At a projected cost of $124 million, the acid plant will be installed at MWS, located in the Western portion of the Witwatersrand Basin approximately 160 km southwest of Johannesburg. Based on an analysis of pyrite feed-stock potential from the MWS tailings dams, a preliminary technical assessment and a recent market analysis, the company expects that it will take 19 months to procure and commission the acid plant with anticipated production beginning in January 2010.

First Uranium has secured its initial requirements for sulphuric acid in a market where acid supplies remain very tight. The company anticipates significant acid price increases that are expected to continue in the medium term, as acid prices are closely related to the market for sulphur which is also indicating tight supply and significant price increases.

The company said future price projections in South Africa, which indicate sulphuric acid costs ranging between $330/metric ton (mt) and $600/mt, have not taken into consideration acid demand at new mining projects, such as MWS, which will come on stream in the near term and approximately represent an additional 15% of current market acid supply.

Even assuming more conservative increases in acid costs, the company said it expects that its investment of $124 million in an acid plant, on its own, will have an internal rate of return of 6%, an NPV of $28 million and a payback of 11 years. The lowcost acid produced by this plant will improve NPV at Ezulwini and MWS as sulphur will be sourced from current operations at no cost.

Once the acid plant is completed, First Uranium will direct all of the pyrite currently produced as waste at the MWS tailings plant to the acid plant for the production of sulphuric acid, which will eliminate the need to source acid from third-party vendors. Since the planned production of the acid would be more than sufficient to supply both Ezulwini’s and MWS’s projected acid requirements, excess acid could be sold into the market at the then prevailing market rates. In addition, as the production of acid in the plant will be an exothermic reaction, there is the opportunity to generate a by-product of approximately four megawatts of power, which will be available to augment the power supply to Ezulwini and MWS.

“We are in a fortunate position to have access to pyrite which is currently being discarded as a waste product after we have removed the gold from the pyrite flotation concentrate at MWS,” said Gordon Miller, President and CEO of First Uranium. “While we believe that we have dealt with the current electrical power supply issues in a satisfactory way, it is but one of the important issues facing mining companies today. Consistent and reasonably priced acid supply is a fundamental requirement for our operations and the decision to build an acid plant will not only secure supply and protect us from rampant acid price inflation, it will also assist with future power requirements.”