CRU STRATEGIES a division of CRU International Limited

Chancery House

53-64 Chancery Lane

London

WC2A 1QS

UK

Tel: +44 20 7903 2000

Fax: +44 20 7903 2172

517, Tower 2

Bright China Chang An

Building

7 Jianguomennei Avenue

Beijing 100005, China

Tel: +86 10 6510 2206

Fax: +86 10 6510 2207

Augusto Leguía Norte

Nº 100 of.506

Las Condes

Santiago

Chile

Tel: +56 2 2231 3900

Fax: +56 2 2231 4314

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Langley

WA 98260

USA

Tel: +1 360 321 4707

Fax: +1 360 321 4709

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Grand Hyatt

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Mumbai 400055

India

Tel: +91 22 3953 7395

Fax: +91 22 3953 7200

CRU STRATEGIES

1. Introduction to CRU

2. Short-term outlook

3. Long-term outlook

4. Summary

Presentation overview

CRU STRATEGIES

1. Introduction to CRU

2. Short-term outlook

3. Long-term outlook

4. Summary

Presentation overview

CRU STRATEGIES

Leading research group focused on mining and metals,

chemicals and fertilizers

Analysis Consultancy

(Strategies) Events

• Daily / Weekly news

• Fundamental analysis

• Market forecast

• Cost analysis

• Asset & Project

Valuation

• Negotiation Support

• Market Decisions

• Strategy Development

• Conferences

• Seminars

• Events

• Workshops

• Networking

CRU STRATEGIES

1. Introduction to CRU

2. Short-term outlook

3. Long-term outlook

4. Summary

Presentation overview

CRU STRATEGIES

Demand is considerably weaker than expected in 2011... Net primary demand forecasts, in ‘000 t U3O8

Data: CRU

0

50

100

2010 2011 2012 2013 2014 2015 2016

kt U

3O

8

Pre-Fukushima Preliminary 2013 Forecast

-22%

-10%

CRU STRATEGIES

...and there is a significant amount of potential primary

supply in the pipeline... Potential supply in ‘000 t U3O8

0

10

20

30

40

50

60

70

80

90

100

2009 2010 2011 2012 2013 2014 2015 2016

Po

ten

tial

Su

pp

ly k

t U

3O

8

9% potential growth in uranium

Data: CRU

CRU STRATEGIES

...however we expect this to be mostly offset by project

delays and Chinese stockpiling... Net primary demand less primary supply, in ‘000 t U3O8

-10

-5

0

5

10

15

2009 2010 2011 2012 2013 2014 2015 2016

kt U

3O

8

Data: CRU

CRU STRATEGIES

...but the market is still weak... Spot price, June 2006 – June 2013

Date: UxC, Tradetech

40.00

60.00

80.00

100.00

120.00

140.00

160.00Ju

n 0

6

Oct

06

Feb

07

Jun

07

Oct

07

Feb

08

Jun

08

Oct

08

Feb

09

Jun

09

Oct

09

Feb

10

Jun

10

Oct

10

Feb

11

Jun

11

Oct

11

Feb

12

Jun

12

Oct

12

Feb

13

Jun

13

$/l

b U

3O

8

CRU STRATEGIES

...and current spot prices render some operating mines

uneconomic or marginal... Business costs 2013

0

10

20

30

40

50

60

- 10 20 30 40 50 60 70 80

$/lb

Cumulative production t U3O8

CRU STRATEGIES

...although the long-term price lends greater support,

spot purchases are remain discretionary. Spot price and long-term price, June 2006 – June 2013

40.00

60.00

80.00

100.00

120.00

140.00

160.00Ju

n 0

6

Oct

06

Feb

07

Jun

07

Oct

07

Feb

08

Jun

08

Oct

08

Feb

09

Jun

09

Oct

09

Feb

10

Jun

10

Oct

10

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11

Jun

11

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11

Feb

12

Jun

12

Oct

12

Feb

13

Jun

13

$/l

b U

3O

8

CRU STRATEGIES

1. Introduction to CRU

2. Short-term outlook

3. Long-term outlook

4. Summary

Presentation overview

CRU STRATEGIES

Long-term demand drivers remain robust and are

particularly relevant for China...

CRU STRATEGIES

...and China is central to the demand story for uranium as

it already is for so many other minerals... Uranium demand, 2010 to 2035

0

60,000

120,000

180,000

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

202

1

202

2

202

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5

202

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202

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202

8

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9

203

0

203

1

203

2

203

3

203

4

203

5

ton

ne

s U

3O

8

USA Japan Europe China - Mainland India Russia RoW

CRU STRATEGIES

Project gateways: a project must progress in a number of

different areas before it can reach production

1 2 3 4 5

Speculative Possible Probable Committed Operating

Geology

Metallurgy/

technology

Engineering

Social and

environmental

Marketing/

commercial

Transportation

Ownership/

management

Financial

CRU STRATEGIES

Long-term we will need to explore and develop more new

projects; the medium-term is more complex. Long-term gap analysis

0

100,000

200,000

2010 2015 2020 2025 2030 2035

ton

nes

U3O

8

Committed Probable Possible Net primary Demand

CRU STRATEGIES

The project pipeline indicates that grades are getting

lower and average resource bases smaller...

0.1

1

10

100

1000

0.1 1 10 100 1000 10000

Closed Mine

Operating Mine

Development

Feasibility

Exploration

Stalled

Pre-Mined Resource (mt ore)

Gra

de (

kg U

3O

8/t

)

CRU STRATEGIES

...meaning a price of around $65/lb in real terms will be needed to

incentivise the new projects required to meet demand Economic Costs Curve, 2030

0

20

40

60

80

100

120

140

160

0 20 40 60 80 100 120 140 160 180

No

min

al U

S$/l

b o

f U

3O

8

Cumulative Production ('000 tonnes U3O8)

CRU STRATEGIES

1. Introduction to CRU

2. Short-term outlook

3. Long-term outlook

4. Summary

Presentation overview

CRU STRATEGIES

• Demand-side

– Chinese growth story underpins a strong long-term outlook

– India and countries new to nuclear power also contribute

– Political uncertainty decreases and we trend towards more acceptance of

nuclear power

Summary

• Supply

– Short-term the industry is well supplied

– Advanced projects can meet medium term demand at higher prices

– Exploration and project development required to support LT demand growth

• Prices

– Limited upside over the next 6-18 months

– LT price of around $65 required to encourage project development

CRU STRATEGIES

CRU’s Research

CRU contacts for further information:

In London

Ian Hiscock, Senior Consultant, CRU Strategies

(+44 20 7903 2244 * ian.hiscock@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

CRU STRATEGIES

Thank you for your attention