First Uranium reports financial and operating results for third quarter ended December 31, 2008

    All amounts are in US dollars unless otherwise noted.

    For a full discussion of financial and operating results, the Financial
    Statements and Management Discussion & Analysis, please see the Company's
    website, under "Investor Centre / Interim Reports"

    TORONTO and JOHANNESBURG, Feb. 9 /CNW/ - First Uranium Corporation
(TSX:FIU, JSE:FUM) (ISIN:CA33744R1029) ("First Uranium" or "the Company")
today announced its financial and operating results for the three and nine
months ended December 31, 2008 ("Q3 2009" and "2009 YTD", respectively) and
provided technical updates for both the underground Ezulwini Mine ("Ezulwini")
and the Mine Waste Solutions tailings recovery operation ("MWS").

    During the quarter, First Uranium continued its focus on:
    -  the rehabilitation and bringing into production of the Ezulwini
       underground mine;
    -  the commissioning of the Ezulwini uranium plant;
    -  the construction at MWS of the second gold module; and
    -  the construction at MWS of the first two uranium modules.

    Through the balance of the fiscal year ending March 31, 2009 ("FY 2009"),
the Corporation will continue to focus its resources and efforts on the
above-mentioned activities.

    During Q3 2009, First Uranium:
    -  advanced refurbishment, construction and development activities at
       both Ezulwini and MWS, with capital expenditures of $53.4 million in
       the quarter
    -  hoisted 30,892 tonnes of gold- and uranium-bearing ore at Ezulwini
    -  underground development at Ezulwini remained constrained because the
       majority of shaft time availability was allocated to the shaft
       refurbishment project, which was substantially completed subsequent to
       the end of the quarter on February 7, 2009
    -  processed 80,079 tonnes of gold-bearing ore at Ezulwini, producing
       6,411 ounces of gold
    -  successfully commissioned the second 50,000 tonne-per-month grinding
       mill at Ezulwini
    -  reprocessed 1.8 million tonnes of tailings through the MWS gold plant
       at a yield of 0.2 grams of gold per tonne, producing 12,235 ounces of
       gold at a Cash Cost (as defined in the note (b) in the Financial
       Overview table below) of $368 per ounce
    -  achieved unit operating costs at MWS of $2.12 per tonne that were 13%
       lower than the forecast $2.43 per tonne in the Company's most recent
       technical report for MWS
    -  reported a 59% increase in revenue from gold sales at MWS compared to
       Q3 2008
    -  on November 5, 2008, signed a definitive agreement with Gold Wheaton
       (Barbados) Corporation ("GW"), a wholly-owned subsidiary of Gold
       Wheaton Gold Corp., whereby GW acquired the right to receive 25% of
       the estimated 2.1 million ounces of life-of-mine gold production from
       MWS (the "Gold Stream Transaction")
    -  on December 18, 2008 received $50 million (the "First Payment") from
       GW upon fulfilling the closing conditions under the Gold Stream
       Transaction; a further $75 million (the "Balance Payment") is due on
       or before March 12, 2009, failing which the Gold Stream Transaction
       reverts to only 10% of the life-of-mine gold production from MWS
    -  ended the quarter with $39.0 million of cash and cash equivalents
    -  on November 10, 2008 announced the results of an updated technical
       report for Ezulwini and also applied several modifying factors to the
       MWS technical report dated March 31, 2008 resulting from an improved
       understanding of the project expansion milestones as well as the
       improved operational performance of MWS in Q2 2009

    Financial Overview
                                       Q3 2009   Q3 2008  2009 YTD  2008 YTD
      Tonnes hoisted                    30,892    27,951    97,595    27,951
      Ounces of gold sold(a)             6,411     5,055     6,534     5,055
      Average selling price
       per ounce ($)                       922       831       922       831
      Tonnes reclaimed (000s)            1,798       832     5,302     2,461
      Average gold recovery grade
       (grams/tonne)                      0.21      0.28      0.19      0.21
      Total ounces of gold reclaimed    12,235     7,357    32,586    20,901
      Total ounces of gold sold         12,581     7,328    32,441    20,831
      Average selling price
       per ounce ($)                       838       905       860       723
      Average cost per
       ounce reclaimed ($)                 428       741       421       626
      Average Cash Cost per
       ounce reclaimed ($)(b)              368       677       385       562
    Summary of Consolidated Financial Results
    (in thousands of dollars, except per share amounts)
    -  Ezulwini(a)                       5,910         -     5,910         -
    -  MWS(c)                           10,548     6,633    27,899    15,059
                                        16,458     6,633    33,809    15,069
    Cost of sales
     (including amortization)(c)
    -  Ezulwini(a)                     (12,054)        -   (12,054)        -
    -  MWS(c)                           (5,385)   (5,433)  (13,645)  (13,030)
                                       (17,439)   (5,433)  (25,699)  (13,030)
    Gross (loss) profit
    -  Ezulwini                         (6,144)        -    (6,144)        -
    -  MWS                               5,163     1,200    14,254     2,039
                                          (981)    1,200     8,110     2,039

