Metal Prospects. Uranium Market Outlook Second Quarter Demand. Supply. Market Balance. Price Forecasts. Risks to Forecast

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1 RBC Dominion Securities Inc. Adam Schatzker (Analyst) (416) H. Fraser Phillips (Analyst) (416) Robin Kozar (Associate) (416) Jamie Riff (Associate) (416) David Ing (Associate) (416) March 24, 2008 This report is priced as of market close March 14, 2008 ET. All values in U.S. dollars unless otherwise noted. For Required Disclosures, please see page 27. Metal Prospects Uranium Market Outlook Second Quarter 2008 Demand We foresee uranium demand growing by an average of 3.9% per year during the next 25 years, in line with our previous forecast. We expect that new reactors will take many years to permit and build; however, we believe the demand for material will precede reactor commissioning by many years. Announcements continue to be made by governments and companies around the world regarding potential new nuclear plants. We believe this trend will continue as nuclear power continues to be seen as a clean alternative for baseload generation. Supply The supply of uranium is forecast to grow by an average of 7.9% annually until 2013, down from our previous forecast of 9%. We have adjusted our supply forecast slightly, mainly driven by decreased production from Uranium One, the lower production from new Kazakh ISR mines due to acid shortages, and shortages and delays caused by electricity shortages in South Africa. After 2015, we are forecasting that uranium supply will decrease by an average of approximately 5% per year based on reserve exhaustion. The high uranium price has already begun to attract new production and increased exploration spending to try to fill the gap post We believe the uranium price will continue to remain at levels that are sufficient to justify the continued exploration for, and development of, new deposits. Market Balance We expect that the market will be in either a small deficit or balance for 2007 through 2009 due to shortfalls on the production side. From 2010 to 2013 we foresee small surpluses developing; however, we think that any surplus material will be purchased by consumers looking for initial cores or inventory, or by countries like India and China that are seeking to build strategic uranium inventories. From 2015 onward, our projections indicate a potential for a severe and growing deficit. Price Forecasts Our spot price forecasts to 2017 are unchanged this quarter compared to last quarter; however, we have raised our long-term price by $10/lb to $45/lb. We continue to believe that the tight market in 2008 will result in a modest deficit. Therefore, we are forecasting a rising uranium spot price in A 2007E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E Long-Term New $48 $99 $110 $100 $95 $90 $75 $75 $70 $60 $50 $50 $45 Previous $48 $99 $110 $100 $95 $90 $75 $75 $70 $60 $50 $50 $35 Source: RBC Capital Markets estimates Risks to Forecast Any major problem with a nuclear reactor could quickly curtail new reactor builds and thereby reduce demand. Technical or regulatory problems could reduce mine supply. Material owned by speculators and investors could temporarily flood the market.

2 Uranium Market Outlook March 24, 2008 Table of Contents Price Forecast Analysis... 5 Uranium Supply... 9 Supply General Comments... 9 Primary Mine Supply Secondary Uranium Supply Highly Enriched Uranium MOX and RepU Russian Suspension Agreement (RSA) Uranium Demand WNA Demand Forecast Analysis Nuclear Generating Costs Required Disclosures Additional Disclosures Adam Schatzker

3 March 24, 2008 Uranium Market Outlook Exhibit 1: Uranium/Supply Demand Balance (MM lb U 3 O 8 equivalent) Supply: U3O8 Production: E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E Western World Existing Planned Total % Change Year/Year 14.6% 3.0% -7.9% -4.5% 9.0% 14.4% 3.0% 14.1% 17.5% 9.1% 7.0% 1.2% Former East Block Existing Planned Total % Change Year/Year 5.0% 14.8% 7.5% 13.6% 21.3% 21.0% 9.3% 6.9% 9.0% 7.5% 2.6% 1.8% Total World Existing Planned Total % Change Year/Year 11.9% 6.2% -3.5% 1.3% 13.4% 16.9% 5.5% 11.2% 14.2% 8.5% 5.4% 1.4% Former Soviet Union Exports: E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E Russian EUP Re-enriched Tails HEU Feed HEU Feed II Kazak EUP Total HEU Feed: E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E GNSS (U.S. Quota) Cameco/Cogema/Nukem Total Other: E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E USEC Sales U.S. Government Stockile Sales TVA DOE HEU MOX & Reprocessed U Total Supply: E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E Total U3O8 Supply % Change Year/Year 6.7% 5.6% -1.2% -3.5% 7.9% 12.1% 2.5% 6.6% 11.7% 6.7% -3.6% 1.3% Demand: Reactor & Inventory Requirements E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E RBC Base Demand % Change Year/Year -5.4% -2.1% -0.7% 2.1% 2.0% 10.3% 2.5% 4.3% 0.5% 6.4% 6.1% 4.3% Market Balance & Price Implied Market Surplus/Deficit: E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E World Basis RBC Base Demand Case Average Spot Price US$/lb U3O8 $11.38 $18.32 $28.14 $47.91 $98.68 $ $ $95.00 $90.00 $75.00 $75.00 $70.00 $60.00 Average Term Price US$/lb U3O8 $12.10 $20.33 $30.73 $49.41 $93.68 $95.00 $95.00 $90.00 $85.00 $70.00 $70.00 $65.00 $55.00 Source: World Nuclear Association, Ux Consulting, company reports, RBC Capital Markets estimates Adam Schatzker 3

