: Expenses
         related to
         MWS acquisition            -            -         (705)           -
        ---------------------------------------------------------------------
                                    -            -        1,249            -
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    19. COMMITMENTS

        Capital commitments
                                                    December 31     March 31
                                                           2007         2007
                                                        US$'000      US$'000
        ---------------------------------------------------------------------
        Ezulwini Mine                                    53,390       14,836
        MWS                                               3,393            -
        ---------------------------------------------------------------------
        Total contractual obligations                    56,783       14,836
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The capital commitments are payable within one year.

        Toll treatment agreement

        The Corporation entered into an agreement with a third party,
        commencing in January 2009, to calcine the yellowcake from First
        Uranium to produce uranium oxide packaged for dispatch to converters.
        Either party may terminate the agreement on 18 months notice. The
        third party calciner will construct a plant with one-half of the
        capacity of the plant to be dedicated for the processing of the First
        Uranium yellowcake and will acquire a road tanker to transport the
        yellowcake from the First Uranium operations to the calciner's
        operations. First Uranium will pay one-half of the construction cost
        of the calcining plant up to a maximum of ZAR15 million and one-half
        of the cost of the tanker (together referred to as the "Loan"). The
        Loan will be effective as of January 5, 2009 and is to be repaid in
        monthly instalments over a seven year period commencing
        January 30, 2009. The Loan will bear interest equal to the prime
        overdraft rate as quoted by the South African Reserve Bank, plus 2%
        commencing January 5, 2009. If First Uranium cancels the agreement,
        in the absence of a right under the agreement to cancel the agreement
        in prescribed circumstances, First Uranium will continue to be
        obligated to repay the entire Loan.

        Royalty agreements

        On December 20, 2006, FUSA, Simmer & Jack and Aberdeen entered into
        an arrangement (the "Aberdeen Arrangement") pursuant to which (i)
        Simmer & Jack confirmed that it will pay to Aberdeen the amount of
        any royalty owing to Aberdeen under the Aberdeen Loan Agreement in
        respect of gold produced from the tailings to be acquired by FUSA
        from BGM pursuant to the Buffelsfontein Tailings and Rights
        Agreement, and (ii) FUSA confirmed that it will pay to Simmer & Jack,
        immediately prior to any payment contemplated in (i) above, an amount
        equal to the amount of any royalty payment to be made by Simmer &
        Jack to Aberdeen in respect of gold produced from the tailings to be
        acquired by FUSA from BGM pursuant to the Buffelsfontein Tailings and
        Rights Agreement.

        Pursuant to the Buffelsfontein Tailings and Rights Agreement dated
        December 20, 2006 among BGM, Simmer & Jack and FUSA, in consideration
        for the cession of the Buffelsfontein Tailings and Mining Right from
        BGM to FUSA as well as certain servitudes, and the right to the
        tailings arising from future underground mining operations by BGM at
        the BGM Underground Mine, FUSA agreed to pay to BGM a royalty of 1%
        plus value added tax of the gross revenue earned by FUSA from the
        sale of uranium, gold, sulphur and other minerals recovered from the
        processing of tailings acquired by FUSA from BGM pursuant to the
        Buffelsfontein Tailings and Rights Agreement.

        As and when there is production from the Buffelsfontein tailings dams
        acquired from BGM pursuant to the Buffelsfontein Tailings and Rights
        Agreement, FUSA will become liable to pay: (i) to Simmer & Jack,
        under the Aberdeen Arrangement Agreement, an amount equal to the
        royalty payable by Simmer & Jack to Aberdeen pursuant to the Aberdeen
        Loan Agreement in respect of the tailings to be acquired from BGM
        pursuant to the Buffelsfontein Tailings and Rights Agreement, and
        (ii) to BGM the above-mentioned 1% royalty pursuant to the terms of
        the Buffelsfontein Tailings and Rights Agreement.

        During December 2007 MWS commenced processing the Buffelsfontein
        tailings and as a result MWS is now obligated to pay a royalty to BGM
        pursuant to the Buffelsfontein Tailings and Rights Agreement and make
        other payments to Simmer & Jack pursuant to the Aberdeen Arrangement
        in respect of the metals recovered from the Buffelsfontein tailings.

    20. FINANCIAL INSTRUMENTS

        Financial risk factors

        The Corporation's activities expose it to a variety of financial
        risks, including the effects of changes in debt and equity market
        prices, foreign currency exchange rates and interest rates. The
        Corporation's overall risk management program focuses on the
        unpredictability of financial markets and seeks to minimize potential
        adverse effects on the financial performance of the Corporation.

        Risk management carried out by the Corporation is approved by the
        Board of Directors.

        (i)   Foreign exchange and commodity price risk

              The Corporation does not hedge its exposure to foreign currency
              exchange risk nor does it hedge its exposure to commodity price
              fluctuation risk.

        (ii)  Interest rate risk

              The Corporation does not hedge its exposure to interest rate
              risk. Deposits attract interest at rates that vary with prime.
              The Corporation's policy is to manage interest rate risk so
              that fluctuations in variable rates do not have a material
              impact on the statement of operations and deficit.

        (iii) Credit risk

              The Corporation has no significant concentrations of credit
              risk. The Corporation has policies in place to ensure that
              sales of products and services are made to customers with an
              appropriate credit history. The Corporation has policies that
              limit the amount of credit exposure to any one financial
              institution.

        (iv)  Liquidity risk

              Prudent liquidity risk management implies maintaining
              sufficient cash and marketable securities, the availability of
              funding through an adequate amount of credit facilities and the
              ability to close out market positions. The Corporation manages
              liquidity risk through an ongoing review of future commitments
              and credit facilities. Cash flow forecasts are prepared and
              adequate utilized borrowing facilities are monitored.

        Fair value estimation

        The fair value of publicly traded derivatives and trading securities
        is based on quoted market prices at the balance sheet date.

        In assessing the fair value of other financial instruments, the
        Corporation uses a variety of methods and makes assumptions that are
        based on market conditions existing at each balance sheet date.
        Option pricing models and estimated discounted value of future cash
        flows, are used to determine fair value for the remaining financial
        instruments.

        The face value less any estimated credit adjustments for financial
        assets and liabilities with a maturity of less than one year are
        assumed to approximate their fair values. The fair value of financial
        liabilities for disclosure purposes is estimated by discounting the
        future contractual cash flows at the current market interest rate
        available to the Corporation for similar financial instruments.

        The actual disclosed values of the financial instruments all
        approximate the fair values of these instruments.

    21. RELATED PARTY TRANSACTIONS AND COMMITMENTS

                                                    December 31       Mar 31
                                                           2007         2007
        Related party balances                          US$'000      US$'000
        ---------------------------------------------------------------------
        FUSA amount (to)/from Simmer & Jack                   -        5,079
        First Uranium amount (to)/from Simmer & Jack       (832)       1,684
        Loan to Chief Executive Officer                   1,019            -
        ---------------------------------------------------------------------
                                Three months ended         Nine months ended
                                       December 31               December 31
        Related party            2007         2006         2007         2006
         transactions         US$'000      US$'000      US$'000      US$'000
        ---------------------------------------------------------------------
        Shared services
         fees to
         Simmer & Jack           (907)        (929)      (1,893)      (1,730)
        Fees to empowerment
         company                  (55)           -         (271)           -
        Interest to
         Simmer & Jack
         by EMC                     -          (46)           -         (101)
        Interest from
         Simmer & Jack
         by FUSA                    -          106            -          235
        Interest on loan
         to Chief
         Executive Officer          9            -            9            -
        ---------------------------------------------------------------------

        On December 20, 2006 First Uranium and Simmer & Jack entered into a
        shared services agreement (the "Shared Services Agreement"). Pursuant
        to the terms of the Shared Services Agreement, First Uranium may
        retain certain services to be provided by Simmer & Jack, including
        project management and technical services, cash management and
        investment services, accounting, treasury and financial services,
        corporate secretarial support and human resources and staffing
        services, including payroll and benefits administration, and such
        other services as may be required by First Uranium and which Simmer &
        Jack is able and willing to provide. The expenses for the three and
        nine months ending December 31, 2007 relates to such services
        received.

        During the three months ending December 31, 2007, US$0.4 million
        (December 31, 2006: US$0.9 million) of the total shared services fees
        were capitalized, representing services provided in respect of
        technical services for the Ezulwini Mine and the Buffelsfontein
        Tailings Recovery Project. During the nine months ending
        December 31, 2007, US$0.8 million (December 31, 2006: US$1.0 million)
        of such costs were capitalized.

        Prior to December 2006, the Corporation shared its premises with
        other companies that had common directors and reimbursed the related
        companies for its proportional share of expenses or was reimbursed by
        the related companies for their proportional share of expenses.
        During both the three and nine months ending December 31, 2006, the
        Corporation was charged $0.6 million for consulting services provided
        by related directors, officers and consultants of the Corporation.

        In addition, First Uranium has agreed to reimburse Simmer & Jack with
        respect to 50% of fees that Simmer & Jack is required to pay to an
        empowerment company for consulting services regarding transformation,
        human resources and occupational health and safety. BJ Njenje,
        AX Sisulu and SLB Mapisa, shareholders of the empowerment company,
        are also directors of Simmer & Jack.

        On September 27, 2007, the Board approved a loan in the amount of
        Cdn$1 million to the Chief Executive Officer of First Uranium for the
        purpose of facilitating his purchase of a family home. The loan is
        for a term of six years, is unsecured and bears interest at 4%
        payable monthly in arrears. The loan was advanced on
        October 17, 2007.

        As previously disclosed, the Corporation entered into an agreement on
        December 12, 2006 with Waterpan for the purchase of the remaining 10%
        of the shares of EMC in consideration for 6.1 million common shares
        of First Uranium. On December 14, 2007, EMC obtained a bridging loan
        from a South African banking institution to purchase Waterpan's 10%
        shareholding in EMC. Waterpan used the proceeds to partially fund the
        purchase of 6.1 million common shares (the "Waterpan Shares") of
        First Uranium for a consideration of $43.6 million. First Uranium
        used the proceeds from the sale of the Waterpan Shares to repay the
        bridging loan to the South African banking institution and to pay the
        taxes resulting from the purchase of the EMC shares. Concurrent with
        the closing of this transaction, one million of the Waterpan Shares
        were sold by way of a private placement. Waterpan has a contractual
        agreement to retain the remaining Waterpan Shares until
        April 1, 2009. Certain shareholders of Waterpan are officers or
        employees of First Uranium or directors of its subsidiaries. The
        Waterpan transaction had no net impact on the cash flow of the
        First Uranium group of companies.

    22. SUBSEQUENT EVENTS

        Regular power outages have recently beset South Africa, causing
        disruption in business activities. Coal-fed power stations are
        running low on fuel and several power-generating facilities are down
        for maintenance. No new power generating facilities are expected to
        start up in South Africa until 2012. The primary response of Eskom,
        South Africa's national power utility, to these power deficiencies is
        to ask that its customers conserve energy and/or to restrict the
        amount of power supplied to them.

        On January 25, 2008, Eskom advised that continuity of electric power
        supply could not be guaranteed. Specific warnings were communicated
        to South African mining companies, including the Corporation, which
        were specifically asked by Eskom to reduce power consumption to 80%
        of load requirements. While this was subsequently increased to 90%,
        Eskom also informed mining companies that this authorization could be
        withdrawn at a later date, as electrical power supply remains tight.

        After a preliminary review of the feasibility of the Corporation
        generating its own power, the Board has provisionally concluded that
        the Corporation's two projects are sufficiently robust to continue
        development as planned based on the addition of power generation
        capacity.

