Resource World Magazine

surprisingly inelastic relative to price." Rule said it is also worthy to note that as the industry matures the average plant size has been growing. The plants that are being built today, say in China, require four times as much fuel as in the past, such as the one at San Onofre on the coast of Southern California. Regarding the stock market, is Rule expecting that a rise in the uranium price will increase the shares price of uranium explorers? "Mostly not," he speculated. "We learned in the last cycle that exploring for uranium is a high-risk exercise. I would suggest that there are seven or eight uranium juniors who actually have some uranium resources that have some leverage to the uranium price. As we have learned with other mineral exploration industries, if the price of something you don't have goes up, it doesn't dramatically change the fortune of the company. I think investors have wised up since the last uranium boom in 2004. JULY 2013 ❝It's a good idea for investors to focus on teams that have been successful in the uranium sector in the past.❞ Would now be a good time to buy shares in uranium producers? "I think that is probably accurate," said Rule. "There are a couple of ways to play this," Rule notes. "Uranium Participation Corp. trades on the TSX and is a uranium investment holding company. They don't have any exploration or operational risk. The uranium producers from the biggest ones on down may be more leveraged to uranium prices, but more risky." "For readers of Resource World, who are willing to take exploration or developmental risk, I think you come down to the third tier which are exploration and development focused juniors who have already found deposits – probably deposits that could not be put into production at US $40 a pound, but would be considered resources or reserves at US $80. Rule doesn't think uranium discoveries will kick-start uranium stocks in general. "I believe that the investing community observed during the last cycle that success in uranium involves a management team with experience in uranium," he noted. "There are probably no more than 20 such teams out there. So I suspect that a rebound in the uranium price will lead to a dramatic response in a few stocks, but I don't think it will be broadly based." Rule said it's a good idea for investors to focus on teams that have been successful in the uranium sector in the past. www.resourceworld.com 7

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