Market is Getting Heated

So much for waiting until the Cameco news on Cigar Lake was reported in March. Before either of the updates the uranium stocks around the world have been roaring to new highs across the board. The TICUA (our uranium average for Canadian companies) is up over 20% since the lows reached in early January, and has not had a down day 12 trading days! That is roughly 2 trading weeks with no downward action! This is most definitely a bullish sign and could be the market setting up for a strong push upward after the Cameco news. We now believe that the news coming out will almost definitely be bad as there has been so much strength recently in other stocks, but there is always room for surprises in the market.

Today the Uranium Spot price increased $10 to $85 per pound, which is the largest gain ever for uranium. This now indicates that not only are securities investors thinking Cigar Lake is delayed longer than thought, but that uranium purchasers are beginning to buy into the notion that either prices are going higher or that Cameco is not going to be able to come through anytime soon. As we have said before, many people tell us that it is absolutely possible to salvage the project, but getting it done on time requires an awful lot to go right. With that said, if Cameco can pull through with this and achieve their objectives early or on time, we would be inclined to vote it among the New Seven Marvels of the World.

We are watching Strathmore still with a very close eye as it seems to be borrowing a page from the Forsys playbook with this powerful movement upwards. If AREVA is kicking the tires as we suspect, then the stock has much further to run. Also of note is Monster Copper which has begun another run upwards. They have a large land position in the CMB of Labrador, including a parcel in close proximity to some of Aurora's deposits. The more that Aurora expands these deposits, the higher the probability that they extend in some form onto MNS property as well as the possibility that MNS may be taken out. We believe that the MNS story is one of significance that has not yet been discovered by uranium investors...quite possibly because they have COPPER in their name. We also received a call from Bluerock Resources today and they explained their press release to us regarding a new mine (which is really an old mine, but one that is not worn out thus it is receiving a new life). The mine is built, however drilling will be done to try and further develop the deposit as well as outfitting the mine. We are told that the grade is about .30% U3O8 and the project is in proximity to a mill. This should be watched carefully as this mine will be much cheaper to develop than building a new one, certainly a positive for the company.

It now appears that Australia is going to overturn the Three Mines Policy no matter who is in office, or leading in the polls. This morning the news out of Australia stated that the ruling Labour Party's Left faction leader was in favor of opening up uranium mining in the country. This should open the door for some more multi-nationals to emerge out of this industry, as well as serial-purchasers to make further purchases. Paladin and SXR will most certainly be buying, and Denison should in order to fill the pipeline with some mid-exploration projects. Australia offers some cheap lbs. in the ground for investors and possibly companies looking to buy. This is a story that shall get some more attention in the future as it plays out, but continue to watch it carefully to have a working knowledge of the situation.

Also of interest to uranium investors is the fact that big oil seems to be moving "beyond petroleum". We are told from very reliable sources that one of the majors may very well be investigating a particular uranium project in order to buy in (not Strathmore's). This signals a major milestone for the industry if this rumor pans out, and if the oil companies are willing to buy in now and proclaim uranium as the fuel of the future. We shall eagerly await any news regarding big oil in the uranium arena, but until then we shall view this for what it is: A RUMOR.

We shall anxiously await the Cameco news out in March (there should be two releases...one in mid-March and the other one at the end) as we believe that this will be the news of the year, at least until the Australians meet in April! These next two months will be key in deciding how the market acts until next October, so we shall pay close attention and in the meantime develop some ideas of how we shall react to the news. As always, we hope that we are of help in leading you through this exciting investment opportunity that uranium offers each of us and that some of you may be profiting from the news we supply. Good health and good trading.

News is All About

This past week has seen a dramatic change in the landscape of the uranium industry. Cameco has been stalling as of recently and the market is eagerly awaiting their news in March. SXR has purchased UrAsia in a $3.1 billion deal, and will become the #3 uranium company in the world behind Cameco and Areva.

SXR has been one of our favorite uranium stocks from the beginning, however UrAsia has been one of our least favorite ones due to their rediculously large share float and geographic location. However, we shall stick with SXR management as we believe they are some of the best in the business and hopefully watch as they maximize value from UrAsia's assets. We have heard rumors that UrAsia's production is not fully being realized, but we shall see in the months to come. We shall be proud owners of the largest mid-major in the industry and hopefully continue to see our company grow into the next uranium blue-chip as we previously forecasted. The current money to be made is in the near-term producers and they will continue to be picked off so long as their market caps remain low and do not appreciate considerably.

With that in mind, we believe that Forsys (FSY) could be picked off as they spin off their gold assets and get ever closer to beginning construction on their mine in Namibia. Also of note is that Namibia has declared that they will cease to issue anymore licenses for uranium exploration for the time being, so those companies with licenses are somewhat more valuable on this fact alone. Ur Energy (URE) is also looking nice as their stock has been somewhat stalled in the $4 range for the past few months. They should be producing in early 2008 which makes them one of the next few companies to begin production. Assets like these are becoming ever more attractive as the price of uranium rises and the company's stock is stalled.

Strathmore Minerals (STM) has been on a major upswing from our last buy. They took on one JV partner already which was a smaller outfit. Now they are in negotiations for their Roca Honda project. The company took a $100,000 payment for the exclusive right to negotiate the right to construct and mine the Roca Honda project. This is a puny sum compared to what some companies are getting for a "lock-up period" here, in Australia, and in Canada. Strathmore stated that, "it has granted to a Fortune Global 500 international diversified resource and industrial corporation the exclusive right to negotiate a joint venture agreement." So after looking at the list of companies located within the 400-500 range, we come up with a possibility that is very intriguing. There is only one reason that Strathmore is allowing the rights to be negotiated for such a cheap price and that reason is expertise. The company that appears to have the best expertise at this time is AREVA, especially after Cameco's mishap managing Cigar Lake and what has happened in the past at McArthur River. AREVA is purchasing stakes in minors and sharing their expertise for stakes as well. However if you check out the list, coming in at #483 is AREVA and they also fit the description of an "international diversified resource and industrial corporation". This is the way we see it, and if our assumptions are correct, then STM is worth $8 per share. The stock did not move on this news, however we find ourselves once again buyers of STM at C$4.24.

BRD, which has fallen considerably over the past month or so is now approaching a level of support. We think that if the company has 10,000,000 lbs. between all of their projects, which their CEO has indicated to us, then there is the potential for some value here. We are averaging down in this situation and shall double our position at the C$.50 level. Usually trying to catch falling knives is not the best idea, however we see their potential level of lbs. in the ground valued at C$1, which we think is undervalued just as Strathmore was not so long ago.

The next 60 days are going to be what decides how uranium stocks act for the rest of the year, because if we go into a gradual merger mode, then uranium stocks will attract even more speculation during their seasonal downtrend through the summer months. Take-out targets do not decline with the general market when there are aggressive shoppers about, and that may end up being the case as we move forward. Everyone should sit back and enjoy this period as this could very well be a major milestone in our industries evolution. Be happy your here and invested in some of the most promising companies, and as always stay strong during downtrends in the general market.

On a closing note, it must be noted that our uranium index for Canada, as well as Australia, has closed at a record high for the past 3 days. The juniors are showing strength across the board as well as across continents. This is quite bullish, but there should be a calm before the storm develop before Cameco's first announcement, and depending on that news another may develop before their second announcement (our inclenation is that the first announcement will be the most important and all that investors hear or care about). Until next time, good health and good trading.