4 Uranium Market Outlook March 24, 2008 The World Nuclear Association (WNA) supply and demand forecast (The Global Nuclear Fuel Market Supply and Demand ) was released in September The WNA book is a bi-annual publication in which the supply and demand for uranium, conversion, enrichment, fuel fabrication and nuclear electricity generation are forecast. We have used the WNA data as the foundation for our U 3 O 8 demand forecast. However, we believe that there are shortfalls to the WNA methodology, which we address later. As a result, our forecast demand is somewhat higher than that forecast by the WNA. This is discussed in detail in the Uranium Demand section of this report. Our uranium spot price forecast remains unchanged this quarter. We think that the uranium price has already experienced its peak in the summer of 2007 at $135/lb U 3 O 8. Looking forward, we believe the price will remain, on average, above $100/lb for 2008 and 2009; however, we believe the speculator-driven market is a thing of the past and that prices will remain at more reasonable levels compared to those experienced in the first half of As new supply sources enter the market and surpluses become apparent, we expect that the spot price will come down. In the long term, we are forecasting a price of $45/lb in 2007 dollars, starting in Exhibit 2: Global Uranium Supply/Demand Balance 50, ,000 40, ,000 30, , ,000 20, ,000 10, , ,000-10, ,000-20, ,000 75,000-30,000 50,000-40,000 25,000 Net Balance -50,000 (kt, LS) World Supply (kt, RS) World Requirements (kt, 0 RS) thousands lbs U3O A 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E thousands lbs U3O8 We believe that the near-term deficits and precarious market balances should continue to support the uranium price between $75/lb and $115/lb. Source: Ux Consulting, World Nuclear Association, RBC Capital Markets estimates Exhibit 3: Global U 3 O 8 Supply Versus Demand (000 lb) 300, , s lbs U3O8 200, , ,000 50,000 0 Other Secondary USEC HEU FSU Secondary Former East Bloc Mine Western World Mine Global Demand A 2009E 2011E 2013E 2015E 2017E 2019E The supply response to date has been noticeable, but not nearly enough to compensate for the forecast demand growth in the future (beyond 2015). We are forecasting significant new supply being added to the market in the coming years. Our supply forecast is risk adjusted such that our forecast for new production is, in many cases, lower than management forecasts. Source: Ux Consulting, World Nuclear Association, RBC Capital Markets estimates 4 Adam Schatzker

5 March 24, 2008 Exhibit 4: Global U 3 O 8 Supply/Demand Balance and U 3 O 8 Price thousands lbs U3O8 125, ,000 75,000 50,000 25, ,000-50,000-75, ,000 $ $ $75.00 $50.00 $25.00 $0.00 Uranium Price (US$/lb) Uranium Market Outlook We believe 2007 and 2008 will be the peak years for uranium prices. Beyond 2008 we believe the clarity of new supply will act to lower the spot price over time. Net Balance (kt, LS) E 2010E 2012E 2014E 2016E 2018E 2020E U3O8 Price (US$/lb) Source: Ux Consulting, World Nuclear Association, RBC Capital Markets estimates Price Forecast Analysis We believe that high uranium prices will persist for many years (relative to historical levels). In the near term, we believe the continued spot market deficit will help to maintain prices between $75/lb and $115/lb. As new supply is brought to market in the coming years, we feel that this will be the signal for the spot price to retrace to more sustainable levels. We believe the market will be in surplus by approximately 4 to 30 million pounds in 2011 through 2014; however, we do not believe that this will precipitate a severe downdraft in the spot price, as there are likely many buyers for that material (e.g., initial cores, utility inventories, strategic inventories, etc.). We think that the opportunities for speculators to make large returns by holding uranium will be few in the coming years, as supply is brought to market and the deficits turn into surpluses. Ux Consulting notes that speculative purchases comprised 25%, 25% and 20% (or more) of 2005, 2006 and 2007 purchases, respectively. With such a large component of the spot market expected to be absent in the coming years, it seems logical that the price volatility experienced in 2006 and 2007 will diminish. In our uranium spot price forecast, we believe the uranium price will peak in 2008 and gradually retrace towards our long-term price forecast ($45/lb) by At that point we feel prices will have been high enough for long enough to stimulate new exploration, production and development to ensure a more secure supply base. The Role of the NYMEX Futures In May 2007 uranium futures began trading on the NYMEX. Volumes have been quite low, but this is to be expected from a newly launched futures contract. There are certain attributes of the uranium market that we think make uranium futures quite different from other commodity futures: Uranium futures cannot be settled with physical delivery (this is not unique to uranium). The uranium future is settled based on the Ux Consulting spot price at the end of the month. This is quite different to other commodities that trade on a daily basis. In general terms, futures prices are expected to converge with the spot price on the day of settlement; we do not believe this will always be the case with the uranium futures. The market participants for the futures market and the spot market will likely be very different. We estimate that the spot market comprises fewer than 150 participants globally. The futures market is more or less open to anyone who can afford it (with a single contract of 250 pounds U 3 O 8 trading for less than $40,000). Therefore, we believe there will be two different groups of buyers and sellers with different motivations: the spot market participants will transact in physical material, while those trading futures will settle in cash. Adam Schatzker 5

6 Uranium Market Outlook March 24, 2008 A Note on Contracts With the uranium spot price retracing to and below the current Ux long-term price of $95/lb, we believe the contract market will be more predictable than it was when the spot price was $120/lb and higher. Utilities requirements for the near-term are thought to be mostly covered and we do not expect significant contracting to occur for this time frame. From 2010 onward, we estimate that there is a substantial and growing level of uncovered demand and that contracts will be written to cover most of this demand in the coming years. Exhibit 5: Uncovered Uranium Requirements Estimate (2008E 2017E) millions lbs U3O % 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E % of Demand Uncovered U.S. Utilities Non-U.S. Utilities Uncovered % of Total Source: Ux Consulting, RBC Capital Markets estimates Over the next year or two, we expect that contracts will continue to be skewed to those with market-related terms as opposed to those with fixed prices. We expect that, on average, contracts will be 75% market related and 25% base escalated. For companies with mines under development or advanced exploration, we believe the contracting market will continue to look for offers, but at substantial discounts. We think that utilities will be very risk sensitive with respect to new entrants, given the difficulty that uranium companies have had bringing new production to market in recent years. 6 Adam Schatzker

