Credit Suisse Uranium Initiation

03 May 2012 Americas/Canada Equity Research

Diversified Metals & Mining / Metals & Mining

Uranium One Inc. (UUU.TO) OUTPERFORM* [V] Rating Price (02 May 12, C$) 3.03 Target price (C$) 4.50¹ 52-week price range 4.44 - 1.94 Market cap. (C$ m) 2,900.28 Enterprise value (US$ m) 3,208.30 *Stock ratings are relative to the relevant country benchmark. ¹Target price is for 12 months. [V] = Stock considered volatile (see Disclosure Appendix).

Research Analysts Ralph M. Profiti, CFA

1 416 352 4563 [email protected] Hussein Govani

416 352 4677 [email protected]

Share price performance 5 4 3 2 1 May-11

Sep-11

Jan-12 Indexed Price Relative

On 05/02/12 the S&P/TSX COMPS INDEX closed at 12094.38

Quarterly EPS

2011A 2012E 2013E

Q1

0.01 0.02 0.05

Q2

0.03 0.03 0.05

Q3

Out of the Blocks and Hitting Stride Reinstating coverage of Uranium One Inc. (UUU.TO) at Outperform. After

a period of restriction, we reinstate coverage of UUU with an Outperform rating and 12-month target price of C$4.50/share. Stronger reserve base and another year of production growth. UUU is targeting another year of production growth with FY12 attributable share of 11.6Mln lbs U3O8 U3O8 (+9% YoY) at an average cash cost of $19/lb sold. FY13 attributable share of production is estimated to grow a further +7.8% YoY to 12.5Mln lbs U3O8. With average cash costs around $20/lb, UUU remains remains in the lowest cost quartile of the uranium cost curve and as a result, maintains a strong relative position on EBITDA margins on a per pound (sold) basis. the early stages of a positive turn Seeking an inflection. We believe we are in the in market sentiment towards uranium and uranium equities that would see a return to the historical valuation range on P/NAV of 1.2-1.4x (peak valuation 1.6x) based on: (i) partial restart of Japanese nuclear capacity; (ii) resumption of approvals for new nuclear reactors in China; (iii) expiry of the HEU supply agreement in 2013; and (iv) slower production growth from Kazakhstan. Relative valuations are rich on traditional metrics (P/NAV, EV/EBITDA) vs. peer group metals; however, we believe uranium equities will continue to trade at premium based on scarcity value, lack of investment alternatives and the relatively high barriers to entry associated with uranium mining. Valuation: UUU well-positioned for recovery in uranium prices . We believe the current spot price of $52/lb is fundamentally supported and a staged recovery in prices more reflective of incentivized supply pricing, in our view between $65-70/lb, will occur over the next 18-24 months. We currently assume $55/lb in 2013, $65/lb $65/lb in 2014, and $75/lb in in 2014. Our 12-month TP for UUU of C$4.50/share is based on a 1.2x our NAV estimate of C$3.57/share. Our target multiple for UUU reflects the low-end of the historical range (1-1.6x). Financial and valuation metrics Year

Daily May 04, 2011 - May 02, 2012, 5/04/11 = C$4.44

Price

REINSTATEMENT

Q4

0.05 -0.00 0.03 0.03 0.05 0.06

EPS (CS adj.) (US$) Prev. EPS (US$) P/E (x) P/E rel. (%) Revenue (US$ m) EBITDA (US$ m) OCFPS (US$) P/OCF (x) EV/EBITDA (current) Net debt (US$ m) ROIC (%) Numb Number er of shar shares es (m) (m) BV/s BV/sha hare re (Nex (Nextt Qtr. Qtr.,, US$) US$) Net debt debt (Next (Next Qtr., Qtr., US$ m) Net debt/tot cap (Next Qtr., %)

12/11A

0.09 — 33.3 233.6 530.4 332.9 0 .1 8 1 2 .0 9 .3 164 6.25 957. 957.19 19 2.1 2.1 305.5 305.5 1 5 .2

12/12E

12/13E

0.11 0 .2 1 — — 27.1 1 4 .4 205.2 126.0 619.6 839.6 365.8 557.0 0.29 0 .3 8 10.5 8 .1 8.5 5. 5 .6 266 509 5.70 7 .8 3 IC (cur (curre rent nt,, US$ US$ m) EV/I EV/IC C (x) (x) Divide Dividend nd (Next (Next Qtr., Qtr., US$) US$) Dividend yield (%)

12/14E

0.31 — 9 .9 95.1 1,037.6 720.3 0.47 6 .5 4.3 252 10.94 2,15 2,157. 7.40 40 1.4 1.4 — —

Source: Company data, Credit Suisse estimates.

DISCLOSURE APPENDIX CONTAINS ANALYST CERTIFICATIONS AND THE STATUS OF NON-US ANALYSTS. U.S. Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS

BEYOND INFORMATION® Client-Driven Solutions, Insights, and Access

03 May 2012

Investment summary We are reinstating coverage of Uranium One Inc. (UUU.TO) with an Outperform rating and 12-month target price of C$4.50/share. In our view, we are in the early stages stages of a positive turn in market sentiment towards uranium and uranium equities that will see a recovery in the spot uranium price and a gradual return to historical valuations for uranium equities of 1.2-1.4x on P/NAV P/NAV (peak valuation 1.6x) vs. 1x currently. From our perspective, we base changes in market sentiment on key industry catalysts: (i) partial restart of Japanese nuclear capacity; (ii) resumption of approvals for new nuclear reactors in China; (iii) expiry of the HEU supply agreement in 2013; and (iv) slower production growth rates from Kazakhstan. UUU is well positioned within the global uranium space as one of the largest publically traded producers, a rising uranium production profile, low-cost ISR operations, and a uranium contract book highly levered to the spot uranium price. Our target price on UUU of $4.50/share is based on a 1.2x our cash-adjusted NAV estimate (C$3.57/share). Our target multiple reflect the low-end of historical P/NAV multiples for uranium producers of 11.6x and are in-line for UUU relative to its closest peers, Cameco Corp. and Paladin Energy Ltd.

Uranium valuations have substantially compressed Exhibit 1: Uranium 1: Uranium peer group valuation table Company Uranium One Inc.

