dj recomended buy 7/1/11, page-2

Heres the full report from Djs.

Key Points
The Mecsek Hills Uranium Project comprise WHE s P?cs Project and the concessions
surrounding and including the former Mecsek uranium mine, located west and adjoining the
western boundary of WHE s licenses. The total land area for the project is 72 km2 (18,000
acres). The uranium mine, which closed in 1997 due to low uranium prices, produced
approximately 46 million pounds of uranium metal over the course of 40 years. When mining
ceased significant areas of uranium mineralisation remained unmined.
WHE have announced an updated resource estimate for its uranium project with an increase
of 117% on the previous resource to 65m lbs U3O8 for the wholly owned licenses. The entire
project JORC Inferred resource has been estimated at 77m lbs, an overall increase of 158%.
The updated resource covers three license areas
P?cs and P?cs North (wholly owned by
WHE) and the MML-E license held by Mecsek-?ko, with an Inferred resource now of 9.8Mt
at 0.057% U3O8 for 12mt.
WHE and the State-owned Mecsek-?ko are now re-negotiating the Co-operation Agreement
in the light of the new resource estimate and are currently in discussion to jointly develop the
Mecsek South target as part of the overall Mecsek Hills Uranium Project. WHE is also
currently conducting a strategic review focused on identifying the most attractive option to
maximise value from its uranium project.
Using a peer group of 10 ASX listed uranium companies with exploration or development
projects in Australia, Africa and Europe, we derive an average Enterprise Value per resource
lb ( A$ EV/Resource lb) of $3.14. No producers were included in the peer group. In
comparison, WHE have an EV/lb U3O8 of just $1.20.
We believe the above points and the under-valued share price relative to peers will underpin a
re-rating of the stock during 2011. Based on the above we maintain our Speculative Buy
recommendation on WHE and re-iterate our short term (April 2011) price target of $0.89
per share. However, our combined uranium and our risked based, short to medium term
UCG valuations would see a price target of $1.67 per share.