URANIUM REACTION Report says British nuclear industry safe; BHP pushing ahead with Olympic Dam...>>.."NO REASON TO CURTAIL NUCLEAR” SAYS UK NUCLEAR REGULATORY AGENCY

URANIUM REACTION

Report says British nuclear industry safe; BHP pushing ahead with Olympic Dam

http://www.versantpartners.com/pdfFiles/20111013Uranium.pdf

"NO REASON TO CURTAIL NUCLEAR” SAYS UK NUCLEAR REGULATORY AGENCY 

The United Kingdom’s Office for Nuclear Regulation has given Britain the green light for nuclear safety. The organization’s Chief Nuclear Inspector, Dr. Mike Weightman, "sees no reason to curtail the operation of power plants or other nuclear facilities in the UK", in the wake of the powerful earthquake and subsequent tsunami which crippled the Japanese plants in March. Further noting that, “the [nuclear] industry has reacted responsibly and appropriately, displaying strong leadership for safety and safety culture.”

Weightman’s review highlights 38 areas he believes the UK can learn from the crisis in Japan. Some of the suggestions include the use of off-site infrastructure such as the electrical grid supply in extreme events, emergency-response arrangements, and layout of plant, risks associated with flooding, planning controls around nuclear facilities and prioritizing safety reviews. 

BHP PROCEEDING WITH OLYMPIC DAM EXPANSION

Following the receipt of federal and state environmental approvals this past week, BHP Billiton (BHP-NYSE) is proceeding with its plans to expand its Olympic Dam mine located in South Australia. The mine is the world’s largest uranium deposit, its fourth largest copper ore body and its fifth largest gold deposit.  The upgrade, which is expected to cost somewhere in the region of $30 billion, would see BHP’s uranium output jump from 4,500 tonnes to 19,000 tonnes. At the expanded rate, Olympic Dam is expected to account for 34% of global mine production of uranium.

The mining giant has approved $1.2 billion for the first phase of the expansion. It is designated to procure longlead time items such as trucks and accommodation and begin infrastructure development and early site works.

The majority of the capital is conditional on an indenture agreement being passed through the South Australian Parliament.  The South Australian Government will be bringing the indenture legislation to state Parliament next week with a view to having it passed  before Christmas. 

Along with Cameco’s Cigar Lake project, BHP’s Olympic Dam expansion is one of the two most significant primary supply variables over the next ten to fifteen years. If both develop and produce according to expectations, global uranium supply and demand fundamentals are expected to be in balance.

However, history has shown that mining development projects rarely go according to plan – if ever. Exhibit 1. Olympic Dam Expansion Development Forecast

Source: BHP Billiton

CAMECO SIGNS MOU TO IMPROVE CIGAR LAKE PROJECT

Cameco (CCO-TSX) has signed a non-binding memorandum of understanding (MOU) with its joint venture partners to mill all Cigar Lake ore at the McClean Lake mill.

The new milling arrangement is expected to result in a significant reduction in the operating cost of the Cigar Lake project, which is 50% owned and operated by Cameco. The other Cigar Lake joint venture partners are AREVA Resources Canada Inc. (37%), Idemitsu Resources Canada Inc. (8%) and TEPCO Resources Inc (5%).

Under the previous toll-milling agreement, both the McClean Lake mill and Cameco's Rabbit Lake mill would process uranium from Cigar Lake. Under the new arrangement, the McClean Lake mill would process and package 100% of Cigar Lake uranium. Cameco's Rabbit Lake mill will continue to process ore mined on the site and has the flexibility to process ore from other sources such as potential ore from the Roughrider deposit should Cameco’s acquisition for Hathor Exploration (HAT-TSX) succeed.

RUSSIA PLANNING TO REPLACE KOLA REACTORS WITH A MODEL THAT IS 2 – 3 TIMES MORE POWERFUL

The head of Roasatom, the Russian nuclear agency, has announced that the country plans to replace four nuclear reactors in the arctic with two that are two- to three-times more powerful.

The feasibility study for the new reactors is expected to commence in 2012 and construction is scheduled to start in 2015. The new plant is expected to be phased in and when up and running the old Kola plant is expected to be closed starting with the earliest reactor.

This decision by the Russians does not come as a surprise as the country is the third most aggressive builder of nuclear power plants.  As of September 2011, the country has 54 reactors combined in the construction, planned and proposed stages. Uranium Reaction  October 13, 2011

 Rob Chang, (416) 849-5008  3 of 7

Exhibit 2. Kola Nuclear Power Plant

Source: BarentsObserver.com

UZBEK-CHINESE JOINT VENTURE TO BEGIN DEVELOPMENT

The Uzbek-Chinese joint venture Uz-China Uranium plans to start black shale uranium mining in the Navoi region, Uzbekistan by early 2013. The actions will be coordinated to develop technologies of separate  extracting uranium and vanadium while developing black shale uranium deposits by late 2011.

The technological tests are planned to be made in 2012, allowing the company to begin the development of black shale deposits in 2013.

NUCLEAR POWERED ICEBREAKERS A TEST FOR FLOATING NUCLEAR PLANT

Soon we may be able to transport nuclear power plants to any location via the sea. This comes as a result of Russian commitment to marine nuclear power growth. Russia has been powering their icebreakers with nuclear power and has hinted that the icebreakers can be seen as forerunners of floating nuclear power plants.

A few of the icebreakers are expected to be decommissioned soon and replaced with new models that will be based around the RITM-200 pressurized water reactor, which integrates some main components into the reactor vessel and produces 55 MWe for the motor-driven propeller. The same design is foreseen as being incorporated in floating power plants.  It would operate on fuel enriched to less than 20% uranium-235 and require refuelling every seven years over a 40-year lifespan. Uranium Reaction  October 13, 2011

 Rob Chang, (416) 849-5008  4 of 7

Russia has already commenced building the first mobile small reactor power plant in Saint Petersburg. The Akademik Lomonosov will use two KLT-40S reactors to produce a total of 70 MWe for Vilyuchinsk, in the Kamchatka region in Russia's Far East.  They are of the hope that later units based on the RITM-200 would feature one reactor and produce 55 MWe

URANIUM EQUITY BASKET OUTPERFORMS

Our basket of highlighted uranium names rebounded this week as its performance from October 5 to October 12 was up 11.8% on average. It outperformed the broader S&P/TSX Global Base Metals Index’s return of 7.5% over the same period. 

Since we highlighted the names on August 24, the basket has posted a performance of -3.3% and has significantly outperformed the S&P/TSX Global Base Metals Index’s retu