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First Uranium Corp Near Yr Lows as Credit Suisse Lowers Target Price

Credit Suisse has revised its estimates and lowered its target price on First Uranium Corporation (FIU.TO), seeing near-term financing headwinds.

"First Uranium reported headline EPS of $(0.38) per share for the year ended March 31, 2011, below our estimate of $(0.34) per share and consensus of $(0.35) per share. The earnings miss was primarily related to higher costs than expected. Total revenue for the year was $172 million, in line with our estimate of $170 million."

Ezulwini produced 11.4 koz of gold in Q4, at cash costs of $2,178/oz. "Production was impacted by shaft throughput issues, a shutdown caused by a fatality, and an illegal 1-day strike in the quarter. We expect production and unit cash costs to improve going forward, as the company has addressed the shaft throughput issues, but we anticipate the improvements will be hampered in part by ongoing training requirements and DMR mandates."

MWS produced 22.2 koz of gold in Q4, at cash costs of $471/oz. "Production at MWS continues to improve, as the company optimizes its existing gold modules, and throughput and recoveries improve. Production will continue to increase now that the third gold module and the new Tailings Storage Facility are operational, but we expect near term cash costs to increase as well due to wage and power cost inflation. "

Near-term financing headwinds. "FIU has C$150 million in convertible debt maturing in June 2012, and the company will focus heavily on cost management until then. We forecast that $20 million of the debt will be repaid, with the outstanding balance converted into equity (204 million shares at current prices), although refinancing the debt is a possibility."

Valuation: "We are revising our F2012/F2013 EPS estimates to ($0.00)/$0.04 from ($0.06)/$0.05. We are maintaining our Neutral Rating, but are reducing our target price to C$1.20 from C$1.50. The new target price remains based on 0.35x multiple to our new NAVPS of $3.51 (down from $4.12)."

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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