Potential rebound in 2H 2008
Spot Price Forecast to Increase in 3Q 2008
Supply Issues to Persist
Although supply-side dynamics have done little to affect prices thus far in 2008, we think
production shortfalls will continue to dominate the uranium market in the medium to longterm.
Current and future production problems have persisted in Canada’s Athabasca Basin
with huge delays at Cameco’s Cigar Lake project. In addition, the energy crisis in southern
Africa limited uranium output in the region early in the year and threatens to hamper
production for a minimum of four years or until South Africa’s Eskom can increase electricity
generation capacity. Although we forecast a slight market surplus in 2009 of 2.8Mlb we
believe that further supply disruptions to existing operations and greenfield and brownfield
project delays could easily swing the market into deficit.
Utilities Likely to re-enter market in 3Q
In our view, the longer problems with production persist, the greater propensity they will
have in increasing the scramble for utilities to secure supply. We believe that utilities will reenter
the market in 3Q 2008 driving the spot price from around the current US$68 to
US$110/lb by the end of 4Q. Currently, there are 79 new reactors with regulatory approval
scheduled to come on-line between now and 2015 with dozens more in permitting stages.
While North America and Europe have the highest concentration of current installed capacity,
the growth story is in Eastern Europe and Asia, particularly in China and India. Utilities will
likely build inventories or accelerate long-term procurement.
Timing your entry – potential US$2-5/lb further downside but expect US$110 by 4Q
According to industry consultants Ux, in 2007, a total of 105 spot transactions were reported
for 19.8Mlbs U3O8 equivalent, down around 43% compared to 2005 and 2006 levels. That
trend has carried into this year and thus far, spot volumes have been low. Ux has reported
only 31 deals for around 6Mlbs U3O8 equivalent done in the first quarter. Although the spot
market represents only ~15% of the uranium market it is a solid indicator of market
tightness. We believe that recent supply disruptions should start really flowing through in 3Q
2008 and we believe that the market has only US$2-5/lb in further downside in 2Q before a
forecast rise to US$110/lb during 2H 2008.
Advanced Explorers and Medium Term Producers to Benefit
Many companies trading at 12 month lows despite having advanced projects
Over the past twelve months we have seen the spot uranium price increase from ~US$70/lb
to US$135/lb and now back to US$68/lb. During this time many uranium juniors have
experienced meteoric share price rises only to experience sharp declines giving up most if
not all their gains with the drop in the uranium price. Whilst Paladin and ERA offer investors
the only direct exposure to uranium production, a number of advanced exploration and
potential medium term production opportunities do exist. We believe that with a potential
rebound in the uranium price in 3Q 2008 companies with advanced exploration projects
should benefit. Despite delineating resources and significantly advancing their projects in
some cases to pre-feasibility stage many companies are trading near twelve month lows. We
have listed below in alphabetical order six uranium explorers that have projects which we
believe could be economically viable and in our opinion should benefit with a potential
rebound in the uranium price in 2H 2008.
A-cap Resources (not rated): exploring the Letlhakane project in Botswana which currently
contains an inferred resource of 20Mlb at an average grade of 140ppm. Targeting potential

resource of 100 Mlb. A-cap is conducting a scoping study investigating a potential low strip
heap leach operation similar to Areva’s Trekkopje project in Namibia. Study is due for
completion by end of 2008 coinciding with resource upgrade. Average project grade could
increase to 160-180ppm with increasing confidence between chemical assays and down-hole
gamma logging. Project is close to infrastructure (power, water, roads).
Alliance Resources (not rated): has a 25% free carried interest (75% held by Quasar
Resources Pty Ltd) in the Arkaroola Project in South Australia next to the operating Beverley
mine. The company is targeting a 30-47Mlb resource at the Four Mile East Deposit. The
Beverley Four Mile West deposit has an inferred resource of 3.9 million tonnes at 0.37%
U3O8 containing 15,000 tonnes (32 million lb) of U3O8. A staged development is planned for
the West deposit with production of 1.5Mlbpa targeted by early 2010 using in-situ leach (ISL)
technology.
Bannerman Resources (not rated): recently announced an updated inferred and indicated
resource at its Goanikontes Anomaly A deposit in central Namibia of 72Mlb of U3O8 at an
average grade of 201ppm U3O8. The company is targeting a total resource of 100Mlb at
Anomaly A. We believe the average grade may ultimately increase to 220-250ppm. A
bankable feasibility study should be completed during 1H 2009 targeting a 15Mt per annum
project (mine and mill) producing between 2,900t (6.4Mlb) and 4,000t (8.8Mlb) of U3O8 per
annum from 2011, although we believe first production in 2013 is more likely. The Anomaly A
deposit should support a low stripping ratio and importantly the project is within short
distance of roads, towns, the Rossing mine’s electrical sub station and a potential second
water pipeline required for the Langer Heinrich. In addition to the Anomaly A deposit
Bannerman has many large near surface untested alaskites.
Extract Resources (not rated): exploring for uranium hosted alaskites ~15km east of
Bannerman’s Anomaly A deposit. Targeting an initial resource of 30Mlb by mid 2008 from its
Ida Dome/Garnet Valley project but the ultimate objective is to delineate a 50Mlb resource.
Average grade may be ~350ppm if recent high grade intercepts are included in the resource.
Terrain is more challenging than Bannerman’s. Hollands Dome target is extremely exciting
and could provide upside to both grade and tonnes. In addition, the company’s Rossing
South prospect could be a significant discovery, but the deposit has 50m of alluvial cover.
Mantra Resources (not rated): may well have discovered Africa’s next “Kayelekera” at its
Mkuju River project in southern Tanzania. Mantra owns a large land package containing highly
prospective Karoo sandstones in southern Africa. Exploration focus has been on the
discovery of roll-front sandstone hosted uranium deposits similar to Paladin’s Kayelekera
project in Malawi. The North West trend and Nyota targets have returned wide thick high
grade secondary mineralisation including several 10m wide intercepts @1,500ppm close to
surface. The company is targeting the release of an initial resource and completion of a
scoping study by the end of 2008. Based on exploration to date, we believe that the Mkuju
River project may support a 30Mlb resource at an average grade of between 500-800ppm.
Marathon Resources (BUY): owns the Mt Gee deposit in South Australia which contains
26,900 tonnes of inferred and indicated U3O8 resource at an average grade of 629ppm. The
Mt Gee deposit ranks as one of Australia's premier uranium deposits. The company is
committed to developing the resource, with commissioning targeted for late 2011.
Uranex (BUY): focusing on three exploration projects of which one includes a 9,800
(~20Mlb) historical resource at Thatchers Soak in Western Australia. However the primary
focus is on delineating a minimum 20Mlb resource at the Bahi playa lake style project in
central Tanzania. We expect an initial resource by mid 2008 and the completion of a scoping
study by the end of 2008. The Bahi project hosts near surface mineralisation in ancient playa
lake systems, average grade could be at least 300ppm. The project is close to power, rail and towns.

Table of Contents
Potential rebound in 2H 2008 ........................................................... 3
Tools to Identify the Next Producers............................................... 5
The market and price outlook ........................................................ 14
Uranium companies ........................................................................ 16