Price 1-May-12 2. 9 5

Cameco Corp. Denison Mines Ltd. ERA Ltd. Paladin Energy Ltd. Average (excl UUU) Average (excl UUU/ERA) UUU/ERA)

Target Price 4.50

53%

Investment rating OUTPERFORM

28.00 1.85 1.35 3.00

25% -2% -18% 82%

NEUTRAL NEUTRAL UNDERPERFORM OUTPERFORM

22.47 1.88 1.65 1.65

ROR (%)

Market Capitalization 2,824

EV/EBITDA 2012 2013 8.1 5.8

8,881 734 864 1,399

10.5 n/a n/ 5.4 n/a n/ 8.0 10.5

22% 35%

8.6 n/a 1.8 9.4 6.6 9.0

NAVPS 3.57

P/NAV 0.83

24.33 1.82 1.35 2.35

Implied uranium pr p rice 59.00

0.92 1.03 1.22 0.70 0.97 0.89

59.50 n/a 72.00 56.50 62.67 58.00

Source: Company data, Credit Suisse estimates

Inflection point could see valuations return to historical average 1.2-1.4x (peak 1.6x)

Although relative valuations are rich on traditional metrics (P/NAV, EV/EBITDA) vs. the peer group of other metals (see Exhibit 3), 3), we believe uranium equities will continue to trade at premium based on scarcity sc arcity value, lack of investment alternatives and the relatively high barriers to entry associated with uranium mining. Exhibit 2: Historical 2: Historical implied uranium price Uranium

CCO

UUU

175

150

125

100

Uranium equities historically trade 1.4-1.6x on P/NAV

Exhibit 3: 3: Uranium Uranium equity valuations vs. peer metals PDN

Gold (Intermediate and Senior)

1.0 0.9

Uranium Silver

0.8 PGM's

0.7

V A N / P

75

0.6

50

0.5

25

0.4

-

0.3

Base Metals/Diversifieds

Gold (Junior/Developer)

Iron Ore

3

4

5

6

7

8

9

10

11

FY13 EV/EBITDA


Uranium One Inc. (UUU.TO)


2

03 May 2012

In the 6-8 months leading up to the Fukushima accident, UUU was the best performing uranium stock in the peer group. Post-Fukushima, shares of UUU have performed largely in-line with CCO and outperformed PDN and DML. Exhibit 4: Indexed share performance pre-Fukushima

Exhibit 5: Indexed share performance post-Fukushima



UUU looking to another year of production growth UUU is targeting another year of production growth with FY12 attributable share of 11.6Mln lbs U3O8 (+9% YoY) at an average cash cost of $19/lb sold. FY13 attributable share is estimate to grow a further +7.8% YoY to 12.5Mln lbs U3O8. Further, we estimate that in five years, UUU sales will reach roughly half those of CCO vs. 35% in FY12. Exhibit 6: UUU uranium production by mine Kazakhs tan

Mku ju River

H oneymoon

Powde r Ri ver Basi n

Exhibit 7: Uranium sales (CCO, UUU, and PDN) CCO.TO

Cash cost ( rh s)

20

25

UUU.TO

PDN.TO

40,000

35,000

18 16

20

30,000

14 25,000

12

15 20,000

10 8

10

15,000

6 10,000

4

5 5,000

2 -

2009A

2010A

2011A

2012E

2013E

2014E


2015E

2007A

2016E

2008A

2009A

2010A

2011A

2012E

2013E

2014E

2015E

2016E


Low cost position; industry leading margins With average cash costs historically in the range of $16-20/lb uranium produced, UUU remains the lowest cost producer among its established industry peers. As a result, UUU generates the strongest EBITDA on a per pound (sold) basis. Despite being a low-cost producer, UUU has faced challenges related to sulphuric acid shortages at its Kazakhstan operations, which is key to the ISR uranium extraction process. Although supply is not an issue currently, UUU has identified logistical and transport issues which influence the availability of sulphuric acid to its mines. In 2011, domestic sulphuric acid supplies in Kazakhstan were supplemented by imports from Russia, which constituted approximately 36% of sulphuric acid delivered to UUU’s mines.


FY12 cash costs $19/lb.

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03 May 2012

Exhibit 8: EBITDA/Lb of uranium CCO

UUU

Exhibit 9: Uranium cash costs (US$/lb)

PDN

Ux-Spot

Ux-LT

CCO

60

120

50

100

UUU

PDN

45 40 35

40

80

30

60

30 25 20

20

40

10

20

15 10 5

-

2007A

2008A

2009A

2010A

2011A

2012E

2013E


2014E

2015E

-

2016E

2007A

2008A

2009A

2010A

2011A

2012E

2013E

2014E

2015E

2016E


Well positioned for leverage to underlying We estimate UUU offers investors the highest leverage to spot uranium prices relative to its closest peers (Paladin Energy, Cameco, Denison, and ERA). UUU’s average realized price is highly correlated to spot prices (90%), whereby sales contracts normally reference average market prices up to 3 months before delivery. As a result, we see below-average market prices in a rising uranium price environment, and the opposite vice-versa during periods of falling market prices. As customary in the majority of uranium sales contracts, delivery schedules are highly discretionary at the customer and as such vary significantly from quarter-to-quarter.

UUU is roughly 90% exposed to spot prices

Our principle method of valuation is the discounting of unlevered after-tax free cash flows using a base discount rate of 9% and Kazakhstan country risk premium of 1%, which we calculate using default spread over a default free government bond rate. Exhibit 10 illustrates UUU’s net asset value (NAV) using normalized uranium price deck and various discount rates. We estimate a 100bps change in the Kazakhstan country risk premium impacts NAV by 160bps. Similarly, a 100bps change in the base case discount rate impact NAV by 130bps. Exhibit 10: Net asset value sensiti vity to uranium price and discount rate 40 3.57 0% 1.96 * 4% 1.31 R D 6% 1.09 e s 8% 0.92 a c 10% 0.78 e s 12% 0.67 a 15% 0.54 B 20% 0.40 *Kazakhstan country risk premium

50 4.00 2.80 2.39 2.07 1.81 1.60 1.35 1.06 add: 1%

Uranium price (US$/lb) 60 70 80 6.04 8.08 10.11 4.29 5.78 7.27 3.69 5.00 6.30 3.22 4.37 5.53 2.84 3.87 4.90 2.53 3.45 4.38 2.16 2.96 3.77 1.72 2.37 3.03

90 12.15 8.77 7.61 6.68 5.93 5.31 4.57 3.69

100 14.18 10.25 8.90 7.82 6.95 6.23 5.37 4.34


Stronger balance sheet required for next growth phase In December 2011, UUU issued ruble-denominated bonds with an aggregate principal amount of $463.5Mln (RUB14.3Bln). In connection with the offering, UUU entered into a RUB/USD cross-currency interest rate swap agreement, creating a synthetic US dollar instrument with an interest rate of 6.74%, bringing UUU’s balance sheet at end-2011 to a


4

03 May 2012

cash balance of $619Mln (or net debt $164Mln, including convertible debt) and a D/E ratio of 29% (or 39% including convertible debt). We estimate further capital raising of $400500Mln would be required to complete the Mantra acquisition option if all conditions precedent, including minority shareholder approval, are met. Exhibit 11: Cash flow summary incl. Mantra option Operating cash flow C ap it al e xp en di tu re s+ Acq ui si ti on s

Exhibit 12: Cash flow summary excl. Mantra option

Debt/equity capital raised C as h a nd e qu iv al en ts ( RH S)

Operating cash flow C ap it al e xp en di tu re s+ Acq ui si ti on s

Debt/equity capital raised C as h a nd e qu iv al en ts ( RH S)

1,500

1,500

1,500

1,500

1,000

1,250

1,000

1,250

500

1,000

500

1,000

-

750

-

750

(500)

500

(500)

