Investment opportunities in the worldwide uranium industry Marino G. Pieterse

1. Investment opportunities in the worldwide uranium industry Marino G. Pieterse Publisher Uraniumletter International MENA MINING Congress 2009 October 26 – 29, 2009 Manama , Bahrain

7. 15 year price graph 2 year price graph

8. Why Uranium? • Uranium is the most cost effective and environmental friendly large scale alternative for electricity generating as the only viable alternative to fossil fuels • Climate change : • Kyoto protocol paves the way for nuclear renaissance • Growing public concern over global warming will lead to increasing dependence on nuclear-fuelled power plants as power utilities and governments strive to reduce greenhouse gas emissions of C02 from fossil fuel power stations. • Nuclear power is one of the cleanest methods of producing electricity because it doesn’t produce greenhouse gas. • 1000 tonnes of uranium produces the same amount of electricity as 16 million tonnes of coal, which generates 33 million tonnes of carbon dioxide – the principal greenhouse gas.

10. Positive change in sentiment on nuclear power European Union has decided cutting emissions of greenhouse gas by at least 20% from 1990 levels by 2020 in an attempt to prevent irreversible and possibly catastrophic climate change The US will cut its dependence on foreign oil significantly and diversify its energy supply, including safe nuclear power. A growing number of countries, including Russia, China and India, is supporting nuclear power as means of moving away from fossil fuels China’s Renewable Energy Law (in effect January 2006) ordered a degree on 20% of total energy consumption to come from renewable sources by 2020 Restrictive policy on developing Uranium Industry in Australia changing During the Party’s annual conference in April 2007, Labor ended its 25-year old “No New Mines” policy on uranium, meaning the development of new uranium mines now has by-partisan support at the federal level. While South Australia and Northern Territory already allowed uranium mining earlier, the ban in Western Australia has been lifted in November 2008 with Queensland still to follow, since recent elections left the anti-uranium mining Labour Party still in power with a small majority.

11. Nuclear Power provides 16% of the world’s total electricity and 34% of the European Union’s needs France receives 78% of its electricity from nuclear, Belgium almost 56%, Sweden close to 50%, South Korea 40%, Switzerland 40%, Japan 25% and the United States 20%.

13. Shortage in supply is expected to keep uranium oxyde price (U3O8) rising PRODUCTION :Primary supply: International Nuclear’s most recent “Scheduled Uranium production Forecast” shows world-wide uranium production increasing from current levels of approximately 107 million pounds U3O8 to as much as 115 million pounds per year by 2010-2011, before declining as some mines reach reserve depletion.Secundary supply : Growing demand temporarily met by secondary supply, particularly from down-blending of Russian weapons’ highly enriched uranium into commercial grade fueling being consumed in the United States (20 million pounds from 2009 to 2013).Russia will not renew the HEU contract after 2013. New agreement between Russia’s Fenex with US utilities firm Fuelco, worth a reported $ 1 billion. The deal will allow Fenex to supply uranium to US companies from 2014 to 2020.

17. Future of uranium demand • Globally 436 nuclear power plants operating todaywith a generating capacity of 372 GWeannually consuming some 168 million pounds of uranium to produce 16% of the world’s electricity • 45 plants are under construction plus a further 266 more reactors proposedadding only those being built or planned would yield a dramatic 35% increase in the number of plants worldwide

18. Looming Uranium shortage • All uranium consumed today goes into electricity generating - Uranium demand utility-like in nature and only modestly impacted by economic weakness • Nuclear power is competitive economically- High capital costs of $ 4 billion (2-3 times as high as coal-fired and 5-6 times as high as gas-fired) are offset by low ongoing fuel, operating and maintenance costs Unlike the alternatives, nuclear plans are fairly insensitive to feedstock pricing, as the costs of uranium accounts for less than10% of the cost of producing electricity • As China and India continue to industrialize, their need for low-cost base load electricity will only grow.Combined, the two acount for 40% of the 43 reactors currently under construction worldwide

19. China • China plans to quadruple its nuclear output by 2020 and to triple or quadruple output again by 2030 • Chinacurrently produces 8GWe through nuclear power (11 reactors) and • Expects to produce 50-60 GWe by 2020 (35 reactors under construction and planned) and 120 to 160 GWe by 2030 (86 reactors proposed)

20. China’s power supply- total 360 gigawatt per annum - Coal 74,0% 70% transported by rail : Oil 14,0% - 24% of global rail traffic Domestic Hydro-Power 8,2% - 6% of world rail tracks Nuclear energy 1,1% Natural gas 0,3% Bottle necks in transport network will be Others (solar, windpower) 2,4% followed by regional power shortages 100,0% ▼ China has committed US$ 248 billion to rail expansion over the next 15 years Environmental pollution problems ▼ Call for a diversification away from coal ▼ Plans to reduce coal’s contribution to the power supply to around 60% by 2020

