20110922 versant on uranium

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20110922 versant on uranium

  1. 1. September 22, 2011 Industry Update URANIUM REACTION Japan “determined” to restart nuclear plants, why isn’t Germany? JAPANESE PRIME MINISTER DETERMINED TO RESTART NUCLEAR PLANTS Japanese Prime Minister Yoshihiko Noda has stated that it is “impossible” for Japan to get by economically without nuclear power or under a quick phase out plan. Noting that a power shortage, “could bring down Japan’s economy”, Noda indicated that “if we want [nuclear power] to go down to zero, development of alternative energy must be advanced considerably ... it’s still too early to say if we can get to that stage”. Exhibit 1. Japanese Prime Minister Yoshihiko NodaEquity Research Source: Wall Street Journal The statement by the Japanese Prime Minister follows an estimated 30,000 citizen protest against nuclear power in Tokyo. Noda intends to restart Japan’s idled reactors during the spring to summer period of 2012. Since the events of March 11, nuclear reactors that were shut down for routine maintenance have been prevented from restarting and fewer than a dozen of Japan’s 54 reactors are currently in operation. At the current rate, all nuclear power reactors in Japan will be shut down by May 2012. Anti-nuclear critics have contended that Japan managed pretty well this past summer while many nuclear power plants were idled. Indicating that the situation is not as dire as the Prime Minister asserts. However, Chief Cabinet Secretary Osamu Fujimura has noted that Japan only had a 2.7% power supply shortfall during peak electricity demand this past summer. However, a power deficit of about 10% is projected for next summer if all reactors are shut down. Noda also noted that the reactors at Fukushima Daiichi are expected to achieve cold shutdown by the end of the year, which would be a month ahead of schedule. Rob Chang rchang@versantpartners.com (416) 849-5008 (866) 442-4485 Sales/Trading — Montreal: (514) 845-8111, (800) 465-5616; Toronto: (416) 363-5757, (866) 442-4485 See disclosure and a description of our recommendation structure at the end of this report.
  2. 2. Uranium Reaction September 22, 2011 The strong pro-nuclear statement by the new Japanese Prime Minister is a sober approach to the nuclear power issue. The economic reality is that it would be prohibitively expensive to replace nuclear power with conventional power sources such as liquefied natural gas (“LNG”) or coal. It is estimated that it would cost approximately US$60.5 billion in capital costs to construct the necessary LNG capacity and between US$93–$151 billion to construct the necessary coal-fired capacity to replace the amount of power provided by the country’s current fleet of nuclear reactors. Ongoing operation of these conventional sources of power would be very expensive as it would annually cost Japan about US$27 billion and US$17 billion to import the necessary volumes of LNG and coal to fuel the plants, respectively. Replacing nuclear power with alternative energy sources will also be very challenging as it would require a 49-fold increase in capacity from wind, solar and geothermal sources. The cost to replace current nuclear power with solar (US$688 BILLION) or wind (US$334 BILLION) would be astronomical. Moreover, Japan is estimated to have only 23.5 GW of geothermal