Catalysts and RisksThe greatest risks facing the company are...

Catalysts and Risks
The greatest risks facing the company are fluctuations in currency and commodity
prices. As with any uranium project, the company’s assets are most levered to the
uranium price. However, we have used a US$40 long-term U3O8 price in our
model, which is approximately 40% below the current spot price. We expect a
bankable feasibility study could be completed in mid 2010 which could show the
project is very robust, even at conservative uranium prices for the next several
years. A substantial catalyst for the stock could come from further exploration
news from its newly discovered Rössing South discovery. A significant risk for
Extract is the project financing for the Ida Dome. We estimate that the capex could
be in excess of US$300m.

Valuation and Recommendation
We have valued the company largely from its NAV, which we have calculated to be
C$2.05 using a 10% discount rate. We have modelled a slightly larger throughput
than envisioned in the scoping study to produce over 5m lbs of U3O8 per annum
and estimate the operating costs in the first five years of production could average
$23.14 per pound of U3O8. Using our U3O8 price estimates, Extract could
generate nearly US$150m in pre-tax cash flow from operations at the Ida Dome.
We are initiating coverage with a Buy Rating and a $2.05 target price.