Uranium One

From Expert J.Bass

Uranium One* (UUU ): TSX :

We are cautious about the revival of the uranium sector having sold all nine stocks in our " uranium basket " last summer. The commodity price fell from a high of $130 to $70 ,driving many investors out of the sector. there has been a recent recovery to $90 but investors are still shy having been burned.

Our new watchlist includes only producers and now we see the aggressive management of Uranium One securing its acid supply. Uranium One has facilities around the world and the sector remains a long term growth story.
With a current price of one half of our sale price it should be purchased - in increments until the market settles.

According to a Reuters report, UUU plans to invest in a Russian sulphuric acid plant as a backup to secure supply. UUU Chief Executive Neal Froneman told Reuters in an interview, “We intend to invest in a plant in Russia as a source of secure supply should there be another disruption in Kazakhstan...that plant can be refurbished and in production within about 18 months.” UUU has been through a tough patch, since announcing revisions to production forecasts due commissioning delays at Dominion and production constraints in Kazakhstan because of a sulphuric acid shortage. In his review of UUU’s Q3/07 results (dated November 16, 2007), Canaccord Adams Metals & Mining Analyst Jim Taylor had this to say about the company’s sulphuric acid issue: “The immediate issue of acid is expected to be resolved by mid-2008. This involves importing acid from Uzbekistan and Russia up until May 2008 when the delayed scrubber unit at Kazakhhmys’ Balkash copper smelter, which is expected to produce 1.2Mtpa of acid, is expected to be commissioned. We note that as a longer-term solution to the availability of acid, Kazatomprom and its partners are considering to build an acid plant that could produce in excess of 500ktpa of sulphuric acid, by burning elemental sulphur, which we understand to be readily available from the de-sulphidisation of hydrocarbons from the Caspian basin.”

Jack Bass is the editor of the market letter The Apprentice Millionaire Program - available at www.amprogram.com