    Amortization(c)                       (760)    (472)    (1,148)   (1,333)
    Operating loss(d)                   (6,657)  (4,484)   (11,579)   (9,838)
    Income (loss) for the period         1,281   (3,998)    (5,620)    4,524
    Basic and diluted
     (loss) income per share              0.01    (0.03)     (0.04)     0.04
    Cash flow utilized in operations     3,679  (11,587)      (740)   19,904
    Cash outflow from
     investing activities              (51,388) (28,035)  (174,983)  (75,011)
    (a) During Q3 2009, the gold processing plant at Ezulwini was regarded as
        ready for commercial use, notwithstanding the fact that the plant was
        operating at considerably less than capacity during these early days
        of production. Accordingly, from the beginning of Q3 2009, the
        revenues and related costs derived from the gold processing plant
        were included in the Company's financial results. Prior to Q3 2009,
        the costs of production from Ezulwini were capitalized and related
        proceeds of sales credited against capital.
    (b) Cash cost per ounce is defined as cost of sales divided by ounces of
        gold sold. Total cash costs exclude amortization expense and
        inventory purchase accounting adjustments. For further information on
        this non-GAAP performance measure see page 8 of the Company's Q3 2009
    (c) For Q3 2008 and 2008 YTD only the results of MWS for the month of
        June 2007 were included in the Company's consolidated results as the
        effective date of acquisition of MWS was June 6, 2007.
    (d) This is a non-GAAP measurement. Operating loss is loss before
        interest income, interest and accretion expenses, foreign exchange
        gains and income tax charges.

