Wednesday, January 10, 2007

Uranium Stock Profile: FIRST URANIUM CORPORATION (TSE:FIU)

Introduction

In case you missed it, there is a new mid-tier uranium junior that just started trading several weeks ago. It is not one of my picks yet, but I thought this was a good time to start a section in my blog on profiling more uranium stocks.

First Uranium (TSE:FIU) is a new gold and uranium company that just completed its $233 million IPO. Its parent company Simmers & Jack will spin off two projects in South Africa called Ezulwini and Buffelsfontein to First Uranium: the main objective of Ezulwini project is to re-open and develop the underground mine while constructing a tailings recovery facility for the Buffelsfontein project. Simmers & Jack still retain more than two-thirds of First Uranium.

The company cites exposure to both uranium and gold as a "strategic commodity mix" and expects produce gold in the 2nd quarter of 2007 for the Ezulwini project with uranium being first produced from the same project by the end of 2008. The Buffelsfontein project is expected to produce both uranium and gold by mid-2008. Any uranium production next year represents a very serious claim and First Uranium must believe that it can do such, advertising near-term production as its very first "Business Strength" in their prospectus.

With the IPO money, First Uranium intends to use the bulk of it on the two projects, about $89 million on Ezulwini and $62 on Buffelsfontein

Ezulwini Project

First Uranium will recommission the underground uranium and gold mine. There are a number of reef packages, including the Upper and Middle Elsberg reefs which the company will focus on. Measured and Indicated Reef includes just over 2 million ounces of gold and 6.7 million ounces of uranium. There is some engineering work to be done, but the plan is for a 19 year mine life for Ezulwini.

Buffelsfontein Project

First Uranium wants to build a recovery plant for this mine that contains a total of 2.7 million ounces of gold and 42.7 million lbs of uranium in measured and indicated, both of much lower grade. The goal ramp up production after three years to produce 138,000 ozs of gold and 950,000 lbs of uranium a year. Again, the mine life is fairly long at 14 years. However, the caveat with Buffelsfontein is that First Uranium needs to convert their old mining permit to a new one that lets them mining in the tailing dumps.

Personal Thoughts

First Uranium is an interesting play of two very hot metals and is a company that comes from an impressive lineage; Simmers & Jack was THE stock to own in the JSE in 2006 and has established itself as one of the most promising South African mining firms. First Uranium's goals of near-term production of gold and then uranium, ramping up to 380,700 ounces of gold and 1,534,600 pounds of uranium in 2009, is something that does intruige me; however, one must consider that several important steps need to be taken before the company becomes a full-fledged gold and uranium producer. The stock debuted at $7, ran up to almost $9 before being caught in the uranium stock meltdown where it currently hovers just under the $8 mark.
 

1 Comments:

Blogger Mike Wong said...

Seems like a comprehensive outlook on some of your companies here. I think that you could do with less adverts on the site, it makes people not want to read it. Anyway, good content otherwise.

7:22 AM  

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