First Uranium reports results for Q2 2010

    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, Nov. 13 /CNW/ - First Uranium Corporation (TSX:FIU, JSE:FUM) (ISIN:CA33744R1029) ("First Uranium" or "the Company") today announced that for the three-month period ended September 30, 2009 ("Q2 2010") the Company recorded a net loss for the quarter of $18.4 million or $0.11 per share as compared with a loss of $1.1 million or $0.01 per share in the same quarter of the prior year ("Q2 2009"). The substantial increase in the consolidated loss was attributable to the loss incurred at the Ezulwini Mine combined with the significant foreign exchange loss on translation, notwithstanding higher production and gross profit at the Company's Mine Waste Solutions tailings recovery operation ("MWS").

The Ezulwini Mine converted to a full time operation prior to the beginning of Q2 2010. This enabled a sharp intensification of mining activity during Q2 2010 with a 76% increase in the gold content mined, a 110% increase in the gold recovered and a 89% increase in the overall gold recovered grade compared to Q1 2010. The financial benefit of these production increases were not fully realized in Q2 2010 as the gold plant was also processing low-grade ore from the de-stress cuts in the Upper Elsburg ("UE") ore body of the Ezulwini Mine, which are designed to reduce pressure on the load-bearing shaft pillar of the UE ore body and to open up mining of the high-grade ore in the shaft pillar. Now that the de-stress cuts have been completed, gold grades from the UE ore body have already begun to significantly improve.

At MWS, the recent commissioning of the second gold plant module resulted in the Q2 2010 tonnage throughput increasing by 35% compared to Q2 2009 and Q1 2010. This was the primary reason for the 22% increase in revenues and increased operating profit margin from MWS compared to Q1 2010. This increase was partially offset by a temporary increase in the unit cost of production compared with the previous quarter as, during the final stages of commissioning, the second gold plant shared the elution capacity at the first gold plant module. This resulted in less gold recovered than will be the case now that each module has its own elution circuit.

Gordon Miller, First Uranium's President and Chief Executive Officer commented, "First Uranium has come a long way in its brief history. At the Ezulwini Mine we have completed a difficult project to refurbish the mine shaft and have both the uranium and gold plants built and operational. We have also made great strides in developing our underground mining operations. At the Mine Waste Solutions tailings recovery operation, we are processing ore at 66% of our planned capacity, have two of the three planned gold plants up and running and are nearing completion of the construction of our first two uranium plant modules.

"We continue, however, to encounter challenges. The most recent of these has been the suspension of authorization to proceed with the construction of the new tailings deposition site at MWS; authorization which we had welcomed only a few months ago. To address this concern and find a resolution, management is actively engaged in discussion with all interested parties and is confident that this can and will be resolved. Management has also formulated and may have to implement an interim strategy, which would extend the deposition capacity on existing tailings dams.

"It is clear, however, that although the vast majority of the work is now behind us and this company is well on its way to successfully completing a remarkable growth phase, we are vulnerable to cash flow constraints in what remains of the build up phase. As stewards of our shareholders' investment in this company, we believe it prudent to bolster our balance sheet and are taking steps to do just that, including the recently announced gold stream transaction to raise $50 million."

During Q2 2010, First Uranium:

