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Apr082008 Portfolio Update 08 April 2008

Uranium Chart 08 April 2008

This chart is courtesy of

In scanning through a number of charts of uranium mining stocks we can see that the majority exhibit a similar pattern in that they have fallen to a position below their own 50 day moving day average. This is not exactly a knock out but the points have pilled up against these stocks.

As we said in our last update, "wrongly or rightly we decided to grin and bear it and not sell any of our stocks and subsequently register the associated loses" So we are now in situation where we believe that the damage is done and that the downside is limited. However there is no moon shot rally on the cards either, as it looks like progress will be slow and mixed from here on. We are sticking with our previous stance of ‘hold’ and recommending just a few stocks as ‘buys’ with the view to acquiring these stocks gradually, which are Laramide Resources Limited and Mega Uranium Limited.

Cameco Corporation – Watch
Cameco was trading at $36.94 when we last updated the portfolio and closed at $35.08 yesterday, no real change here, pretty much sideways movement.

RPT Uranium Corporation – Hold.
We bought RPT on the 19th February 2007 for $0.42 and sold it for $0.62 on the 13th June 2007 for a profit of 47.6% in 4 months. We still like this stock and so bought it back at around 50 cents, however RPT closed at $0.16 yesterday, again pretty much sideways movement.

Uranium Participation Limited – Hold
U is trading at C$9.26 having been as low as $9.00 recently. We bought at $11.97 on 21 November 2006 so U is still showing a small paper loss but we will continue to hold, as it offers direct exposure to uranium without the risks inherent in mining.

Strateco Resources Incorporated – Hold
We made a small investment in RSC at $2.30 and it recently traded at $2.87, however it closed at $2.00 on yesterday showing a slight deterioration since the last update. The news flow has been good but this sector is out of favour so investors have turned their attention to other opportunities.

Crosshair Exploration and Mining Corporation
– Neutral.
Having taken a small profit we continue to watch CXX. The stock was trading at about $1.46 last month but has fallen back to close yesterday at $0.86. We had hoped that CXX had found some support at $1.00 but that soon dissipated. The news flow has been good and frequent so this rapid deterioration comes as a surprise to us. Although we do not own this stock it is tempting at these price levels.

Laramide Resources Limited – Buy
This stock was trading for about $5.00 last month and closed yesterday at $3.63, we bought at $5.78 on the 28 July 2006 so we are now in the red with this one. When we were sitting on a paper profit of around 80% we sold half in order to buy other uranium stocks, as we needed a bigger spread of stocks at the time. Laramide may have formed a bottom at $3.00 however we need a little more time for a confirmation.

Mega Uranium Limited – Buy
We bought MEGA at around $4.0 on 27 July 2006. MGA was trading at $3.32 last month but has since dropped back considerably to close at $2.38 yesterday. Hopefully Mega has found some support at $2.00, which appears to be very cheap buy at the moment.

Khan Resources Ltd - Hold
We bought Khan on the 5th March at $3.63 and it dropped to $1.33 due to licensing issues with the Mongolian regulators. So, in anticipation of Khans management team finding a resolution to this problem we decided to buy again. (See Khan Resources: A speculative buy) the stock rallied and we took a profit of 15% in a matter of days before the stock fell back. Khan closed at $1.73 last month only to fall back again to $1.21 yesterday.

Aurora Energy Resources - Hold
We bought Aurora on the 5th March 2007 at $14.17 and it is now trading at $5.27. A resolution to the issues surrounding the granting of a mining license is desperately critical to their activities in the Central Mineral Belt. Any good news would send this uranium stock soaring, however that’s easier said then done.

Strathmore Mineral Corporation - Hold
We bought STM on the 14th April 2007 at $4.96 and it is currently trading at $1.55, which is a very disappointing performance indeed. STM along with the others is a victim of the downturn in uranium prices.

Ur-Energy - Hold
We bought Ur-Energy on the 23rd April 2007 at $4.75 and we also gave a second buy signal on the 24th August 2007 when we acquired more stock at $3.03. URE closed on Friday at $1.78, which begs the question, is this the low for Ur-Energy or are we in for more of the same?

Denison Mines Corporation – Watch
We don’t own Denison (DML on the TSE) despite trying to buy it when times were better. Recently this stock put in a run to break the $9.00 level only to fall back again and close at $6.85 yesterday. We will continue to watch for the now.

This tiny sector has been hammered and we are sorry not to be able to bring you better news. However being a small market sector and thinly traded, suggests that when the market perception improves these stocks could move up the ladder with some speed. We have already witnessed the odd uranium stock jumping up by 20% in a single day, as trigger-happy investors did not want to be left behind. The longer-term price remains strong at $95/lb but the spot price continues to put a damper on things as it shows uranium trading at $71/lb. Very little uranium changes hands at the spot price but its importance rules the roost, for now!

