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Low-cost First Uranium engaged in 'very, very attractive' gold production – CEO
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18th September 2008
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Gold and uranium producer First Uranium was engaged in “very, very attractive” low-volume but high-margin gold production CEO Gordon Miller said on Thursday, as the TSX and JSE-listed company ramped up its South African gold pours from new plants and put the finishing touches to its new uranium plant that would be producing yellow cake before the year-end.

“At Mine Waste Solutions right now the cash costs are $400/oz and we are selling gold at close to $800/oz, and there’s your margin. It’s very, very attractive business at this point in time and much the same will happen at Ezulwini as we start ramping up production,” he said.

Miller, who is also CEO of Simmer & Jack Mines, told Mining Weekly Online at the opening of First Uranium’s newly commissioned Ezulwini gold plant west of Johannesburg that uranium production would follow hot on the heels of the company’s increasing production of high-margin gold from both underground and surface.

This, he said, would change the company’s risk ratings, as it graduated from being a developer to being a producer.

“The advantage is that it costs you the same per ton to mine both gold and uranium,” Miller said.

Once the company began selling uranium as well as gold, unit production costs would plummet.

“We account on a coproduct costing basis so we allocate the costs to the two revenue streams.

“Right now, we are a gold producer. We will also be a uranium producer pretty soon, and, in terms of the life-of-mine profiles, we are targeting to be in the lower quartile of cash-cost producers globally.

“Our objective is to be a low-cost producer and we have set pretty high thresholds in terms of cut-offs, both for the tailings operation, as well as the start-up at Ezulwini,” he said.

Simultaneously, the uranium-miner had the advantage of nuclear being perceived as a relatively clean base-load power generator.

“Nations that have a big proportion of nuclear generation have much lower carbon footprints than those that are generating base-load power from coal. The bottom line is the nuclear plants continue to run so it is relatively easy to determine the usage of uranium, the fuel for these power plants.

“The growth in uranium demand is related to the growth in the number of nuclear plants being built and many are planned, so the fundamentals for uranium remain very positive,” he said.

While the spot uranium price had been volatile, term prices for contracts with longer delivery lead times were considerably more stable.

On the current financial illiquidity leading to the consolidation of the uranium-mining sector, Miller said that the stocks of exploration companies had traded down, which signalled consolidation as a means of survival.

“Consolidation in the junior sector may well happen,” he said.

First Uranium was producing gold at both Ezulwini and at the tailing-recovering Mine Waste Solutions.

Uranium was currently being mined at Mine Waste Solutions, but not being recovered, and would be recovered from early next year from new uranium modules under construction.

Edited by: Creamer Media Reporter


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CEO Gordon Miller

CEO Gordon Miller