    -   commissioned the second gold plant module at MWS, doubling its gold
        production capacity;
    -   increased its treatment of tailings through the MWS gold plant from
        Q1 2010 by 35% for a total of 2.5 million tonnes;
    -   increased gold produced by MWS by 22% from 11,007 ounces in Q1 2010
        to 13,422 ounces in Q2 2010 at a Cash Cost of $409 per ounce (as
        defined in the notes to the Consolidated Results of Operations table
        in this news release);
    -   commenced construction of the third gold plant module at MWS;
    -   increased ore hoisted from the Ezulwini Mine from 64,965 tonnes in Q1
        2010 by 52% to 98,831 tonnes in Q2 2010;
    -   increased the recovered grade of ore from the Ezulwini Mine from an
        average grade of 1.3 grams of gold per tonne in Q1 2010 to an average
        recovered grade of 2.6 grams of gold per tonne in Q2 2010;
    -   increased production of gold from the Ezulwini Mine by 89% from Q1
        2010 to 7,952 ounces of gold;
    -   completed the de-stress cuts required to open up mining of the high-
        grade ore in the shaft pillar of the UE gold-only ore body at a grade
        of 7.79 grams per tonne at the Ezulwini Mine;
    -   increased the workable face length for the Middle Elsburg gold and
        uranium ore body to 754 metres with a gold grade of 3.13 grams per
        tonne and a uranium grade of 0.44 grams per tonne in Q2 2010; and
    -   finalized a one-year term credit facility of ZAR160 million
        ($20.5 million) with Simmer & Jack Mines, Limited (Simmer & Jack) on
        August 14, 2009.

Subsequent to Q2 2010:

On November 5, 2009, First Uranium entered into a second agreement with Gold Wheaton (Barbados) Corporation ("GW"), whereby GW for a payment upon closing of $50 million will purchase 7 percent of the estimated 5.8 million ounces of the life-of-mine gold production from the Ezulwini Mine ("the Ezulwini Gold Stream Transaction") at a price of the lesser of $400 per ounce or the prevailing spot price. Subject to certain conditions and approvals, which management expects to be fulfilled, the Ezulwini Gold Stream Transaction is expected to close in late November 2009. Additional detail is provided in the Company's Management Discussion and Analysis for the period ending September 30, 2009.

Also on November 5, 2009, MWS submitted a response to South African regulators regarding a notification on October 18, 2009 of their intention to withdraw the positive Record of Decision ("RoD") to construct a new life-of-mine tailings storage facility ("TSF"), which is designed to store all of the future tailings depositions of the remaining life of the operation. Although management is fully confident that the TSF permitting will be resolved, the length of delay might become material, so an interim tailings deposition strategy has been developed.

    Financial considerations with respect to the completion of capital

The Company's financing results to date, while substantial, are not sufficient to enable it to fund all aspects of its operations and consequently the Company must, in part, rely on cash generated from the operations to fund the remaining capital expenditure at MWS.

The Ezulwini Mine has recently completed most of its capital projects and is now in a production ramp-up phase. It is anticipated that the Ezulwini Mine will turn cash positive by December 31, 2009. The MWS operations are profitable and generating cash, but the MWS capital projects still require cash in excess of that currently being generated. The capital intensive phase will continue for the next nine months, after which MWS is also anticipated to turn cash positive.

At September 30, 2009, the funding required to complete the current capital projects at the Ezulwini Mine and MWS was $217 million, of which $193 million is planned to be spent in the next twelve months. At September 30, 2009, the Company had existing commitments of $72.9 million. In addition, due to the permitting delay relating to the construction of its new TSF as discussed above, the Company may also be required to incur additional capital.

The slower ramp-up of production at the Ezulwini Mine, delays in commissioning additional plant modules at both the Ezulwini Mine and MWS and increased capital requirements have resulted in less cash being generated by the Company than previously anticipated. As a result, the Company is now required to secure additional sources of funding to ensure that it will be able to meet its spending and purchase obligations as they become due and advance its planned projects at MWS.

Available cash resources of $60.0 million at September 30, 2009 together with the cash generated from the sale of gold and uranium would not be sufficient to fund completion of the current capital projects at MWS. The $50 million proceeds from the Ezulwini Gold Stream Transaction, as noted above, is expected to fully address this cash shortfall, but without these funds, the Company would have to significantly delay or curtail capital expenditures in order to meet its current obligations as they fall due. Management has no reason to believe that the Ezulwini Gold Stream Transaction will not close as scheduled. However, should this occur, the Company may not be able to meet its future obligations and continue to operate in the normal course as a going concern.