        The initial impact of this decision is as follows:

        For the Ezulwini Mine:

        -  given the uncertainty of power supply at a third-party gold plant
           to toll-treat the Corporation's ore, the Board has decided to
           postpone the ramp-up of the underground production and to
           accelerate the shaft refurbishment program

        -  the weekly operating plan to date has been to focus on mine
           development and hoisting for three days and on shaft
           rehabilitation for four days; henceforth the intention is to focus
           entirely on shaft refurbishment until the operation's gold plant
           is commissioned in April 2008

        -  the first 50,000 tonne per month module of the gold plant is on
           schedule for commissioning in April 2008 using existing generator
           capacity; should Eskom power not be forthcoming, the Ezulwini Mine
           has existing power generating capacity of 13 MVA ("1 Megavolt
           Ampere = 1 Mega Watt") which will be utilized

        -  the first 50,000 tonne per month module of the uranium plant
           remains on schedule for commissioning in June 2008; a feasibility
           study of power generation options is underway to reduce power
           reliance on Eskom;

        -  commissioning of the remaining modules of the gold and uranium
           plant will be deferred by approximately a year to January 2010 to
           coincide with the corresponding mine development plan

        For MWS:

        -  the current MWS operation is presently unaffected by the power
           situation as it has been drawing additional power from BGM

        -  upgrading of the MWS gold plant to increase the design capacity to
           630,000 tonnes per month remains on schedule for completion in
           Q4 2008

        -  the expansion of the current operations, however, will require
           additional power; a power generation feasibility study has been
           initiated with the expected result that the expansion will be
           delayed by approximately three months

        The decision to invest in generating our own power is a temporary
        measure until the power situation has normalized which may take
        several years. It is expected that the Corporation will be able to
        monetize a significant portion of its investment in owner-generated
        power at that time.

    23. SEGMENTED INFORMATION

        Segmented information is presented in respect of the Corporation's
        business and geographical segments. The primary format business
        segments, is based on the Corporation's management and internal
        reporting structure. Inter-segment reporting is determined on an
        arm's length basis.

        Segment results, assets and liabilities include items directly
        attributable to a segment as well as those that can be allocated on a
        reasonable basis. Unallocated items comprise mainly income earning
        assets and revenue, interest-bearing loans, borrowing and expenses,
        and corporate assets and expenses. Segment capital expenditure is the
        total cost incurred during the period to acquire segment assets that
        are expected to be used for more than one period.

                                   South Africa               Canada
                             Ezulwini
        Three months ended       Mine        MWS(*)   Corporate        Total
         December 31, 2007    US$'000      US$'000      US$'000      US$'000
        ---------------------------------------------------------------------

        Revenue                     -        6,633            -        6,633
        Cost of sales               -       (5,433)           -       (5,433)
        ---------------------------------------------------------------------
                                    -        1,200            -        1,200
        Other income            1,375            4            -        1,379
        Expenditure
        General, consulting
         and administrative
         expenditures          (1,478)        (269)      (2,311)      (4,058)
        Stock-based
         compensation            (383)        (147)        (549)      (1,079)
        Pumping, feasibility
         and rehabilitation
         costs                 (1,607)        (273)           -       (1,880)
        Amortization on
         property, plant
         and equipment            (44)           -           (2)         (46)
        ---------------------------------------------------------------------
                               (3,512)        (689)      (2,862)      (7,063)
        ---------------------------------------------------------------------

        Operating profit
         (loss)                (2,137)         515       (2,862)      (4,484)
        Interest income           142          152        4,173        4,467
        Interest expense            -            -       (1,629)      (1,629)
        Accretion expense
         on convertible
         debentures                 -            -       (3,724)      (3,724)
        Foreign exchange
         gains (losses)           155        3,367       (2,277)       1,245
        ---------------------------------------------------------------------
        Income (loss)
         before taxes          (1,840)       4,034       (6,319)      (4,125)
        Provision for
         income taxes               -          127            -          127
        ---------------------------------------------------------------------
        Net income (loss)
         for the period        (1,840)       4,161       (6,319)      (3,998)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Total assets          125,733       76,312      202,510      404,555
        Total liabilities     (18,275)     (24,640)    (105,211)    (148,126)
        Capital expenditure   (17,358)     (10,677)           -      (28,035)
        ---------------------------------------------------------------------

        (*) Includes the Buffelsfontein Tailings Recovery Project.


                                   South Africa               Canada
                             Ezulwini
        Three months ended       Mine        MWS(*)   Corporate        Total
         December 31, 2006    US$'000      US$'000      US$'000      US$'000
        ---------------------------------------------------------------------

        Expenditure
        General, consulting
         and administrative
         expenditure                -         (591)        (115)        (706)
        Stock-based
         compensation               -            -         (519)        (519)
        Pumping and
         feasibility costs       (350)           -            -         (350)
        ---------------------------------------------------------------------

        Operating loss           (350)        (591)        (634)      (1,575)
        Interest income           247          102          180          529
        Foreign exchange
         gains (losses)        (2,266)         154         (629)      (2,741)
        ---------------------------------------------------------------------
        Loss before
         income taxes          (2,369)        (335)      (1,083)      (3,787)
        Provision for
         income taxes               -            -            -            -
        ---------------------------------------------------------------------
        Net loss for
         the period            (2,369)        (335)      (1,083)      (3,787)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Total assets           24,302       16,419      154,653      195,374
        Total liabilities     (15,249)        (256)      (8,773)     (24,278)
        Capital expenditure   (11,726)           -            -      (11,726)
        ---------------------------------------------------------------------

        (*) Includes the Buffelsfontein Tailings Recovery Project.


                                   South Africa               Canada
                             Ezulwini
        Nine months ended        Mine        MWS(*)   Corporate        Total
         December 31, 2007    US$'000      US$'000      US$'000      US$'000
        ---------------------------------------------------------------------

        Revenue                     -       15,069            -       15,069
        Cost of sales               -      (13,030)           -      (13,030)
        ---------------------------------------------------------------------
                                    -        2,039            -        2,039
        Other income            2,272            4            -        2,276
        Expenditure
        General, consulting
         and administrative
         expenditures          (2,168)        (431)      (5,949)      (8,548)
        Stock-based
         compensation            (694)        (225)      (1,594)      (2,513)
        Pumping, feasibility
         and rehabilitation
         costs                 (2,316)        (632)           -       (2,948)
        Amortization on
         property, plant
         and equipment           (135)           -           (9)        (144)
        ---------------------------------------------------------------------
                               (5,313)      (1,288)      (7,552)     (14,153)
        ---------------------------------------------------------------------

        Operating profit
         (loss)                (3,041)         755       (7,552)      (9,838)
        Interest income           273          264       12,303       12,840
        Interest expense           (4)           -       (4,083)      (4,087)
        Accretion expense
         on convertible
         debentures                 -            -       (8,103)      (8,103)
        Foreign exchange
         gains (losses)        (2,225)       4,622       11,239       13,636
        ---------------------------------------------------------------------
        Income (loss)
         before income
         taxes                 (4,997)       5,641        3,804        4,448
        Provision for
         income taxes               -           76            -           76
        ---------------------------------------------------------------------
        Net income (loss)
         for the period        (4,997)       5,717        3,804        4,524
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Total assets          125,733       76,312      202,510      404,555
        Total liabilities     (18,275)     (24,640)    (105,211)    (148,126)
        Capital expenditure   (59,548)     (16,822)         (25)     (76,395)
        ---------------------------------------------------------------------

        (*) Includes the Buffelsfontein Tailings Recovery Project.


                                   South Africa               Canada
                             Ezulwini
        Nine months ended        Mine        MWS(*)   Corporate        Total
         December 30, 2006    US$'000      US$'000      US$'000      US$'000
        ---------------------------------------------------------------------

        Expenditure
        General, consulting
         and administrative
         expenditures          (1,228)      (1,310)        (818)      (3,356)
        Stock-based
         compensation               -            -         (519)        (519)
        Pumping and
         feasibility costs       (350)           -            -         (350)
        ---------------------------------------------------------------------

        Operating loss         (1,578)      (1,310)      (1,337)      (4,225)
        Interest income             -          235          187          422
        Interest expense         (101)           -            -         (101)
        Foreign exchange
         losses                  (106)        (416)        (813)      (1,335)
        ---------------------------------------------------------------------
        Loss before
         income taxes          (1,785)      (1,491)      (1,963)      (5,239)
        Provision for
         income taxes               -            -            -            -
        ---------------------------------------------------------------------
        Net loss for
         the period            (1,785)      (1,491)      (1,963)      (5,239)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Total assets           24,302       16,419      154,653      195,374
        Total liabilities     (15,249)        (256)      (8,773)     (24,278)
        Capital expenditure   (16,945)           -            -      (16,945)
        ---------------------------------------------------------------------

        (*)   Includes the Buffelsfontein Tailings Recovery Project.
    



    FIRST URANIUM CORPORATION

    MANAGEMENT'S DISCUSSION AND ANALYSIS
    of the financial results
    for the three and nine months ended
    December 31, 2007

    Management's discussion and analysis of the unaudited consolidated
    financial condition and results of operations for the three and nine
    months ended December 31, 2007

    This Management's Discussion and Analysis ("MD&A") of the consolidated
financial position and results of operations review the activities, unaudited
consolidated results of operations and financial condition of First Uranium
Corporation and its subsidiaries ("First Uranium" or the "Corporation") for
the three months ended December 31, 2007 ("Q3 2008") and the nine months ended
December 31, 2007 ("2008 YTD"), compared to the corresponding three months of
the preceding year ("Q3 2007") and the nine months ended December 31, 2006
("2007 YTD"), together with certain trends and factors that are expected to
have an impact in the future. References to "Q4 2008" refer to the
Corporation's next three months ending March 31, 2008. References to "FY 2008"
and "FY 2007" refer to the fiscal years ending March 31, 2008 and March 31,
2007, respectively.
    This MD&A is intended to supplement and complement the unaudited
consolidated financial statements and notes thereto for Q3 2008 and 2008 YTD
(collectively the "Financial Statements") which have been prepared in
accordance with Canadian generally accepted accounting principles ("Canadian
GAAP"). The MD&A should be read in conjunction with the Financial Statements,
the audited consolidated financial statements for FY 2007 and the related
management's discussion and analysis. The information contained in this MD&A
is current to February 14, 2008, unless otherwise indicated.
    First Uranium is currently focused on the rehabilitation and bringing
into production of the Ezulwini underground uranium ("U(3)O8") and gold ("Au")
mine (the "Ezulwini Mine") and the recovery of uranium and gold from the
existing and future surface tailings at the Buffelsfontein mine through gold
and uranium plants originally planned to be constructed near the tailings at
the Buffelsfontein mine (the "Buffelsfontein Tailings Recovery Project"). In
June 2007, the Corporation acquired Mine Waste Solutions (Proprietary) Limited
("MWS"), an existing tailings treatment company which had an operating gold
recovery plant in place. As a result of the MWS purchase, First Uranium
changed its plans for the Buffelsfontein Tailings Recovery Project so that the
historical and future tailings from the Buffelsfontein mine (the
"Buffelsfontein Tailings") will now be transported by pipeline to the MWS site
and processed through MWS's existing gold plant and, subject to their
completion, through the new uranium recovery plant and additional gold
recovery facilities which are currently being constructed at the MWS site. For
greater clarity, the Buffelsfontein Tailings Recovery Project, as enhanced and
modified by the addition of MWS, will henceforth be referred to as MWS.
    The reporting currency for the Corporation is the US dollar, and all
amounts in the following discussion are in US dollars ("$"), except where
otherwise indicated.
    This MD&A includes certain forward-looking statements. Please read the
cautionary note at the end of this document.