500

(1,000)

250

(1,000)

250

(1,500)

2009A

2010A

2011A

2012E

2013E

2014E

2015E

(1,500)

2016E

2009A


2010A

2011A

2012E

2013E

2014E

2015E

2016E


Still acquisitive with a majority shareholder JSC Atomredmetzoloto (ARMZ) currently owns 51% equity interest in UUU having gone through a UUU shareholder approved asset swap where under ARMZ acquired a controlling stake in UUU in exchange for cash and ownership of two projects (Akbastau and Zarechnoye). In addition, UUU has undertaken five major transactions in the past five years. Currently, UUU sources all its commercial production in Kazakhstan, with FY12 marking the introduction of two new mines (Honeymoon, Australia and Willow Creek, USA) as UUU begins to diversify its production base. We believe continued growth through M&A and outside of Kazakhstan is a prudent strategy that balances asset opportunities, operating challenges, and strategic sensibility. Long-term, the optionality on acquiring/developing Mkuju River (Tanzania) would bring non-Kazakhstan uranium production to about 20% of steady-state production.

5 major transactions over last five years

Exhibit 13: Selected uranium transactions (2006-present) y = 0.1581x - 0.4708

35

30 ) b l / 25 $ S U ( n o i 20 t a u l a v 15 n o i t c a s n 10 a r T

Jun-2007: SxR/EMC ($1.7Bln) Jun-2009: UUU/Karatau ($0.4Bln) Feb-2007: SxR/UrAsia ($2.9Bln)

Dec-2010: ARMZ/Mantra ($1.2Bln)

Jan-2012: UUU/Mantra 13.9% ($0.15Bln) Jun-2010: UUU/ARMZ ($0.4Bln)

5

-

20

40

60

80

100

120

140

160

Uranium spot price (US$/lb)



5

03 May 2012

Uranium market outlook: sentiment turning In our view, the social and political tolerance for new nuclear build remains dynamic and because of the unique technological and environmental challenges facing uranium/nuclear, industry sentiment continues to be subject to public opinion risks. We remain constructive on the outlook for new reactor build in China, Russia, and India, where we forecast 38GWe new nuclear capacity over the next five years (2012-2016) and total global new capacity of 49GWe. We are negative on the outlook for nuclear capacity in Germany, where we assuming full phase out – in-line with government policy initiatives.

We forecast 38GWe new nuclear capacity over the next five years (2012-2016)

Following Fukushima, several energy and nuclear regulatory bodies, along with utilities undertook significant nuclear safety reviews, regulatory changes, and reactor stress tests. Even before completing these reviews, some countries had closure plans well underway, largely due to expiry of useful life and policy changes due to changeover in government. Since Fukushima, several countries (mostly in the developed world) have re-affirmed their favorable intentions towards new nuclear. A summary of key changes by country, as summarized by the World Energy Council, is seen below. Exhibit 14: Nuclear energy policy changes after Fukushima (as of January 2012) Countries with existing nuclear installations:

Use of nuclear power in principle not being contested

Use of existing nuclear power being contested Use of existing nuclear power being phased-out

Argentina, Armenia, Belgium, Brazil, Bulgaria, Canada, China, Czech Republic, Finland, France, Hungary, India, Iran, Mexico, Netherlands, Pakistan, Romania, Russia, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Taiwan, Ukraine, United Kingdom, United States Japan Germany, Switzerland

Countries currently constructing new nuclear installations:

Construction projects not being contested Construction projects cancelled, scaled-back or delayed

Argentina, Brazil, Bulgaria, China, Finland, France, India, South Korea, Pakistan, Russia, Slovakia, Taiwan, Ukraine, United States Japan

Countries with plans and/or proposals to construct new nuclear installations:

Plans/proposals for new constructions not being contested

Plans/proposals for new constructions prohibited

United States, France, Russia, South Korea, Ukraine, Canada, China, United Kingdom, Sweden, Spain, Belgium, Taiwan, India, Czech Republic, Finland, Bulgaria, Brazil, Hungary, Slovakia, South Africa, Romania, Argentina, Pakistan, Slovenia, Netherlands, Armenia, Saudi Arabia, Poland, UAE, Turkey, Vietnam, Belarus, Bangladesh, Indonesia, Lithuania, Egypt, Kazakhstan, Thailand, Chile, Malaysia, Israel Germany, Switzerland, Italy

Source: World Energy Council (World Energy Perspective: Nuclear Energy One Year After Fukushima, M arch 2012)

We believe a number of positive developments are building in the uranium and nuclear sector over the next 12-18 months, which in our view, serves to potentially turn sentiment in nuclear energy towards a more favorable path and in turn, positively re-rate uranium equities. Our views are based on: (i) partial restart of Japanese nuclear capacity; (ii) resumption of approvals for new nuclear reactors in China; (iii) expiry of the HEU supply agreement in 2013); and (iv) slower production growth rates from Kazakhstan. Over the last five years, Kazakhstan (currently the world’s largest uranium producer) has grown production an average of 30% (CAGR). Last year, we estimate Kazakhstan grew production 9.8% YoY to 50.6Mln lbs, U3O8 and has targeted 9.7% YoY growth in 2012 (to 55.5Mln lbs). As of 1Q12, Kazakhstan produced 12.1Mln lbs, implying a run-rate of 48.5Mln lbs (or largely flat vs. 2011).


6

03 May 2012

Exhibit 15: Net changes in number of reactors (March 10, 2011 to April 2, 2012)

China Germany India Iran Japan South Korea Pakistan Russia Saudi Arabia Ukraine United Kingdom USA Vietnam Other Net change Pre-Fukushima Change (%)

Reactors

Operating

15 9 20 1 51 23 2 33

3 -8

15 17 104 153

1 -4 2 1 1

Under Construction

Planned

Proposed

-1

1

10

2 -1

-1 -2

-2 1 -1

4

-1 16 -9

-2

-2 -8 443 -1.8%

2 0 62 0.0%

2 2 1 2 158 1.3%

-4 -6 -6 5 324 1.5%

Source: World Energy Council (World Energy Perspective: Nuclear Energy One Year After Fukushima, M arch 2012), World Nuclear Association

Prior to the events in Fukushima, nuclear energy in Japan accounted for ~30% of electricity requirements (March 2011). A key policy shift in the months ensuing calls for a reduction in future dependence and a recommendation that nuclear power's contribution to electricity be targeted anywhere between 0-36% in the medium term. Meanwhile, the last of Japan’s 51 operable reactors is expected to be shut in early May for scheduled maintenance and safety checks. In March 2012, the Japan Atomic Industrial Forum (JAIF) predicted a 10-12% electricity shortage in summer 2012. We assume Japan eventually returns to ~30% nuclear capacity factor beginning in 2012 (16 reactors out of 51). The Japanese central government has approved the restart of Kansai Electric’s Ohi 3 & 4 reactors, with prefecture approval in the waiting. Following Fukushima, the Chinese government suspended its approval process pending a review of plant location, layout, regulatory controls, and safety. China currently has 15 nuclear reactors in operation, more than 26 under construction, and 51 planned. Additional reactors are planned, including some of the world's most advanced, to give a five- or six-fold increase in nuclear capacity to at least 60GWe by 2020. By the end of China’s 12th Five-Year Plan (2015), some 25 GWe of new capacity is planned to be operational, making some 40-45GWe more may be added by the end of the 13th Five Year Plan (2019). We expect a turn in uranium prices tow ard end of the year