7 March 24, 2008 Exhibit 6: RBC Capital Markets Uranium Price Forecast (US$/lb U 3 O 8 ) Current Previous Change LT Price 2006A $47.91 $ A $98.68 $ $ E $ $ $ E $ $ $ E $95.00 $ $ E $90.00 $ $ E $75.00 $ $ E $75.00 $ $ E $70.00 $ $ E $60.00 $ $ E $50.00 $ $ E $50.00 $ $50.00 Long-Term $45.00 $35.00 $10.00 $48.00 Uranium Market Outlook We are forecasting 2007 to 2009 to be the peak years for the uranium spot price. We believe the long-term price will be at a discount to the spot price until This is based on the assumption that the long-term price represents the price for escalating base-priced contracts. Source: Ux Consulting, RBC Capital Markets estimates Exhibit 7: Spot Versus Term Contract Uranium Prices US$/lb U3O8 $150 $140 $130 $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Long Term Contract Price Spot Price The long-term price has remained unchanged for both Ux and TradeTech since reaching $95/lb at the end of May We do not foresee significant movement in the term price over the next three years Source: Ux Consulting, RBC Capital Markets estimates Exhibit 8: Annual Volumes and U 3 O 8 Prices $125 $100 $75 $50 $25 $0 Both spot and contract volumes remained strong in 2006; however, volumes did not match the records set in Much of 2007 s spot volume was carried out in the last three months at prices between $75/lb and $85/lb. Spot volumes have been relatively strong in 2008; we believe this is due to the relatively low uranium price. 08 = YTD Spot Volume (mm lbs, LS) Completed Contract Volume (mm lbs, LS) Annual Average Spot U3O8 Price (US$/lb, RS) Source: Ux Consulting, RBC Capital Markets estimates Adam Schatzker 7

8 Uranium Market Outlook March 24, 2008 Exhibit 9: Uranium Futures Prices $/lb U3O8 $90 $85 $80 $75 $70 $65 $60 $55 $50 6/2008 7/2008 8/2008 9/ / / /2008 1/2009 2/2009 3/2009 Open Interest Mid Last 4/2009 5/2009 6/ Number of Contracts In May 2007 uranium futures began trading on NYMEX. To date, the volumes have been very small and the bid-ask spreads quite large. Given that the futures market for uranium is still very young, we are not convinced that it provides an accurate measure of future spot prices. We believe that the futures contracts will provide some utility to those wanting to financially hedge uranium exposure; however, since the futures do not provide for physical delivery, we think they will be of limited use to utilities. Note: Forward curve as of March 17, Source: Bloomberg 8 Adam Schatzker

9 March 24, 2008 Uranium Market Outlook Uranium Supply Exhibit 10: Uranium Supply 2004 to 2015E (000 lb U 3 O 8 ) Year E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E Africa 18,400 18,434 18,291 16,258 20,725 26,747 32,270 37,762 40,556 43,677 46,547 47,268 Australia 23,327 24,921 22,167 22,016 20,625 23,750 24,415 24,580 24,580 23,580 23,580 22,745 Canada 30,152 30,230 25,640 24,345 25,967 26,467 20,567 24,865 38,162 44,767 49,767 49,767 Kazakhstan 8,632 11,381 13,225 17,055 23,774 32,464 37,367 41,088 45,417 50,009 51,721 52,889 Russia 8,000 8,997 9,220 9,600 10,400 10,920 10,920 11,440 13,000 13,780 14,040 14,300 Ukraine 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100 USA 2,140 2,686 4,412 4,485 5,700 6,600 8,662 10,930 12,480 14,538 15,710 17,450 Uzbekistan 5,330 5,700 6,000 6,500 7,000 7,500 7,800 7,800 7,800 7,800 7,800 7,800 Other 4,757 4,728 4,329 4,352 4,704 4,954 5,204 5,454 5,454 5,454 5,454 5,454 Total Mine Supply 102, , , , , , , , , , , ,772 y/y Change 11.9% 6.2% -3.5% 1.3% 13.4% 16.9% 5.5% 11.2% 14.2% 8.5% 5.4% 1.4% Non-Mine Supply Former Soviet Union Supplies Russian Govt Stockpiles 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 5,000 5,000 5,000 5,000 Re-Enriched Tails 13,000 13,000 13,000 13,000 13,000 12,000 9,000 6,000 6,000 6,000 6,000 6,000 HEU Feed ,000 8,000 8,000 8,000 8, HEU II Kazak EUP Total FSU 25,000 24,000 23,000 22,000 21,000 27,000 23,000 19,000 19,000 19,000 11,000 11,000 HEU Feed (to West) Cameco/Cogema/Nukem/GNSS 14,000 16,000 17,000 18,000 19,000 12,000 12,000 12,000 12,000 12, USEC Sales 8,000 7,000 6,000 3,000 1,000 1,000 1,000 1, Other U.S. Government Stocks 0 0 2, ,000 1,000 2,100 3,100 4,200 4,200 4,200 4,200 TVA 0 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 US HEU Blend-down (Non-TVA) MOX + RepU 7,500 8,500 8,500 6,700 6,500 7,600 7,500 6,700 7,000 7,000 7,000 7,000 Total Other 7,500 10,000 12,860 8,720 9,000 10,100 11,100 11,300 12,700 12,700 12,700 12,700 Total Non-Mine Supply 54,500 57,000 58,860 51,720 50,000 50,100 47,100 43,300 44,200 43,700 23,700 23,700 TOTAL URANIUM SUPPLY 157, , , , , , , , , , , ,472 y/y Change 6.7% 5.6% -1.2% -3.5% 7.9% 12.1% 2.5% 6.6% 11.7% 6.7% -3.6% 1.3% Source: World Nuclear Association, Ux Consulting, company reports, RBC Capital Markets estimates Supply General Comments Since our last update we have made few changes to our supply forecast. The most significant changes are due to the electricity problems in South Africa and the continuing problems with Uranium One s Dominion mine (also in South Africa). We have also changed our long-term outlook for Dominion: rather than reaching 7 million pounds, we are now forecasting 4 million pounds by Looking forward, most of the growth in supply comes from companies that are new producers (i.e., Uranium One, Paladin, etc.) and/or countries that are increasing their supply contribution significantly (i.e., Namibia and Kazakhstan). While we are confident that most of the forecast production will come to fruition, we must caution that if production milestones are delayed, the market reaction could be strong and result in higher than anticipated uranium prices. Adam Schatzker 9

