Cameco + BHP Billiton...as go the Generals, so too Should the Foot Soldiers
Thursday October 4, 2007

We know that everybody here is familiar with the investment thesis regarding uranium. Our position has been and continues to be that the investment thesis remains intact. As additional support for our current bullish stance on the uraniums we draw upon our years of stock market investment experience and observations that we have learned along the way.

At the inception of most bull market moves, regardless of industry, investment capital moves into the leaders because by definition they are usually the largest and best capitalized companies and their equity is in most cases highly liquid. In our case, that means Cameco, specifically as a pure play, and BHP Billiton, more generally. As you recall, they were the main beneficiaries (speaking in investing terms, not operational) when the uranium price first began to increase. We are pleased to note that our work shows the price of Cameco has bottomed and has recently broken through both its 50-day and 200-day moving averages. In recent trading, the stock has since fallen below the 200-day level, but remains nearly directly between the two as we write. BHP Billiton also hit a recent high in Australian trading recently.

This has bullish implications for the emerging leaders and junior exploration companies that we follow. Just as the large industry leaders are the main initial beneficiaries, at the start of new bull markets so too are they the initial beneficiaries after those violent periodic bull market corrections (such as the one we just experienced). We think the price action of Cameco and BHP Billiton are giving us the “all clear signal” for all stocks. As an aside, although we use Cameco as a “beacon” or proxy for the uranium market in general, we remain wary of further delays at Cameco's Cigar Lake Mine. Therefore we continue to prefer those uranium companies moving forward with bringing production online and moving forward with plans for projects to come online in the near future.