potential, which is shy of the 70.3 GW in expected electricity demand in 2030. We wonder aloud what these numbers look like for Germany and whether a country dealing with a weak eurozone is equipped to make the expensive commitment of exiting nuclear. FINLAND PUSHES AHEAD WITH NUCLEAR POWER Finland’s supreme administrative court has overruled appeals of a nuclear reactor project. The ruling follows a Finnish parliament vote in July 2010 that supported the construction of two new nuclear reactors, which will increase the country’s total to seven. Supporters of the nuclear program point to the country’s harsh winters that require high energy consumption. The country’s steel making and forestry industries also rely on cheap power. Anti-nuclear activists have mentioned that they will take their efforts to the European Union. ROSSING TO BE HIT BY A STRIKE ON FRIDAY About 1,200 workers representing 75% of Rossing’s workforce may go on strike on Friday, September 23 at 6:00 GMT. The Mineworkers Union of Namibia (“MUN”) is protesting differences in bonuses paid to workers and management. Workers are demanding 30,000 Namibian dollars (US$3,877) each on top of N$11,000 they have already received. In response, Rossing management has filed a Labour Court motion seeking a ruling that would block workers from going on strike. The Rossing uranium mine is located in Namibia and is 68.6%-owned by Rio Tinto (RTP-NYSE). It is one of the world’s largest uranium mines and it produced about 8 M lbs of U3O8 in 2010. Rob Chang, (416) 849-5008 2 of 6
  3. 3. Uranium Reaction September 22, 2011 POSITIVE METALLURGICAL TEST RESULTS AT LAGUNA SALADA U3O8 Corp. (UWE-TSXV) reported positive alkaline leach results from the Guanaco area of its Laguna Salada project, which is located in Argentina’s Chubut province. Management reports that recoveries of 94% for uranium and 51% for vanadium were achieved from the upgraded fine component of the gravels. Interestingly, the best extraction results occurred only four hours of leaching – indicating that recoveries may be rapid and lowers potential operating costs. The uranium and vanadium at Laguna Salada lie within a few metres from surface in soft, unconsolidated gravel that appears amenable to low-cost mining techniques without the need for blasting or crushing. Simple screening separation of the pebbles and coarse sand concentrates the uranium-vanadium in the fine material and increases uranium grades to approximately 620-670ppm. Management also updated the regulatory environment in the Chubut Province. While there is presently an open-pit mining ban in Chubut Province, draft legislation is reported to propose that open-pit mining be allowed in the central semi-desert plain of the province. A similar approach, that allows mining in the central plain, is in effect in the adjacent Santa Cruz Province. Laguna Salada and several other mining projects are situated in this central plain of Chubut Province including the Argentinean National Nuclear Authority’s Cerro Solo uranium deposit and Pan American Silvers (PAA-TSX) Navidad silver project, both of which are reported to be due for development by open-pit mining methods. URANIUM EQUITY BASKET OUTPERFORMS Our basket of highlighted uranium names had a modestly positive week as its performance from September 14 to September 21 was up 1.8% on average. It significantly outperformed