The document is a presentation by Ian Hiscock from CRU Strategies about the outlook for uranium mining costs in the Americas. It discusses the uranium market in 2010, including increased Chinese imports and supply disruptions that led to market deficits and higher prices. It outlines a positive long-term outlook for uranium due to fundamental supply shortages and investment needs. Regarding mining in the Americas, it notes that production is dominated by one very low-cost source in Canada and that growth depends on new projects, though exploration activity is increasing.

1. AMERICAS’ RESOURCES
INVESTMENT CONGRESS
Outlook for uranium mining cost
in the Americas
Ian Hiscock – Consultant, CRU Strategies
IRONMONGERS’ HALL, CITY OF LONDON ● TUESDAY, 1 FEB 2011
www.ObjectiveCapitalConferences.com

2. Uranium market outlook
Ian Hiscock – Consultant, CRU Strategies
LONDON | BEIJING | SANTIAGO | SEATTLE | SYDNEY | RIO DE JANEIRO | MINNEAPOLIS | MUMBAI
31 Mount Pleasant, London WC1X 0AD UK PO Box 1269, Langley, WA 98260 USA
Tel: +44 20 7903 2000 Fax: +44 20 7278 0003 Tel: +1 360 321 4707 Fax: +1 360 3214709
517, Tower 2, Bright China Chan An Building, 2911 West 54th Street,
7 Jianguomennei Avenue, Beijing 100005, China Minneapolis, MN 55410, USA
Tel: +86 10 6510 2206 Fax: +86 10 6510 2207 Tel: +1 612 922 9092 Fax: +1 612 920 3225
Augusto Leguía Norte Nº 100 of.506, Level 2, Kalpataru Synergy, Opp. Grand Hyatt,
CRU Strategies is a division of CRU International Limited Las Condes, Santiago, Chile Santa Cruz (East), Mumbai 400055, India
www.crustrategies.com Tel: +56 2 231 3900 Fax: +56 2 231 4314 Tel: +91 22 3953 7395 Fax: +91 22 3953 7200

3. Presentation Outline
• Brief introduction to CRU
• The uranium market in 2010
• The outlook for uranium
• Uranium mining in the Americas
3

4. • Brief introduction to CRU
• The uranium market in 2010
• The outlook for uranium
• Uranium mining in the Americas
4

5. Introduction to CRU
 Leading research group focused on:
• Mining and metals
• Chemicals and fertilizers
 Independent, with a global presence
• Established in the late 1960s
• Privately owned to ensure its independence
• Offices in London, Beijing, Santiago, India,
Australia and North America

6. Presentation Outline
• Brief introduction to CRU
• The uranium market in 2010
• The outlook for uranium
• Uranium mining in the Americas
6

7. Chinese import of more than 17,000 t U in 2010...
Uranium imports, monthly, China, 2009-2010, tonnes U
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Dec-09
Dec-10
Jan-09
Aug-09
Nov-09
Aug-10
Nov-10
Feb-09
Mar-09
Jun-09
Apr-09
May-09
Sep-09
Jan-10
Jul-09
Mar-10
Jun-10
Oct-09
Feb-10
Apr-10
May-10
Sep-10
Jul-10
Oct-10
Data: CRU Analysis, GTIS
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8. ...coupled with some supply disruptions...
• Chiefly, a 28% decrease in U3O8 production at ERA’s Ranger mine.
Approximately 1000 tonnes less than original target production.
• Olympic Dam was still recovering from a shaft failure at the
beginning of the year
• Although Kazakh production rose by almost 25% year-on-year from
2009, they missed targeted production by a modest amount
8

9. ...has resulted in market deficits. Concurrently, prices
have increased more than 50%...
UxC weekly price, US$/lb U3O8
75
70
65
60
55
50
45
40
May 10
Apr 10
Nov 10
Mar 10
Aug 10
Sep 10
Oct 10
Dec 10
Jan 11
Feb 10
Jan 10
Jun 10
Jul 10
Data: CRU Analysis, UxC Consulting
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10. 101
103
105
85
87
89
91
93
95
97
99
Jan-2009
Feb-2009
Mar-2009
Apr-2009
Data: CRU Analysis, US Federal Reserve
May-2009
Jun-2009
Jul-2009
Aug-2009
Sep-2009
Oct-2009
Nov-2009
Dec-2009
Jan-2010
USD Trade Weighted Index, monthly, Jan ’09 = 100
Feb-2010
Mar-2010
...aided by further dollar depreciation.
Apr-2010
May-2010
Jun-2010
Jul-2010
Aug-2010
Sep-2010
Oct-2010
10
Nov-2010
Dec-2010

11. Presentation Outline
• Brief introduction to CRU
• The uranium market in 2010
• The outlook for uranium
• Uranium mining in the Americas
11