It is evident from the foregoing that cash constraints may yet arise in the future should the operations not generate the projected revenues for any reason, and there is a need for a stronger balance sheet. Management has therefore been actively pursuing various other financing options and is reprioritizing certain development and expansion activities to minimize funding requirements and optimize the Company's cash position.

    Consolidated Results of Operations
    Production               Q2       Q2        %     2010     2009        %
     Summary               2010     2009   Change      YTD      YTD   Change
    Ezulwini Mine
      Tonnes hoisted     98,831   44,532     122%  163,796   62,703     161%
      Tonnes milled      94,599   44,014   1,149%  187,067   44,014     100%
      Ounces of gold
       produced           7,952        -     100%   11,746        -     100%
      Ounces of gold
       sold               7,047        -     100%   10,425        -     100%
      Average selling
       price per
       ounce ($)          1,022        -     100%    1,001        -     100%
      Tonnes reclaimed
       (000s)             2,476    1,839    34.6%    4,311    3,504    23.0%
      Average gold
       recovery grade
       (grams/tonne)       0.17     0.20  (15.0)%     0.18     0.18        -
      Ounces of gold
       reclaimed         13,422   11,821    13.5%   24,429   20,351    20.0%
      Ounces of gold
       sold              11,739   12,118    (3.1%)  22,415   19,859    12.9%
      Average gold
       selling price
       per ounce ($)      1,007      870    17.8%      959      874    10.8%
      Average gold cost
       per ounce
       reclaimed ($)       (427)    (380)   12.9%     (395)    (423)   (6.6%)
      Average Cash Cost
       per ounce of gold
       reclaimed ($)(a)    (409)    (363)   12.7%     (372)    (404)   (7.9%)

    Summary of Consolidated Financial Results
    (in thousands of dollars, except per share amounts)

    Revenue              19,025   10,546    80.4%   31,920   17,351    84.0%
    Ezulwini Mine         7,202        -     100%   10,435        -     100%
    MWS                  11,823   10,546    12.1%   21,485   17,351    23.8%

    Cost of sales
     amortization)      (24,434)  (4,532)    439%  (40,017)  (7,872)    408%
    Ezulwini Mine       (18,949)       -     100%  (30,918)       -     100%
    MWS                  (5,485)  (4,532)     21%   (9,099)  (7,872)   15.6%

    Amortization         (1,324)    (199)    565%   (2,561)    (388)    560%
    Ezulwini Mine        (1,075)       -     100%   (1,999)       -     100%
    MWS                    (249)    (199)   25.1%     (562)    (388)   44.8%

    Gross (loss) profit  (6,733)   5,815    (216%) (10,658)   9,091    (217%)
    Ezulwini Mine       (12,822)       -    (100%) (22,482)       -    (100%)
    MWS                   6,089    5,815     4.7%   11,824    9,091    30.1%

    Other income            743      625    18.9%    1,023      997     2.6%
     expenditures(b)     (8,823)  (7,512)   17.5%  (15,622) (15,008)    4.1%
    Operating loss(c)   (14,813)  (1,072)  1,282%  (25,257)  (4,920)    413%
    Investment income       238    1,173   (79.7%)     944    3,005   (82.9%)
    Interest and
     expenditures        (3,822)  (3,788)    1.0%   (7,380)  (5,937)   30.4%
    Fair value loss
     on derivative
     liability             (703)       -     100%   (1,180)       -     100%
    Accretion expense
     on asset retirement
     obligations           (521)    (381)   36.7%   (1,013)    (762)   32.7%
    Foreign exchange
     (loss) gain          2,364    3,285   (28.0%) (14,044)   2,761   6,275%
    Loss before income
     taxes              (17,257)    (783)  2,104%  (47,930)  (5,853)    719%
    Income tax charge    (1,184)    (323)    267%   (3,775)  (1,048)  2,261%
    Loss for the
     period             (18,441)  (1,106)  1,567%  (51,705)  (6,901)  6,492%

    Basic and diluted
     loss per common
     share                (0.11)   (0.01)  1,000%    (0.32)   (0.05)    540%