the broader S&P/TSX Global Base Metals Index’s return of -10.9% over the same period. Since we highlighted the names on August 24, the basket has gained 5.8% and has outperformed the S&P/TSX Global Base Metals Index’s return of -10.9%. Exhibit 2. One-Week Performance of Highlighted Uranium Names Company Name Ticker Weekly Since Inception Cameco CCO -3.3% -8.8% Uranium One UUU 5.3% -7.6% Uranium Participation U 5.3% 8.4% Fission Energy FIS 15.4% 50.0% Kivalliq Energy KIV 1.4% 9.1% Energy Fuels EFR -13.3% -16.1% Average 1.8% 5.8% S&P TSX Global Base Metals Index -12.5% -10.9% Source: Versant Partners Rob Chang, (416) 849-5008 3 of 6
  4. 4. Uranium Reaction September 22, 2011 IF CASH IS KING Uranium equities trading at the lowest multiples relative to their most recently reported balance sheet cash positions are the following:Exhibit 3. Top 10 Uranium Companies - Price to Balance Sheet CashSeptember 22, 2011 All figures in $CAD Enterprise Value Price/Cash Cash SharesCompany Name Stage Stock Price Market Cap (MM) (MM) (MM) O/SContinental Precious Minerals, Inc. (TSX:CZQ) Exploration $0.29 15.01 -4.69 0.8x 19.7 51.75Tigris Uranium Corp. (TSXV:TU) Exploration $0.21 11.90 -0.85 0.9x 12.75 56.68Australian American Mining Corporation Limited (ASX:AIW) Pre-Feasibility $0.14 9.29 2.03 1.3x 7.26 66.34Macusani Yellowcake, Inc. (TSXV:YEL) Exploration $0.18 19.40 4.91 1.3x 14.49 107.78Alliance Resources Ltd. (ASX:AGS) Development $0.16 54.59 17.33 1.5x 37.26 341.17Tournigan Energy Ltd. (TSXV:TVC) Pre-Feasibility $0.11 21.31 8.94 1.7x 12.37 193.73Energia Minerals Limited (ASX:EMX) Exploration $0.09 6.26 2.65 1.7x 3.61 69.50Powertech Uranium Corp. (TSX:PWE) Pre-Feasibility $0.12 12.40 14.17 1.8x 6.86 103.30Uranium North Resources Corp. (TSXV:UNR) Exploration $0.15 12.68 5.87 1.9x 6.81 84.52Strathmore Minerals Corp. (TSX:STM) Feasibility $0.52 46.77 31.56 2.1x 22.2 89.94Source: Versant Partners and Capital IQ IMPLIED EV/LB VALUATION Applying the concept of mean reversion, a market-implied valuation can be derived by applying the average EV/Lb value to the valuation of each constituent company to determine its value if it reverted to the mean. Exhibit 4. EV/Lb Averages by Development Stage Global # of 43-101/JORC Stage Resource Constituents EV/Lb Avg EV/Lb Avg Producer 7 $6.35 $7.94 Developer 4 $2.58 $2.37 Feasibility 7 $0.48 $0.44 Pre-Feasibility 10 $1.11 $0.95 Exploration 32 $1.41 $1.36 60 $1.63 $1.74 *Results higher than three standard deviations are removed from the calculation of averages Source: Versant Partners Rob Chang, (416) 849-5008 4 of 6
  5. 5. Uranium Update September 22, 2011Exhibit 5. Uranium Comparables September 22, 2011 All figures in $CAD Based on 43-101/JORC Resource Based on Global Resource Resources and Reserves (MM lbs) Implied EV/Lb Upside to Market Enterprise Value Price/Cash Total SYM Exch Company Name Stage Stock Price Market Cap (MM) MKT / LB EV / LB MKT / LB EV / LB Valuation Implied Value (MM) Avg Grade P&P M&I Inferred Historical TotalCCO TSX Cameco Corp. (TSX:CCO) Production $20.05 $17.35 -13.48% 7,913.94 7,905.40 6.5x $8.06 $8.06 $7.55 $7.54 9.393% 484.04 141.65 355.67 67.28 1,048.64DML TSX Denison Mines Corp. (TSX:DML) Production $1.36 $5.84 329.66% 523.14 390.56 3.9x $4.32 $3.22 $1.57 $1.17 0.419% 2.87 78.80 39.51 212.15 333.33 ERA ASX Energy Resources of Australia Ltd. (ASX:ERA) Production $3.15 $23.08 632.70% 600.83 