12. Market deficits are expected to continue through 2011,
lending support to recent high prices
Market balance, percentage of primary supply requirements
5%
0%
-5%
-10%
-15%
-20%
-25%
2009 2010 2011
Data: CRU Analysis
12

13. Over the longer term, the market outlook is also very
positive from the producer’s perspective...
• Fundamental supply shortages over the next 10 years
– Rapid increases in demand, particularly from China
– A legacy of underinvestment in exploration and mine development
restricting primary supply
– Declining secondary supply
• An investment gap of 65,000tpa U3O8 emerges post 2020
13

14. ...with significant investment required to meet future
demand
Net primary demand vs. primary production, tonnes U3O8, 2020-2030
200,000
Supply gap of ~65,000 tpa U3O8
tonnes U3O8
100,000
Projected supply from
mines operating in 2020
0
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Data: CRU Analysis
World production Net primary demand

15. Long-term demand drivers
• New demand in developing • Increased demand from
economies. developing economies.
• Increased mechanisation. • Higher and more volatile
• Possible shift in usage supply costs
patterns for personal Growth in
transportation. Price of
power
Fossil fuels
demand
Energy CO2
security emissions • International
• Strategic incentives to agreements on climate
shift patterns in energy change
production and • Localized pollution
consumption. issues
15

16. Presentation Outline
• Brief introduction to CRU
• The uranium market in 2010
• The outlook for uranium
• Uranium mining in the Americas
16

17. The Americas produced 22% of world primary supply in
2010, more than 80% of which was from Canada
Namibia Niger
Russia
Uzbekistan
Australia
Brazil Ukraine
USA
RoW
Canada
Kazakhstan
17

18. Many mines and prospects in the Americas are low-cost...
1. Very high-grade material found in the Athabasca basin in
Saskatchewan, Canada.
– Low unit cost, but high initial capital and mining complex
2. Small ISL operations/projects in the USA, mostly in Wyoming but
also in Nebraska, Utah and Texas.
In Latin America, only brazil produces uranium. Although there are
many exploration prospects located in Chile, Peru and Argentina.
18

19. ...and located in justifications that are considered
favourable towards mining.
• Fraser Institute Survey of Mining Companies, The policy potential
index, 2010 mid-year update, covering 51 jurisdictions
• Alberta (ranked number 1), Quebec, Yukon and Saskatchewan are
all ranked in the top 5.
• In the USA, Alaska, Arizona, Nevada, Utah and Wyoming all feature
in the top 20.
• Chile the most favourable in South America. Columbia, Mexico at
and Peru are in the top 20.
• By contrast ranks for the principle mining districts in Australia (South
and Western Australia) have fallen dramatically since last year.
Average rank for Australian States is now 31
19

20. CRU assess costs at four different levels
CRU’s Value-Based Costing (VBC) methodology:
Economic costs:
Corporate costs +
capital charge
Corporate costs:
Business costs +
corporate overhead + Long run
remediation costs investment
Business costs: decisions, long
Site costs + run price
realisations costs (i.e.
sales & marketing, Business efficiency
Site costs: transportation)
Labour, fuel, power,
consumables, etc.
Measure free
cash flow
Benchmarking
20

21. Most uranium production in the Americas comes from
one very low-cost source.
Economic Cost Curve, 2009
Data: CRU Analysis
21

22. Production growth hinges on one large project, but
exploration activity has picked up considerably.
• Canada’s Athabasca basin in Saskatchewan is the focus for existing
uranium production and exploration, however there is also exploration
under way in Labrador, Quebec, Ontario and British Columbia.
• The USA has a few advanced projects, but involve only small tonnages
• Most projects in Latin America are currently at the very early stages of
development.
• There are 100s of projects at the grass roots and advanced exploration
stages but only a handful at the prefeasibility/ feasibility study stages...
• This is not unique to the Americas there are only about 100 in the world
compared with more than 400 copper projects and 900 gold projects.
22

23. Thank you for listening
23

24. Contact details
CRU contacts for further information:
In London
Ian Hiscock, Consultant, CRU Strategies
+44 20 7903 2244  ian.hiscock@crugroup.com
Philip Macoun, Principal Consultant, CRU Strategies
+44 20 7903 2200  philip.macoun@crugroup.com
In the USA
Irv Adler, VP, Business Development, North America, CRU
+1 260 918 3643  irv.adler@crugroup.com
In Sydney
Philip Sewell, Business Development Manager, Australasia, CRU
+61 2 9387 8842  philip.sewell@crugroup.com
In Perth
Allan Trench, Regional Director, Australasia, CRU
+61 (0)43 709 2466  allan.trench@crugroup.com
Website: www.crugroup.com
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