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First Uranium to defer expansion

Aerial view of
First Uranium’s
Ezulwini mine
Johannesburg, South Africa — MININGREVIEW.COM — 24 March 2010 – Emerging South African metal company First Uranium Corporation still plans to curtail gold production and defer expansion, after a planned solution to its financial woes was disclosed earlier this month.

Newly announced valuations of the company’s two operating divisions indicate that the net value of both has fallen dramatically. Reference is made to estimated cash flow after costs and capital expenditure over the long term.

The value of First Uranium subsidiary Mine Waste Solutions (MWS) “’ which is intended to reclaim gold and uranium from 14 mine dumps “’ has halved since March 2008, to about US$211 million (R1.5 billion). The value of the second operating division, the Ezulwini mine, has halved since January 2009 to US$437 million (R3.2 billion).

Ezulwini’s value depreciation is chiefly related to rising costs, including the price of electricity, a statement reads. MWS’ plans were radically altered after the company had received temporary approval for a mine-waste storage facility, and then lost it.

This led to loss of funding, rising indebtedness and a fine to be paid to an earlier financier.

However, reports fin24.com, Simmer & Jack “’ the gold mining company from which First Uranium was originally unbundled “’ this month came up with a rescue plan, accompanied by the issue of US$150 million (R1.1 billion) worth of convertible notes.

The funding plan will increase Simmers’ current 37% interest in First Uranium to 48%.

MWS will still curtail its existing operations because of the delay in preparing its new storage facility. Only one of its two gold operations will be worked until May 2011, and construction of the storage facility will begin in November.

In May 2011 the second gold operation, as well as a planned third one, will become operational.

First Uranium is now aiming to commission uranium plants at MWS in August 2011.