The spot uranium price has been relatively stable and range-bound in the $50-55/lb range over the past ten months. Near-term, we see continued uncertainty driven by limited longterm contracting, concerns about possible excess German/Japanese inventories, US DOE materials into the market, and general sentiment. We estimate prices in the current range will provide a disincentive for new mines and brownfield expansion. Medium and longterm, we believe the uranium price will stage a recovery to a level that reflects the incentive price for production expansion and exploration, averaging between $65-70/lb over the next five years. Our peak price of $75/lb in 2014 coincides with expiration of the US-Russia HEU supply agreement. Supporting of view, we estimate the market will be in deficit by approximately 6Mln lbs (2% of global demand) in 2014, although it is highly unlikely in our view that prices will return to $100+/lb level seen in 2007.


7

03 May 2012

Since our last update, only modest changes to our supply-demand forecasts

Between 2012-2020, we estimate total uranium demand of 1.97Bln lbs U3O8, down 4% vs. our previous forecast of 2.06Bln lbs. Our new demand forecasts take into account revised assumptions for Japanese restarts and full decommissioning in Germany. In summary, we forecast a net addition of 68 reactors to the current global fleet of 435 in operation by 2020. Between 2012-2020, we estimate total uranium supply of 2.1Bln lbs U3O8, a slight increase compared to our previous estimate of 2.08Bln lbs (or +0.8%), which takes into account lower supply from higher-cost producers resulting from weaker uranium prices, regulatory delays, and slower construction schedules for new mines, offset by updated supply from Roughrider mine (Canada) and US DOE material. We believe future supply trends will focus on uranium deposits of the highest quality in terms of tonnage, grade, cost, and ability to finance. In total, between 2012-2020, we estimate the global uranium market will largely in balance (deficits occurring in 2014) with more significant deficits occurring after 2022. Exhibit 16: Credit Suisse uranium supply/demand summary 40

Net implied surplus (deficit) based on available supply Uranium price forecast (US$/lb of U3O8)

120

30 8 O 3 20 U s b l n l 10 M n i ) t i c i f e d ( s (10) u l p r u s t (20) e N

100

80

60

40

20

(30) (40)

-



8

03 May 2012

Exhibit 17: Credit Suisse Uranium supply/demand summary 2008

all figures in Mln lbs U3O8, unless noted Uranium mine production North America South America Western Europe Eastern Europe Kazakhstan Russia & Other FSU Africa Asia & Oceana Other (adjustments) Mine production growth rate Secondary supply Total supply growth rate

2009

26.2 0.9 0.5 22.2 18.9 19.0 27.7 115.4 9.9% 54.3 169.6 -1.1%

Nuclear power plant (NPP) forecasts (units) China India Japan Russia U.S.A. Other Total growth rate

11.0 17.0 53.0 31.0 104.0 225.0 441.0 0.0%

Uranium demand analysis Existing NPP capacity New NPP capacity Strategic inventory build Total demand growth rate

174.3 174.3 -0.1%

2010

29.8 0.9 0.5 36.5 19.6 19.6 27.4 134.3 16.4% 65.9 200.1 18.0%

11.0 17.0 53.0 31.0 104.0 225.0 441.0 0.0%

175.4 175.4 0.6%

2011

28.1 0.4 0.0 46.3 22.2 23.0 25.6 145.6 8.4% 64.3 209.9 4.9%

18.0 22.0 51.0 34.0 104.0 212.0 441.0 0.0%

178.2 12.0 190.2 8.5%

2012

26.9 0.7 0.0 48.1 22.5 26.6 21.3 146.0 0.3% 57.9 203.9 -2.9%

15.0 20.0 51.0 32.0 104.0 211.0 433.0 -1.8%

175.1 18.0 192.3 1.1%

2013

2014

18.0 22.0 51.0 34.0 104.0 212.0 441.0 1.8%

156.0 19.0 4.7 178.1 -7.4%

158.7 23.4 11.6 192.2 7.9%

162.6 30.1 11.6 202.8 5.5%

164.7 36.6 11.6 211.5 4.3%

165.4 46.8 11.6 222.6 5.3%

22.0 23.0 51.0 35.0 104.0 218.0 453.0 2.7%

27.4 0.7 0.0 50.6 23.8 41.2 22.0 165.6 3.2% 30.9 196.5 -10.7%

27.0 24.0 51.0 37.0 104.0 220.0 463.0 2.2%

30.5 0.7 0.0 58.5 24.6 45.4 21.9 181.5 9.6% 30.9 212.4 8.1%

32.0 25.0 51.0 39.0 104.0 221.0 472.0 1.9%

2017

2016

25.5 0.7 0.0 50.3 22.8 33.9 24.9 158.1 8.2% 59.2 217.2 6.6%

25.2 0.7 0.0 50.3 23.1 37.9 23.2 160.4 1.5% 59.7 220.1 1.3%

2015

39.3 0.7 0.0 61.1 25.5 55.1 21.2 202.9 11.8% 32.2 235.1 10.7%

37.0 27.0 51.0 41.0 104.0 222.0 482.0 2.1%

2018

44.9 0.7 0.0 59.5 26.5 54.8 20.4 206.9 2.0% 37.2 244.1 3.8%

54.5 0.0 56.4 26.8 59.3 26.7 223.8 4.4% 42.8 266.6 3.9%

43.0 29.0 51.0 43.0 104.0 223.0 493.0 2.3%

55.0 37.0 51.0 47.0 105.0 225.0 520.0 2.6%

60.0 41.0 51.0 49.0 106.0 227.0 534.0 2.7%

166.0 51.5 11.6 228.0 2.4%

166.7 60.8 11.6 238.0 4.4%

167.4 63.6 11.6 241.5 1.5%

168.0 74.5 11.6 253.0 4.8%

49.0 33.0 51.0 45.0 105.0 224.0 507.0 2.8%

2020

51.1 0.7 0.0 56.4 26.7 56.7 22.7 214.3 4.0% 42.2 256.5 3.3%

48.3 0.7 0.0 55.9 26.6 55.0 19.7 206.1 -0.4% 42.2 248.2 1.7%

2019

Market surplus (deficit) Based on total supply Surplus (deficit) as % of global demand

(5) -3%

25 14%

20 10%

12 6%

39 22%

28 15%

(6) -3%

1 0%

12 6%

16 7%

10 4%

15 6%

14 5%

Excl Russia/supplier inventories Surplus (deficit) as % of global demand

(10) -6%

13 7%

14 7%

12 6%

39 22%

28 15%

(6) -3%

1 0%

12 6%

11 5%

0 0%

5 2%

4 1%

(41) -23%

(45) -23%

(46) -24%

(20) -11%

(32) -17%

(32) -13%

(27) -11%

(29) -12%

Excluding secondary sources Surplus (deficit) as % of global demand

(59) -34%

(37) -18%

(30) -14%

(20) -9%

(21) -9%



9

03 May 2012

Valuation Our target price on UUU of $4.50/share is based on a 1.2x our cash-adjusted NAV estimate (C$3.57/share). Our target multiple reflect the low-end of historical P/NAV multiples for uranium producers of 1-1.6x and are in-line for UUU relative to its closest peers, Cameco Corp. and Paladin Energy Ltd.