    Responsibility of Management and the Board of Directors

    Management is responsible for the information disclosed in this MD&A and
the accompanying Financial Statements and has in place the appropriate
information systems, procedures and controls to ensure that information used
internally by management and disclosed externally is materially complete and
reliable. In addition, the Corporation's Audit Committee, on behalf of the
Board of Directors, provides an oversight role with respect to all public
financial disclosures made by the Corporation, and has reviewed and approved
this MD&A and the accompanying Financial Statements.

    Disclosure Controls and Procedures

    Disclosure controls and procedures are designed to provide reasonable
assurance that all relevant information is gathered and reported on a timely
basis to senior management, including the Corporation's Chief Executive
Officer and Chief Financial Officer, so that appropriate decisions can be made
regarding public disclosure. As at the end of the period covered by this MD&A,
management of First Uranium, under the direction of the Chief Executive
Officer and the Chief Financial Officer, evaluated the effectiveness of the
Corporation's disclosure controls and procedures as required by Canadian
securities laws.
    Based on this evaluation, the Chief Executive Officer and the Chief
Financial Officer have concluded that as of the end of the period covered by
this MD&A, the disclosure controls and procedures were effective to provide
reasonable assurance that information required to be disclosed in First
Uranium's annual filings and interim filings (as such terms are defined under
Multilateral Instrument 52-109 - Certification of Disclosure in Issuers'
Annual and Interim Filings) and other reports filed or submitted under
Canadian securities laws is recorded, processed, summarized and reported
within the time periods specified by those laws, and that material information
is accumulated and communicated to management of First Uranium, including the
Chief Executive Officer and the Chief Financial Officer, as appropriate to
allow timely decisions regarding required disclosure.
    During the most recent quarter there were no changes in the Corporation's
internal controls over financial reporting that materially affected, or are
reasonably likely to materially affect, the Corporation's internal control
over financial reporting.

    Overview

    First Uranium is a Canadian resource company focused on the development
of uranium and gold projects in South Africa. The Corporation's goal is to
become a significant producer of uranium and gold through the re-opening and
development of the Ezulwini Mine and the development of MWS. To expand its
production profile, First Uranium plans to continue to identify and acquire
additional uranium and gold projects in southern Africa and elsewhere. The
Corporation received net proceeds of $177.7 million from the sale of
33 million common shares in an initial public offering (the "Offering") in
December 2006 and raised an additional $130.6 million from the sale of senior
unsecured convertible debentures (the "Debentures") in May 2007. The common
shares and the Debentures of First Uranium are listed on the Toronto Stock
Exchange (the "TSX"). In addition, the common shares are listed on the
Johannesburg Stock Exchange (the "JSE"). As of February 11, 2008, Simmer and
Jack Mines, Limited ("Simmer & Jack"), a South African incorporated public
company listed on the JSE, owned 62.4% of the common shares of First Uranium.


    Recent Highlights

    During Q3 2008, First Uranium:

    
    -   toll-treated 27,951 tonnes of ore from the Ezulwini Mine at a
        recovered grade of 5.6 grams of gold per tonne, producing
        5,055 ounces of gold at a Cash Cost (as defined in the notes to the
        production tables in the Operations Overview of this MD&A) of
        $348 per ounce
    -   started drilling specific targets related to the possible expansion
        of the existing Ezulwini Mine (the "Ezulwini Expansion Program")
    -   completed construction of the pump station at MWS and the
        10.5-kilometre pipeline to the MWS gold plant at a total cost of
        $11.7 million
    -   completed the clean up and processing of the remaining tailings of
        the MWS No. 2 tailings dam and commenced hydraulic mining and pumping
        of material from the Buffelsfontein No. 2 dam to the MWS gold plant
        for processing during mid-December
    -   processed a total of 832,208 tonnes of tailings through the MWS gold
        plant at a recovered grade of 0.275 grams of gold per tonne,
        producing a total of 7,357 ounces of gold at a Cash Cost of $674 per
        ounce
    -   completed a pre-feasibility study of MWS incorporating higher average
        uranium and gold price assumptions and increased capital investment,
        which projected the project's expected net present value ("NPV")
        increasing by 71% to $505 million and its internal rate of return
        ("IRR") increasing from 69% to 151%
    -   entered into an interim off-take agreement with a third party
        pursuant to which the third party will purchase yellowcake from
        First Uranium from June 2008 until January 2009 at rates based upon
        the then prevailing spot prices
    -   issued 6.1 million First Uranium common shares to Waterpan Mining
        Consortium ("Waterpan") in connection with the acquisition of the
        remaining 10% interest in Ezulwini Mining Company (Proprietary)
        Limited ("EMC") which owns and operates the Ezulwini Mine, resulting
        in EMC becoming wholly-owned by First Uranium (the "Waterpan
        Transaction")
    -   ended the period with $215.2 million in cash and cash equivalents

    Subsequent to the end of Q3 2008, First Uranium:

    -   was granted an unconditional prospecting right for 6,843 hectares of
        additional property adjacent to the Ezulwini Mine
    -   filed the technical report for the pre-feasibility study of MWS,
        details of which were announced on December 19, 2007
    -   due to the significantly reduced supply of electrical power currently
        available in South Africa, its national power utility ("Eskom")
        developed concerns about its ability to supply power in the short and
        medium term. As a result, First Uranium has had to impose voluntary
        shut-downs of mine development and hoisting activity at the Ezulwini
        Mine. Most recently, Eskom has implemented compulsory cut-backs of
        power consumption on businesses and mining companies generally (the
        "Power Situation"). The specific effects of these measures mandated
        by Eskom on First Uranium's operations and development projects and
        any modifications thereto have been and continue to be analyzed. In
        addition to specific discussions and references to the affect of the
        Power Situation in certain areas of this MD&A, there may be other
        affects that are not known or foreseen at this time. See further
        discussion under 'Risks - Power Supply' in this MD&A.

    During Q4 2008, and prior to the Power Situation, First Uranium had
planned to:

    -   commence the upgrading of the MWS gold plant to increase the design
        capacity from 500,000 tonnes per month to 630,000 tonnes per month,
        with completion scheduled in Q4 2008
    -   upgrade MWS No. 5 tailings dam to enable a deposition rate of
        630,000 tonnes of material per month. The upgrade is expected to be
        completed during Q4 2008.
    -   start on-site preparation for the construction of the additional gold
        plant module and the two uranium plant modules at MWS

    Preliminary Assessment of the Impact of the Power Situation

    After a preliminary review of the feasibility of the Corporation
generating its own power, the Board has provisionally concluded that the
Corporation's two projects are sufficiently robust to continue development as
planned based on the addition of owner-operated power generation.

    The initial impact of this decision is as follows:

    For the Ezulwini Mine:
    -   given the uncertainty of power supply to a third-party gold plant
        which toll treats the Corporation's ore, the Board has decided to
        postpone the ramp-up of the underground production and to accelerate
        the shaft refurbishment program
    -   the weekly operating plan to date has been to focus on mine
        development and hoisting for three days and shaft rehabilitation for
        four days; henceforth the intention is to focus entirely on shaft
        refurbishment until the operation's gold plant is commissioned
    -   the first 50,000 tonne per month module of the gold plant remains on
        schedule for commissioning in April 2008 using existing generator
        capacity; should Eskom power not be forthcoming, the Ezulwini Mine
        has existing power generating capacity of 13 MVA ("1 Megavolt
        Ampere = 1 Mega Watt") which will be utilized
    -   the first 50,000 tonne per month module of the uranium plant remains
        on schedule for commissioning in June 2008; a feasibility study of
        power generating options is underway to reduce power reliance on
        Eskom;
    -   commissioning of the remaining modules of the gold and uranium plant
        will be deferred by approximately a year to January 2010 to coincide
        with the corresponding mine development plan

    For MWS:
    -   the current MWS operation is presently unaffected by the Power
        Situation as it has been drawing additional power from Buffelsfontein
        Gold Mines Limited ("BGM")
    -   upgrading of the MWS gold plant to increase the design capacity to
        630,000 tonnes per month remains on schedule for completion in
        Q4 2008
    -   the expansion of the current operations, however, will require
        additional power; a power generation feasibility study has been
        initiated with the expected result that the expansion will be delayed
        by approximately three months
    

    The decision to invest in generating our own power is a temporary measure
until the Power Situation has normalized which will take several years. It is
expected that the Corporation will be able to monetize a significant portion
of its investment in owner-generated power at that time.

    Financial Overview

    First Uranium's primary focus has been the development of the Ezulwini
Mine and MWS, resulting in limited gold production to date.
    During Q3 2008, a total of 12,412 ounces of gold were produced and sold
from the Ezulwini Mine and MWS, at an average price of $873 per ounce.
Combined production during 2008 YTD totaled 25,956 ounces of gold, which was
sold at an average price of $742 per ounce.
    In Q3 2008, gold was produced at average Cash Costs of $348 and $674 per
ounce at the Ezulwini Mine and MWS, respectively. As the Ezulwini Mine is
still in a ramp-up phase and has not yet achieved commercial levels of
production, the revenue less cost of production from its mining operations of
$2.4 million have been capitalized against Mine infrastructure costs in
Property, Plant and Equipment. The relatively high average cash costs at MWS
can be attributed primarily to the diminishing resources taken from the MWS
No. 2 tailings dam, which necessitated a low-volume, high-cost mechanical load
and placement operation. With the transition to the high-volume, low-cost
operations associated with the mining of the Buffelsfontein Tailings during
December 2007, the average cash costs started to decrease and are expected to
decrease significantly as the throughput to the MWS gold plant increases.
    General, consulting and administrative expenditures combined with the
limited ore and tailings processed during the development phase of the two
uranium and gold projects resulted in an operating loss of $4.5 million and
$9.8 million in Q3 2008 and 2008 YTD, respectively. The Corporation reported
an operating loss of $1.6 million in Q3 2007 and $4.2 million in 2007 YTD,
reflecting expenditures incurred in preparation of the uranium and gold
projects for production, along with general and administrative expenses.
    The net loss of $4.1 million in Q3 2008 was primarily the result of the
ongoing expenditures mentioned above. The $4.4 million net income for 2008 YTD
was primarily the result of foreign exchange gains on translation of net
assets held in Canadian dollars and South African Rand into US dollars, offset
by higher expenditures. The Corporation reported a net loss of $3.8 million in
Q3 2007 and $5.2 million for 2007 YTD, primarily as a result of expenditures
incurred in preparation of the mining projects for production, general,
consulting and administrative expenses and foreign exchange losses.
    As at December 31, 2007, First Uranium was well funded and in a strong
financial position, with total assets of $404.6 million, total liabilities of
$148.1 million and shareholders' equity of $256.4 million. At the end of
Q3 2008, First Uranium had cash and cash equivalents of $215.2 million
(Q3 2007: $154.6 million), compared to $138.9 million at the end of FY 2007.
The Corporation currently holds its funds in cash and bank-sponsored
guaranteed investment certificates. It has no exposure to asset-backed
commercial paper. The increase in cash and cash equivalents from the end of
FY 2007 was primarily attributable to the net proceeds of $130.6 million
received from the sale of the Debentures in May 2007, offset by $28.0 million
and $76.4 million of cash utilized for capital expenditure at the
Corporation's two mining operations during Q3 2008 and 2008 YTD, respectively.
    Prior to the recent onset of the Power Situation, the Corporation
believed that with anticipated revenue from future sales of gold and uranium
at current price assumptions, together with funds from the proceeds of the
Offering and the Debentures, it would have the cash resources necessary to
develop and advance its two existing mining projects to full production by
2010, as currently planned. The Corporation has reviewed its operating and
expansion plans, is making provision to purchase additional power generation
capacity and has modified the timing of its capital projects. The Corporation
believes that the above-mentioned sources of capital, along with funds that
may be available under a mandate letter and term sheet with a financial
institution (see 'Liquidity and Capital Resources' in this MD&A) are
sufficient funding to develop and advance its two existing mining projects,
inclusive of the purchase of additional power generation capacity.