10 Uranium Market Outlook March 24, 2008 Exhibit 11: Uranium Mine Supply 2007E to 2020E - New vs. Previous Forecast (000 lb U 3 O 8 ) 250, ,000 Mine Supply (000s lbs U 3 O 8 ) 150, ,000 50, A 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E Current Forecast Previous Forecast Source: World Nuclear Association, Ux Consulting, company reports, RBC Capital Markets estimates 10 Adam Schatzker

11 March 24, 2008 Uranium Market Outlook Primary Mine Supply Exhibit 12: Changes in Uranium Mine Production 2006A to 2015E (2005 base year; 000 lb U 3 O 8 ) Year 2007A 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E Africa Niger (725) Namibia - Langer Heinrich 122 1,958 3,259 3,497 3,671 3,752 3,752 3,752 3,752 Namibia - Rossing & others (1,261) South Africa (Dominion) ,126 2,445 2,567 2,689 3,048 3,454 4,064 South Africa (Anglo Ashanti) (169) (639) (189) (189) (189) (189) Ezulwini Buffelsfontien ,218 1,395 1, Kayalekera (Paladin) ,270 3,060 3,274 3,274 3,274 3,274 Rossing Additions ,200 1,200 1,200 1,200 1,200 1,200 Incremental Langer Heinrich , Trekoppkje (50%) Start ,000 2,000 2,000 2,000 2,000 2,000 Imouraren, Niger (AREVA) Total Africa (2,033) 2,357 7,766 12,627 15,931 16,131 17,000 17,589 18,157 Australia Ranger 1,464 (224) (467) (467) (467) Olympic Dam (1,815) (1,518) Beverley Honeymoon Total Australia (151) (1,492) 2,248 2,413 2,413 2,413 1, Canada McArthur River (3) Cigar Lake (Rabbit L.) ,999 8,996 18,000 18,000 18,000 McClean Lake (178) 1,805 2,705 (1,795) (1,795) (1,795) (1,795) (1,795) (1,795) Rabbit Lake (1,114) (1,527) (1,927) (3,327) (2,027) (2,727) (5,127) (5,127) (5,127) Midwest (McClean) ,000 8,000 8,000 8,000 Aurora ,000 5,000 Total Canada (1,295) (5,073) (775) 12,522 19,127 24,127 24,127 Kazakhstan LLP Kazatomprom (2,297) (1,637) (787) (127) (787) (787) Stepnogorsk 1,200 1,200 1,300 1,300 1,300 1,375 1,390 1,430 1,560 Akdala 2,600 2,600 2,600 2,600 2,600 2,600 2,600 2,600 2,600 Inkai (200) 1,200 4,033 4,200 4,200 4,200 4,200 4,200 4,200 Muyunkum 627 2,262 2,262 2,262 2,262 2,262 2,262 2,262 2,262 Budenovskoye ,000 2,600 2,600 2,600 2,600 2,600 2,600 Central Mynkuduk ,000 2,800 3,800 4,250 5,200 5,200 5,200 Western Mynkuduk ,000 1,560 2,080 2,600 2,600 2,600 2,600 Zarechnoye 780 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 Kharasan ,974 2,713 3,875 5,813 6,975 7,750 7,750 South Inkai ,557 2,595 3,633 5,189 7,784 9,341 10,379 Total Kazakhstan 3,830 10,549 19,239 24,142 27,863 32,192 36,784 38,496 39,664 Czech Republic (138) (36) (36) (36) (36) (36) (36) (36) (36) Other ,161 1,161 1,161 1,161 1,161 Total Other ,125 1,125 1,125 1,125 1,125 Continued on next page. Adam Schatzker 11

12 Uranium Market Outlook March 24, 2008 Exhibit 12: Changes in Uranium Mine Production 2006A to 2015E (2005 base year; 000 lb U 3 O 8 ) (continued) Year 2007A 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E Russia Dolmatovskoye ,800 1,800 1,800 1,800 Khiagda ,460 1,980 2,760 3,020 3,280 Total Russia 380 1,180 1,700 1,700 2,220 3,780 4,560 4,820 5,080 United States AREVA/Christensen Ranch PRI/Crow Butte - (29) ,071 2,071 (729) (729) (729) Cotter Rio Algom PRI/Highland/Smith R. (60) (44) (44) (44) (44) (44) (44) (44) (44) URI/Kingsville Dome (94) (94) URI/Vasquez (85) (165) (165) (165) (165) (165) (165) (165) (165) IUC/White Mesa 20 (280) (280) (280) (280) (280) (280) (280) (280) Mestena/Alta Mesa (183) - (100) (100) (100) (100) (100) (100) (100) Churchrock ,000 1,000 1,000 Henry Mtns./White Mesa - 1,400 1,500 1,500 1,500 1,500 1,500 1,500 1,500 Powder River (UUU) ,350 1,800 2,250 Great Divide (UUU) ,350 1,800 Palangana Hobson (UUU) ,200 1, Shootaring ,000 Lost Soldier (URE) ,000 1,000 Lost Creek (URE) ,000 Goliad ,400 1,400 1,400 Other ,500 3,000 3,000 Total USA 73 1,288 2,188 4,250 6,068 8,068 10,126 11,298 13,038 Uzbekistan Navoie 500 1,000 1,500 1,800 1,800 1,800 1,800 1,800 1,800 Total Uzbekistan 500 1,000 1,500 1,800 1,800 1,800 1,800 1,800 1,800 TOTAL CHANGES TO SUPPLY (base 2006) 1,326 15,884 36,093 42,734 56,644 78,031 91,929 99, ,523 EXISTING SUPPLY BY REGION Africa (2,033) 2,357 7,766 12,627 15,931 16,131 17,000 17,589 18,157 Australia (151) (1,492) 2,248 2,413 2,413 2,413 1, Canada (1,295) (5,073) (775) 12,522 19,127 24,127 24,127 Kazakhstan 3,830 10,549 19,239 24,142 27,863 32,192 36,784 38,496 39,664 Russia 380 1,180 1,700 1,700 2,220 3,780 4,560 4,820 5,080 USA 73 1,288 2,188 4,250 6,068 8,068 10,126 11,298 13,038 Uzbekistan 500 1,000 1,500 1,800 1,800 1,800 1,800 1,800 1,800 Other ,125 1,125 1,125 1,125 1,125 Total 1,326 15,584 36,093 42,734 56,644 78,031 91,929 99, ,523 Source: World Nuclear Association, Ux Consulting, company reports, RBC Capital Markets estimates 12 Adam Schatzker