    At Ezulwini, the delays encountered in commissioning of the gold elution
circuit during Q2 2009 were resolved and the gold processing plant commenced
operating in October 2008, generating revenue of $5.9 million from 6,411
ounces of gold sold at an average selling price of $922 per ounce during Q3
2009. As mentioned in note (a) above, from the beginning of Q3 2009, the
revenues and related costs derived from the gold processing plant were
included in the Company's financial results. Ezulwini is still in a build-up
phase of production and the shaft refurbishment project limited the
underground mining and development activities during the quarter resulting in
lower tonnages, considerably higher unit costs and a negative margin on
Ezulwini production. As a result, Ezulwini incurred a gross loss of $6.1
million in Q3 2009. It is anticipated that the unit costs will decrease as the
underground mining and development activities increase.
    At MWS, the Company operated at planned throughput and gold recovery
rates achieving 94.8% of its gold production forecast during Q3 2009 (6% above
technical report plan published in April 2008) and showed continued
improvement in its financial results. The higher average Cash Costs in Q3 2008
were attributable primarily to the high-cost mechanical load and placement
operation required to mine the remnants taken from the MWS No.2 tailings dam.
The increased revenues from continued improvement in gold production as well
as the reduction in operating costs at MWS (despite the inclusion of $0.8
million of costs related to the Gold Stream transaction) resulted in the
significant increase in gross profit from tailings processed at MWS from $1.2
million in Q3 2008 to $5.2 million in Q3 2009.
    The consolidated operating loss in Q3 2009 was higher than the operating
loss in Q3 2008 despite the continuing improvement and much higher gross
profit on MWS production, principally due to the aforementioned gross loss
during production build-up at Ezulwini and higher general, consulting and
administrative expenses. The consolidated operating loss in Q3 2008 reflected
increased revenues at MWS, which were more than offset by the increase in
corporate and administration expenses as operating activities expanded during
the quarter.
    The consolidated income in Q3 2009 was primarily the result of the
significant foreign exchange gains on translation of Canadian and South
African assets, liabilities, revenues and expenses converted to US dollars,
which strengthened against the other reporting currencies in the period. The
Company reported a consolidated loss in Q3 2008 that was primarily the result
of operating losses for the quarter, partially offset by foreign exchange
translation gains net interest income earned and taxes recovered.
    The cash generated from operating activities during Q3 2009 was primarily
attributable to the additional cash generated from gold sales with the
commencement of gold production at Ezulwini during the quarter and the receipt
of a large value added tax receivable that more than offset the operating and
other expenditures. The cash utilized in operating activities during Q3 2008
reflected net operating expenses offset by net interest received during the
    The cash utilized in investing activities in Q3 2009 primarily related to
capital expenditures of $17.2 million and $36.3 million at Ezulwini and MWS,
respectively. The cash utilized in investing activities during Q3 2008
comprised capital expenditures of $17.4 million at Ezulwini and $10.7 million
at MWS. A further $1.9 million cash transferred to restricted cash during Q1
2009 was released during Q3 2009 to fund the final payment on the 30 MW power
plant acquired by MWS.
    At the end of Q3 2009, First Uranium had total assets of $439.7 million,
total liabilities of $208.1 million and shareholders' equity of $231.6
million. The Company had cash and cash equivalents of $39.0 million (excluding
$0.5 million of restricted cash on deposit) compared to $164.7 million at the
end of FY 2008. The Company currently holds its funds in cash and
bank-sponsored guaranteed investment certificates with Canadian and South
African banks.
    The escalation of the recent market turbulence arising from the global
credit crisis has resulted in significantly reduced economic activity
worldwide, a severe limitation in access to capital, volatility and
uncertainty of prospects for global metal prices, exchange rates and the cost
of materials. Management is carefully monitoring these developments, the
impact these conditions may have on the Company's operations, financial
condition and outlook, and is actively assessing non-critical capital
expenditures and opportunities to reduce overheads and operating costs. In
particular, considerable attention has been given to securing the near- and
medium-term funding requirements of the Company's currently-identified capital
    Subsequent to the quarter, on January 27, 2009, the Company entered into
a bought deal private placement offering (the "Private Placement") through
which the Company expects to raise gross proceeds of Cdn$61.5 million
(approximately $49 million). The Private Placement is expected to close on
February 11, 2009. The Balance Payment of $75 million under the Gold Stream
Transaction is also due on or before March 12, 2009.
    The additional cash expected from the closing of the Private Placement
and the Balance Payment under the Gold Stream Transaction will mitigate most,
if not all, of the financing risk that would otherwise confront the
Corporation in the near- to mid- term. Assuming the completion of these
financing activities, the Company anticipates that its capital programs will
continue as planned and that both operations will be generating free cash flow
by April 2010.
    At the end of Q3 2009, $199.1 million of cash has been invested in
capital projects at Ezulwini, of which $16.1 million and $86.8 million was
invested during Q3 2009 and 2009 YTD, respectively, including $31.9 million
capitalized pre-production costs, pumping and other capital related costs. The
revised project costs at Ezulwini released in November 2008 indicated that the
total capital required over the life of the mine was estimated at $300
million, exclusive of sustaining capital.
    At the end of Q3 2009, $108.4 million of cash has been invested in
capital projects at MWS, of which $46.7 million and $87.2 million were
invested during Q3 2009 and 2009 YTD, respectively. The revised project costs
at MWS released in November 2008 indicated that the total capital required
over the life of mine was estimated at $315 million, exclusive of sustaining

    Operational Overview

                         Q3 2008    Q4 2008    Q1 2009    Q2 2009    Q3 2009
    Tonnes processed     832,208  1,592,242  1,664,537  1,839,188  1,798,022
    Head grade             0.455      0.370      0.369      0.407      0.420
    Recovered grade        0.275      0.139      0.160      0.200      0.212
    Recovery %               60%        38%        43%        49%        50%
    Gold recovered (kg)      229        219        265        368        380
    Gold recovered (oz)    7,357      7,030      8,530     11,821     12,235

    At MWS, the Company:
    -  reprocessed 1.8 million tonnes of tailings through the gold plant at a
       yield of 0.21 grams of gold per tonne, producing 12,235 ounces of gold
       compared to forecast of 12,900 ounces; and
    -  progressed construction of the second gold plant module and the first
       two modules of the uranium plant, which are scheduled for
       commissioning during Q1 2010.