Our primary valuation of uranium producers is based on the net present value (NPV) of its mining assets, which we derive using a discounted cash flow analysis (DCF) of mining operations, the market value of interests in listed equity investments, and valuation adjustments. The DCF analysis is applied to after-tax, unlevered free cash flows derived from the underlying life-of-mine plans of each operation and associated technicaleconomic parameters. The life-of-mine plans for each operation have been interpreted from UUU’s declared reserves and resources statement, which are calculated using the JORC/43-101/Russian C1 & C2 codes for reporting mineral reserves and resources. Our base-case discount rate of 9% (real-terms) represents what we estimate is the average cost of equity for global mining projects. In addition, our modeling assumes all measured and indicated resources are converted into reserves and conversion of inferred resources of 80-100%. It should be noted that the conversion of resources into reserves requires, among other things, additional definition drilling and infrastructure to demonstrate the economic viability of exploitation. Under these assumptions, our life-of-mine plans include projected expansion and ongoing capital expenditure based on our interpretation of the historical ratio of capital expenditure per pound of uranium production. To calculate NPV, our discount rate for UUU’s various mining assets incorporate the following assumptions: •

Minimum acceptable rate of return of 9% (real-terms)

•

New project risk rate is between 0-4% (real-terms)

•

Country risk rate of 0-4% (real terms) – Kazakhstan 1%

Exhibit 18: Net asset value summary Share price (C$/share) 2.95 Net Asset Value Summary Long-term U3O8 spot price 65 Long-term U3O8 contract price 65 Long-term H2SO4 price 125 Base case discount rate 9% Kazakhstan country risk premium 1% Net Asset Value (NAV) based on unlevered after-tax free cash flows Beneficial Discount all figures in US$Mln interest rate 70% 10% Akdala 70% 10% South Inkai 30% 10% Kharasan 50% 10% Karatua 50% 10% Akbastau Zarechnoye 49.67% 10% 100% 10% Mkuju River 100% 9% Honeymoon 100% 9% Powder River Basin Other Gross asset value (US$Mln) - Total debt + Cash + Uranium in inventory 3.456 Mln lbs +/- Adjustments Net asset value (US$Mln) Fully diluted shares outstanding Net asset value (US$/share) Exchange rate (US$ per CAD$) Net asset value (C$/share)

NPV Share (%) (US$Mln) 10% 309 25% 763 8% 254 14% 451 16% 490 342 11% 7% 206 1% 42 4% 131 4% 125 3,112 100% 568 517 156 3,216 957 3.36 0.9400 3.57

NPV (US$/share) 0.32 0.80 0.27 0.47 0.51 0.36 0.22 0.04 0.14 0.13 3.25



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03 May 2012

Mantra value option: Catalyst for UUU’s next mine A revised agreement with ARMZ gives UUU a call option to acquire Mantra from ARMZ, exercisable at any point up to June 7, 2013, for a purchase price equal to ARMZ’s acquisition cost of Mantra of ~$1Bln, including any additional expenditures contributed by ARMZ to Mantra or its properties and interest thereon at a rate of 2.65% per annum. On January 16, 2012, UUU announced that it had elected to pay $150Mln to ARMZ which extended the term of the Mantra call option to June 7, 2013 (from June 7, 2012) and resulted in UUU acquiring a 13.9% stake in Mantra from ARMZ. The agreement also provides ARMZ with a put option to sell Mantra to UUU at the end of the option term if all conditions precedent, including minority shareholder approval, are met. Exhibit 19: Mkuju River Project NPV 40 50 0.22 0.25 0.71 0% * 4% (0.02) 0.25 e t 6% (0.09) 0.12 a r t (0.14) 0.03 8% n u 10% (0.17) (0.04) o c s (0.19) (0.08) 12% i D (0.21) (0.13) 15% 20% (0.21) (0.16) *Kazakhstan country risk premium add:

1%

Exhibit 20: Mkuju River Project NPV (incl acquisition cost)

Uranium price (US$/lb) 60 70 80 1.16 1.62 2.08 0.51 0.78 1.05 0.33 0.54 0.74 0.19 0.36 0.52 0.10 0.23 0.36 0.03 0.14 0.24 (0.04) 0.04 0.12 (0.11) (0.05) 0.00

90 2.53 1.31 0.95 0.69 0.50 0.35 0.20 0.05

100 2.99 1.58 1.16 0.86 0.63 0.46 0.28 0.11

Source: Credit Suisse estimates

40 50 (0.87) 0% (0.83) (0.38) * 4% (1.10) (0.84) e t a (1.18) (0.97) 6% r t (1.23) (1.06) 8% n u (1.26) (1.12) 10% o c 12% (1.28) (1.17) s i D 15% (1.30) (1.21) 20% (1.30) (1.25) *Kazakhstan country risk premium add:

1%

Uranium price (US$/lb) 60 70 80 0.08 0.53 0.99 (0.57) (0.31) (0.04) (0.76) (0.55) (0.34) (0.89) (0.73) (0.56) (0.99) (0.86) (0.72) (1.06) (0.95) (0.84) (1.13) (1.05) (0.97) (1.19) (1.14) (1.09)

90 1.45 0.23 (0.13) (0.40) (0.59) (0.73) (0.88) (1.03)

100 1.90 0.49 0.08 (0.23) (0.46) (0.62) (0.80) (0.98)

Source: Credit Suisse estimates

Technical report on Mantra assets expected 3Q12 The Mkuju River Project is a uranium development project located in southern Tanzania with current activities focused on licensing and permitting. Additional exploration work on the project is being conducted in the area of the expected Special Mining License. During 4Q11, a single rig was operated, with a second rig being mobilized to the site. Drilling was focused on brownfields exploration and resource upgrade drilling to enable conversion of inferred material within the pit designs to an indicated classification. A definitive feasibility study (DFS) relating to Mkuju River is being prepared by UUU and is expected to be finalized by 1H12 and announced in 3Q12. Exhibit 21: Mkuju River Mineral Resource Estimate (September 27, 2011) Measured Indicated Measured and indicated* Inferred

Mln tonnes 80.3 59.3 139.6 42.5

Uranium grade (U3O8%) 0.0313% 0.0291% 0.0303% 0.0278%

Contained U3O8 (Mln lbs) 55.4 38.0 93.3 26.0

Ore value per tonne (@$65/lb) 44.85 41.70 43.42 39.84



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03 May 2012

Financials Exhibit 22: Income statement 2008A

(US$ millions) Revenues Operating expenses Depreciation and depletion G&A Exploration Total operating expenses