    
    Operations overview

    Ezulwini Mine

                                                             2008       2007
                                    Q3 2008    Q3 2007        YTD        YTD
    -------------------------------------------------------------------------
    Ezulwini Mine
      Tonnes processed (000s)            28          -         28          -
      Average recovery grade
       (grams/tonne)                    5.6          -        5.6          -
      Ounces of gold sold             5,055          -      5,055          -
      Average selling price per
       ounce ($)                        832          -        832          -
      Average cost per ounce ($)        348          -        348          -
      Average Cash Cost per ounce ($)   348          -        348          -
    -------------------------------------------------------------------------
    Revenue ($000s)                   4,203          -      4,203          -
    Cost of production ($000s)       (1,760)         -     (1,760)         -
    Amortization ($000s)                  -          -          -          -
    Total cost of production
     ($000s)                         (1,760)         -     (1,760)         -
    -------------------------------------------------------------------------
                                      2,443          -      2,443          -
    -------------------------------------------------------------------------
    

    "Cash Costs" are costs directly related to the physical activities of
    producing gold, and include mining, processing and other plant costs,
    third-party refining and smelting costs, marketing expense, on-site
    general and administrative costs, royalties, in-mine drilling
    expenditures that are related to production and other direct costs. Sales
    of by-product metals are deducted from the above in computing cash costs.
    Cash costs exclude depreciation, depletion and amortization, corporate
    general and administrative expense, exploration, interest, and
    pre-feasibility costs and accruals for mine reclamation. Cash costs are
    calculated and presented using the "Gold Institute Production Cost
    Standard" applied consistently for all periods presented.

    Total cash costs per ounce is a non-GAAP measurement and investors are
    cautioned not to place undue reliance on it and are urged to read all
    GAAP accounting disclosures presented in the consolidated financial
    statements and accompanying footnotes.

    The Corporation has substantially completed the re-commissioning of the
Ezulwini Mine and was, until the onset of the Power Situation, in the process
of ramping up underground production. The Board has decided to postpone the
ramp-up of underground production and to focus entirely on shaft refurbishment
until the operation's gold plant is commissioned in April 2008. The Ezulwini
Mine is part of the Ezulwini mining right, which includes certain surface and
underground assets, acquired by EMC. Simmer & Jack is presently the registered
owner of the Ezulwini mining right. On December 20, 2006, EMC and Simmer &
Jack entered into an agreement (the "Ezulwini Mining Right Agreement")
pursuant to which Simmer & Jack agreed to take the necessary steps to obtain
all ministerial approvals in order to effect the ceding of the Ezulwini mining
right from Simmer & Jack to EMC. The Corporation remains confident that the
transfer will be completed in due course.
    EMC operates the Ezulwini Mine under a new order mining right as
described in detail in the Corporation's Annual Information Form for the
fiscal year ended March 31, 2007 (the "AIF") (www.firsturanium.com).
    As disclosed above, the revenue less cost of production from the Ezulwini
Mine's mining operations of $2.4 million have been capitalized against Mine
infrastructure costs in Property, Plant and Equipment during both Q3 2008 and
2008 YTD. The Ezulwini Mine is still in a ramp-up phase and has not yet
achieved commercial levels of production.
    The ramp-up of production at the Ezulwini Mine during Q3 2008 resulted in
the toll-treatment of 27,951 tonnes of ore at a recovered grade of 5.6 grams
of gold per tonne, producing 5,055 ounces of gold at a cash cost of $348 per
ounce. Production during the first two months of Q3 2008 was negatively
influenced by the lower than planned grades, but this was more than offset in
December, when Ezulwini's production exceeded the planned rate due to higher
than expected grades. The Corporation continues to expect that the "average
grades" at the Ezulwini Mine will be as originally forecast.
    The Corporation is continuing to develop access to the Ezulwini Mine
shaft de-stress cut on the Upper Elsburg ("UE") gold only horizon on levels
38a and 41. During Q3 2008, 247.5 metres were developed, bringing the total
metres developed in the shaft pillar to 833 metres. Progressive grades
encountered on the MA and MB raises in the shaft pillar to date were 5.09 and
5.81 grams of gold per tonne, respectively.
    Stoping for de-stressing of the 41 level MB raise has resulted in an area
of 712 square metres being mined at an in-situ stope grade of 4.74 grams per
tonne. In the Middle Elsburg ("ME") uranium and gold section, stope production
in the newly re-established 45 10B stope commenced in Q3 2008 and has resulted
in an area of 1,059 square metres being mined at an in-situ stope grade of
25.78 grams of gold per tonne. Further stope development has been postponed
due to the Power Situation, but is expected to resume closer to the start-up
of the operation's gold plant.
    As of the end of December 2007, the clean-up process on surface and
underground has generated a stockpile in excess of 124,000 tonnes containing
an average grade of 1.1 grams per tonne of gold or approximately 2,800 ounces
of recoverable gold, assuming an average recovery rate of 64%. This stockpile
will be utilized during mill commissioning, which is currently scheduled for
April 2008.
    Construction activities, which include the refurbishment of the shaft and
construction of the first modules of both the gold and uranium plants, began
in December 2006 and are still planned to continue until the gold and uranium
plants are completed in April 2008 and June 2008, respectively. While the
Ezulwini Mine has authorization from Eskom for the running of the gold plant,
should Eskom power not be forthcoming, the Ezulwini Mine has existing power
generating capacity of 13 MVA which will be utilized. For the additional
modules planned for the uranium plant, a feasibility study of options for
power generation is underway to reduce power reliance on Eskom.
    EMC has accelerated the main shaft rehabilitation program and is
continuing the refurbishment of the infrastructure in the ME uranium and gold
section and the UE gold only section from which hoisting of ore began in
October 2007.
    The following is a summary of the progress on the Ezulwini main shaft
refurbishment project:

    
    -   the second phase of the main shaft refurbishment, which involves
        support of the Western Areas Formation ("WAF") continues to be
        undertaken from the access provided by the new tower steelwork and is
        nearing completion.
    -   the section where the shaft barrel traverses the WAF zone has been
        consolidated through the injection of resin and reinforced with
        anchors.
    -   to prevent bulging of the low-strength WAF between the anchors,
        pre-formed curved panels of heavy metallurgical screens are being
        installed to provide a cladding layer. During Q3 2008, 186 screens
        were installed, which now secure the full WAF intersection in the
        shaft.
    -   a layer of ultra high quality shotcrete is being applied over the
        screens, anchors and concrete lining to provide improved area load
        distribution around the anchors. During Q3 2008, 70% of the screens
        were shotcreted.
    -   shaft operational time has been limited to four days per week while
        shaft rehabilitation work is executed; however, with no opportunity
        to continue toll treating the ore for the recovery of gold, a
        decision has been made to temporarily postpone mining in the ME and
        focus full time on the completion of the shaft refurbishment.
    

    Construction of the first 50,000 tonne per month module of the gold plant
is on schedule for completion in April 2008, accelerating the originally
disclosed planned date for completion of construction by three months. As of
December 31, 2007 this plant was 64% complete.
    The first 50,000 tonne per month module of the uranium plant is on
schedule for commissioning in June 2008. As of December 31, 2007 this plant
was 42% complete.
    Prior to the Power Situation, the Corporation estimated that $271 million
of capital would be required for the Ezulwini Mine, $193 million of which was
expected to be invested in the first four years of the project. This estimate
is being re-calculated to make provision for the installation of power
generation capacity. As of the end of Q3 2008, $76.2 million cash has been
spent at the Ezulwini Mine ($21.4 million in Q3 2008, $35.2 million in the
first six months of FY 2008 and $19.3 million during FY 2007).


    
    Mine Waste Solutions

                                                             2008       2007
                                    Q3 2008    Q3 2007        YTD        YTD
    -------------------------------------------------------------------------
    MWS
      Tonnes processed (kt)             832          -      2,461          -
      Ounces of gold sold             7,357          -     20,901          -
      Average selling price per
       ounce ($)                        902          -        721          -
      Average cost per ounce ($)        739          -        623          -
      Average Cash Cost per ounce ($)   674          -        560          -
    -------------------------------------------------------------------------
    Revenue ($000s)                   6,633          -     15,069          -
    Cost of production ($000s)       (4,961)         -    (11,697)         -
    Amortization ($000s)               (472)         -     (1,333)         -
    Total cost of production ($000s) (5,433)         -    (13,030)         -
    -------------------------------------------------------------------------
                                      1,200          -      2,039          -
    -------------------------------------------------------------------------
    

    "Cash Costs" are costs directly related to the physical activities of
    producing gold, and include mining, processing and other plant costs,
    third-party refining and smelting costs, marketing expense, on-site
    general and administrative costs, royalties, in-mine drilling
    expenditures that are related to production and other direct costs. Sales
    of by-product metals are deducted from the above in computing cash costs.
    Cash costs exclude depreciation, depletion and amortization, corporate
    general and administrative expense, exploration, interest, and
    pre-feasibility costs and accruals for mine reclamation. Cash costs are
    calculated and presented using the "Gold Institute Production Cost
    Standard" applied consistently for all periods presented.

    Total cash costs per ounce is a non-GAAP measurement and investors are
    cautioned not to place undue reliance on it and are urged to read all
    GAAP accounting disclosures presented in the consolidated financial
    statements and accompanying footnotes.