    (a) "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; on-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. The Gold Institute was a non-profit industry
        association comprised of leading gold producers, refiners, bullion
        suppliers and manufacturers. This institute has now been incorporated
        into the National Mining Association. The guidance was first issued
        in 1996 and revised in November 1999. Total cash costs per ounce is a
        non-GAAP measurement and investors are cautioned not to place undue
        reliance on it and are advised to read all GAAP accounting
        disclosures presented in the Company's audited consolidated financial
        statements for FY 2009 and accompanying footnotes thereto.
    (b) Other expenditures include general, consulting and administrative
        expenditures, pumping feasibility and rehabilitation costs, stock-
        based compensation and non-production related amortization. See page
        3 to the Financial Statements for detail.
    (c) This is a non-GAAP measurement. Operating loss is loss before
        interest income, interest and accretion expenses, fair value loss on
        derivative liability, foreign exchange gain or loss and income tax
        charges. See page 3 to the Financial Statements for more detail.

    Consolidated Financial Position

    Summary Balance Sheet and Key financial ratios

    (thousands of dollars)                      Q2 2010    FY 2009  % Change
    Cash and cash equivalents                    59,675    112,005    (46.7%)
    Other current assets(a)                      28,583     12,670    125.6%
    Current liabilities                         (94,711)   (58,629)    61.5%
    Total assets                                658,989    566,472     16.3%
    Total liabilities                          (347,302)  (296,375)    17.2%
    Debt(b)                                    (138,165)  (121,710)    13.5%
    Total shareholders' equity                 (311,687)  (270,097)    15.4%
    Key financial ratios:
    Current ratio(c)                             0.93:1     2.13:1
    Debt-to-equity(d)                            0.44:1     0.45:1


    (a) Other current assets include accounts receivable, income tax
        receivable and inventories.
    (b) Convertible debentures liability of Cdn$150 million translated to
        US$ at the exchange rate at the end of the period.
    (c) Current assets divided by current liabilities at the end of the
        reporting period.
    (d) Debt divided by total shareholder's equity at the end of the
        reporting period.

Balance sheet review

Total assets primarily comprise property, plant and equipment, reflecting the capital intensive projects at the Ezulwini Mine and MWS, cash and cash equivalents, accounts receivable, income taxes recoverable and inventories.

The 16% increase in total assets since FY 2009 is attributable to an increase in accounts receivable and inventories related to the increase in production at the Ezulwini Mine, income taxes recoverable in respect of the MWS gold stream transaction and an increase in property, plant and equipment as a result of the capital projects at both operations, partially offset by the reduced cash and cash equivalents resulting from capital expenditures and cash operating losses.

The 17% increase in total liabilities since FY 2009 represents the increased accounts payable and accrued liabilities arising from the increased capital expenditures at MWS, drawdown of the new Facility with Simmer & Jack in August 2009, an increase in the Cdn$ denominated debt portion of the senior unsecured convertible debentures (the US dollar equivalent is higher because of the weaker US dollar relative to the Cdn$) and an increase in future tax liability arising from the increased asset base at MWS during 2010 YTD.

On August 14, 2009 the Company finalized a one-year term credit facility of ZAR160 million ($20.5 million) (the "Facility") with Simmer & Jack. The Company drew down the entire Facility during Q2 2010. The Facility bears interest at the three-month Johannesburg Interbank Agreed Rate (JIBAR) for ZAR denominated loans (currently 7.40%) plus 7% per annum. An arrangement fee of 3% was paid on the Facility amount and the Company paid for the legal and other costs relating to the Facility. The Company may repay the principal and accrued interest and terminate the Facility at any time before the one year anniversary without notice or penalty.


Ezulwini Mine

The key elements that will drive production and operating results at the Ezulwini Mine are:

    -   the creation of available face length, with uranium and gold grades
        within planned ranges;
    -   increasing production ramp-up;
    -   improving gold and uranium recoveries; and
    -   the sale of uranium to nuclear power utilities.

