Simmers&Jack having been impacted by the news ( see bold characters near the end of the article ) regarding FIU they're also under pressure and they might use their political clout to help FIU get their permit .

Brendan Ryan | Wed, 03 Feb 2010 13:44
[miningmx.com] -- FIRST Uranium Corporation (First Uranium) CEO Gordon Miller failed to make his scheduled presentation to the Mining Indaba Conference in Cape Town on Wednesday as financial pressure mounted on the troubled company.

Miller was due to speak on "Mining reborn in South Africa – Overcoming the Challenges" but, according to the conference organisers "was unable to present today."

First Uranium’s primary listing is on the Toronto Stock Exchange (TSX) and the share fell sharply to a new 12-month low during trading on Tuesday.

Reason was yet another negative revision to forecast production from the group’s operations at Ezulwini near Randfontein and Mine Waste Solutions (MWS) ) near Klerksdorp.

The announcement triggered a warning to First Uranium from Gold Wheaton Corporation that the revisions to the MWS production estimates could trigger a $42m penalty payment by First Uranium to Gold Wheaton.

Gold Wheaton has contracted to buy 25% of the gold output from MWS at favourable prices after paying $75m upfront as a capital injection into First Uranium in March last year.

Gold Wheaton CEO David Cohen commented, "Gold Wheaton is extremely disappointed in the steps that First Uranium has taken as a result of its permitting and financial issues.

"It is possible that this action by First Uranium at MWS will trigger, amongst other things, a $42 million penalty payment due to Gold Wheaton if the project does not pass a technical completion test by June 1, 2010.

"We are committed to work with First Uranium as they resolve their current issues."

Miller was not immediately available for comment and First Uranium chairman Nigel Brunette also could not be reached.

First Uranium shares dropped 22% to close at C$1.40 in Toronto on Tuesday. The share is dual-listed on the JSE but trading volumes on the Johannesburg bourse are extremely thin.

The share did not trade on Wednesday morning where it was quoted at R16. The current share price in Canadian dollars equates to just under R10 a share.

First Uranium’s troubles were triggered by the withdrawal of the environmental authorisation for the new tailings storage facility (TSF) at MWS.

That has forced First Uranium to suspend the construction and commissioning of the third gold plant at MWS and reduce production from two gold plants to one gold plant at the end of March this year.

As a result First Uranium has dropped its forecast gold production from MWS to 57,000oz for 2010 and 64,000oz for 2011.

Miller said in a statement released on Tuesday that the reduced production would allow the group to, "maximise the availability of its current deposition facility until the permitting issue has been resolved but will also result in lower revenues and increase the amount of financing needed by the company."

He added the withdrawal of the environmental approval had, "not only delayed construction of the TSF, it has also disrupted certain well-advanced corporate financing opportunities which, along with the slower-than-expected production build-up at Ezulwini mine would, if alternative financing is not obtained, severely compromise the company’s financial position.

"The company is now reviewing strategic alternatives and is engaged in discussions with respect to alternative financing opportunities."

Miller commented the production build-up at Ezulwini mine was progressing more slowly than anticipated "due to the challenges of training and building up the efficiency of the mining crews with the result that the mine has yet to generate positive operating cash flow."

The problems at First Uranium are having a knock-on effect on the share price of Simmer and Jack Mines (Simmers) which owns 37% of First Uranium.

The Simmers share price has fallen over the past fortnight from just over 200c to 163c.

Simmers has already loaned $20m to First Uranium but it seems unlikely that it will provide further financial support.

Reasons are the restructuring of the Simmers board and the opposition of BEE partner Vulisango against further financial commitment to First Uranium.

Vulisango CEO Valence Watson bitterly opposed the $20m loan and has frequently voiced his view that Simmers should conserve its cash for use on its own operations.

Miller and Brunette were previously CEO and chairman respectively of Simmers as well as First Uranium. They stepped down from Simmers as part of a restructuring of the board aimed at resolving the long-running dispute with Vulisango.