    At Ezulwini, the Company:
    -  milled 12,866 tonnes of gold-bearing ore sourced from surface
    -  allocated proportionately more time to fast-track the shaft
       refurbishment project with resultant delays to underground development
       and production. This resulted in only 30,892 tonnes of gold- and
       uranium-bearing ore being hoisted;
    -  substantially completed the shaft refurbishment project subsequent to
       the quarter on February 7, 2009, allowing the shaft to be available
       for full utilization of underground mining and development activities;
    -  resolved the delays encountered in commissioning of the gold elution
       circuit resulting in the gold processing plant commencing production
       of gold;
    -  commissioned the second grinding mill (doubling the operation's
       milling capacity to 100,000 tonnes per month) thereby providing the
       flexibility to concurrently process uranium- and gold-bearing ore from
       the Middle Elsburg reefs, as well as gold-bearing ore from the Upper
       Elsburg reefs; and
    -  at the end of Q3 2009, had stockpiled ore as shown in the following

    EZULWINI SURFACE STOCKPILE STATUS (as at December 31, 2008)
                                               Gold grade            U(3)O(8)
    Source                      Tonnes    (grams/tonne)(*)       grade (%)(*)
    Underground clean up
     and development           106,598               1.12                  -
    Uranium ore stockpile       61,266                  -              0.036
    (*)Sampled belt grades

    Subsequent to the end of Q3 2009

    As mentioned above, on January 27, 2009, the Company announced that it
entered into a Private Placement agreement with a syndicate of underwriters
who agreed to purchase 20,500,000 Units of the Company at a price of $3.00 per
Unit for gross proceeds of CDN$61.5 million. Each Unit will consist of one
common share of First Uranium and one-half of one common share purchase
warrant (each full warrant, a "Warrant"); each full Warrant being exercisable
to acquire one common share of First Uranium at a purchase price of $4.15 for
a period of 24 months following the closing date, which is expected to be
February 11, 2009. Closing is subject to customary conditions, including the
receipt of all necessary approvals.
    On February 7, 2009, the shaft refurbishment project at Ezulwini was
substantially completed, allowing the shaft to be available for full
utilization of underground mining and development activities. Although some
shaft refurbishment activities and the plan to destress the shaft pillar will
continue throughout FY 2010, this activity is not expected to interfere with
planned mining activities.

    Sulphuric Acid Plant Update

    The Company completed an approximately +/-10% specification and
procurement study for a 360 tonnes per day 'fit-for-purpose' sulphuric acid
plant estimated to cost $70 million, which could be located at Ezulwini. The
recently completed metallurgical test work on the MWS tailings resources
concluded that the installation of a 600 tonne per day sulphuric acid plant at
a cost of $124 million at MWS will be technically more challenging and less
capital inefficient compared with the option of constructing an acid plant at
Ezulwini. Installing a smaller 360 tonnes per day 'fit-for-purpose' sulphuric
acid plant at Ezulwini would improve capital efficiencies. As previously
reported, due to recent and continuing softening of sulphuric acid prices, the
Company has deferred its decision to build an acid plant until acid prices and
supply stabilize.

    Power Update

    During 2009 YTD the electrical power requirements of both MWS and
Ezulwini were supplied by South Africa's national power utility, Eskom,
without a repeat of the major interruptions experienced in Q4 2008. As a
backup plan to secure a continuous supply of electrical power at Ezulwini, the
Company has connected the existing 14 megawatts ("MW") of standby diesel
generated power capacity to the new plant. Further diesel generating power,
comprising 10 units with a capacity of 1 MW each (the "Gensets"), arrived on
site and are currently connected into the mine supply grid. The Gensets are
ready for immediate use should the need arise.
    At MWS, the 30 MW power plant, which was acquired to ensure a sufficient
supply of power to start up the uranium and add-on gold plants, is currently
undergoing testing and refurbishment and civil construction work is in
progress for installation of the power plant in April 2009.
    During 2009 YTD, capital expenditures of $9.1 million were spent on
securing the above sources of power to supplement the power supplied by Eskom.
    By procuring these alternative sources of power, the Company has secured
sufficient capacity to meet its operating requirements during the early stages
of each operations' development and to run emergency systems at the
underground operation at Ezulwini, in the event of power disruptions. A
provision has been included in each operation's operating costs in the event
of having to run these alternate power sources during peak demand periods,
although that need has not yet arisen.
    One of the factors enabling Eskom to meet the Company's power
requirements in Q3 2009 has been the decline in the current demand for Eskom
power brought on by the impact of the credit crisis in Southern Africa.
Although it may be too early to predict the outcome of the economic downturn,
it is envisaged that there may be no need for the Company to generate its own
power, which could result in a reduction in forecast operating cost estimates
at both operations.