Earnings from operations

149.8 30.5 22.6 48.7 14.9 116.6 33.2 (3,336.2) (3,303.0) 44.2 (1,013.6) (2,333.6)

2009A

152.0 51.0 46.4 37.9 8.8 144.1 7.9 (230.8) (222.9) (185.5) (0.6) (38.1) (0.08) (0.08) (0.08) (0.01) (0.09)

475.6 475.6

Interest & other income (expense) Earnings before taxes & minority interests Income taxes Minority interest Other Net earnings

EPS (Basic) - Reported Adjustments EPS (Basic) - Adjusted

EPS (Diluted) - Reported Adjustments EPS (Fully diluted) - Adjusted

(4.98) 4.97 (0.02) (4.98) 4.97 (0.02)

Average shares outstanding (Basic) Average shares outstanding (Fully diluted)

468.4 468.4

2010A

2011A

326.9 92.0 97.4 55.9 5.4 250.8 76.1 (192.0) (115.9) 73.8 (189.7)

(0.31) (0.31) (0.31) 0.05 (0.26)

611.6 611.6

2012E

530.4 142.6 125.2 50.4 4.5 322.7 207.7 (56.4) 151.3 62.9 88.4

0.09 0.02 0.12 0.09 0.02 0.12

957.2 957.2

619.6 211.8 173.0 35.0 7.0 426.8 192.8 (37.7) 155.0 46.5 108.5

0.11 0.11 0.11 0.11

957.2 957.2

2013E

2014E

839.6 240.6 182.8 35.0 7.0 465.5 374.2 (37.8) 336.3 100.9 235.4

1,037.6 275.3 182.8 35.0 7.0 500.2 537.4 (40.9) 496.6 149.0 347.6

0.21 0.21 0.21 0.21

0.31 0.31 0.31 0.31

1,103.0 1,103.0

1,123.9 1,123.9


We forecast UUU’s share of capital expenditure in FY12 of ~$213Mln. We assume UUU will successfully exercise the Mkuju River Put/Call option in 2Q13 and fund its portion (~$890Mln) with cash and equity raise ($500Mln), though numerous funding alternatives exist given UUU’s strong balance sheet and conservative D/E ratio (currently 29%). For conservatism, we assume an equity-raise in 2Q13 at the current share price of ~$3/share. Exhibit 23: Cash flow statement 2008A

(US$ millions) Net earnings Depreciation, depletion and reclamation Future income tax recovery Minority interests Other Gross operating cash flow Changes in non-cash working capital Other Cash provided by operating activities

Additions to PP&E Acquisition of net business assets Increase in LT receivables, investments & other Disposal of assets & other Cash provided by investing activities

Net increase (decrease) in debt Shares issued Subsidiary issue of shares Dividends to common shareholders Other Cash provided by financing activities Effects of exchange rate fluctuations Net change in cash & equivalents Cash & equivalent (B.O.P.) Cash & equivalent (E.O.P.) Gross cash flow (GCF) per share Operating cash flow per share Free cash flow per share

(2,334) 23 (1,014) 3,328 3 33 36

(217) 123 (93)

18 8 60 86

(12) 17 160 176 3.4 0.01 36.1 0.08 (180.6) (0.39)

2009A

2010A

2011A

2012E

2013E

2014E

(38) 46 (206) 214 16 (10) 6

(190) 97 25 160 92 (46) 46

88 125 (12) 17 219 (49) 170

109 173 282 282

235 183 418 418

348 183 530 530

(272) (890) (1,162)

(273) (273)

(68) 16 (52)

(108) (10) (112) (14) (244)

12 1 13

164 35 (493) 648 355

5 (28) 176 148

15.7 0.03 6.1 0.01 (62.1) (0.13)

11 167 148 324

92.4 0.15 46.4 0.08 (554.9) (0.91)

(152) (17) 2 6 (161) 305 (18) 287

-

(2) 295 324 619 219.1 0.23 169.7 0.18 17.8 0.02

(213) (170) (383)

500 500

(102) 619 517 281.6 0.29 281.6 0.29 68.2 0.07

(244) 517 274

418.3 0.38 418.3 0.38 146.4 0.13

257 274 531 530.4 0.47 530.4 0.47 257.1 0.23



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03 May 2012

UUU had a cash balance of $619Mln at the end of 2011 (net debt $112/Mln including convertible debt) and a D/E ratio of 29%. We forecast a cash balance of $517Mln at the end of 2012 (net debt $202Mln including convertible debt) and a D/E ratio of 27%. Exhibit 24: Balance Sheet (US$ millions)

Cash & equivalents Accounts receivable, net Inventories Supplies and prepaid expenses Current portion of LT recievable & other Total current assets

2008A

2009A

176 40 17 31 265

148 42 72 24 287

Property, plant and equipment Long-term receivables, investments, & other Goodwill

1,285 77 -

Total assets

1,627

2,730 107 -

2,149

3,369

47 13 60

66 2 64 137 268

Long term debt Convertible debt (December 31, 2011) Convertible debt (February 15, 2020) Convertible debt (March 12, 2015) Other liabilities Deferred taxes

61 118 62 375

Minority Interest

Total liabilities & shareholder equity

3,523 132 (2,750) 46 1,627

619 138 91 2 850

2,205 97 151

83 14

3,303

2012E

2013E

2014E

517 138 91 2 748

274 138 91 2 504

531 138 91 2 762

2,246 267 151

2,335 1,157 151

2,425 1,157 151

3,412

4,147

4,495

237 333

58 11 52 13 135

58 11 52 13 135

58 11 52 13 135

58 11 52 13 135

141 78 181

206 116 377

516 214 107 337

516 214 107 337

516 214 107 337

516 214 107 337

-

-

-

-

-

-

5,825 193 (3,181) -

5,825 193 (2,833) -

4,147

4,495

3,823 133 (2,522) 46

2011A

324 103 91 14 532

1,748 114 -

Acounts payable and accrued liabilities Income Taxes payable Current portion of long term debt Other Total current liabilities

Share capital Contributed surplus Retained earnings Convertible Debentures

2010A

2,149

5,325 115 (3,194) 90 3,369

5,325 193 (3,525)

3,303

5,325 193 (3,416)

3,412



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03 May 2012

Operations Uranium One Inc. (UUU) is Canadian-based and one of the world’s largest publicly-traded uranium producers with a primary listing on the Toronto Stock Exchange and a secondary listing on the Johannesburg Stock Exchange. UUU has a portfolio of assets, primarily located in Kazakhstan, as well as the US and Australia, and is operator of the Mkuju River Project in Tanzania. UUU’s major shareholder (51%) is JSC Atomredmetzoloto (ARMZ) which is a wholly-owned subsidiary of the Russian State Corporation for Nuclear Energy (Rosatom). Exhibit 25: Uranium One operations