13 March 24, 2008 Exhibit 13: Mine Supply, Non-Mine Supply and Demand 000s lbs U3O8 300, , , , ,000 50,000 - Uranium Market Outlook We believe the market will remain in balance until the end of 2009, driven primarily by initial core purchases (we have not forecast any non-essential demand such as that from speculators). Surpluses are forecast for 2011 through 2014; however, we think it is likely that much, if not all, of this material will be absorbed easily into the market, particularly through the building of strategic inventories by countries like China, India and South Africa (with announced intentions to build uranium inventories). 2007E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E Existing Supply Likely Additions Possible Additions Secondary Sources Global Demand Source: World Nuclear Association, Ux Consulting, RBC Capital Markets estimates Exhibit 14: Global Mine-Sourced Uranium, Uranium Demand and Price Forecast thousands of lbs U3O8 240, , , , , , , ,000 80,000 60,000 40,000 20,000 0 Forecast $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 U3O8 $/lb Mine-sourced uranium production remains well short of demand. The difference should continue to come from inventories and secondary supplies until at least 2015; thereafter, additional secondary sources will have to be made available or new mine supply will be required A 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E Production Requirements Average Uranium Spot Price (US$/lb) Source: World Nuclear Association, Ux Consulting, RBC Capital Markets estimates Exhibit 15: Uranium Production by Region E (000 lb U 3 O 8 ) U3O8 Supply (000s lbs) 250, , , ,000 50,000 Other USA Canada Africa Australia Uzbekistan Ukraine Russia Kazakhstan Eastern Bloc The rising uranium price from 2003 onward has stimulated a significant rise in mined output, particularly from the former Soviet Union and in particular Kazakhstan E 2013E 2018E Source: World Nuclear Association, Ux Consulting, RBC Capital Markets estimates Adam Schatzker 13

14 Uranium Market Outlook March 24, 2008 Exhibit 16: 2008E Production by Geographical Region Africa Australia 17% Other 17% 3% The top producer list continues to be much the same as in previous years, except for the dramatic rise of Kazakhstan to the number two spot. Uzbekistan 6% USA 5% C anada 20% Ukraine 2% Russia 9% Kazakhstan 20% Source: World Nuclear Association, Ux Consulting, RBC Capital Markets estimates Exhibit 17: Global Uranium Producers Production (000s lbs U 3 O 8 ) % of World Total Cameco 21,446 21% Rio Tinto 18,443 18% Areva 13,706 13% KazAtomProm 9,617 9% TVEL 8,481 8% BHP Billiton 7,456 7% Navoi 5,876 6% Uranium One 2,600 3% Other 19,140 15% Total 106, % Source: World Nuclear Association, Ux Consulting, Areva, RBC Capital Markets estimates Exhibit 18: Selected Uranium Mines (Most recent reserves) Mine Reserves Reserve Contained (1) Annual Production Extraction Name Country Owner (000s Tonnes) Grade (%U 3 O 8 ) mm lbs U 3 O 8 Est. (000s lbs U 3 O 8 ) Method McArthur River Canada Cameco/Areva % u/g Cigar Lake Canada Cameco/Areva % u/g Inkai Kazakhstan Cameco/Kazatomprom 86, % ISL Olympic Dam Australia BHP Billiton 374, % o/p - byproduct of Cu Rossing Namibia Rio Tinto (69%) 132, % o/p Ranger Australia Energy Resources Australia 35, % o/p Langer Heinrich Namibia Paladin Resources 37,174 * 0.06% o/p Dominion Project South Africa SXR Uranium One 18, % u/g - byproduct Au Honeymoon Australia SXR Uranium One 1,200 ** 0.24% ISL Beverly Australia Heathgate Resources n/a n/a ISL Crow Butte United States Cameco % ISL Smith Ranch/Highland United States Cameco 5, % ISL (1) Regulated maximum or potential maximum * M&I Resource ** I Resource Source: Company reports, RBC Capital Markets estimates 14 Adam Schatzker

15 March 24, 2008 Uranium Market Outlook Exhibit 19: RBCCM Long-Term Uranium Production Cash Cost Curve Cash Cost (US$/lb U 3O 8) $80.00 $75.00 $70.00 $65.00 $60.00 $55.00 $50.00 $45.00 $40.00 $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $ th Percentile We are forecasting a long-term uranium price of $45/lb starting in Our long-term price is based upon the 90th percentile of our cash cost curve forecast. We feel that this level is appropriate to maintain uranium production over the long term. We believe our higher price forecasts between 2008 and 2017 are sufficient to bring enough production to the market to satisfy future demand. Cumulative Production (mm lbs U3O8) Source: Ux Consulting, Company Reports, RBC Capital Markets estimates Exhibit 20: Long-Term Uranium Production and Requirements (1945 to 2020E) Million pounds U3O Historical inventories were built up from the mid-1950s through to the late 1980s. However, much of the uranium produced during that period was, and still is, used for military purposes. We believe that there is no significant inventory remaining outside of military or government holdings that is not destined for reactor requirements E 2015E 2020E Western Production Eastern Production Requirements Source: Ux Consulting, World Nuclear Association, RBC Capital Markets estimates Adam Schatzker 15

