uraniumindexcontinuesitsrise

      Over the past week we have seen theinvestar's Canadian Uranium Average creep through some
recent highs and establish itself on a potentially new trend upwards. We must note that this trend would
have been much more profound had Uranium One not dragged down the average so much with their
recent disappointing news, however such is life and we just wanted to alert everyone as to the "real"
general strength among the industry as a whole. We see Pinetree Capital, a company which holds large
stakes in many of the uranium juniors moving strongly higher with other large caps including Denison
Mines Ltd., Mega Uranium (a company in which PNP owns a large stake), Aurora Energy and Laramide
Resources. Investors have even pushed up the shares in Uranium Participation Corp. over the past few
days which could be in anticipation of a rally in the uranium spot price with power problems in South
Africa appearing to be a long-term issue and not possessing a quick fix.

      Our belief is that all precious metals will continue to rise as power will continue to be an issue in
South Africa. Although this has little to do with uranium on the surface, it has two very important issues
that could potentially affect uranium firms. First, and most importantly, South Africa is the largest
producer of electricity on the African continent and export electricity to many of their poorer neighbors.
This affects the uranium companies in countries such as Namibia for instance who will probably not be
able to increase production due to an inability to increase power consumption from the Namibian power
grid. The good news is that Namibia has plans to build both power plants and desalinization plants in
order to increase the output of current mines in the country and enable companies to bring new ones
online. The second issue affecting uranium companies in the region, and this is on a much smaller
scale, is the fact that some of the mines in the region host gold along with uranium, with gold as the
by-product. As gold prices rise, the companies realize a "kicker" in that they are already paying to
extract the resources. So as prices rise, earnings rise exponentially.

      Also of interest to many of you has to be the fact that oil has now risen above the $100 price level
on real trades. Previously there were a two floor trades of one contract each where the traders priced
the contracts at $100 for the sake of it and the market ignored it as they were set up. This week
however, we saw real trades push the price above the century mark and real closes above it as well.
Following oil higher is natural gas which has recently risen to multi-year highs and could break out
further if oil continues its steady rise in the next few months. Not only are oil and natural gas rising, but
coal has risen as well, which seems to complete the trifecta. Coal is up on China's plans to add
electricity capacity derived from its use, which we highlighted in our last article, but as coal's price rises
so too does the attractiveness of natural gas fired plants which are much more cleaner burning than coal
plants.

      With all of this said, one has to believe that uranium prices can go higher, especially as it becomes
more and more price competitive with coal and gas fired turbine plants. Investors in Uranium
Participation Corp. are indicating as much as they push the price up. The bull case for uranium still
remains that supply is constrained, and the future production we believed we would be having in the next
few years is not going to make it to market as Cameco, Uranium One and Paladin have dropped
production estimates over the past year. Demand is still increasing as many Asian countries, along with
the BRICs (the Brazil, Russia, India and China's of the world) are planning to build many new nuclear
plants which will only add to the demand side currenltly unfulfilled by supply.

      In the weeks ahead geopolitical events should play a key role in where energy prices go from
current levels and thus should be given proper attention. We think that uranium mining shares will
continue to rise in the weeks ahead, and should 2008 become the year of commodities then we could
see movement upwards over the next few months. We will be adding RSS feeds in the next few weeks to
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