JNR Resources Inc JNRRF

Weekly Toll Cross Report

[megphi]

URANIUM INDUSTRY: 2005 U3O8 Target Price Upgrade: US$25.00/lb Straddling the Gap? Supply-demand fundamentals should continue to drive prices higher and encourage exploration • We are raising our uranium price forecast for 2005 and beyond to US$25/lb U3O8, up from US$20/lb. • In 2003, world U3O8 production totaled 92 mm lbs while demand was between 170 – 173 mm lbs. Uranium inventories were used to fill the gap. • Depletion of supplier and utility stockpiles has occurred in recent years due to a decline in production rates, cutbacks in supply from secondary Russian LEU/HEU, several supply disruptions in 2003 and growing demand from in western countries and developing nations. If these trends continue, the spread between supply and demand could reach 100 mm lbs U3O8 over the next 10 years and 500 mm lbs U3O8 over the next 20 years. • A further supply crunch could be the result of a Rio Tinto decision to shut down its Rossing mine in Namibia (decision expected in December 2004). In 2003, the low grade, high-cost Rossing mine produced 4.5 mm lbs of U3O8 or approximately 6% of the total western world production. Rossing was the 6th largest western world producing mine in 2003 and a decision to close this mine by 2007 could potentially drive U3O8 prices higher over the next 6 – 12 months. • Recent amendments made to the TENEX agreement will ultimately remove 74 mm lbs U3O8 from foreign markets between now and 2013. The Russian government has identified a growing need for LEU/HEU feed to fuel domestic energy production. • The spread between supply and demand should drive the price of U3O8 higher over the coming years. We believe that as the price increases idle operations could potentially be brought back online (i.e. IUC’s Arizona Strip, Colorado Plateau and Bullfrog properties and URIX’s Vasquez deposit). Additionally, projects in the prefeasibility stage such as Southern Cross Resources’ Honeymoon project in Australia and Palladin Resources’ Langer Heinrich project in Namibia may become increasingly economic. • However, even with the additional uranium production from projects scheduled to come online (Inkai, Kazakhstan / Cigar Lake, Saskatchewan) and the projects currently in pre-feasibility, we anticipate that the market will continue to be under-supplied, thus encouraging further exploration. • Our commodity price upgrade has resulted in higher target prices for the uranium stocks that we cover. We are raising our 12-month target price on Southern Cross Resources to $1.65, up from $1.25. Our target price is based on 1 x our NAV. We are also raising our 12 month target prices for International Uranium Corp. and JNR Resources based on the effect that an increased commodity price has on our Blue Sky models. Our new targets for IUC and JNN are $7.57 and $2.31, up from $4.10 and $1.35 per share. In light of continued positive fundamentals for the uranium mining industry, we maintain our BUY recommendation for these three companies. June 28, 2004 Jonathan Wiesblatt Equity Analyst [phone] [e-mail]