16 Uranium Market Outlook March 24, 2008 Secondary Uranium Supply Exhibit 21: Secondary Uranium Supply 2003 to 2030E 000s lbs U3O8 70,000 60,000 50,000 40,000 30,000 20,000 10, A 2009E 2011E 2013E 2015E 2017E 2019E 2021E 2023E 2025E 2027E 2029E HEU I Re-Enriched Tails Russian Government Stockpile Sales US/USEC Government Stockpile Sales MOX & RepU Source: Ux Consulting, RBC Capital Markets estimates The U.S. government has plans to possibly place up to 5.5 million pounds of uranium per year into the market in the coming years. The material will be sourced from highly enriched uranium (HEU) and strategic stockpiles. We have already factored in 6.5 million pounds (including TVA material already being delivered). Therefore, we do not foresee this changing our view of the market or uranium prices. Secondary supply has comprised a large portion of the uranium supply over the past 20 years. We believe that there will be no continuation of the current HEU supply agreement with Russia when it expires in 2013 (see the Russian Suspension Agreement section on the following page). Aside from the primary mine supply of uranium, a key component of the supply/demand balance is the contribution from secondary sources. The secondary sources are varied and comprise the following: MOX and RepU See below. US/USEC Government Stockpile Sales The sales of previous government strategic stocks that have been deemed surplus. Some of this material is sold through the United States Enrichment Corporation (USEC), a public company that was previously a government organization. Russian Government Stockpile Sales Surplus strategic stocks. Re-Enriched Tails Derived from the waste streams of previous enrichment (called depleted uranium) that are reprocessed to extract additional usable uranium. HEU I and HEU II See below. Cameco, Areva (the French nuclear utility), Nukem (a German nuclear services company) and GNSS (Globe Nuclear Supply Services) The original companies that were assigned the rights to sell the HEU/LEU products outside of Russia. Effective January 2004, GNSS lost its rights to sell Russian HEU/LEU material. Highly Enriched Uranium Historically, more than half of the uranium produced in the world has been used in the production of nuclear weapons and in fueling military vessels. However, since the end of the Cold War in the early 1990s, many weapons have been dismantled under international treaties and some of the highly enriched uranium (HEU) and plutonium has been declared surplus. In 1993, the governments of the United States and Russia agreed to allow 500 tonnes of Russian surplus HEU containing about 90% U-235 to be sold into the market as blended-down low enriched uranium (LEU) containing about 4% U-235; this equates to approximately 395 million pounds of U 3 O 8. The agreement called for the material to be sold into the market over a 20-year period. Recently it was announced that the Russian HEU partner, Tenex, has asked the Western partners (Cameco, AREVA and Nukem) to renegotiate the pricing of the U 3 O 8 component of the HEU agreement. We are assuming that the volumes sold under the HEU contract are unaffected; therefore any renegotiation of the price will have no effect on our supply demand outlook or price forecast. 16 Adam Schatzker

17 March 24, 2008 Uranium Market Outlook MOX and RepU Mixed oxide fuel (MOX) is a combination of plutonium oxide recovered from spent fuel and new uranium oxide from depleted uranium (a waste product of the fuel enrichment), while reprocessed uranium (RepU) involves the removal of uranium and plutonium from spent fuel to fabricate new fuel. While these two fuel sources have been used for many years, the contribution has been quite low (approximately 5% of total uranium supply). We have assumed that the contribution from both MOX and RepU will decrease, on both a percentage and an absolute basis. With a high uranium price, the economics of reprocessing become more attractive (still considered marginal and done more for political than economic reasons), but the ability to increase production is currently limited by the capacity of existing facilities. We believe the secondary supply will remain fairly constant and predictable. However, with high uranium prices, the potential increase of supply from MOX, RepU and re-enriched tails exists. Also, while Russia has significantly reduced its supply of weapons-grade uranium through the HEU program, the United States has not. Depending on political pressure and the availability of resources, there is always a possibility that the U.S. material could find its way to the market in the future. Russian Suspension Agreement (RSA) Further to our last commentary regarding the agreement initialed between Russia and the United States to allow the importation of Russian origin uranium products starting in 2011 through 2020 (after the expiry of the HEU agreement in 2013), the two countries have signed an amendment to the RSA that formalizes the initial agreement and provides Russia with access, albeit limited, to the U.S. commercial markets until We continue to believe that the RSA is focused on providing U.S. utilities with access to Russian enrichment services. We do not think that the RSA will introduce any new uranium to the global supply chain and, therefore, our supply-demand forecast is not affected by this agreement. Of particular note are the following aspects of the amended RSA: As we stated in our prior update, the annual quotas come into effect post-2013, equate to 20% of the total forecast U.S. annual consumption (as per the World Nuclear Association s 2005 Reference Case adjusted to 0.30% tails assay), and all material will be measured in terms of kilograms of enriched uranium product (EUP) standardized to 4.4% U 235 with a tails assay of 0.30%. Russia can sell uranium from Enriched Uranium Product (EUP) stockpiles that were brought into the U.S. as part of deliveries grandfathered by the original 1992 RSA. No further approvals are necessary for sales of these EUP stockpiles if the sales are made before January 1, While Russia considers SWU transactions services, the U.S. wishes to treat them as goods and therefore subject to antidumping regulations. Essential definitions and processes under the amendment remain to be clarified by Statements of Administrative Intent to be issued by the U.S. government at some undetermined time in the future. Reopener periods in 2016 and 2019 will allow adjustments to these export limits if the WNA s forecasts of U.S. demand are revised higher. The U.S. may consider termination of the amended RSA if Russia fails to carry out its commitments under the initial HEU agreement. Although implementation has not yet been set, the U.S. believes that Russian uranium imported for initial cores should be used exclusively for that purpose and, if not, should be counted against the export limits under the amended RSA. The U.S. can unilaterally increase the export limits to address what it calls unforeseen situations of substantial market disruption, but stressed that such an action would only be done to support the U.S. economy and after consulting the domestic uranium industry. Adam Schatzker 17