22. 10 countries account for 92% of global uranium production Canada, Australia, Kazakhstan, Russia, Niger, Namibia, Uzbekistan and the United States. Growth leaders: Kazakhstan - forecasts production to surge by more than 40% to 9,400 tonnes and plans to mine 15,000 tonnes of uranium by 2010 and 27,000 tonnes by 2015-16 Russia - expected production 3,700 tonnes and 4,000 tonnes in 2008 and 2009, respectively; seeking to boost output to 20,000 tonnes by 2024 Namibia - expects to increase production by about a third, thanks to the development of the Paladin’s Langer Heinrich Deposit Niger- Areva’s Imouran Project will almost double the country’s uranium output to 5,000 tonnes U per year

23. Top-10 company producers account for 87% of global uranium production

26. Market valuation of the world’s major uranium producers(as per September 30, 2009)

29. Canada’s uranium minesProduce about one-third of the world’s uranium from three mines, all three located in the Athabasca Basin, Saskatchewan ►McArthur River (69.8% Cameco – 30.2% Areva)production 2008: 7,528 tonnes U3O8 (2007: 8,492 tonnes)reserves : 166,835 tonnes U3O8 ►Rabbit Lake(Cameco 100%)production 2008: 1,613 tonnes U3O8 (2007: 1,821 tonnes)reserves : 8,690 tonnes U3O8 ►McClean Lake – Areva 70% (operator) – Denison Mines 22.5% - OURD 7.5%production 2008: 1,476 tonnes U3O8 (2007: 867 tonnes)reserves : 22,500 tonnes U3O8

30. Future mines Canada • Cigar Lake – Cameco 50% (manager) – Areva 37% - Idemitsu 8%Project set beyond 2001 (major flood)estimated production: 8,200 tonnes U3O8life : 30 – 40 yearsReserves : 176,700 tonnes U3O8 at over 24% grade • Midwest – Areva 69.16% (manager) – Denison Mines 25.17% - OURD 5.67% In December 2007, decision to proceed with development at a cost of Cdn$ 435 million and production expected from 2011.In November 2008, the Project was stalled due to several factor, including 50% rise in capital costs.Reserves : 18,900 tonnes U3O8

31. Australia’s uranium mines ►Ranger – Energy Resources of Australia (ERA) – 68% Rio TintoProduction 2008 : 5,330 tonnes U3O8 2009E: 6,000 tonnes U3O8Reserves : 43,996 tonnes U3O8 ►Olympic Dam– BHP Billiton 100% Production 2008 :3,943 tonnes U3O8• plus 194,000 tonnes copper and 108.039 ounces of goldProduction 2009: Huge setback due to a mechanical failure in the 80-metre deep Clark shaft’s haulage system. The Clark shaft is responsible for the vast majority of ore brought to surface at the mIne and will not be back in action for 4 to 6 months (expected loss 900 to 1,400 tonnes U3O8) • Expansion plan over 11 years :19,000 tonnes U3O8Reserves : 284,700 tonnes U3O8 ►Beverley– Heathgate 100% (affiliate of General Atomics of USA)Production 2008 :659 tonnes U3O82009E: 1,500 tonnes U3O8Reserves : 21,000 tonnes U3O8

32. United States uranium producers • In 2008, production fell 15% to 1,780 tonnes U3O8 or 3.9 million pounds U3O8 Uranium production in the United States is from one mill (White Mesa, Utah) and 6 ISR (in situ recovery) operations ► Cameco Resources(formerly Power Resources) operates the Smith Ranch – Highland Mine in Wyoming and Crow Butte Mine in Nebraska, both of them ISL operations, from total reserves of 15,000 tonnes U3O8.Cameco Resources is aiming to increase production from these mines and adjacent properties to 2,090 tonnes U3O8 per year by 2011. ► Denison Minesproduced 791,000 tonnes U3O8 in 2008 through its 200 t/day White Mesa mill in southern Utah from its own and purchased ore, as well as doing some toll milling. • In 2007, 4 operating mines in the Colorado Plateau area: Topaz, Pandora, West Sunday and Sunday/St.Jude. • Two further old mines reopened in 2008 (Rim Canyon, Beaver Shaft). A third mine (Van 4) in production early 2009.

33. Namibiauranium producers Namibia has two significant uranium mines capable of providing 10% of world mining output. Its first uranium mine began operating in 1976. ► Langer Heinrich – Paladin – 100% production 2008: 919 tonnes Uestimated 2009 : 1,430 tonnes U 2010 : 2,300 tonnes UReserves : 25,000 tonnes U (JORC and NI 43-101 compliant)Measured & Indicated resources: 32,800 tU ► Rössing Uranium– Rio Tinto 68.6%, Iran 15%, Industrial Development Corp. of South Africa 10%, Namibian Government 3%In 2008, production was 2,370 t/U and is on target for 4,000 t/U for 2010 onwardsReserves : 37,900 tonnes U (0.028% ore)Resources: Measured & Indicated Resources 71,088 tonnes U (0.025/0.042% ore)

34. Namibia – advanced exploration projects

35. Short-list uranium investment recommendations (as per October 20, 2009)

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