miserablenolonger

    The past few weeks have been quite difficult for uranium investors as the market in general remains
reluctant to take on risk. This risk aversion has led uranium equities downwards with some companies'
stocks either at or approaching multi-year lows and our uranium index once again near this year's lows.
Until the market as a whole has a good feeling for what to expect with the mortgage related write-downs,
volatility will most certainly surround such high risk, high reward situations such as our junior uranium
mining stocks.

    Some stocks have faired quite poorly this year as investor's shore up their cash positions and lock in
gains before they have the opportunity to lose them. On the other hand, there are some stocks which
have certainly delivered stellar returns to their shareholders during this market downturn. The difference
between these companies, the winners and the losers, is that those who are up have provided good
news to the investment community while the losers have reported poor news or no news at all. In these
types of markets it IS possible for no news to be bad news. UEX (UEX.TO) has reported very good
grades as they continue to drill with AREVA at Shea Creek which has provided the fuel to power the
stock up to new all-time highs recently. Paladin (PDN.TO) and Uranium One (UUU.TO) have not been so
fortunate. Both have failed to meet their production goals and been taken to the woodshed by investors
for their poor performance. In markets such as the one we are currently in, investors do not like
surprises and are less willing to allow a pass for poor performance as they may during a powerful bull
market plowing forward.

    We are in a type of correction here, but it seems that it should be short lived. This may be a type of
consolidation period which lasts for 12-18 months or so as investors lick their wounds and begin to test
the waters once again (but let us all remember that this really started in March, so we are just a few
months from reaching the 12 month milestone). With China and other developing countries' desire to
build nuclear plants to fuel their spectacular growth growing, uranium equities could once again come
into favor with investors. Keep in mind that the engineering firms who build these plants are holding up
much better and continue to announce new deals. AREVA's deal with China this week is further
evidence of the desire to add large, cheap, emission clean energy to their grids.

    With all of that said, the argument can be made that now is a perfect time to SMARTLY add to
positions in your portfolio or begin buying new positions altogether. At these prices we believe that there
is some value to be found, especially in the top-tier companies. The top-tier will be the group which
experiences the first money inflows once investors come back into the market. So one should keep an
eye on Uranium One (UUU.TO), Paladin (PDN.TO), Denison Mines (DML.TO, DNN), UR-Energy
(URE.TO), and lastly Strathmore Minerals (STM.V). Cameco (CCO.TO, CCJ) would also be an
interesting play, however they are experiencing major operational deficiencies right now so the risk is a
bit high. For American investors trying to get exposure to Aurora Energy (AXU.TO), a company we like
very much and believe the Central Mineral Belt of Labrador holds massive potential, look no further than
Frontier Development Group (FRG) which is traded on the Amex.

   Although the uranium index is near the yearly lows, many of the stocks have begun to act out of
character. On top of this we notice that some companies' stocks have been propelled to dramatically
higher prices on good news, which is not out of the ordinary but our point is that it was GOOD news and
not GREAT news. Great news would have warranted some of these reactions, while good news should
have been something a little less.

    What does this tell us? Well for one it tells us that investors still have an appetite for risk at this point
and are waiting for the right opportunity to once again enter the uranium investing arena. After getting
burnt so bad for nearly 12 months, they should not be this anxious, but they are. Many investors will be
taking losses this year to match gains for tax purposes so there may be a small window to add to your
holdings at bargain prices. Also of importance is the fact that when the market gets hot, it spikes quickly
and 10% moves (both up and down) are the norm during those cycles for many equities. Everyone
wants to 'buy on the dips' but few recognize those dips as the market corrections they are instead of the
end of an investment opportunity; in short we believe this to be a dip to buy uranium equities.