First Uranium Increases Cost of Tailings Project 76%

First Uranium Corp., a developer of metal deposits in South Africa, said the cost of a project to extract uranium from mine waste jumped 76 percent since May after it raised planned output and raw-material costs gained.

The Buffelsfontein tailings project in South Africa will cost $260 million, compared with an earlier estimate of $148 million, the company said in a statement to Johannesburg's Stock Exchange News Service today. First Uranium decided to use a more expensive extraction process, which will boost production.

The changes to the project will boost average annual uranium production to 1.34 million pounds from 922,000 pounds while average gold production will be 126,000 ounces, compared with an earlier estimate of 128,000 ounces. The new and expanded plants are expected to start up in November next year.

First Uranium raised its gold price estimate to $734 an ounce in 2009. The metal will average $627 in 2012, it said, compared with an estimate of $500 for that period made in May. Uranium is estimated at $104 a pound in 2009. It will average $78 in 2012, compared with a May estimate of $50.

Uranium traded at $90 a pound at the end of last week while gold traded at $800.91 an ounce as of 2:36 p.m. London time.

First Uranium fell as much as 71 cents, or 6.9 percent, to C$9.58 in Toronto and traded at C$9.92 as of 9:35 a.m. local time.

To contact the reporter on this story: Antony Sguazzin in Johannesburg asguazzin@bloomberg.net

To contact the editor responsible for this story: Simon Casey scasey4@bloomberg.net.

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