If you have any comments or suggestions then please feel free to add them to this article whether you agree with us or not.

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Laramide reports good intersects at Westmoreland

LAM chart 08 April 2008

Laramide is pleased to report results of five diamond drill holes from its Westmoreland project located in North West Queensland, Australia, according to Marketwire.

Worthy of note was the result of Drill Hole WDD07-3 which intersected 66 metres @ 0.29 % U3O8 from a depth of 10 metres.

In a quote from the VP for Exploration, Peter Mullens said:

"The results confirm continuity of mineralization identified in historical drilling and also indicates the potential for high grade lenses within the broader mineralized envelope. In addition, the results reaffirm our strong belief in the technical strength of the project."

These are good results and with the planned introduction of a second drill rig to accelerate the drilling programme, the news flow should gather some pace. A drill programme of 12,000 metres is planned for completion this summer.

Taking a quick look at the chart we can see that Laramide may have found some support at the $3.00 level and a good news stream should help it to progress from here. The MACD also looks positive for this uranium stock so maybe the worst is behind us now and we can look forward to some reasonable progress.

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Urenco secures new loan of 125 million Euro

High demand for its enrichment services has enabled this European consortium to secure a 125 million Euro loan for its expansion plans. Chief Financial Officer Bart Le Blanc told Reuters in an interview recently that:

"Over the last couple of days we have been able to conclude an agreement with an institution for a 30-year loan. We expect with lifetime extensions (of nuclear power plants), with new builds in Asia and maybe new builds in the U.S. and the UK to continue to have a strong order book going forward,"

Their plans include a new plant in the United States, which is planned to be operational in mid-2009 and will will utilise Urenco's gas centrifuge technology, which they say is 60% less energy intensive than its competitors' gas diffusion technology.

This year they have turned in good profits and their orders for work are scheduled beyond 2025 which will generate around 18 billion Euro.

It looks to us to be the business to be in, with solid profits and a full order book but as it is government owned, ah well, that's life!

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Uranium: No Direction Home!

Like a naughty boy sent to stand outside of the classroom uranium is once again being ignored by most of the investment community. Uranium stocks have put in an occasional flurry but still remain a long way off their previous highs.

Uranium Chart 02 April 2008

Thanks to for the chart

As the above chart shows the current spot price has slipped once again to now stand at $71/lb. Although we view this as secondary to the longer term uranium price of around $95/lb, it is the spot price that is watched by investors and gets considerable coverage from the media.

As we write we can see that MGA is up 9.9%, URE is up 6.7% and PNP is up 10%. However CCO and CXX have not moved. We get the impression that the current action is more to do with investors trimming and re-arranging their portfolios rather than new money coming into this sector. Some of our readers recently wrote and told us that they have sold their uranium's in order to participate in the bull market that is unfolding in the precious metals arena. When we look at the battering that this sector has taken we have some sympathy with them, however we would question the timing of the move. To move from a sector that is on the floor to one which is on the ceiling just does not fit with our way of thinking, although we do believe that both gold and silver, after this short term pull back, still have a long way to go.

The uranium sector appears to be a victim of fashion, yesterdays wonder horse, however we still need to solve the energy problem before your computer is reduced to a three day week due to rotational blackouts which are not that far away. When the energy companies start talking rotas the penny will drop and the cavalry charge will begin. Until then, rightly or wrongly, we will stay invested in this sector and look to identify possible bargains along the way.

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Nuclear Renaissance of the UK!

John Hutton 30 March 2008

Enterprise Minister John Hutton addressing a conference of Unite said Britain could position itself as the gateway to a new nuclear renaissance across Europe. Enthusiastically Mr Hutton went on to say:

"More countries are looking to a range of low carbon solutions to answer their own energy challenges. There has never been a greater global demand for finance, equipment and skills to build and operate nuclear power stations. And here too I want Britain to be leading the world in the development and application of this new generation of low carbon power technology." according to a report carried by World Nuclear News.

This is good news for holders of uranium stocks in that the UK appears to be finally getting a grip of the situation and doing something about it. However, as most of the skilled workers who built the original power stations have reached retirement age it begs the question of just where does the UK find the labour required 'to be leading the world' as he says.

Having met with possible investors from the USA, Europe and Japan Mr Hutton declared "there are powerful signals from them and others in the industry that the UK is now one of the world’s most viable new build markets." Agreed! The UK most definitely has the need but the skill base needs rebuilding from the ground up.

Finally Mr Hutton suggests that we focus on “five key building blocks: regulation, planning, sites, waste and skills."

