UPDATE 1-First Uranium warns on financial position, shares sink

* Says to explore strategic alternatives on financing

* To restructure ops, halts new gold plant construction

* Move at MWS may trigger $42 mln payment

* First Uranium shares fall 26 pct to year-low
(Adds details; Gold Wheaton comments, updates share movement)

By R. Manikandan and Ashutosh Joshi

BANGALORE, Feb 2 (BestGrowthStock) – Canada’s First Uranium Corp
(FIU.TO: ) said it is reviewing strategic alternatives for
financing and will restructure its operations following the
recent withdrawal of environmental approval for its key South
African project, sending its shares tumbling to a year-low.

The withdrawal of the environmental authorization (EA)
delayed construction of the tailings storage facility (TSF),
and disrupted certain “well-advanced” corporate financing
opportunities, First Uranium said in a statement.

This, along with the slower-than-expected production
build-up at the Ezulwini mine, would, if alternative financing
is not obtained, “severely compromise” the company’s financial
position, First Uranium said.

The company also suspended construction and commissioning
of one of its gold plants in Mine Waste Solutions (MWS)
tailings recovery project, which was due for completion in May,
and will scale back production at the project to one plant from
two by March.

Separately, Gold Wheaton Gold Corp (GLW.V: ), which has a
gold sale deal with First Uranium, said if the MWS project
fails to pass the technical completion test by June 1, it may
result in a $42 million penalty payment to Gold Wheaton.

First Uranium slashed its gold production target to 57,000
ounces from MWS in fiscal 2011 and 64,000 ounces in fiscal
2012. The company had targeted annual production of about
140,000 ounces of gold from MWS.

Gold Wheaton said weaker production at MWS will cut its
overall gold production forecast by 17 percent, or about 20,000
ounces, in each of 2010 and 2011.

“We still believe the assets are good assets, financially
robust assets. From our perspective, we would like the
production gets started as early as possible. That way
everybody wins,” Gold Wheaton Chief Executive David Cohen told
Reuters.

Cohen said he was confident of the quality of both MWS and
Ezulwini assets, and that the assets will support the
operations, regardless whoever operates it.

First Uranium said it is in “intensive” talks with the
North West Provincial government in South Africa and is
“cautiously optimistic” that the EA will be reinstated.

Shares of the Toronto-based company were down 41 Canadian
cents at C$1.47 Tuesday afternoon on the Toronto Stock
Exchange. They touched a low of C$1.40 earlier in the day.

Gold Wheaton shares were down 3 Canadian cents at 27
Canadian cents on the Toronto Venture Exchange.
Stock Investing

(Reporting by R. Manikandan; Editing by Gopakumar Warrier)

UPDATE 1-First Uranium warns on financial position, shares sink