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Rossing Uranium Mine Out of Commission
Wednesday, October 25, 2006

We have reputable sources reporting today that the Rossing Uranium Mine in Namibia has closed. Apparently there is a strike by the mine's workers which has closed the mine in what appears to be the near future. Although the details are vague at this point, we understand that Namibia, although politically stable has power and water problems. This strike has now cut off 8% of the world's uranium production, and the longer it carries out the more serious it will become. We take the stance that this will turn out to be a prolonged strike as many strikes across the world are beginning to cripple the multinationals.

Remember the strike that began earlier this year in South America that took out a large portion of the world's copper production by shutting down the Escondida Mine. They dragged that strike out for a considerable time as neither side wanted to cede to the other. Keeping this in mind it is our opinion that Rio Tinto will drag this out, thus increasing the price of uranium and further tightening an already tight market.

With the problems at Cigar Lake (a large future producing mine) and strike at Rossing (a large producing mine), many investors are beginning to understand just how tight this market is currently and will be in the future. As market conditions have changed considerably over the last few weeks we believe that our two favorite soon-to-be uranium producers will lead the way higher. In fact we believe that they will outpace the actual producers in this industry as they will be signing new contracts at the current market prices. Cigar Lake will become an engineering nightmare, as well as a permitting headache. As Africa's uranium resources rise in value and as more mines open the possibility for strikes and sieges from rebel groups rises. Remember what has continually happened with Shell and other oil and gas projects. We believe that South Africa will be free from these problems as it is a stable political state and has competitive wages due to the various types of mining that go on in the country (diamonds, gold, silver, and uranium). Namibia will follow once its citizens are given the basic needs for life (water and power are currently missing from the equation) as it is a very stable political state.

Updates: 

ASXSF: We closed our trade today in ASXSF as it was just that, A TRADE. We love where uranium is going right now, and will thus reinvest this money back into other uranium plays. We closed this because we stated it was a trade and the stock went further than we figured it would (rising about 30% in 2-3 weeks). We decided to book the profits and invest the money into something we know, and we will shortly get back to you on this.


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