409.32 3.1x $0.91 $0.62 $0.91 $0.62 0.308% 246.20 272.64 144.74 0.00 663.59PDN TSX Paladin Energy, Ltd. (TSX:PDN) Production $1.56 $3.52 125.63% 1,212.62 1,874.27 10.7x $2.48 $3.84 $2.32 $3.59 0.078% 159.20 192.06 136.91 34.58 522.74UEC AMEX Uranium Energy Corp. (AMEX:UEC) Production $3.01 $4.15 37.85% 217.59 185.88 6.9x $11.43 $9.77 $5.15 $4.40 0.066% 0.00 6.53 12.50 23.24 42.27 UUU TSX Uranium One Inc. (TSX:UUU) Production $2.56 $1.20 -53.15% 2,450.43 2,629.44 8.0x $11.72 $12.57 $11.72 $12.57 0.072% 47.97 59.93 101.25 0.00 209.14 WU TSXV White Canyon Uranium Ltd. (TSXV:WU) Production $0.23 $0.05 -80.02% 47.35 50.31 157.8x $24.19 $25.70 0.105% 0.00 0.00 0.00 1.96 1.96AGS ASX Alliance Resources Ltd. (ASX:AGS) Development $0.16 $0.24 51.00% 54.59 17.33 1.5x $3.12 $0.99 $3.12 $0.99 0.324% 0.00 8.00 9.50 0.00 17.50 EFR TSX Energy Fuels Inc. (TSX:EFR) Development $0.26 $0.43 65.07% 32.24 23.73 3.8x $2.99 $2.20 $1.86 $1.37 0.206% 0.00 6.45 4.35 6.53 17.32 URZ amex Uranerz Energy Corp. (AMEX:URZ) Development $1.62 $1.20 -25.84% 124.66 81.50 2.9x $6.54 $4.28 $6.54 $4.28 0.103% 0.00 15.72 3.34 0.00 19.06 URE TSX UR-Energy Inc. (TSX:URE) Development $1.06 $0.99 -6.95% 109.82 78.44 3.5x $4.00 $2.86 $4.00 $2.86 0.066% 0.00 23.72 3.71 0.00 27.43ACB ASX A-Cap Resources Ltd. (ASX:ACB) Feasibility $0.22 $0.46 108.64% 43.78 28.47 2.9x $0.28 $0.18 $0.28 $0.18 0.015% 0.00 50.20 107.60 0.00 157.80 BAN TSX Bannerman Resources Limited (TSX:BAN) Feasibility $0.31 $0.37 20.90% 72.68 66.38 4.6x $0.43 $0.39 $0.43 $0.39 0.020% 0.00 118.96 51.12 0.00 170.08 BKY ASX Berkeley Resources Ltd. (ASX:BKY) Feasibility $0.35 $0.26 -26.16% 61.01 53.57 8.2x $0.78 $0.69 $0.78 $0.69 0.045% 0.00 34.90 43.15 0.00 78.05 KRI TSX Khan Resources Inc. (TSX:KRI) Feasibility $0.27 $0.46 70.12% 14.64 8.37 2.3x $0.38 $0.22 $0.38 $0.22 0.127% 30.68 6.61 1.39 0.00 38.69MGA TSX Mega Uranium Ltd. (TSX:MGA) Feasibility $0.26 $0.19 -25.10% 66.84 35.72 2.1x $1.70 $0.91 $1.70 $0.91 0.112% 0.00 34.56 4.76 0.00 39.32 STM TSX Strathmore Minerals Corp. (TSX:STM) Feasibility $0.52 $0.82 57.56% 46.77 31.56 2.1x $0.83 $0.56 $0.44 $0.30 0.089% 0.00 36.85 19.51 50.50 106.87 TUE TSXV Titan Uranium Inc. (TSXV:TUE) Feasibility $0.15 $0.16 9.56% 19.47 13.10 3.1x $0.64 $0.43 $0.63 $0.42 0.113% 0.00 30.40 0.00 0.65 31.05 AIW ASX Australian American Mining Corporation Limited (ASX:AIW) Pre-Feasibility $0.14 $0.31 124.67% 9.29 2.03 1.3x $0.75 $0.16 $0.75 $0.16 0.088% 0.00 0.00 12.31 0.00 12.31 BYU TSXV Bayswater Uranium Corp. (TSXV:BYU) Pre-Feasibility $0.24 $2.32 867.58% 5.36 3.64 3.1x $0.25 $0.17 $0.12 $0.08 0.083% 0.00 11.46 10.16 23.73 45.35 FSY TSX Forsys Metals Corp. (TSX:FSY) Pre-Feasibility $0.57 $1.28 125.35% 45.67 38.55 6.4x $0.53 $0.44 $0.53 $0.44 0.024% 0.00 77.20 9.50 0.00 86.70 LAM TSX Laramide Resources Ltd. (TSX:LAM) Pre-Feasibility $0.89 $1.11 25.01% 60.40 56.76 16.6x $0.97 $0.91 $0.93 $0.87 0.116% 0.00 43.26 19.07 2.70 65.03 PEN ASX Peninsula Energy Limited (ASX:PEN) Pre-Feasibility $0.04 $0.04 -12.50% 83.38 55.73 3.0x $2.53 $1.69 $2.03 $1.36 0.036% 0.00 10.50 22.50 8.00 41.00PWE TSX Powertech Uranium Corp. (TSX:PWE) Pre-Feasibility $0.12 $0.24 98.84% 12.40 14.17 1.8x $0.52 $0.59 $0.52 $0.59 0.138% 0.00 17.06 6.85 0.00 23.91RSC TSX Strateco Resources Inc. (TSX:RSC) Pre-Feasibility $0.43 $0.18 -57.57% 62.32 67.96 13.2x $3.08 $3.36 $2.15 $2.34 0.434% 0.00 7.46 12.78 8.80 29.03 TOE ASX Toro Energy Ltd (ASX:TOE) Pre-Feasibility $0.08 $0.07 -16.41% 77.20 46.50 2.5x $2.52 $1.52 $2.52 $1.52 0.050% 0.00 10.87 19.74 0.00 30.61 TVC TSXV Tournigan Energy Ltd. (TSXV:TVC) Pre-Feasibility $0.11 $0.41 275.15% 21.31 8.94 1.7x $0.52 $0.22 $0.35 $0.15 0.302% 0.00 28.49 12.66 20.00 61.15 UNX ASX Uranex NL (ASX:UNX) Pre-Feasibility $0.38 $0.23 -40.69% 64.39 59.07 12.1x $2.16 $1.99 $2.16 $1.99 0.014% 0.00 4.35 25.40 0.00 29.74 ABE TSXV Abitex Resources Inc. (TSXV:ABE) Exploration $0.06 $0.11 76.50% 5.70 4.94 7.0x $0.87 $0.75 $0.87 $0.75 0.527% 0.00 1.96 4.63 0.00 6.59 AEE ASX Aura Energy Limited (ASX:AEE) Exploration $0.21 $6.87 3170.62% 27.74 21.20 4.2x $0.04 $0.03 $0.04 $0.03 0.016% 0.00 0.00 638.00 0.00 638.00 CZQ TSX Continental Precious Minerals, Inc. (TSX:CZQ) Exploration $0.29 $29.51 10075.17% 15.01 -4.69 0.8x $0.01 ($0.00) $0.01 ($0.00) 0.019% 0.00 14.41 1,037.96 15.34 1,067.71 CXZ AMEX Crosshair Exploration & Mining Corp. (AMEX:CXZ) Exploration $0.57 $0.79 38.99% 27.06 16.27 2.5x $1.51 $0.91 $1.42 $0.86 0.044% 0.00 7.40 10.50 1.10 19.00CUE TSXV Cue Resources Ltd (TSXV:CUE) Exploration $0.04 $0.12 196.43% 4.56 4.44 38.0x $0.48 $0.47 $0.48 $0.47 0.043% 0.00 8.30 1.20 0.00 9.50 DYL ASX Deep Yellow Ltd. (ASX:DYL) Exploration $0.14 $0.07 -46.66% 157.85 144.08 11.5x $3.16 $2.89 $3.16 $2.89 0.035% 0.00 30.80 19.09 0.00 49.89EMX ASX Energia Minerals Limited (ASX:EMX) Exploration $0.09 $0.20 126.09% 6.26 2.65 1.7x $0.84 $0.35 $0.84 $0.35 0.028% 0.00 0.00 7.46 0.00 7.46EME ASX Energy Metals Limited (ASX:EME) Exploration $0.44 $0.35 -21.50% 67.66 38.52 2.3x $3.98 $2.27 $3.98 $2.27 0.091% 0.00 4.90 12.08 0.00 16.98 EXT ASX Extract Resources Ltd. (ASX:EXT) Exploration $7.97 $3.20 -59.91% 2,000.55 1,923.05 25.8x $3.90 $3.75 $3.90 $3.75 0.046% 319.90 38.51 154.80 0.00 513.21 FIS TSXV Fission Energy Corp. (TSXV:FIS) Exploration $0.75 $0.64 -14.68% 73.17 45.88 2.7x $2.94 $1.84 $2.94 $1.84 0.058% 0.00 0.00 24.89 0.00 24.89 FTE ASX Forte Energy NL (ASX:FTE) Exploration $0.05 $0.03 -40.09% 29.14 28.06 27.0x $2.51 $2.42 $2.51 $2.42 0.030% 0.00 0.00 11.60 0.00 11.60 HAT TSX Hathor Exploration Ltd. (TSX:HAT) Exploration $4.08 $0.93 -77.09% 461.12 437.26 19.3x $7.96 $7.55 $7.96 $7.55 8.628% 0.00 17.21 40.73 0.00 57.94 JNN TSXV JNR Resources Inc. (TSXV:JNN) Exploration $0.10 $0.03 -65.42% 10.62 8.26 4.5x $11.43 $8.89 0.090% 0.00 0.00 0.00 0.93 0.93 KIV TSXV Kivalliq Energy Corp. (TSXV:KIV) Exploration $0.36 $0.29 -19.05% 44.10 28.38 2.8x $3.12 $2.01 $3.12 $2.01 0.790% 0.00 0.00 14.15 0.00 14.15 YEL TSXV Macusani Yellowcake, Inc. (TSXV:YEL) Exploration $0.18 $0.49 173.66% 19.40 4.91 1.3x $0.71 $0.18 $0.71 $0.18 0.021% 0.00 10.37 16.97 0.00 27.34MEY ASX Marenica Energy Ltd (ASX:MEY) Exploration $0.03 $0.20 564.55% 14.96 11.36 2.9x $0.22 $0.17 $0.22 $0.17 0.017% 0.00 9.60 58.40 0.00 68.00MAW TSX Mawson Resources Ltd. (TSX:MAW) Exploration $1.45 $3.68 153.50% 74.89 61.92 5.8x $4.90 $4.05 $0.60 $0.49 0.031% 0.00 0.12 15.17 110.00 125.29GEM TSXV Pele Mountain Resources Inc. (TSXV:GEM) Exploration $0.19 $0.52 171.66% 25.44 22.14 7.7x $0.55 $0.47 $0.55 $0.47 0.045% 0.00 15.18 31.44 0.00 46.63 PIT TSXV Pitchblack Resources Ltd. (TSXV:PIT) Exploration $0.18 $2.01 1018.68% 3.71 3.15 6.6x $0.13 $0.11 0.057% 0.00 0.00 0.00 29.00 29.00 PXP TSXV Pitchstone Exploration Ltd. (TSXV:PXP) Exploration $0.15 $0.19 28.79% 5.98 4.07 3.1x $1.46 $0.99 $1.46 $0.99 0.230% 0.00 0.00 4.10 0.00 4.10 