As we are on the subject of building blocks may we humbly suggest that construction is added to this list as this is the area that will consume the most time and money.

But its a start, have a good one and thanks to Wayne for the heads up.

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Securing America’s Energy Future

There is an interesting article on The Heritage Foundation written by Jack Spencer and Nick Loris regarding uranium's role in America's future and the difficulties in mining it. They go on to say;

“The nation's largest known uranium deposit was discovered in the 1980s on a farm in southern Virginia. The owner of that land has recently explored the possibility of mining the approximately $10 billion worth of uranium believed to be on the site. Despite the fact that uranium has been mined safely around the world for decades, including in New Mexico, Nebraska, Utah, and Wyoming, Virginia bureaucrats have decided to prohibit land owners from even studying the viability of mining”

It strikes us that life is difficult enough for the energy industry without making it even harder with bans here and restrictions there. What will it take for some of these bureaucrats to see the error of their ways? Will rotational blackouts do the trick? Do we have to go all the way and see people suffer before we take the shackles off? The mind boggles!

In their conclusion the authors have this to say;

“Nuclear energy is becoming globally recognized as a safe, affordable, clean source of energy. Uranium is an important and necessary component of nuclear energy, and firms choosing to pursue uranium mining should not be unnecessarily burdened by fear and government overreach.”

Absolutely Right, three cheers for Jack and Nick. They have done a thorough job here so do try and find the time to read it by clicking this link.

Many thanks to B for alerting us to it, what with FRG being up 18% and Laramide up 13% we were a little distracted today.

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SKF: Increased Our Position

We recently bought a position the inverse ETF called Ultra Short Financials ProShares, (AMEX:SKF) in a “Bet Against The Banks”. SKF is designed to rise 20% when the Dow Jones US Financials Index falls 10%.

This is a volatile security and has recently endured a significant pullback and, as we are still bearish on the financial sector, in our opinion this is a great time to buy. We are taking advantage of this and have more than doubled our position in SKF at an average price of $103.95. This is just a quick note to let our readers know our position, a more comprehensive write up of the situation will be coming shortly.


Crosshair: Is this as low as it can go?

Crosshair Exploration and Mining Corporation put on 12.79% yesterday and still closed below a dollar, at $0.97.

Crosshair has suffered as much as any other uranium stock that we know when you think that it once traded at four dollars plus and a few days ago it was down to $0.86 per share! At this point we wondered just how bad it could get for Crosshair before the bargain hunters decided to step in a bag a few shares. Yesterday may well prove to be a turning point for this uranium stock as it finally joined in with a small rally that lifted most of this sectors stocks. From our mail bag we can see that Crosshair has many supporters so it is even more surprising to see it perform so poorly. On the news front there has been a revision to the bought deal financing and some changes to the management team, nothing drastic though.

Taking a quick look at the chart we can see what sad story this one is, a one trip to the bottom of the pit.

CXX Chart 25 March 2008

However, this uranium stock could now be the bargain of the week. At times like these we need to be alert and avail ourselves for such opportunities. If Crosshair is on your list to be accumulated then now would appear to be a reasonable time to make a move. We do not own this stock but we have owned it in the past and traded it for a profit but we will stay put for the moment and observe this micro market. It would be nice to consider it in isolation but we must remain cognisant of the economy in general and the financial system in particular, which lurches from fiasco to pantomime all in the same day. On the positive side the long term and the spot price for uranium is remaining reasonably steady, setting the stage for a small, if unspectacular, rally going forward.

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Physical Uranium Contract for London Metals Exchange!

LME picture 22 March 2008

Another sign of the growing interest in this tiny market sector is the slow, but sure growth of the interest in various vehicles for trading uranium. We have witnessed the birth of the futures market for uranium over at NYMEX and now we another possibility on the cards.

According to David Stellfox, of who wrote: 'According to industry sources, global mining giant BHP Billiton is one of the companies that have approached the LME about setting up a contract. One major issue yet to be addressed is where the product would be stored.' An interesting point given that the possibility of storing uranium anywhere in the UK will become the target of the various environmental groups who are still opposed to nuclear power. The article goes on to say that;

“They believe an LME contract would help jump-start the moribund uranium spot market, but add that if a uranium market is to develop as have other commodity markets, there will need to be a level playing field for all participants.”

A jump start for the spot market! Well, every little bit helps, and why not? But as we have said many times before it is the long term contract price that is important and not so much the spot price. However, we do tend to watch the spot price more avidly.

It also offers an alternative to having to use the conversion facilities for storage, who by their strategic position in this process do have an advantage in terms of knowledgeof the market.

Lets hope that they go for it.

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