First Uranium FIU Downgrading to Underperform

admin — Wed, 03 Feb 2010 17:18:32 +0000

First Uranium (FIU) – $1.50 – The Stars Need to Align: Downgrading to Sector Underperform
Sector Underperform (prev. Sector Perform), Speculative Risk, Price Target: $1.50 (prev. $4.00)
On February 2, 2010, First Uranium provided an update on recent developments related to the North West Provincial government’s recent decision to withdraw First Uranium’s (FIU) environmental authorization (EA) for the new Tailings Storage Facility (TSF). In addition, FIU also provided a FQ3/10 production update and provided revised production guidance for fiscal 2010, 2011, 2012 and 2013. FIU has indicated that based on these recent discussions, it remains cautiously optimistic that the EA will be reinstated; however, given the track record with respect to this permit, RBC CM remains hesitant and has assumed that the permit will be granted in late-2011 to match the company’s guidance. RBC CM estimates that FIU will require between $100M and $150M in new funding, and posits that debt is highly unlikely and equity will be challenging and dilutive. RBC CM assumes that FIU will operate MWS at a reduced rate until 2012 at which time it is able to resume full production. Without the tailings permit, MWS’s value is severely diminished. RBC CM believes that until FIU has its operations, permitting and balance sheet issues under control, the company will underperform its peers.

First Uranium FIU MWS Tailings Permit Up in the Air

admin — Thu, 21 Jan 2010 16:58:42 +0000

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.

TSX Commentary » First Uranium

First Uranium FIU Downgrading to Underperform

First Uranium FIU MWS Tailings Permit Up in the Air