Once the Company's yellowcake has been calcined, the uranium will be shipped overseas to uranium convertors for conversion and sale. Including the time required for shipping and converting uranium, the recognition of revenue from sales of uranium is expected on average to lag production by three months.

No uranium supply contracts have been entered into. The Company has entered into a letter of intent to supply the South African utility, Eskom, with uranium for their Koeberg nuclear power station beginning in 2011 and continuing through to 2017. The intended agreement is structured to deliver a portion of the uranium at the prevailing spot price and the remainder based on an escalated price. The Company expects to finalize an agreement with Eskom by the end of December 2009. The agreement will be subject to completion of due diligence by Eskom and the Company satisfying certain conditions including obtaining approval of the South African Reserve Bank.


The second gold plant module at MWS is now producing gold. This plant module has increased MWS's ore processing capacity from 633,000 tonnes per month to 1.3 million tonnes per month, an increase of 650,000 tonnes per month. MWS commenced construction of the third gold plant module, which is scheduled for commissioning by June 2010. The third module is expected to increase MWS's ore processing capacity by another 650,000 tonnes to over 1.9 million tonnes per month.

Regarding the first two uranium plant modules, a design error has been detected on the ion exchange ("IX") columns, which requires re-engineering before commissioning can commence. The rectification of the IX columns is expected to result in a two-month delay in commissioning the two uranium plant modules. Commissioning is now expected to take place in February 2010.

As previously disclosed, management has decided to delay portions of the third uranium plant module until such time that higher uranium prices are offered in the uranium market. Management has reconfigured the plant design and changed the mine plan to achieve approximately 91% of the previously planned life of mine uranium production, resulting in a more efficient capital investment program and an optimized cash flow profile. The mine plan includes combining the optimized flotation mass pull with direct feed from four high-grade tailings dams to improve the operating margin.

Management concluded the test work to finalize heat and oxygen control elements within the pressure leach process. The outcome of the test work is being integrated into the CBE of the pressure leach process. The CBE is expected to be completed by the end of Q3 2010. Construction is dependent upon having the required permitting in place and sufficient financial resources to proceed. Construction is expected to take from nine to twelve months. The pressure leach process is expected to enhance gold and uranium recoveries and reduce operating costs per unit significantly.

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 a.m. local Toronto time and 5:00 p.m. local Johannesburg time on Tuesday, November 17. 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 permitting, costs of production, capital expenditures, price of uranium and gold, supply and price of sulphuric acid, the availability and price of electrical power, the estimation of mineral resources and reserves, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs and timing of development of new deposits, success of exploration activities, permitting time lines, currency fluctuations, requirements for additional capital, availability of financing on acceptable terms, 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, 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. 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) operating and capital cost estimates, metal prices, exchange rates and discount rates applied in the preliminary economic assessment for the Ezulwini Mine and the prefeasibility study for MWS and as updated by the Company in its continuous disclosure from time to time are achieved;(ii) approvals to continue with the construction of the new tailings deposition storage facility and to operate the expanded MWS operations will be obtained and approvals to transfer or grant, as the case may be, mining rights or prospecting rights will be obtained; (iii) consistent supply of sufficient power will be available to develop and operate the projects as planned; (iv) mineral reserve and 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 the Company will be able to secure additional BEE investment in the Company's common shares to a sufficient level to maintain compliance with BEE requirements as required by applicable law; 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 (TSX:FIU, JSE:FUM) is focused on its goal of becoming a significant low-cost producer of uranium and gold through the expansion of the underground development to feed the new uranium and gold plants at the Ezulwini Mine and through the expansion of the plant capacity of the Mine Waste Solutions tailings recovery facility, both operations situated in South Africa.

SOURCE First Uranium Corporation

For further information: For further information: Bob Tait, Vice President, Investor Relations at, (416) 342-5639 (office) or (416) 558-3858 (mobile), 1240-155 University Avenue, Toronto, ON, M5H 3B7

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