http://www.miningmx.com/news/energy/First-Uranium-in-EA-talks-with-officials.htm

] -- Uranium producer First Uranium said it has been engaged in intensive discussions at the most senior levels with officials of the North West Provincial government, including the Department of Agriculture, Conservation, Environment and Rural Development (NWDACE) regarding its decision to withdraw the company's environmental authorization (EA) for the new Tailings Storage Facility (TSF).

First Uranium said the TSF was designed to accommodate future tailings deposition at the Mine Waste Solutions (MWS) tailings recovery project in South Africa.

"While the EA has not yet been reinstated, based on these recent discussions, the company is cautiously optimistic that the EA will be reinstated," it said in a statement.

Gordon Miller, President and CEO of First Uranium, commented: "As a result of the circumstances that have been precipitated by the unexpected withdrawal of the environmental authorization for our future tailings deposition site at MWS, management's key priorities are to resolve this authorization issue as quickly as possible, seek strategic alternatives for financing and the immediate restructuring of our operations."

The company added that the announcement of the withdrawal of the EA has not only delayed construction of the TSF, it has also disrupted certain well-advanced corporate financing opportunities, which, along with the slower than expected production buildup at the Ezulwini Mine, would, if alternative financing is not obtained, severely compromise the company's financial position.

First Uranium is now reviewing strategic alternatives, and is engaged in discussions with respect to alternative financing opportunities. The company has taken action to delay future development expenditures, particularly at its MWS tailings recovery operation as part of a company-wide program to conserve capital.

The construction of the first uranium plant module will be concluded by the end of February 2010, at which time commissioning will commence. The plant is expected to commence production of ammonium diuranate (yellowcake) during the second half of calendar year 2010.

While the construction of the third gold plant was progressing ahead of schedule and due for completion in May 2010, as a result of the apparent withdrawal of the environmental authorization for the TSF, construction and commissioning of the third gold plant have been suspended.

Production at MWS will be scaled back from two gold plants to one at the end of March 2010. The reduced production will enable the company to maximize the availability of its current deposition capacity until the permitting issue has been resolved, but will also result in lower revenues and increase the amount of financing required by the company, it said.

Under the revised construction schedule the MWS No. 5 Dam will provide sufficient tailings deposition capacity for the one gold plant until the end of December 2011. Subject to re-instatement of the EA and the receipt of additional capital in the near term, the project will be able to continue along its originally planned production trajectory of 35,000 ounces per quarter.

In addition, the Ezulwini Mine development plan is ahead of schedule, however, the mine production forecast has been revised in response to slower than expected mine production ramp up to date and the capital constraints.

The company added that at MWS, the Q3 2010 gold produced was less than forecast as the grade reconciliation in the Buffelsfontein No 4 Dam was slightly below expectations and operations were interrupted by heavy rain storms during the quarter.

The ability to secure the EA, as well as funding, sooner will allow acceleration of the annualized gold production rate to 140,000 ounces per annum and uranium production to 960,000 pounds per annum as originally planned. From the point at which the EA and funding are secured, MWS will require a six-month window to conclude the necessary construction activities to realize the increased production rate.

The company also said production build up at the Ezulwini mine is progressing more slowly than originally anticipated due to the challenges of training and building up the efficiency of the mining crews with the result that the mine has yet to generate positive operating cash flow. Based on the performance to date and the Company's current cash position, the Ezulwini mine plan has been revised.

The current mining rate is not expected to immediately fill the uranium and gold plants that have production capacities of 100,000 tonnes per month and 200,000 tonnes per month, respectively.

A minimum three-month delay is expected between uranium production and sales, allowing time for calcining, shipment and conversion.

During the quarter ended December 2009, the company produced 10,054 ounces of gold from the Ezulwini Mine, a 26% percent increase compared to the previous quarter, and 21,891 ounces of gold from the Mine Waste Solutions tailings recovery project, a 63% increase compared to the previous quarter. During the quarter, the company also continued to optimize its uranium production at the Ezulwini Mine and has shipped its first container of 23,760 pounds of uranium in the form of yellowcake for processing in the United States.

In Q4 2010, MWS expects to commence commissioning of one flotation circuit and the uranium plant. The remaining two flotation circuits, the third gold plant and the TSF will be completed upon reinstatement of the EA and the receipt of funding.

It will also terminate the EPCM contract and dismiss all construction personnel from the project and focus production on one of the existing gold plants for an estimated quarterly production of 15,844 ounces of gold.

In Q4 2010, the Ezulwini Mine expects to open up over 400 metres (net of mining activity) for a total of over 3.1km of available mining face underground at the Ezulwini Mine and record its first sale of uranium