18 Uranium Market Outlook March 24, 2008 Uranium Demand Exhibit 22: Uranium Demand 2004 to 2015E (000 lb U 3 O 8 ) Year A 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E North America 58,701 55,776 53,717 55,367 55,234 55,656 56,044 56,833 57,498 58,735 60,631 61,410 South America 1,219 1,217 1,084 1,119 1,130 1,366 2,477 1,419 2,014 2,054 2,091 3,408 West & Central Europe 58,979 57,783 60,812 60,977 62,334 59,448 59,923 60,354 62,476 63,690 64,041 65,927 East and South-East Europe 14,153 15,289 13,740 14,089 14,542 14,622 15,744 15,789 16,813 17,764 18,058 20,925 Africa ,477 1,208 1,809 West and Central Asia 133 1, ,995 1,334 South Asia 1,287 1,393 2,795 2,206 2,766 3,408 3,813 4,115 3,958 5,281 4,646 5,960 South-East Asia & Pacific ,200 0 East Asia 36,259 34,473 32,864 35,865 36,594 39,222 40,607 41,348 45,562 47,741 51,693 55,133 Initial Core Demand ,674 14,540 12,127 5,771 9,020 11,571 8,770 Reactor Inventory Demand ,918 10,625 11,861 15,264 17,698 Total Demand 171, , , , , , , , , , , ,373 y/y Change -5.4% -2.2% -0.6% 2.2% 2.0% 10.2% 1.9% 5.6% -0.1% 6.4% 6.1% 4.3% Including: USA 57,453 53,956 49,183 48,757 50,302 50,167 50,031 50,222 50,983 51,617 52,273 53,577 France 26,838 25,811 26,999 27,129 27,793 27,915 28,027 27,793 27,876 27,978 28,757 28,893 Russia 9,466 8,582 8,566 8,624 8,862 9,308 9,379 10,569 10,571 11,551 11,551 12,711 Japan 23,736 22,285 18,511 19,285 21,456 20,071 22,243 21,045 21,923 24,288 23,607 25,851 UK 6,154 5,857 6,559 6,458 5,921 5,831 5,460 4,849 4,935 5,024 5,112 5,206 China 2,808 3,926 4,425 3,013 3,800 3,738 5,382 7,204 6,965 6,546 10,477 11,585 y/y Change 39.8% 39.8% 12.7% -31.9% 26.1% -1.6% 44.0% 33.8% -3.3% -6.0% 60.0% 10.6% India 1,108 1,126 2,488 2,626 2,034 2,593 2,761 3,639 3,810 3,647 3,763 4,322 y/y Change 1.6% 1.6% 121.0% 5.5% -22.5% 27.5% 6.4% 31.8% 4.7% -4.3% 3.2% 14.9% Source: World Nuclear Association, Ux Consulting, company reports, RBC Capital Markets estimates WNA Demand Forecast Analysis Every two years the World Nuclear Association (WNA) revises its forecast of nuclear electricity generation and the supply and demand for uranium, conversion, enrichment and fuel fabrication. For our forecast purposes, we focus on the uranium demand portion of the study; we carry out our own supply forecast. Our forecast is based upon the WNA Upper scenario contained within The Global Nuclear Fuel Market Supply and Demand Exhibit 23: WNA 2005, 2007 and RBC Forecast Demand for 2003 to 2030 (000 lb U 3 O 8 ) 450, , , , , , , E 2009E 2011E 2013E 2015E 2017E 2019E 2021E 2023E 2025E 2027E 2029E 2005 Reference 2005 Upper 2007 Reference 2007 Upper RBC Forecast Source: World Nuclear Association, Ux Consulting, company reports, RBC Capital Markets estimates 18 Adam Schatzker

19 March 24, 2008 Uranium Market Outlook The outcome of the 2007 study is considerably different than the one published in September While nuclearsourced electricity generation is almost the same (slightly lower for the upper scenario), the demand for uranium is forecast to be lower in all three scenarios (lower, reference and upper). The lower level of demand is driven primarily by a significant lowering of assumed Western World enrichment tails assays. Exhibit 24: WNA 2005 and 2007 Upper and Reference Nuclear Generation for 2003 to 2030 (MWe net) MWe net Reference 2005 Upper 2007 Reference 2007 Upper Source: World Nuclear Association The WNA carries out its study without consideration of the price of inputs or products. As stated in the 2007 report: Consideration of likely price levels is outside the scope of this report, but the scenarios presented could change substantially within a few years if perceived market conditions become very different from those presently prevailing. We believe that forecasting supply and demand levels absolutely requires the consideration of price; otherwise the study could tend toward unrealistic outcomes. Our price forecast for uranium is very different from those that were prevailing at the time the document was authored. We have used the WNA report as the foundation for our demand forecast; however, we believe that the WNA work provides only a partial picture of future demand. There are three areas in which our forecast differs from that of the WNA: (1) enrichment tails assays; (2) initial cores; and (3) new reactor inventories. (1) Tails Assays The enrichment process is used to increase the weight percent of the U 235 isotope in nuclear fuel. Natural uranium contains 0.711% U 235 with the remainder comprising U 238 (and other minor constituents). Typically, most reactors require U 235 levels between 3.5% and 5.0%. The enrichment process uses physical separation using either gaseous diffusion or centrifuge technology to concentrate the U 235. The process is not 100% efficient and results in U 235 being sent to the tails the percentage content of U 235 in the tails is the tails assay. It is possible to bring the tails assay down through the application of additional separation, which is measured as separative work units (SWU). The amount of SWU applied is often limited by the availability of SWU, the relative costs of SWU versus uranium or contract specifications. As mentioned above, the most significant change in the WNA forecast was the lower tails assay assumption for the Western World. We estimate that the WNA s forecast would require, in some years, close to the maximum output of SWUs available in the Western World. However, depending in the prevailing prices for SWUs, uranium and electricity prices, the forecast enrichment capacity may not be available. Given that our forecast is for gradually weakening uranium prices from 2009 onward, we feel the economic impetus to reduce tails assays may likewise diminish. Additionally, with high electricity prices the feasibility of running gaseous diffusion plants at the maximum rated capacity is reduced substantially. Adam Schatzker 19