    MWS is a uranium and gold tailings recovery operation located in the
western portion of the Witwatersrand Basin approximately 160 kilometres from
Johannesburg.
    When the Corporation's wholly-owned subsidiary, First Uranium
(Proprietary) Limited ("FUSA") acquired MWS in June 2007, the Corporation
acquired an existing operating gold mine tailings re-processing facility and
an historic uranium plant, adjacent to the Buffelsfontein property, where the
Buffelsfontein Tailings are now being retreated. During Q3 2008, production
activities were limited to hydraulic mining using high pressure water cannons
to slurry the tailings, clean up and processing of material from the MWS No. 2
tailings dam. As a result of the late commissioning of the production
infrastructure at the Buffelsfontein No. 2 tailings dam it was necessary to
continue hydraulic mining MWS No. 2 tailings dam until December rather than
October, as previously anticipated.
    The project to construct the initial long-life pump station and 10.5-
kilometre pipeline was initiated in June 2007 and, while it was delayed due to
late delivery of slurry pumps and heavy rains that fell during October making
construction difficult, these new production facilities were commissioned in
mid-December.
    As the resources in the MWS No. 2 tailings dam neared exhaustion during
Q3 2008, it was necessary to use mechanical loading and placement of the
remnant material, in addition to hydraulic mining, which resulted in increased
handling costs relative to a normal reclamation operation in addition to the
reduced tonnages. As a result, only 770,436 tonnes of tailings (0.4 million
tonnes in Q1 2008 and 1.2 million tonnes in Q2 2008) were reclaimed from the
MWS No. 2 tailings dam during Q3 2008.
    The pump station and the pipeline between the Buffelsfontein property and
the MWS gold plant were completed and commenced operation during December 2007
which enabled the Corporation to stop mining from the MWS No. 2 tailings dam
and to initiate the hydraulic mining of the Buffelsfontein No. 2 tailings dam
on the Buffelsfontein property. The material from the Buffelsfontein No. 2
tailings dam is being transported via the pipeline to the MWS gold plant for
processing. Full commissioning of the introduction of the material from
Buffelsfontien No. 2 tailings dam to the plant is ongoing.
    The high-pressure pump train located at Buffelsfontein No. 2 tailings dam
is performing as designed, despite having a low utilization of 75% during the
quarter. Once the second train of standby pumps is commissioned, the
utilization is expected to increase to 95%, which will sustain production at
or better than the planned rate of 20,800 tonnes per day. In the meantime,
production rates have reached 20,000 tonnes per day and have not yet been
affected by the Power Situation as MWS has been drawing additional power from
BGM.
    During December, 61,772 tonnes of material from the Buffelsfontein No. 2
tailings dam were processed through the MWS gold plant. The initial lower
daily tonnages at the start of the hydraulic mining of the Buffelsfontein
No. 2 tailings dam were the result of vegetation restricting the flow of
material to the pump station. By the end of December, the vegetation was
sufficiently removed to allow the daily tonnages to exceed 17,000 tonnes per
day. The transition to hydraulic mining of the Buffelsfontein Tailings will
result in a decrease in the Cash Cost as a result of the increased throughput
at the MWS gold plant.
    To date, the achieved grade of 0.36 grams of gold per tonne mined from
the Buffelsfontein No. 2 tailings dam is in line with the resource estimates
for the initial mining benches, although lower than the planned 0.40 grams of
gold per tonne. The grade is expected to improve as the lower portion of the
dam is mined, resulting in higher grade material being treated.
    Due to the Power Situation, the planned expansion of MWS will depend on
the feasibility of acquiring power generation capacity. A feasibility study of
the options for power generation has been initiated which will result in a
delay of the construction of additional modules to the plant of approximately
three months.
    FUSA has an agreement to acquire surface tailings from BGM, a subsidiary
of Simmer & Jack (the "Buffelsfontein Tailings and Rights Agreement"). Please
see the Corporation's MD&A in respect of its audited consolidated financial
statements for Fiscal 2007 for a summary of this agreement. It was originally
contemplated that the BGM transaction would be recognized upon the
satisfaction of the conditions precedent in the Buffelsfontein Tailings and
Rights Agreement, including the transfer of the mining rights to MWS. While
all of the conditions have not yet been satisfied, MWS commenced processing
and accounting for, Buffelsfontein Tailings in December 2007. Consequently,
MWS has assumed the asset retirement obligation related to the Buffelsfontein
Tailings. The corresponding asset of $6.2 million associated with the
Buffelsfontein Tailings is capitalized as part of Tailings for processing
under Property, Plant and Equipment and amortized over the estimated life of
the Buffelsfontein Tailings. (See Note 7 to the interim financial statements.)
    A loan agreement (the "Aberdeen Loan Agreement") was entered into by
Simmer & Jack with Aberdeen International Inc. ("Aberdeen") dated March 30,
2006 pursuant to which Aberdeen provided to Simmer & Jack a loan facility in
the amount of US$10 million in respect of the financing of Simmer & Jack's
acquisition of BGM and the BGM Underground Mine. As part of the consideration
for the facility, Simmer & Jack granted to Aberdeen a net smelter royalty on
all of the gold assets held by Simmer & Jack through BGM. The royalty as
determined in the Aberdeen Loan Agreement, will be applicable to any gold
produced by FUSA from tailings acquired from BGM pursuant to the
Buffelsfontein Tailings and Rights Agreement and will continue until the loan
is repaid to Aberdeen, which Simmer and Jack has advised is expected to occur
by December 31, 2008 (unless extended by Simmer & Jack to December 31, 2010).
In addition, pursuant to the Aberdeen Loan Agreement, Aberdeen has the sole
option, at any time following the one year anniversary of the first advance
thereunder, to convert the amount of the facility outstanding at that time
into ordinary shares of Simmer & Jack at a conversion rate of ZAR0.80, subject
to the approval of Simmer & Jack's shareholders. In the event that such
shareholder approval is not obtained within a reasonable period of time,
Aberdeen will be entitled to a 1.0% net smelter royalty in perpetuity on gold
produced from properties held by BGM, including the Buffelsfontein Tailings.
    On December 20, 2006, FUSA, Simmer & Jack and Aberdeen entered into an
arrangement (the "Aberdeen Arrangement") pursuant to which (i) Simmer & Jack
confirmed that it will pay to Aberdeen the amount of any royalty owing to
Aberdeen under the Aberdeen Loan Agreement in respect of gold produced from
the Buffelsfontein Tailings and (ii) FUSA confirmed that it will pay to Simmer
& Jack, immediately prior to any payment contemplated in (i) above, an amount
equal to the amount of any royalty payment to be made by Simmer & Jack to
Aberdeen in respect of gold produced from the Buffelsfontein Tailings.
    Pursuant to the Buffelsfontein Tailings and Rights Agreement, in
consideration for the cession of the Buffelsfontein Tailings and Mining Right
from BGM to FUSA as well as certain servitudes, and the right to the tailings
arising from future underground mining operations by BGM at the BGM
Underground Mine, FUSA agreed to pay to BGM a royalty of 1% plus value added
tax of the gross revenue earned by FUSA from the sale of uranium, gold,
sulphur and other minerals recovered from the processing of tailings acquired
by FUSA from BGM pursuant to the Buffelsfontein Tailings and Rights Agreement.
    In summary, as and when there is production from the tailings acquired
from BGM pursuant to the Buffelsfontein Tailings and Rights Agreement, FUSA
will become liable to pay: (i) to Simmer & Jack, under the Aberdeen
Arrangement, an amount equal to the royalty payable by Simmer & Jack to
Aberdeen pursuant to the Aberdeen Loan Agreement in respect of gold produced
from the Buffelsfontein Tailings, and (ii) to BGM the above-mentioned 1%
royalty pursuant to the terms of the Buffelsfontein Tailings and Rights
Agreement.
    Since MWS is now processing Buffelsfontein Tailings, the royalty is
accruing and will be paid to BGM and Simmer & Jack as described above. During
Q3 2008 and 2008 YTD, $0.04 million have been accrued as royalties.
    The Corporation is in the process of expanding the existing MWS gold
plant to increase the design capacity of 500,000 tonnes per month to an
average of 630,000 tonnes per month, as previously planned and announced;
however, the decision to complete the planned expansion to construct
additional modules to the plant and the timing thereof is currently subject to
the completion of the feasibility study of the options of power generation.
    To facilitate the plant expansion, an upgrade is planned for MWS No. 5
tailings dam to enable a deposition rate of 630,000 tonnes of material per
month. The upgrade is expected to be completed during Q4 2008.
    During January 2008, MWS started on-site preparation for the construction
of the additional module of the gold plant and the two modules of the uranium
plant. Due to the Power Situation, the plans to add a second module of the
gold plant and to construct the first two modules of the uranium plant will be
postponed pending the completion of a feasibility study of the options for
power generation. The completion of the feasibility study is expected to delay
the planned start-up of the plants by approximately three months. The MWS
No. 5 tailings dam requires a further upgrade to accommodate a deposition rate
of 1,283,000 tonnes of material per month.
    Prior to the Power Situation, the Corporation estimated that $260 million
of capital would be required for MWS, 93% of which was expected to be invested
in the first three years of the project. This estimate is being re-calculated
to make provision for the installation of power generation capacity. Over and
above any additional power generation costs, a feasibility study has been
undertaken which will include an assessment of the impact of reconfiguring the
new modules of the plant to run on alternative sources of power. As of the end
of Q3 2008, $10.2 million cash has been spent on MWS ($2.6 million in Q3 2008,
$6.1 million in the first six months of FY 2008 and $1.5 million during FY
2007).
    On December 19, 2007, the Corporation declared its first mineral reserve
estimate for MWS. The following tables show the updated resource estimate,
followed by the mineral reserve estimate.

