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First Uranium seeks approval for job cuts at Ezulwini Mine

First Uranium seeks approval for job cuts at Ezulwini Mine

First Uranium (TSE:FIU)(JSE:FUM) said Monday that it will seek approval to reduce staffing and cut costs at its Ezulwini Mine in South Africa, as it struggles with production issues at a site that has seen three fatal accidents this year.

The company, which has seen its shares fall by about 86 percent for the year to date, said its plan could affect almost half of the 3,745 workers at the mine.

Monday, First Uranium shares were down five percent to $0.175.

First Uranium will seek approval for the job cuts under the South African Labour Relations Act, the company said in a statement.

The company's operation at the Mine Waste Solutions tailings reprocessing project is not involved in the process being undertaken at the Ezulwini Mine.

First Uranium president and CEO, Deon van der Mescht, said: "While the company continues to believe in the inherent value and potential of the Ezulwini Mine, decisive action is required in order to stem ongoing operating losses.

"Although it is the holiday season and the timing is unfortunate, management has determined that action must be taken now to mitigate the effects of the Christmas shut down and provide employees with an opportunity to increase productivity levels while reaching a consensus around the nature and scope of changes necessary to implement the new operating plan."

The mine has been the site of several accidents, including one in September which killed a drill operator -- the fourth death in the last 15 months.

"The extremely unfortunate fatal accidents in the latter half of the calendar year have had a significant impact on employee morale and productivity, and as such the expected improvement in production has not been forthcoming," van der Mescht said.

The new operating plan for the Ezulwini Mine will focus on safety and improving mine efficiency, the company said.

First Uranium is a gold and uranium producer. In November, it posted a loss of $30.6 million, or 14 cents per share, compared to a year-earlier loss of $58 million or 32 cents per share.

Revenues rose 62 percent to $50.2 million from $30.3 million in the year-ago period.

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February 16 2010

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