INITIATION
The Acorns and the Oak Tree
We are complementing our coverage in the uranium universe of established
producer Cameco Corp. with the addition of three growing players in the space.
Current uranium demand exceeds mine production capability and we believe
market deficits are supportive of prices in the $75-95/lb range over the next 12-
18 months. Factors beyond supply and demand will continue to play a role and
add to market volatility, but we believe market players with long-life, low-cost
reserves, and favorable contract terms will outperform.
In our view, the largest nuclear growth potential lies in the Asia Pacific region
and Europe, which we think will be the catalyst to bring nuclear power’s share of
the global electricity mix to 20-25% versus the current 16%.
We are initiating coverage of Paladin Energy Ltd (PDN) with an
OUTPERFORM rating and a 12-month target price of $7/share. With Langer
Heinrich reaching commercial production, PDN has shown strong potential and
we think production reaching 7M’lbs/year by 2011 will be a key catalyst for the
stock. PDN’s recent $325 Million convertible bond issue will add flexibility as
the company works towards Langer Heinrich Stage II & III expansion, and
development of the Angela and Pamela deposits together with Cameco Corp.
We are initiating coverage of Denison Mines Corp. (DML) with a NEUTRAL
rating and a 12-month target price of $9/share. DML has a solid growth
strategy and could increase production fivefold by 2011. Additionally, the
company has one of the more interesting exploration portfolios in the business
along with an aggressive exploration budget in 2008 of $25Mln. We believe
DML shares are fairly valued at current levels; however, strong leadership in
place at DML allows for good upside.
We are initiating coverage of Uranium One Inc. (UUU) with a NEUTRAL
rating and a 12-month target price of $5/share. A series of false starts by
management on production ramp up schedules have corrected the shares to
compelling levels, yet we remain concerned over street estimates of fair value
and the markets overestimation of potential cash flows out of Kazakhstan given
applicable tax rates. UUU still exhibits strong production growth potential and
we see it more of an execution story over the next 12 months.
Cameco Corp. (CCO, TP$55) remains OUTPERFORM. CCO offers unique
exposure as a vertically integrated player in the nuclear fuel cycle, from uranium
mining to nuclear power generation. A focus on its dominant market share in
uranium production and a continuing shift in investor base from mining to
energy and domestic to international should translate into investors getting more
comfortable with the CCO story and help drive relative outperformance.

Investment Summary
We expect demand from nuclear electricity generators and uranium market participants
will continue to hold uranium prices above the marginal cost of production. Anticipated
robust demand in the long-term market, lack of mine supply and depleting inventories
should form the basis for stronger uranium prices next year. We forecast spot uranium
prices will average $90 per pound during 2010-2012, and estimate floor prices of $45 per
pound beginning in 2016. Production increases in Africa, Canada and Kazakhstan should
help to normalize prices, but structural deficits between mine supply and demand will
require secondary sources of supply to fill the void.
China is set to speed up the development of nuclear power plants to account for 4% of
total power generation capacity in China by 2020, up from 1.5% now, and is planning to
build 29 new nuclear reactors by 2020. By 2020, India’s nuclear power program expects
to have 20 GWe of nuclear capacity on line compared to the current level of 3 GWe and is
planning to build 10 new nuclear reactors.
Based on our multi-tiered valuation analysis, we believe CCO and PDN offer investors a
compelling risk/reward profile over the next 12 months. Given the long-term investment
horizon of uranium producers, we utilize net present value (NPV) of mining assets as our
primary valuation metric, which we derive using discounted cash flow analysis (DCF) of
mining operations.
To calculate NPV, our discount rate for various mining assets incorporate the following
assumptions: Discount rate = Minimum acceptable rate of return of 8% (real-terms) + New
project risk rate is between 0-4% (real-terms) + Country risk rate of 0-4% (real terms).
We believe uranium shares should trade at P/NAV multiples of 1.4 – 1.6x to reflect scarcity
premium among investment alternatives of large, liquid, publicly-traded uranium equities.
In addition, we believe valuations in the uranium space are reflective of the midpoint of
P/NAV multiples of base metals equities (1.0-1.2x) and precious metals equities (1.8-2.2x).
Initiating coverage
1. We are initiating coverage of Paladin Energy Ltd. (PDN) with an OUTPERFORM
rating and a 12-month target price of $7/share.
2. We are initiating coverage of Denison Mines Corp. (DML) with a NEUTRAL rating
and a 12-month target price of $9/share.
3. We are initiating coverage of Uranium One Inc. (UUU) with a NEUTRAL rating
and a 12-month target price of $5/share.

Table of contents
Investment Summary 3
Global Uranium Market 4
Peer Group Valuation 7
Net Asset Value & Implied price 7
Reserves Valuation 8
Production Growth 8
EV/EBITDA & P/E 9
Share Performance 9
Paladin Energy Ltd. (PDN.TO) 11
Valuation & Financials 13
Selected risks 15
Operations 16
Management & Directors 20
Denison Mines Ltd. (DML.TO) 22
Valuation & Financials 24
Selected risks 26
Operations 27
Management & Directors 33
Uranium One Inc. (UUU.TO) 35
Valuation & Financials 37
Selected risks 39
Operations 40
Management & Directors 46