RGT TSX Rockgate Capital Corp. (TSX:RGT) Exploration $1.35 $0.85 -37.20% 146.70 93.75 2.8x $5.29 $3.38 $5.29 $3.38 0.110% 0.00 6.07 21.68 0.00 27.75SMM ASX Summit Resources Ltd. (ASX:SMM) Exploration $1.78 $0.46 -74.41% 388.00 376.44 33.6x $6.24 $6.06 $6.24 $6.06 0.075% 0.00 32.70 29.44 0.00 62.14 TU TSXV Tigris Uranium Corp. (TSXV:TU) Exploration $0.21 $1.02 387.63% 11.90 -0.85 0.9x $0.37 ($0.03) $0.37 ($0.03) 0.105% 0.00 32.08 0.00 0.00 32.08UWE TSXV U308 Corp. (TSXV:UWE) Exploration $0.38 $0.91 139.41% 39.02 23.59 2.5x $2.26 $1.37 $0.71 $0.43 0.103% 0.00 12.10 5.14 38.00 55.24 UEX TSX UEX Corp. (TSX:UEX) Exploration $0.71 $0.68 -4.22% 144.18 130.68 10.7x $1.63 $1.48 $1.63 $1.48 0.741% 0.00 72.77 15.49 0.00 88.25 ULU TSXV Ultra Uranium Corp. (TSXV:ULU) Exploration $0.04 $0.23 462.60% 1.39 1.32 19.9x $0.25 $0.24 0.063% 0.00 0.00 0.00 5.49 5.49URC TSXV Uracan Resources, Ltd. (TSXV:URC) Exploration $0.09 $0.51 465.60% 11.95 6.40 2.2x $0.27 $0.15 $0.27 $0.15 0.012% 0.00 6.86 37.10 0.00 43.95 UNR TSXV Uranium North Resources Corp. (TSXV:UNR) Exploration $0.15 $0.24 61.87% 12.68 5.87 1.9x $1.31 $0.60 $1.31 $0.60 0.087% 0.00 0.00 9.71 0.00 9.71URRE NASDAQ Uranium Resources, Inc. (NasdaqCM:URRE) Exploration $0.84 $1.73 105.52% 78.57 71.20 9.9x $0.72 $0.65 0.168% 0.00 0.00 0.00 109.15 109.15 USA ASX Uraniumsa Limited (ASX:USA) Exploration $0.14 $0.27 95.46% 20.50 12.76 2.6x $0.90 $0.56 $0.90 $0.56 0.028% 0.00 0.00 22.90 0.00 22.90VEM TSX Vena Resources Inc. (TSX:VEM) Exploration $0.20 $0.37 83.45% 24.92 16.00 2.4x $0.93 $0.60 $0.93 $0.60 0.020% 0.00 13.66 13.07 0.00 26.73 VAE TSXV Virginia Energy Resources Inc. (TSXV:VAE) Exploration $0.16 $0.50 214.52% 15.60 11.65 3.9x $0.55 $0.41 $0.49 $0.36 0.076% 0.00 28.56 0.00 3.40 31.96Source: Versant Partners and Capital IQ Rob Chang, (416) 849-5008 5 of 6
  6. 6. Uranium Update September 22, 2011DISCLAIMERS AND DISCLOSURESDisclaimersThe opinions, estimates and projections contained in this report are those of Versant Partners Inc. (“Versant”) as of the date hereof andare subject to change without notice. Versant makes every effort to ensure that the contents have been compiled or derived from sourcesbelieved to be reliable and that contain information and opinions that are accurate and complete; however, Versant makes norepresentation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions which may becontained herein and accepts no liability whatsoever for any loss arising from any use of or reliance on this report or its contents.Information may be available to Versant that is not herein.This report is provided, for informational purposes only, to institutional investor clients of Versant Partners Inc. Canada, and does notconstitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such offer or solicitation wouldbe prohibited. This report is issued and approved for distribution in Canada, Versant Partners Inc., a member of the Investment IndustryRegulatory Organization of Canada ("IIROC"), the Toronto Stock Exchange, the TSX Venture Exchange and the CIPF. This report ishas not been reviewed or approved by Versant Partners USA., a member of FINRA. This report is intended for distribution in theUnited States only to Major Institutional Investors (as such term is defined in SEC 15a-6 and Section 15 of the Securities Exchange Actof 1934, as amended) and is not intended for the use of any person or entity