U3O8 Weekly Spot Price Update – 27 March 2006U3O8 spot price...

U3O8 Weekly Spot Price Update – 27 March 2006

U3O8 spot price unchanged at US$40.50/lb

U3O8 long term price increased US$2/lb to US$42/lb

Key Points

1. 2005 production increased only 5% in from 2004 to 2004 (from 102.3 Mn lbs U3O8 to 108.4 Mn lbs U3O8).
2. 2005 production was ~60 Mn lbs less than 2005 nuclear reactor requirements.
3. Even though the uranium price has increased significantly since 2003 the uranium producers have not significantly expanded to fill nuclear reactor requirements.
4. 2006 production will only increase by ~3% to 112 Mn lbs U3O8. This is not significant considering the strong spot and long term price increases.
5. The only new project scheduled to come on line in 2006 is Paladin’s Langer Heinrich mine in Namibia.
6. Activity in both the short and long term uranium markets indicate the uranium price will continue to increase in the near term.
7. Positive price environment for the uranium sector.

Short Term Activity

1. Activity has been light, but consistent.

Long Term Activity

1. Long term market activity is ‘extremely active’ with demand for over 50Mn lbs U3O8e by more than 10 utilities.
2. Long term price is ‘almost certain to increase again’ as there are numerous requests for U3O8 and producers can ‘pick and choose’ from available demand.

We expect the uranium stocks to react positively tomorrow, particularly those with near term production e.g., Paladin and Denison.