    
    MINERAL RE

SOURCE ESTIMATE 2007 (includes mineral reserves) ------------------------------------------------------------------------- Resource Category Gold Uranium ------------------------------------------------------------------------- Place Dam Tonnes Grade Content Grade 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 1.01 ------------------------------------------------------------------------- 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 Measured & Indicated 336.6 0.28 3,000 0.075 55.85 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Inferred ------------------------------------------------------------------------- Harties Ellaton 1.3 0.39 16 0.147 0.41 ------------------------------------------------------------------------- Harties Flanagan 0.04 0.69 1 0.152 0.02 ------------------------------------------------------------------------- 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 0.28 189 0.100 4.64 ------------------------------------------------------------------------- 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. (7) MWS No. 4 dam is split into 2 domains, namely Domain 1 which is the uppermost section of the dam, and Domain 2, the lower most portion of the dam. The tailings dam has been evaluated in two separate sections as they show distinct differences in grade. MINERAL RESERVE ESTIMATE 2007 ------------------------------------------------------------------------- Reserve Classification Gold Uranium ------------------------------------------------------------------------- Place Dam Tonnes Grade Content Grade 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 average life of mine gold recovery applied was 66%. (7) An effective life of mine uranium recovery of 27% was used and is based on an atmospheric leach process. (8) Table reflects depletion of 1.5 million tonnes from July through October 2007 for MWS No. 2 Dam. (9) Only Domain 2 of the MWS No. 4 dam has been converted to a mineral reserve as the gold grade in Domain 1 is below cut-off. Technical Disclosure All technical disclosure under the heading "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, each of whom is a "qualified person" under NI 43-101 and is independent of First Uranium. Historical technical disclosure under the heading "Buffelsfontein Tailings Recovery Project" is extracted from a technical report entitled "Technical Report on the Pre-feasibility of the Buffelsfontein Tailings Reclamation Project" submitted on November 1, 2007, prepared in accordance with 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, each of whom is a "qualified person" under NI 43-101 and is independent of First Uranium. The disclosure contained in this MD&A relevant to their respective contributions has been reviewed and approved by Messrs. van Heerden, Muller and Odendaal. Results of Operations Consolidated Results 2008 2007 Q3 2008 Q3 2007 YTD YTD ------------------------------------------------------------------------- Group Revenue ($000s) 6,633 - 15,069 - Cost of production ($000s) (4,960) - (11,697) - Amortization ($000s) (473) - (1,333) - Total cost of production ($000s) (5,433) - (13,030) - ------------------------------------------------------------------------- 1,200 - 2,039 - ------------------------------------------------------------------------- Revenue for Q3 2008 as presented above was generated from the processing of tailings material and sale of the related gold at the MWS operations. As the Ezulwini Mine is still in a ramp-up phase and has not yet achieved commercial levels of production, revenue from the sale of its ore, which was mined and then toll-treated at a neighboring third party gold plant, have been set off against Mine infrastructure cost relating to the Ezulwini Mine's mining operations in Property, Plant and Equipment. The Corporation had no production during FY 2007. Other income 2008 2007 (thousands of dollars) Q3 2008 Q3 2007 YTD YTD ------------------------------------------------------------------------- Other income 1,379 - 2,276 - ------------------------------------------------------------------------- Other income consists primarily of fees for sludge pumping services to a third party and hostel rental income at the Ezulwini Mine. There was no such income during the same period last year. Expenditures 2008 2007 (thousands of dollars) Q3 2008 Q3 2007 YTD YTD ------------------------------------------------------------------------- General, consulting and administrative expenditures (4,058) (706) (8,548) (3,356) Stock-based compensation (1,079) (519) (2,513) (519) Pumping, feasibility and rehabilitation costs (1,880) (350) (2,948) (350) Amortization of property, plant and equipment (46) - (144) - Total expenditures (7,063) (1,575) (14,153) (4,225) ------------------------------------------------------------------------- Operating loss (4,484) (1,575) (9,838) (4,225) ------------------------------------------------------------------------- General, consulting and administrative expenditures included $2.3 million and $4.8 million for Q3 2008 and 2008 YTD, respectively, for employee compensation costs, consulting and professional fees, as well as fees charged by Simmer & Jack for services provided pursuant to the Shared Services Agreement (see "Related Party Transactions") of $0.5 million and $1.1 million for Q3 2008 and 2008 YTD, respectively. For Q3 2007 and 2007 YTD, employee compensation costs, consulting and professional fees were $0.6 million and $2.6 million, respectively, and shared services fees from Simmer & Jack expensed for Q3 2007 and 2007 YTD were $0.1 million and $0.7 million, respectively. General, consulting and administrative expenses in Q3 2008 and 2008 YTD primarily reflect the ongoing project development activities, the costs of corporate offices in Johannesburg and Toronto and other expenses of operating a public company, which were not applicable in Q3 2007 and 2007 YTD. The Q3 2008 stock-based compensation expense reflects the amortized cost of 1,223,001 stock options granted during FY 2007 and the amortized cost of 325,715 stock options granted during 2008 YTD. The fair value of the stock- based compensation was estimated using the Black-Scholes option pricing model. During Q3 2008, pumping costs not capitalized at the Ezulwini Mine were included in expenditures until hoisting commenced at the end of October 2007. As of November 2007, pumping costs are included in the cost of production, which has been capitalized to Mine infrastructure cost in Property, Plant and Equipment. Feasibility assessment activities were higher during 2007 YTD, as the Corporation initiated early reviews in respect of re-commissioning the Ezulwini Mine. As the Corporation continues to explore new opportunities, feasibility assessments are ongoing. Included in the costs for Q3 2008 and 2008 YTD are rehabilitation costs incurred at the MWS operations of $0.2 million and $0.6 million, respectively. Amortization of property, plant and equipment in Q3 2008 and 2008 YTD relate to amortization of non-mining assets such as computer equipment and software, furniture and equipment and motor vehicles. There was no amortization during the same periods of FY 2007. Non-operating Income and Expenses 2008 2007 (thousands of dollars) Q3 2008 Q3 2007 YTD YTD ------------------------------------------------------------------------- Operating loss (4,484) (1,575) (9,838) (4,225) Interest income 4,467 529 12,840 422 Interest expense (1,629) - (4,087) (101) Accretion expense on the Debentures (3,724) - (8,103) - Foreign exchange gains 1,245 (2,741) 13,636 (1,335) ------------------------------------------------------------------------- Net (loss) income before income taxes (4,125) (3,787) 4,448 (5,239) ------------------------------------------------------------------------- Interest income in Q3 2008 and 2008 YTD represents interest earned on the net proceeds from the Offering and the Debentures. Cash balances have been invested in short-term deposits with the Corporation's bankers until required for capital projects or to fund operating costs. Interest expense in Q3 2008 and 2008 YTD consists of the interest paid on the Debentures. The interest expense during the same periods of FY 2007 consisted of the non-capital portion of interest paid by EMC on the loan payable to Simmer & Jack. The accretion expense in Q3 2008 and 2008 YTD relates to the Debentures. (See Note 11 to the interim financial statements.) The Corporation's net assets are held in Canadian dollars ("Cdn$") and South African Rand ("ZAR"), while its accounts are presented in US dollars. The foreign exchange gains on translation in Q3 2008 and for 2008 YTD reflect the strengthening of the Canadian dollar and the South African Rand against the US dollar. The majority of the Corporation's funds are currently held in Canadian dollar denominated short-term deposits. The table below shows the exchange rate movements over the first nine months of FY 2008 relative to the first six months and three months of FY 2008 and FY 2007: Q3 2008 Q2 2008 Q1 2008 FY 2007 ------------------------------------------------------------------------- Cdn$ to the ZAR - closing rate 6.99 6.98 6.68 6.30 Cdn$ to the ZAR - average rate 6.93 6.81 6.47 6.20 Cdn$ to the US$ - closing rate 1.10 1.01 0.94 0.87 Cdn$ to the US$ - average rate 1.01 0.95 0.91 0.88 US$ to the ZAR - closing rate 6.85 6.92 7.01 7.28 US$ to the ZAR - average rate 6.79 7.12 7.11 7.06 ------------------------------------------------------------------------- Net (loss) income before income taxes 2008 2007 (thousands of dollars) Q3 2008 Q3 2007 YTD YTD ------------------------------------------------------------------------- Net (loss) income before income taxes (4,125) (3,787) 4,448 (5,239) Provision for income taxes 127 - 76 - ------------------------------------------------------------------------- Net (loss) income for the period (3,998) (3,787) 4,524 (5,239) ------------------------------------------------------------------------- Net loss before taxes in Q3 2008 increased marginally year over year as a result of increased expenditures that more than offset revenue from gold sales. The Corporation recorded net income before taxes in 2008 YTD compared to net loss before taxes for 2007 YTD as a result of the net foreign exchange translation gains partially offset by increased expenditures. The increase in expenditures year over year reflects ongoing project development activities, the costs of corporate offices in Johannesburg and Toronto and other expenses of operating a public company, which were not applicable in Q3 2007 and 2007 YTD. Use of Proceeds Offering Pursuant to the Offering, in December 2006 First Uranium raised total net proceeds of $177.7 million of which $93.1 million had been expended as at December 31, 2007 leaving a balance on hand at that date of $84.6 million: Use of net proceeds During To first December 31, During half of During (millions of dollars) 2007 Q3 2008 FY 2008 FY 2007 ------------------------------------------------------------------------- Development of the Ezulwini Mine (76.2) (21.4) (35.5) (19.3) Development of MWS (10.2) (2.6) (6.1) (1.5) Repayment of indebtedness owed by EMC to Simmer & Jack (14.1) - - (14.1) Purchase of the Ezulwini Mine infrastructure (8.9) - - (8.9) Working capital and general corporate purposes 16.3 3.7 4.0 8.6 ------------------------------------------------------------------------- Total (93.1) (20.3) (37.6) (35.2) ------------------------------------------------------------------------- While First Uranium intends to apply the net proceeds of the Offering approximately as disclosed in the Corporation's MD&A in respect of its audited consolidated financial statements for the Fiscal 2007, such uses are by definition, based on estimates and assumptions and are subject to variance. In addition, there may be circumstances where, for sound business reasons, a re- allocation of the funds may be necessary or advisable. Debentures The Corporation intends to use the net proceeds from the issue of the Debentures to: fund the Ezulwini Expansion Program which is designed to determine the potential for a possible expansion of the Ezulwini Mine; together with the balance of the net proceeds of the Offering, fund the development of the Ezulwini Mine and MWS and for general corporate purposes. The net proceeds of $130.6 million from the issue of the Debentures are currently held in Canadian dollar denominated short-term deposits bearing interest at 4.85% per annum. The approval of the South African Reserve Bank ("SARB"), which was required in connection with the issue of the Debentures, includes a condition that the Corporation transfers the net Debenture proceeds to bank accounts of the Corporation in South Africa and convert the funds to ZAR, by May 3, 2008. Prior to the Power Situation, First Uranium believed that the net Debenture proceeds and the unused portion of the net proceeds of the Offering were sufficient to fund its plans for the near-term development of the Ezulwini Mine, the Ezulwini Expansion Program and MWS expenditures, as adjusted to reflect changed project capital with the acquisition of MWS. The Corporation believes that the anticipated revenue from future sales of gold and uranium at current price assumptions, together with funds from the proceeds of the Offering and the Debentures, along with funds that may be available under a mandate letter and term sheet with a financial institution (see section "Liquidity and Capital Resources" in this MD&A) are sufficient funding to develop and advance its two existing mining projects, inclusive of the purchase of additional power generating capacity. Cash flows Quarterly Cash Flow (thousands of dollars) Q3 2008 Q3 2007 ------------------------------------------------------------------------- Cash flows utilized in operating activities (12,541) (15,307) Cash flows utilized in investing activities (28,035) (11,726) Cash flows from financing activities 506 177,696 Net effect of exchange rates on cash held in foreign currencies 954 2,741 ------------------------------------------------------------------------- Net (decrease) increase in cash and cash equivalents for the period (39,116) 153,404 Cash and cash equivalents at beginning of period 254,332 1,158 ------------------------------------------------------------------------- Cash and cash equivalents at end of period 215,216 154,562 ------------------------------------------------------------------------- The cash utilized by operating activities in Q3 2008 is primarily the result of an increase in expenditures during the quarter, $3.4 million of interest paid on the Debentures and $3.2 million of gold revenue in December from the Ezulwini Mine, which was not received until after the end of Q3 2008. The cash utilized in operating activities in Q3 2007 was primarily the result of an increase in the net receivables from related parties. During Q3 2007, the Corporation's South African operations had not yet established their own bank accounts and as a result, cash was held by Simmer & Jack on behalf of the Corporation. Investing activities utilized $28.0 million in Q3 2008, comprising capital expenditures of $17.7 million and $10.8 million relating to the Ezulwini Mine and MWS, respectively. The cash utilized in investing activities during Q3 2007 was primarily pumping costs at the Ezulwini Mine capitalized as part of mine development expenditures. Cash generated from financing activities in Q3 2008 reflects the proceeds from 71,430 share options exercised during the quarter. The net effect of exchange rates on cash held in foreign currencies (Cdn$ and ZAR) in Q3 2008 is primarily the result of the Debenture proceeds held in cash and the debt portion of the Debentures translated to US dollars at the exchange rate in effect at the end of the quarter, whilst the equity portion of the Debentures was translated to US dollars at