Operating Mines Akdala Uranium Mine

Akdala is UUU’s flagship acid in-situ recovery (ISR) uranium mine located in the Suzak region of South Kazakhstan. A 70%-interest is owned by UUU through the Betpak Dala joint venture, and the other 30%-interest is owned by KazAtomProm, the Kazakhstan state-owned uranium miner and exporter. Pursuant to the terms of its subsoil use contract, the permitted production rate at the Akdala Mine is 2.6Mln lbs U3O8 per year. UUU’s attributable production at Akdala in 2011 was 2.03Mln lbs U3O8. The concentration of uranium in solution averaged approximately 67 mg/l and the average flow rate from the well fields was approximately 1,923 cubic metres/hr. The well installation program for 2012 provides for the installaion of 274 wells, compared to 226 installed in 2011. UUU’s attributable production guidance at Akdala for 2012 is 1.8Mln lbs U3O8 at an average cash cost of $16/lb. South Inkai Uranium Mine

South Inkai is an operating ISR uranium mine located in the Suzak region of South Kazakhstan. A 70%-interest is owned by UUU through the Betpak Dala joint venture, and the other 30%-interest is owned by KazAtomProm. The design capacity of the South Inkai mine is 5.2Mln lbs per year. UUU’s attributable at South Inkai in 2011 was 2.82Mln lbs U3O8. The concentration of uranium in solution averaged 59mg/l during 2011. Due to the additional well fields in


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03 May 2012

production, the average flow rate increased significantly during 2011 to 3,505 cubic metres/hr in 4Q11, compared to 2,784 cubic metres/hr during 1Q11. UUU’s attributable production guidance at South Inkai in 2012 is 3.4Mln lbs U3O8 at an average cash cost of $20/lb. Karatau Uranium Mine.

UUU began accounting for Karatau on December 22, 2009. UUU's attributable production at Karatau in 2011 2.83Mln lbs U3O8. The concentration of uranium in solution averaged approximately 162 mg/l and the average flow rate from the well fields was 1,543 cubic metres/hr. The depth of the Karatau deposit is approximately 650-700 meters, compared to approximately 560 meters at South Inkai and 200 meters at Akdala. The average thickness of the Karatau ore zone varies between 10-17 meters, compared to 10-15 meters at South Inkai and 0.8-13 meters at Akdala. UUU’s attributable production guidance at Karatau in 2012 is 2.6Mln lbs U3O8 at an average cash cost of $13/lb. Akbastau Uranium Mine

The Akbastau Mine is a producing ISR uranium mine in Suzak District of southern Kazakhstan. Pilot production at the Akbastau Mine commenced on January 30, 2009, with UUU acquiring its 50% interest in the mine in December 2010. The production capacity of Akbastau is estimated to be 7.8Mln lbs per year, which is expected by 2016 on an annualized basis. Production from the Akbastau Mine in 2011 was 2.87Mln lbs U3O8 of which 1.44Mln lbs was attributable to UUU. UUU’s attributable production guidance at Akbastau in 2012 is 1.5Mln lbs U3O8 at an average cash cost of $18/lb. Kharasan Uranium Mine

Kharasan is an ISR uranium development project located in the Suzak region of South Kazakhstan. A 30%-interest is owned by UUU through the Kyzylkum joint venture, with a 30%-interest owned by KazAtomProm and a 40%-interest owned by Energy Asia Ltd. The project is currently being commissioned for an annual design capacity of 5.2Mln lbs U3O8, with a current installed capacity of 2.6Mln lbs. Pursuant to the terms of its subsoil use contract, Kharasan is allowed to ramp up production to 7.8Mln lbs/yr by 2014. As previously disclosed, performance of the well fields and uranium production has been below expectations. Several causes for underperformance of the well fields have been identified, including (i) lower than expected flow rates; (ii) sanding out of the production wells caused by the fine grain size; (iii) poor quality control over screen size utilized leading to a significant amount of well repair work; (iv) chemical plugging of screens caused by ineffective manual attempts to balance the well fields. We anticipate a slow ramp-up timetable, with UUU’s attributable production guidance at Kharasan in 2012 of 0.4Mln lbs U3O8. Zarechnoye Mine

The Zarechnoye Uranium Mine is an operating in situ recovery mine located in Kazakhstan, in the southern part of the Syrdaryinskaya Basin in the South Kazakhstan Oblast, approximately 200 km west of Shymkent and 450 km southeast of Kyzyl-Orda. Zarechnoye is a joint venture in which UUU has a 49.67% interest, acquired in December 2010. The remaining ownership interests are a 49.67% stake owned by Kazatomprom, the Kazakh State uranium company, and a 0.66% stake owned by the OJSC Karabaltinsky Mining Complex. The design capacity of Zarechnoye's processing facilities is approximately 2.5 million pounds (970 tons U) per year and it is expected that the annualized rate of production will reach this level in 2012.


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03 May 2012

An area of Zarechnoye known as Zarechnoye South has not yet been developed and is expected to become operational beginning in 2014. Steady state production capacity at Zarechnoye South is expected to be 1.6 million pounds per year, bringing Zarechnoye's combined production capacity to approximately 4 million pounds per year.

Development Projects The Honeymoon Uranium Project

The Honeymoon Uranium Project, located in the uranium-producing state of South Australia, is an advanced in situ recovery (ISR) project. UUU owns 51% of the Honeymoon Uranium Project Joint Venture, which owns the Honeymoon Project. The remaining 49% of the joint venture in owned by Mitsui & Co., Ltd. Planned technical processes for uranium extraction have been confirmed through the operation of a demonstration plant and a field leach trial over an 18 month period. Steady state production levels are expected to be 880,000 pounds U3O8 per year. Powder River Basin Uranium Projects

In January 2010, UUU completed the acquisition of 100% of the MALCO Joint Venture from wholly-owned subsidiaries of AREVA and Électricité de France (EDF). The assets of MALCO include the licensed and permitted Irigaray ISR central processing plant, the Christensen Ranch satellite ISR facility and associated uranium ore bodies located in the Powder River Basin of Wyoming. Willow Creek is expected to form the basis of the operating plan for UUU’s projects in Wyoming. The existing central processing plant currently has a capacity of 1.3 million pounds of U3O8 per year, which is expected to be expanded to the licensed capacity of 2.5 million pounds per year.

Mkuju River Uranium Project Uranium One’s 51% shareholder ARMZ acquired 100% interest in the Mkuju River Project by acquiring Mantra Resources Ltd in June 2011. As of June 2011, UUU is operator of the Mkuju River Project Project Overview

The Mkuju River Project is a large scale uranium development project located in southern Tanzania. Current activity at the Project is focused on licensing and permitting. A definitive feasibility study relating to the Project is being prepared by UUU and is expected to be finalized by mid-2012. Put/Call Agreement

ARMZ and UUU have entered into an Amended and Restated Put/Call Agreement. UUU has a call option to acquire Mantra from ARMZ, exercisable at any point within 12 months of closing (subject to extension) of the acquisition of Mantra by ARMZ. UUU has elected to pay US$150M to ARMZ which both extends the term of the option by one year to June 2013 and results in UUU acquiring a 13.9% stake in Mantra. For either the call or put option to be exercised, UUU minority shareholder approval will be required. The total purchase price to be paid upon exercise of either the put or call option will be equal to ARMZ’s acquisition cost of Mantra, including any additional expenditures and accrued interest of 2.65% per annum.


