ext fair value ?, page-14

IMV the reason for the apparent discrepancy is this. The value that Mr Market is currently putting on producing miners is very differnt from the value the TRADE is putting on them.

It's the same in the oil industry. The market caps of quite a number of oilers I'm invested in are well below the value of their assets if sold in a trade sale.

In other words, the trade is much more confident about the prospects for uranium mining than the market is currently.

I'm sorry to say that if EXT just goes on to develop a mine, then the current market cap will look high in relation to the early-stage nature of its projects. However, it seems highly likely that either it will be sold or enter into a JV. Such an event would put a TRADE value on the company, rather than a MARKET value.

The recent Forsys & Maitland Lake transactions indicate the sort of value that the trade is putting on lbs-in-the-ground and agaist those values, EXT does not look expensive - and will look cheap if and when it proves up the size of resource that we expect. Lord Elpus' figures are based on those comparators.

If it weren't for the prospect of a trade sale/JV in the not too distant future, then we'd really need to wait for the feasibility study to put an NAV on Extract's resources, against which the market cap can be judged.

Quite bit needs to happen before the value of EXT is ocnfirmed but the signs are good:

1. Above expectation JORC resources already announed.
2. Good intercepts seen from drilling so far in Zone 2 currently being drilled.
3. Good prospects of resource upgrades to existing resources as further drill/assay results incorporated.
4. Conservative management optimistic about prospects for further substantial finds along unexplored strike.
5. Interest from multiple potential bidders. RIO, obviously and we note Areva's presence at Peter Mc's most recent presentation.

Finally, there is one factor that sets Extract apart from any other "minor" company (and that includes Paladin). As management has stated, there is a strong possibility that Extract's find is the most significant one in decades. Think about that. What it means is that there IS no other company that has anything comparable, apart from very old monster finds, like Rossing itself.

If that is proven by drilling results, it will mean that Rossing South is a strategic asset, which will have a big influence on future U pricing because of the significant total market share that it's production will command. That puts a premium on its value and virtually gurantees that a major miner or a major consumer will "have" to own it.

I will, hoever emphasise that there are plenty if "ifs" in there. The scale of Rossing South is not proven yet. No investment is without risk!

Regards,

Mark