the rate in effect on the date that the Debentures were issued. Cash Flow for 2008 YTD 2008 2007 (thousands of dollars) YTD YTD ------------------------------------------------------------------------- Cash flows generated from (utilized in) operating activities 9,323 (8,858) Cash flows utilized in investing activities (75,419) (16,945) Cash flows from financing activities 131,409 178,470 Net effect of exchange rates on cash held in foreign currencies 10,989 1,335 ------------------------------------------------------------------------- Net increase in cash and cash equivalents for the period 76,302 154,002 Cash and cash equivalents at beginning of period 138,914 560 ------------------------------------------------------------------------- Cash and cash equivalents at end of period 215,216 154,562 ------------------------------------------------------------------------- The cash generated from operating activities during 2008 YTD was primarily derived from net interest received and the transfer by Simmer & Jack of the Corporation's South African operations' cash funds into their own respective bank accounts at the beginning of FY 2008. The cash utilized in operating activities during 2007 YTD was mainly the result of a reduction in net receivables from related parties and an increase in accounts payable and accrued liabilities. The cash utilized in investing activities in 2008 YTD primarily relates to $60.3 million and $17.0 million of capital expenditures at the Ezulwini Mine and MWS, respectively. The cash utilized in investing activities in 2007 YTD relates to capitalized pumping costs at the Ezulwini Mine. The cash generated during 2008 YTD from financing activities was primarily attributable to the $130.6 million of proceeds raised from the Debentures in Q1 2008. The cash generated from financing activities during 2007 YTD was attributable to the $177.7 million of net proceeds from the Offering in December of 2006. The net effect of exchange rates on cash held in foreign currencies (Cdn$ and ZAR) during 2008 YTD is primarily the result of the Debenture proceeds held in cash and the debt portion of the Debentures translated to US dollars at the exchange rate in effect at the end of the quarter, whilst the equity portion of the Debentures was translated to US dollars at the rate in effect on the date that the Debentures were issued. Financial Position and Liquidity Assets Cash and cash equivalents increased by $76.3 million during 2008 YTD to $215.2 million. The increase is primarily the net result of the $130.6 million of Debenture net proceeds, offset by capital expenditures of $60.3 million at the Ezulwini Mine and $17.0 million at MWS. Amounts receivable of $14.0 million at December 31, 2007 (FY 2007: $1.7 million) is primarily comprised of $3.2 million of gold revenue (after toll-treatment and transport costs) related to the toll-treatment processing of Ezulwini Mine ore in December and $8.9 million of value-added tax and goods and services taxes recoverable, mainly relating to the ongoing capital expenditures on the projects. Inventories of $2.5 million at December 31, 2007 (FY 2007: $0.3 million) include $0.8 million of gold work-in-progress and $0.8 million of spares and consumables from the MWS operations. At the end of the quarter, the Corporation also had surface stockpiles at the Ezulwini Mine, measured and valued at $0.9 million. Property, plant and equipment increased to $166.7 million at December 31, 2007 (FY 2007: $31.0 million). The increase is a result of capital expenditures at the Corporation's two mining operations related to the capital projects as well as the $41.1 million of MWS assets acquired in June 2007 and the $6.2 million value of Buffelsfontein Tailings associated with the asset retirement obligation related to the processing of Buffelsfontein Tailings. (See Note 7 of interim financial statements.) Capital expenditures at the Ezulwini Mine of $28.9 million for Q3 2008 and $71.2 million for 2008 YTD were primarily related to additions to mining infrastructure and construction of the gold and uranium plants. At MWS, capital expenditures of $13.0 million for Q3 2008 and $18.5 million for 2008 YTD were primarily related to the construction of the pump station and the pipeline between the Buffelsfontein property and the MWS gold plant. The increase in asset retirement funds to $5.1 million (FY 2007: $2.8 million) was primarily the result of the $2.0 million environmental rehabilitation trust fund assumed by the Corporation on the acquisition of MWS in June 2007. The $1.0 million loan to a related party represents the loan advanced to the President and Chief Executive Officer of First Uranium on October 17, 2007. (see Note 21 to the interim financial statements.) Investing activities During Q3 2007, investing activities represented primarily pumping costs incurred and capitalized to mine development expenditures. Liabilities As of December 31, 2007, total liabilities were $148.1 million (FY 2007: $11.1 million), consisting of the debt portion of $103.7 million of the Debentures, accounts payable and accrued liabilities of $19.1 million (FY 2007: $5.7 million), the future tax liability in the amount of $10.3 million arising from the MWS acquisition and the asset retirement obligation of $14.2 million (FY 2007: $5.3 million). The increase of accounts payable and accrued liabilities to $19.1 million (FY 2007: $5.7 million) at the end of Q3 2008 was primarily comprised of $11.5 million and $2.4 million of payables related to the capital expenditures incurred at the Ezulwini Mine and MWS, respectively, as well as trade payables of $1.3 million and $2.3 million related to the Ezulwini Mine and MWS operations, respectively. The payable to a related party of $0.8 million at the end of Q3 2008 results from transactions pursuant to the Shared Services Agreement between First Uranium and Simmer & Jack, which were incurred in the normal course of business. At the end of FY 2007, the Corporation had a receivable from a related party of $6.8 million, which were funds held by Simmer & Jack on behalf of the Corporation's South African operations while the Corporation was establishing their own bank accounts. The asset retirement obligation increased as a result of the $2.8 million environmental rehabilitation obligation assumed with the MWS acquisition in June 2007 and the environmental rehabilitation obligation relating to the mining of the Buffelsfontein Tailings commencing in December 2007. (See Note 12 to the interim financial statements.) Liquidity and Capital Resources At December 31, 2007, First Uranium had working capital of $211.8 million (FY 2007: $142.0 million). The significant increase in working capital from the comparable period in FY 2007 is mainly attributable to the net proceeds of $130.6 million from the Debentures. First Uranium anticipates that future capital requirements relating to development of the Ezulwini Mine and MWS, as currently planned, will be funded from existing cash resources (a combination of the funds remaining from the net proceeds of the Offering and the Debentures of $84.6 million and $130.6 million respectively as at December 31, 2007) and from internal cash flow. The above statement excludes the planned installation of power generating capacity, which may be funded by a general corporate credit facility pursuant to a mandate letter and term sheet with Investec Bank Limited ("Investec"). The Corporation is continuing with the process of satisfying certain conditions precedent to this facility and is in discussions with Investec. Capital investments of $260 million and $271 million, inclusive of expenditures to date, are the total project costs estimated to complete the construction of MWS and the Ezulwini Mine, respectively, for which current commitments of $56.8 million (FY 2007: $5.2 million) are in place. As at December 31, 2007, the Corporation's cumulative cash investments relating to its two projects were $86.4 million ($24.0 million in Q3 2008, $31.1 million in Q2 2008, $10.5 million in Q1 2008 and $20.8 million in FY 2007). Capital of $0.5 million was spent in both Q3 2008 and 2008 YTD in relation to the approved exploration budgets of $10 million for the contiguous properties to the north-east and south-east of the Ezulwini Mine and $30 million for the Ezulwini Mine. The extent to which the budgeted amounts are spent depends on the ongoing exploration results. Current commitments of $1.3 million relating to exploration work existed as at December 31, 2007. The exploration expenditures are expected to be funded from available working capital. The Corporation entered into an agreement with a third party, commencing in January 2009, to calcine the yellowcake from First Uranium to produce uranium oxide packaged for dispatch to converters ("Toll Treatment Agreement"). Either party may terminate the agreement on 18 months notice. The third party calciner will construct a plant with one-half of the capacity of the plant to be dedicated for the processing of the First Uranium yellowcake and will purchase a road tanker to transport the yellowcake from the First Uranium operations to the third party calciner's facility. First Uranium will pay one-half of the construction cost of the calcining plant up to a maximum of ZAR15 million and one-half of the cost of the road tanker (together referred to as the "Loan"). The Loan will be effective as of January 5, 2009 and is to be repaid in monthly installments over a seven-year period commencing January 30, 2009. The Loan will bear interest at a rate equal to the prime overdraft rate as quoted by SARB, plus 2%, commencing January 5, 2009. If First Uranium cancels the agreement, in the absence of a right under the agreement to cancel the agreement in a prescribed circumstance, First Uranium will continue to be obligated to repay the entire Loan. As at December 31, 2007, First Uranium had the following contractual obligations: ------------------------------------------------------------------------- Payments due by date ------------------------------------------------------------------------- Less than 1-3 4-5 After 5 (thousands of dollars) 1 year Years Years Years Total ------------------------------------------------------------------------- Operating leases 45 90 252 70 457 Purchase obligations 75,996 - - - 75,996 Capital lease obligations 13 9 - - 22 Asset retirement obligations - - - 14,171 14,171 Senior unsecured convertible debentures - - 130,060 - 130,060 ------------------------------------------------------------------------- Total contractual obligations 76,054 99 130,312 14,241 220,706 ------------------------------------------------------------------------- Summary of Quarterly Results The table below sets out selected financial data for the periods indicated (as derived from First Uranium's consolidated financial statements): ------------------------------------------------------------------------- Basic and Fiscal Quarters Ended Diluted Net Earnings/ (thousands of dollars, Total Income/ (Loss) Long Term except per share amounts) Assets (Loss) per Share Liabilities ------------------------------------------------------------------------- December 31, 2007 404,555 (3,998) (0.03) 128,182 September 30, 2007 389,554 3,051 0.02 117,349 June 30, 2007 373,549 5,471 0.04 118,900 March 31, 2007 (audited) 181,427 (2,689) (0.02) 5,377 December 31, 2006 195,374 (3,787) (0.04) Nil September 30, 2006 8,839 786 0.01 Nil June 30, 2006 4,120 (2,238) (0.03) Nil March 31, 2006 (audited) 3,433 (4,656) (0.05) Nil December 31, 2005 4,519 (2,201) (0.03) Nil ------------------------------------------------------------------------- Outlook The next major milestone for the Ezulwini Mine is the commissioning of the first 50,000 tonne per month module of the gold plant, which is on schedule for April 2008. The first 50,000 tonne per month module of the uranium plant is on schedule for commissioning in June 2008. At MWS, the pipeline is complete and is operating. Commissioning of the introduction of the new material from the Buffelsfontein No. 2 tailings dam to the MWS gold plant is ongoing. Together with the plant upgrade program the operation of the pipeline to allow processing of Buffelsfontein Tailings is expected to have a significant positive impact on MWS operations in terms of volume treated and costs. The grade mined from the Buffelsfontein No. 2 tailings dam is expected to return to the planned average grade of 0.40 grams per tonne as hydraulic mining is extended to include the lower portion of the dam. The short-term outlook is highly dependent upon the Power Situation. The Corporation has initiated a feasibility study of the options for power generation. If the results of the feasibility study are positive, the Corporation plans to proceed with the construction of the additional modules for the gold and uranium plants at the Ezulwini Mine and MWS. For a full discussion of the Corporation's decisions regarding the Power Situation, please refer to the section entitled 'Preliminary Assessment of the Impact of the Power Situation, as discussed earlier in this MD&A. The following summary of expected changes and developments at MWS are a result of the implementation of the pre-feasibility study announced in December 2007 and the filing of the related technical report on February 1, 2008; however, they do not factor in any changes, which may result from the Power Situation: SUMMARY OF CHANGES TO MWS ------------------------------------------------------------------------- Previous Current Units of May Dec measure 2007 2007 Change ------------------------------------------------------------------------- Gold Plant ------------------------------------------------------------------------- 600,000 633,000 6% Tonnes per 600,000 650,000 8% month 600,000 650,000 8% 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 60,000 63,000 5% Module 2 Tonnes 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. As discussed earlier in this MD&A, the expansion of the existing MWS gold plant to increase capacity to an average of 630,000 tonnes per month is scheduled for completion by the end of Fiscal 2008. To facilitate the plant expansion, an upgrade is planned for MWS No. 5 tailings dam to enable a deposition rate of 630,000 tonnes of material per month with expected completion by the end of February 2008. In advance of the commissioning of the second module of the gold plant and the first two modules of the uranium plant, a further upgrade to accommodate a deposition rate of 1,283,000 tonnes of material per month the MWS No. 5 tailings dam is planned. The decision to proceed with and the timing of the commissioning of the second module of the gold plant and the first two modules of the uranium plant at MWS is currently uncertain due to the Power Situation. In addition to the Toll Treatment Agreement with a third party discussed in this MD&A under 'Liquidity and Capital Resources', the Corporation also entered into an interim off-take agreement with the third party, for the period from the planned startup of the uranium plant at the Ezulwini Mine in June 2008 until January 2009, pursuant to which the third party will purchase First Uranium's yellowcake production at rates based on the then prevailing spot prices. The spot price for uranium ranged between $75 and $92 per pound during Q3 2008. As of February 13, 2008, the uranium spot price was $75 per pound. The spot price for gold ranged between $725.50 and $841.10 per ounce during Q3 2008. As of February 11, 2008, the gold spot price was $920 per ounce. The Corporation has no plans to hedge the price it receives for its gold production at this time. Based on the consensus analysts' outlook at leading North American brokerage firms, as of December 19, 2007 management updated its outlook for uranium and gold prices as per the following table. Previous estimates used in the Corporation's technical