that is not a major institutional investor. Major InstitutionalInvestors receiving this report should effect transactions in securities discussed in the report through Versant Partners USA.Potential conflicts of interestThe author of this report is compensated based in part on the overall revenues of Versant, a portion of which are generated byinvestment banking activities. Versant may have had, or seek to have, an investment banking relationship with companies mentioned inthis report. Versant and/or its officers, directors and employees may from time to time acquire, hold or sell securities mentioned hereinas principal or agent. Although Versant makes every effort possible to avoid conflicts of interest, readers should assume that a conflictmight exist, and therefore not rely solely on this report when evaluating whether or not to buy or sell the securities of subject companies.Disclosures as of September 22, 2011Versant has provided investment banking services or received investment banking related compensation from Kivalliq Energy andEnergy Fuels within the past 12 months. Versant has not received investment banking related compensation from Cameco, FissionEnergy, Uranium One, Uranium Participation and U3O8 Corp.The analyst responsible for this research report does not have, either directly or indirectly, a long or short position in the shares or optionsof Kivalliq Energy, Energy Fuels, Cameco, Fission Energy, Uranium One, Uranium Participation and U3O8 Corp.The analyst responsible for this report has visited the material operations of U3O8 Corp, Uranium Energy Corp, Uranerz Energy andKivalliq Energy. The analyst responsible for this report has not visited the material operations of Cameco, Uranium One, UraniumParticipation, and Fission Energy.Analyst certificationThe research analyst whose name appears on this report hereby certifies that the opinions and recommendations expressed hereinaccurately reflect his personal views about the securities, issuers or industries discussed herein.Definitions of recommendationsBUY: The stock is attractively priced relative to the company’s fundamentals and we expect it to appreciate significantly from thecurrent price over the next 6 to 12 months.BUY (Speculative): The stock is attractively priced relative to the company’s fundamentals, however investment in the securitycarries a higher degree of risk.NEUTRAL: The stock is fairly valued, lacks a near term catalyst, or its execution risk is such that we expect it to trade within a narrowrange of the current price in the next 6 to 12 months. The longer term fundamental value of the company may be materially higher, butcertain milestones/catalysts have yet to be fully realized.SELL: The stock is overpriced relative to the company’s fundamentals, and we expect it to decline from the current price over the next6 to 12 months.TENDER: We believe the offer price by the acquirer is fair and thus recommend investors tender their shares to the offer.UNDER REVIEW: We are temporarily placing our recommendation under review until further information is disclosed. Member-Canadian Investor Protection Fund. Customers accounts are protected by the Canadian Investor Protection Fund within specified limits. A brochure describing the nature and limits of coverage is available upon request. Rob Chang, (416) 849-5008

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