    "Our primary focus is to commission the uranium plant at the Ezulwini
Mine and the remaining gold and uranium plants at Mine Waste Solutions, said
Gordon Miller, President and CEO of First Uranium. He added: "This will allow
us to expand our gold production and also complete our transition from
developer to producer of uranium at both operations. With the expected receipt
of the proceeds from the recently announced private placement in mid-February,
we can push forward as planned on all phases of our plant construction and
expect to generate positive free cash flow by April 2010."
    The critical portion of the shaft refurbishment at Ezulwini is complete
and the next major milestone there is the commissioning of the 100,000 tonne
per month uranium plant, which is on schedule to commence recovery of uranium
during Q4 2009.
    First Uranium has not yet signed any long-term contracts to sell uranium.
As long-term uranium supply contracts generally require delivery of fixed
amounts of uranium over a fixed time period, the Company plans to complete the
commissioning of at least one of its uranium plants prior to entering into any
such uranium contracts.

    The current and planned capital projects at MWS include:
    -  completion of the second gold module and the first two uranium modules
       scheduled for Q1 2010;
    -  securing additional Eskom power for the planned expansion of MWS;
    -  construction of the third gold module and the third uranium module
       scheduled for commissioning in December 2009, increasing plant
       capacity to 1.9 million tonnes per month;
    -  permitting a single large tailings dam to accommodate all future
       production tailings as well as tailings from processing the ore of
       Simmer & Jack Mines' Buffelsfontein Gold Mine for uranium.

    An upgrade to accommodate a deposition rate of 1.3 million tonnes of
material per month on the MWS No.5 tailings dam is already underway in advance
of the commissioning of the second module of the MWS gold plant and the first
two modules of the uranium plant. In the event that the MWS No.5 tailings dam
is found to be insufficient, additional un-reclaimed historic tailings dam
footprints have been identified.

    Financial Results: Release and Conference Call

    First Uranium will conduct a conference call with investors to discuss
the information in this news release at 10:00 a.m. local Toronto time and 5:00
p.m. local Johannesburg time on Tuesday, February 10, 2009. The conference
call will be available simultaneously to all interested analysts, investors
and media.
    Callers may dial 1 800 319-4610 (Canada and the US) or 0800 981 705
(South Africa). Callers from other international locations may call +1 604
638-5340. The call will be webcast at and available for
replay shortly after the call for 90 days.
    A telephone replay of the conference call will be available for 30 days.
To access the replay, callers may dial 1 800 319-6413 (Canada and the US).
Callers from other international locations may access the replay by dialing +1
604 638-9010 (Canada). Access to the replay will require the code 2128,
followed by the number sign.

    Cautionary Language Regarding Forward-Looking Information

    This news release contains certain forward-looking statements.
Forward-looking statements include but are not limited to those with respect
to the price of uranium and gold, requirements for additional capital,
availability of financing on acceptable terms, the availability of electrical
power, the planned addition of owner-operated power generation, price of
electrical power, supply and price of sulphuric acid, the estimation of
mineral resources and reserves, the realization of mineral reserve estimates,
the realization of estimated pyrite content in MWS tailings dams, 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,
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", "assumes", "plans", "expects" or
"does not expect", "is expected", "indicated", "budget", "scheduled",
"envisaged", "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 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, to international
operations, to prices of uranium and gold, actual results of current
exploration activities. 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 the date of this news release; (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) the
conditions precedent to the private placement will be satisfied and the
successful financing by Gold Wheaton of the Balance Payment of the prospective
gold stream transaction will be completed; (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
prefeasibility study or preliminary economic assessment, as the case may be,
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; (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; and (ix) consistent supply of sufficient power will be available to
develop and operate the projects as planned.

    About First Uranium Corporation

    First Uranium Corporation (TSX:FIU, JSE:FUM) is focused on the
development of its South African uranium and gold mines with the goal of
becoming a significant producer through the re-opening and underground
development of the Ezulwini Mine and the expansion of the Mine Waste Solutions
tailings recovery operation. First Uranium also plans to grow production by
pursuing value-enhancing acquisition and joint venture opportunities in South
Africa and elsewhere.

    First Uranium Corporation
    1240-155 University Avenue, Toronto, ON Canada M5H 3B7

For further information:

For further information: Bob Tait, VP Investor Relations at or (416) 342-5639 (office) or (416) 558-3858 (mobile)

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