20 Uranium Market Outlook March 24, 2008 Exhibit 25: WNA 2005 and 2007 Upper and Reference Tails Assay Assumptions for Western World Enrichment for 2003 to 2030 (% U 235 in tails) Reference 0.27% 0.27% 0.27% 0.27% 0.27% 0.27% 2005 Upper 0.27% 0.27% 0.27% 0.27% 0.27% 0.27% 2007 Reference 0.25% 0.22% 0.25% 0.25% 0.25% 0.25% 2007 Upper 0.25% 0.22% 0.25% 0.25% 0.25% 0.25% Source: World Nuclear Association For Western World enrichment demand, we have left the tails assay unchanged from the 2005 WNA report at 0.27%. As a result our annual uranium demand forecast is 4.1 million pounds higher, on average, between 2008 and (2) Initial Cores We have calculated the initial cores that are implied by the WNA forecast and we believe they are too low. Our initial core forecast is derived by first estimating the amount of uranium we believe will be necessary for the initial cores of the reactors in the Upper generating scenario. From that, we subtract the amount implied by the WNA uranium demand forecast. The result is an initial cores forecast that is incremental to that published by the WNA. Between 2008 and 2020 our incremental initial core forecast totals approximately 138 million pounds. We have assumed that there is some flexibility in the timing for the demand for initial cores and, therefore, initial core demand is forecast to take up any potential market surplus. In years in which there is insufficient supply to meet initial core demand, the demand is carried over to the following year. Exhibit 26: Annual Initial Core Requirement Forecast (000 lb U 3 O 8 ) 22,500 20,000 17,500 15,000 12,500 10,000 7,500 Others Asia (incl China) Russia & Eastern Europe Europe North America 5,000 2, E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E Source: World Nuclear Association, RBC Capital Markets estimates 20 Adam Schatzker

21 March 24, 2008 Uranium Market Outlook Exhibit 27: Annual Initial Core Requirement and Purchasing Forecast (2007E to 2020E) (000 lb U 3 O 8 ) 2007E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E Beginning Balance 0 10,500 15,255 7, ,880 18,343 25,412 Annual Requirement 10,500 4,755 8,570 7,388 12,127 5,771 9,020 11,571 8,770 14,611 9,354 9,463 7,069 18,777 Cummulative Requirement 10,500 15,255 23,826 14,516 12,127 5,771 9,020 11,571 8,770 14,611 9,604 18,343 25,412 44,189 Market Surplus (no Cores) (11,996) (2,787) 16,698 16,610 28,262 44,215 51,274 34,856 27,566 14, (10,276) (16,561) (16,792) Core Material Purchased ,698 14,516 12,127 5,771 9,020 11,571 8,770 14, Ending Balance 10,500 15,255 7, ,880 18,343 25,412 44,189 Market Balance (11,996) (2,787) 0 0 4,427 27,819 30,392 8,021 1, (10,276) (16,561) (16,792) Source: WNA, RBC Capital Markets estimates (3) New Reactor Inventories The WNA forecast is designed to measure the amount of uranium required by reactors at the time of need. By limiting the forecast scope in this manner, the WNA ignores the necessity for utilities to build an inventory for each new reactor constructed. For our forecast, we have assumed that utilities will build inventories of between one year and two years, depending on the country (see Exhibit 28). Based on these assumptions, we have modeled an additional 186 million pounds of demand between 2008 and Exhibit 28: Utility Strategic Inventory in Terms of Desired Level of Forward Requirements (Demonstrated as % of utilities replying) North America Europe East Asia Total 6 Months 24% 18% 0% 16% 12 Months 34% 30% 12% 22% 18 Months 27% 22% 28% 26% 2 Years 10% 18% 24% 18% 3+ Years 5% 12% 36% 18% Source: World Nuclear Association As with the initial core requirements, we have assumed that new reactor inventories will be purchased when there is material available. In years where there is insufficient U 3 O 8, the balance will be carried over to the following year. Exhibit 29: Annual New Reactor Inventory Requirement and Purchasing Forecast (2008E to 2020E) (000 lb U 3 O 8 ) 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E Beginning Balance 0 1,300 3,371 5, ,633 42,845 67,938 92,739 Annual Requirement 1,300 2,071 3,929 6,502 10,625 11,861 15,264 17,698 20,633 22,212 25,094 24,801 24,213 Cummulative Requirement 1,300 3,371 7,300 11,707 10,625 11,861 15,264 17,698 20,633 42,845 67,938 92, ,951 Market Surplus (no Inventory) (2,787) 0 2,095 16,134 38,444 42,254 23,285 18, (10,276) (16,561) (16,792) Inventory Material Purchased 0 0 2,095 11,707 10,625 11,861 15,264 17, Ending Balance 1,300 3,371 5, ,633 42,845 67,938 92, ,951 Market Balance (2,787) 0 0 4,427 27,819 30,392 8,021 1, (10,276) (16,561) (16,792) Source: WNA, RBC Capital Markets estimates Strategic Inventories As the world looks forward to a renaissance for nuclear power, many countries are proposing to build strategic inventories of uranium to ensure that their fuel supplies are secure. India, China, the United States, South Africa and others have jumped on this bandwagon and, in total, could provide substantial buying in the uranium market. This provides us with a level of comfort with respect to the market surpluses we are forecasting for 2010 to 2013, as these countries could enter the market and absorb any additional material. We have not modeled any strategic inventory buying as it is highly discretionary. Adam Schatzker 21