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03 May 2012

Companies Mentioned (Price as of 02 May 12)

Cameco Corporation (CCO.TO, C$23.05, NEUTRAL [V], TP C$28.00) Denison Mines Corp. (DML.TO, C$1.95, NEUTRAL [V], TP C$1.85) Energy Resources of Australia (ERA.AX, A$1.65, UNDERPERFORM [V], TP A$1.35) Paladin Energy Ltd. (PDN.TO, C$1.63, OUTPERFORM [V], TP C$3.00) Uranium One Inc. (UUU.TO, C$3.03, OUTPERFORM [V], TP C$4.50)

Disclosure Appendix Important Global Disclosures I, Ralph M. Profiti, CFA, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. See the Companies Mentioned section for full company names. 3-Year Price, Target Price a nd Rating Change History Chart for UUU.TO UUU.TO Date

3/12/10 5/10/10 6/9/10 7/19/10 8/9/10 10/20/10 11/15/10 12/15/10

Closing Price (C$)

2.81 2.42 2.19 2.88 3.14 3.87 4.82 4.5

Target Price Initiation/ (C$) Rating Assumption

3.4 3.2 3.3 3.2 4.2 4.3 5.4

N

8 7 6 5

5

O N R

N 4

4 3

3

3 3 N

3

4

R

O

2 C$ 1

Closing Price

Target Price

Initiation/Assumption

Rating

O=Outperform; N=Neutral; U=Underperform; R=Restricted; NR=Not Rated; NC=Not Covered

The analyst(s) responsible for preparing this research report received compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities. Analysts’ stock ratings are defined as follows: Outperform (O): The stock’s total return is expected to outperform the relevant benchmark* by at least 10-15% (or more, depending on perceived risk) over the next 12 months. Neutral (N): The stock’s total return is expected to be in line with the relevant benchmark* (range of ±10-15%) over the next 12 months. Underperform (U): The stock’s total return is expected to underperform the relevant benchmark* by 10- 15% or more over the next 12 months. *Relevant benchmark by region: As of 29 th May 2009, Australia, New Zealand, U.S. and Canadian ratings are based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe**, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. Some U.S. and Canadian ratings may fall outside the absolute total return ranges defined above, depending on market conditions and industry factors. For Latin American, Japanese, and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; for European stocks, ratings are based on a stock’s total return relative to the analyst's coverage universe**. For Australian and New Zealand stocks, 12-month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively. **An analyst's coverage universe consists of all companies covered by the analyst within the relevant se ctor. Restricted (R): In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Volatility Indicator [V]: A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward. Analysts’ coverage universe weightings are distinct from analysts’ stock ratings and are based on the expected performance of an analyst’s coverage universe* versus the relevant broad market benchmark**: Overweight: Industry expected to outperform the relevant broad market benchmark over the next 12 months. Market Weight: Industry expected to perform in-line with the relevant broad market benchmark over the next 12 months. Underweight: Industry expected to underperform the relevant broad market benchmark over the next 12 months. *An analyst’s coverage universe consists of all companies covered by the analyst within the relevant sector.


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03 May 2012

**The broad market benchmark is based on the expected return of the local market index (e.g., the S&P 50 0 in the U.S.) over the next 12 mon ths.

Credit Suisse’s distribution of stock ratings (and banking clients) is: Global Ratings Distribution Outperform/Buy* 47% (59% banking clients) 41% (57% banking clients) Neutral/Hold* Underperform/Sell* 10% (52% banking clients) 2% Restricted *For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely corresp ond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.

Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein. Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research-and-analytics/disclaimer/managing_conflicts_disclaimer.html Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties. See the Companies Mentioned section for full company names. Price Target: (12 months) for (UUU.TO) Method: Our target price of C$4.50/share for UUU is based on a target multiple of 1.2x our net asset value of C$3.57/share (9% base case discount rate), which is based on Credit Suisse long-term uranium price forecast of US$65/lb. Risks: The key risk to our C$4.50/share target price for Uranium One Inc. includes sensitivity to spot and long-term uranium and currency fluctuations. Political and regulatory risks must also be considered in Kazakhstan and Tanzania (taxes, royalties, mining rights, trade restrictions). The nuclear energy sector is subject to public opinion risks impacting demand for nuclear power, uranium and consequently Uranium One Inc.'s valuation. Reserve and resource estimates heavily impact valuation. The accuracy of the estimates can not be guaranteed. Uranium One Inc. is currently involved in multiple projects which implies inherent development risks. As with all mining companies there are operational risks involved such as mine collapses, storms, floods, and strikes, which can not be foreseen. Please refer to the firm's disclosure website at www.credit-suisse.com/researchdisclosures for the definitions of abbreviations typically used in the target price method and risk sections. See the Companies Mentioned section for full company names. The subject company (UUU.TO) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided investment banking services to the subject company (UUU.TO) within the past 12 months. Credit Suisse has received investment banking related compensation from the subject company (UUU.TO) within the past 12 months. Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (UUU.TO) within the next 3 months. Important Regional Disclosures

Singapore recipients should contact a Singapore financial adviser for any matters arising from this research r eport. An analyst involved in the preparation of this report has visited certain material operations of the subject company (UUU.TO) within the past 12 months. The analyst may not have visited all material operations of the subject company. The travel expenses of the analyst in connection with such visits were not paid or reimbursed by the subject company, other than de minimus local travel expenses. Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares. Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report. For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit http://www.csfb.com/legal_terms/canada_research_policy.shtml. The following disclosed European company/ies have estimates that comply with IFRS: CCO.TO. As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.

Principal is not guaranteed in the case of equities because equity prices are variable. Commission is the commission rate or the amount agreed with a customer when setting up an account or at anytime after that. Taiwanese Disclosures: This research report is for reference only. Investors should carefully consider their own investment risk. Investment results are the responsibility of the individual investor. Reports may not be reprinted without permission of CS. Reports written by Taiwan-based analysts on non-Taiwan listed companies are not considered recommendations to buy or sell securities under Taiwan Stock Exchange Operational Regulations Governing Securities Firms Recommending Trades in Securities to Customers. To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors:


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03 May 2012

The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. • Ralph M. Profiti, CFA, non-U.S. analyst, is a research analyst employed by Credit Suisse Securities (Canada), Inc.. • Hussein Govani, non-U.S. analyst, is a research analyst employed by Credit Suisse Securities (Canada), Inc.. For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at www.creditsuisse.com/researchdisclosures or call +1 (877) 291-2683. Disclaimers continue on next page.


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03 May 2012 Americas/Canada Equity Research

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UUU_May2012_FINAL.doc

Credit Suisse Uranium Initiation

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