First Uranium Corp. has had a rough couple of months, as permit problems at its South African mine have ground construction on a new tailings facility to a halt and seriously compromised its financing.
However, a recent site visit by Bart Jaworski with Raymond James had the analyst wondering if the problems are all First Uranium’s own doing.
“Management credibility – we believe management is still deep in the penalty box,” he wrote in a note to clients Tuesday. “In our opinion, it appears First Uranium is at least partly to blame for its permitting woes.”
It appears that the company had started construction on its new Mineral Waste Solutions tailings deposit facility a month before it received authorization in July 2009, without telling the authorities.
The company defended its actions to Mr. Jaworski, saying the work was “insignificant” and did not warrant a permit withdrawal.
“We speculate the transgressions by First Uranium, in combination with the three relatively high-profile appeals, made the project vulnerable to any political machinations ongoing in the region,” he said.
Other things going on in the region include tussles between international investors, and an upcoming municipal election in April.
Mr. Jaworski also expressed concern that capital costs at the site have ballooned to $450-million from initital estimates of $150-million in December 2006.
“We received elusive answers,” he said.
Explanations included poor initial estimates, longer than expected build times, plant upscaling, and external factors.
“We do not find these explanations satisfactory and we believe investors deserve a more transparent reconciliation,” he said.
However, a visit to the company’s other project at Ezulwini was much more pleasant.
“The mine seems to be on a good trajectory with the worst seemingly behind them,” Mr. Jaworski said.
He maintains a Market Perform rating for First Uranium, but has lowered his price target to $1.50 from $1.80.