TSX Commentary

First Uranium (FIU) – $2.10 – MWS Tailings Permit Up in the Air; Mine’s Future Less Certain
Sector Perform, Speculative Risk
On January 20, 2010, First Uranium (FIU) announced that it has been notified by the North West Provincial Government of its decision to withdraw the company’s environmental authorization (EA) for a new Tailings Storage Facility (TSF). The new TSF has been designed to hold future tailings deposition from the company’s Mine Waste Solutions (MWS) tailings recovery project in South Africa. The company has been working actively to retain its EA for the new TSF. According to management, the
decision to withdraw the EA was unexpected. In RBC CM’s view, the outcome of this current problem is not clear. RBC CM does not know the motivations of the NWDACE, or what remedies it may seek. It is, however, quite clear that the future viability of MWS is dependent on First Uranium being allowed to construct the TSF. Without a large tailings storage, MWS’s life could be very limited. RBC CM believes that the NWDACE’s decision to withdraw the EA is binding and will also likely affect the Buffelsfontein gold mine owned and operated by Simmer and Jack Mines (Simmers). This announcement has direct implications
for FIU in four areas:
1) future production rates;
2) rate of capex spending;
3) ability to raise additional financing; and
4) Gold Wheaton agreement breach penalty.
RBC CM has examined the implications of the withdrawal of the EA on the TSF for each.
RBC CM continues to rate First Uranium Sector Perform, Speculative Risk.