reports were for a flat average price of $50 per pound for uranium and $500 per ounce for gold. CHANGES TO PROJECT ASSUMPTIONS ------------------------------------------------------------------------- Beyond Mar Mar Mar Mar Mar Years ending Unit 2009 2010 2011 2012 2012 ------------------------------------------------------------------------- Previous Gold May price ($/oz.) $500 $500 $500 $500 $500 2007 -------------------------------------------------------------- Uranium price ($/lb.) $50 $50 $50 $50 $50 -------------------------------------------------------------- Exchange rate (ZAR/$) 7.4 7.4 7.4 7.4 7.4 ------------------------------------------------------------------------- Current Gold Dec price ($/oz.) $737 $734 $683 $627 $635 2007 -------------------------------------------------------------- Uranium price ($/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. Offsetting the higher price assumptions, mine construction costs have risen for labour, reflecting higher negotiated wage settlements across the sector, and for materials, such as steel and concrete. First Uranium has included assumptions for higher costs in its revised technical reports and future planning assumptions. Related Party Transactions On December 20, 2006, First Uranium and Simmer & Jack entered into a shared services agreement (the "Shared Services Agreement"). For a detailed description of the Shared Services Agreement, see the Corporation's MD&A in respect of its audited consolidated financial statements for FY 2007. During Q3 2008, the Corporation paid $0.9 million to Simmer & Jack ($1.9 million for 2008 YTD) pursuant to the Shared Services Agreement. During Q3 2007, the Corporation paid $0.9 million for shared services relating to the operations to Simmer & Jack ($1.7 million for 2007 YTD). Fees charged by Simmer & Jack of $0.4 million and $0.9 million, respectively, were capitalized during Q3 2008 and 2008 YTD for technical services provided to the Ezulwini Mine and MWS. During Q3 2007 and 2008 YTD, $0.8 million and $1.0 million, respectively, of shared services fees were capitalized. Prior to December 2006, the Corporation shared its premises with other companies that had common directors and reimbursed the related companies for its proportional share of expenses or was reimbursed by the related companies for their proportional share of expenses. During both Q3 2007 and 2007 YTD, the Corporation was charged $0.6 million for consulting services provided by related directors, officers and consultants of the Corporation. First Uranium has agreed to reimburse Simmer & Jack for 50% of the fees that Simmer & Jack is required to pay to an empowerment company for consulting. During Q3 2008 and 2008 YTD, the Corporation paid $0.06 million and $0.3 million, respectively, to Simmer & Jack in connection with such services. As previously disclosed, and at the same time as the Offering, the Corporation entered into an agreement on December 12, 2006 with Waterpan providing for the acquisition of the remaining 10% of the shares of EMC in consideration for 6.1 million common shares of First Uranium. On December 14, 2007 this transaction was completed. (See Note 21 to the interim financial statements.) On September 27, 2007, the Board approved a loan in the amount of Cdn$1 million to the President and Chief Executive Officer of First Uranium for the purpose of facilitating the relocation of his family to Toronto, where the corporate office is located. The loan carries interest at 4% payable monthly in arrears, is for a term of six years from date of closing of the purchase of a family residence and is unsecured. The loan was advanced on October 17, 2007. Interest of $8,682 was received during Q3 2008 and 2008 YTD. Critical Accounting Policies and Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and reported amounts of revenues and expenditures during the reporting period. Note 2 of the interim financial statements describes all of the Corporation's significant accounting policies. Changes in accounting policies Effective April 1, 2007, the Corporation adopted the Canadian Institute of Chartered Accountants ("CICA") Handbook Sections 1530 - Comprehensive Income, Section 3855 - Financial Instruments - Recognition and Measurement and Section 3865 - Hedges. The adoption of these new standards resulted in changes in the accounting for financial instruments and hedges, as well as the recognition of certain transition adjustments. As provided under the standards, the comparative consolidated financial statements have not been restated. The adoption of these Sections is done retroactively without restatement of the consolidated financial statements of prior periods. There was no impact on the consolidated balance sheet of as at April 1, 2007. The effect of these changes in the accounting policies on net income for Q1 2008 is not significant. Effective April 1, 2007, the Corporation adopted the revised Section 1506 - Accounting Changes relating to changes in accounting policies, changes in accounting estimates, and errors. Adoption of these recommendations had no effect on the consolidated financial statements for the Q1 2008, except for the disclosure of accounting changes that have been issued by the CICA but have not yet been adopted by the Corporation because they are not effective until a future date (refer to Future accounting standards below). Section 1535, Capital Disclosures, which is effective for the Corporation for the fiscal year beginning April 1, 2008. This standard requires disclosure of information that enables users of its financial statements to evaluate the entity's objectives, policies and processes for managing capital. The adoption is not expected to have a significant effect on the Corporation's financial statements. Section 3862, Financial Instruments - Disclosures and Section 3863, Financial Instruments - Presentation, which are effective for the Corporation for the fiscal year beginning April 1, 2008. The objective of Section 3862 is to provide financial statement disclosure to enable users to evaluate the significance of financial instruments for the Corporation's financial position and performance and the nature and extent of risks arising from financial instruments that the Corporation is exposed to during the reporting period and the balance sheet date and how the Corporation is managing those risks. The purpose of Section 3863 is to enhance the financial statement user's understanding of the significance of financial instruments to the Corporation's financial position, performance and cash flows. In March 2007, CICA approved Handbook Section 3031 - Inventories, which replaces the existing Section 3030 - Inventories. This standard is effective for the Corporation for interim and annual financial statements relating to the fiscal year beginning April 1, 2008. The standard provides more guidance on the measurement and disclosure requirements for inventories. The Corporation is currently assessing the impact of these new accounting standards on its financial statements. Outstanding Share Data Q3 2008 Q3 2007 2008 YTD 2007 YTD ------------------------------------------------------------------------- Common shares outstanding at beginning of period 124,831,222 88,336,047 121,686,047 87,536,047 Shares issued during the period 6,212,339 33,350,000 9,357,514 34,150,000 ------------------------------------------------------------------------- Common shares outstanding at end of period 131,043,561 121,686,047 131,043,561 121,686,047 ------------------------------------------------------------------------- Unexercised stock options outstanding at end of period 1,349,999 1,115,715 1,349,999 1,115,715 ------------------------------------------------------------------------- Average strike price of outstanding options (Cdn$) 8.73 7.00 8.73 7.00 ------------------------------------------------------------------------- As at February 13, 2007, First Uranium had 131,043,561 common shares outstanding and there were 1,349,999 unexercised stock options outstanding, at an average strike price of Cdn$8.73 per share. As at December 31, 2007 and February 13, 2007, First Uranium also had $135.1 million (Cdn$150 million) principal amount of Debentures outstanding which are convertible into 60.9013 common shares of First Uranium for each Cdn$1,000 principal amount of Debentures, representing 9,135,195 common shares. Risks and Uncertainties Uncertainties There are a number of uncertainties in the mining business of First Uranium that are beyond First Uranium's control, including: - demand and prices for the Corporation's future production of uranium and gold - the consistent supply of sufficient electrical power - government legislation regarding mining companies in South Africa - securities regulation regarding public listed companies in Canada and South Africa - foreign exchange rates - interest rates - the decisions and activities of the Corporation's competitors in the uranium and gold mining business, which impact the supply of uranium and the demand for available services, construction materials, labour and the rights for prospecting and mining - the continued endorsement of nuclear power as a preferred source for the world's energy needs - the decisions of investors to continue to buy and hold the securities of the Corporation - natural disasters, war or random occurrences or acts that could result in a material change to economic and market performance, business conditions or operations Risks In addition, First Uranium is in the development stage and is subject to the risks and challenges similar to other companies in a comparable stage of development. The risks include, but are not limited to, certain business, operational and market risks. For a discussion of the Corporation's risks please refer to the Corporation's MD&A in respect of its audited consolidated financial statements for the fiscal year ended March 31, 2007, the 2007 Annual Information Form and other filings, which are available on the Corporation's website www.firsturanium.com and on www.sedar.com or upon request from the Corporation. Construction costs First Uranium is in the development stage and is building its gold and uranium plants. To complete the construction of these plants requires steel, concrete and construction tradespeople. With the vast amount of construction underway in South Africa, materials and construction tradespeople are difficult to acquire and retain, particularly in light of the upcoming World Cup of soccer in South Africa in 2010 and the high metal prices, which has driven the demand for new mines and plants around the world. To mitigate this risk, First Uranium has secured its supply of materials and tradespeople for the construction of the mills and the gold and uranium plants for the planned modules of the Ezulwini Mine. For MWS, the required materials to expand the gold plant and build the uranium plant have not yet been secured. To mitigate the impact of rising costs, the Corporation has completed a feasibility study for the project, with the exception of the pressure leach circuit, which is still at the pre- feasibility stage. The Corporation expects to secure the materials for expansion of this project pending Eskom's commitment to meet our future power requirements. Labour A trend that could increase risk for the Corporation would be the heightened labour unrest in South Africa. Workers at various South African mining operations have been demanding, through their unions, higher compensation as a result of increased revenues in the mining sector being driven by heightened mineral prices. Strikes have been threatened during some of the negotiations. First Uranium has mitigated the threat of work stoppages by negotiating recent settlements with unions represented at its operations. Similarly, workers in other industries have been demanding higher compensation and threatening strike action. One such example is the strike by petroleum workers in early August, which limited the supply of petrol. Strikes in the public sector and service industries, if protracted, have the potential to disrupt the development of the Corporation's two projects. No material delays have been experienced to date and the projects are on track for their scheduled completion dates. Power Supply Regular power outages have recently beset South Africa, causing disruption in business activities. Coal-fed power stations are running low on fuel and several power-generating facilities are down for maintenance. No new power-generating facilities are expected to start up in South Africa until 2012. Eskom's primary response to these power deficiencies is to ask that its customers conserve energy and/or to restrict the amount of power supplied to them. On January 25, 2008, Eskom advised that continuity of electric power supply could not be guaranteed. Specific warnings were communicated to South African mining companies, including the Corporation, which were specifically asked by Eskom to reduce power consumption to 80% of load requirements. While this was subsequently increased to 90%, Eskom also informed mining companies that this authorization could be withdrawn at a later date, as electrical power supply remains tight. To mitigate the impact of these power restrictions, the Board has concluded that the Corporation's two projects are sufficiently robust to continue development as planned based on the addition of owner-operated power generation. The initial impact of this decision is discussed in the section entitled, 'Preliminary Assessment of the Impact of the Power Situation' as discussed earlier in this MD&A. In addition, First Uranium is implementing power savings solutions and power backup systems where possible. These actions, however, may not be enough. Management plans to continue to monitor the Power Situation for any changes in the power supply from Eskom and any impact on the Corporation's ability to sustain its operations and complete its growth plans. Additional Information Additional information relating to First Uranium is included in the Corporation's Annual Information Form dated June 13, 2007 and it is available on SEDAR at www.sedar.com. Forward-looking Information This MD&A and consolidated financial statements for the period ended December 31, 2007 contain certain forward-looking statements. Forward-looking statements include but are not limited to those with respect to the availability of electrical power, the possible addition of owner-operated power generation, 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 "goal", "objective", "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", 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) unless otherwise indicated, forward-looking statements indicate the Corporation's expectations as at the date of this MD&A; (ii) 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; (iii) 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 (iv) 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 MD&A, First Uranium has made several material assumptions, including but not limited to, the assumption that: (i) consistent supply of sufficient power will be available to develop and operate the projects as planned; (ii) approvals to transfer or grant, as the case may be, mining rights or prospecting rights will be obtained; (iii) metal prices, exchange rates and discount rates applied in the preliminary economic assessments are achieved; (iv) mineral resource estimates are accurate; (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 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 (viii) 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.

For further information:

For further information: Bob Tait, VP Investor Relations, at (416)
558-3858 or bob@firsturanium.com

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First Uranium Corporation

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