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URANIUM REACTION: Point of maximum pessimism


August 26, 2011

FOCUS POINTS: Outside of general market weakness, what is the worst that could reasonably happen to the global uranium market? Nothing.
This year we have had the most powerful earthquake to ever hit Japan (9.0 on the Richter scale) and subsequent tsunami waves of up to 15m in height trigger the largest nuclear accident since the 1986 Chernobyl disaster. A disaster so great, the International Atomic Energy Agency (“IAEA”) applied the highest rating of “7” on its International Nuclear and Radiological Event Scale.

In reaction, countries around the world placed their nuclear programs under review and performed safety checks to reassess safety measures. Germany announced that it intends to exit nuclear power generation by 2020, Italy has cancelled plans on building 10 new reactors and Switzerland has abandoned plans to build new reactors and will not replace its five existing reactors at the end of their respective life spans.

However, outside of Germany, Italy and Switzerland, there does not appear to be any other countries seriously considering a negative course change with respect to nuclear power. In fact, reports have been positive. The China Nuclear Energy Association announced in mid-August that it completed a nationwide safety inspection of nuclear plants on August 5th – a month ahead of schedule. This has led to speculation that the Chinese intend to resume nuclear plant approvals, which were suspended in the wake of the Japanese disaster.

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MARKET SUMMARY

INDICES

Name Last Change
DOW 24388.90 2.29%
S&P 500 2633.08 2.39%
NASDAQ 6969.25 3.14%
TSX 14795.13 0.96%
TSX-V 572.38 0.00%

Resource Commodities

Name Last Change
Gold 1249.82 0.10%
Silver 14.63 0.00
Copper 2.76 0.000
Platinum 794.00 0.08%
Oil 52.61 2.13%
Natural Gas 4.49 3.59%
Uranium 29.00 0.00%
Zinc 1.22 0.00%

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