Laramide Resources Ltd T.LAM

Uranium Sector outlook

[mayorkgh]

RBC's March 14th comment on uranium sector


Uranium

Assessing Japan's Nuclear Crisis on Uranium

Equities

Event

• On March 11, 2011 Japan suffered a massive 8.9 magnitude earthquake

followed by a devastating tsunami. Japan has the third largest nuclear fleet

in the world and a number of its nuclear facilities were significantly affected

by both the earthquake and the tsunami.

• This disaster may cause significant problems in the nuclear industry as

many countries may reconsider life extensions of their old reactors. Some

new build plans could be delayed or even cancelled. We believe the

outlook for new nuclear builds is still positive. The reactors that are

being proposed for construction are of a much newer design than the

ones that are failing in Japan.

• We think that there is a good chance that the spot price weakens in the

near-term. Looking to the longer-term, we think it is safe to assume that

there may be lower uranium demand from Japan given that some reactors

will be written off and others will be down for very long inspection periods

(2+ years). However, if new build plans continue in countries like

China, Russia and India, demand should continue to grow.

• While demand will likely continue to increase, supply growth may be

significantly reduced if there is no equity market support to finance

exploration and development. We believe the uranium price will still

need to exceed $80 per pound to incentivise new uranium development.

• We think there will be some investors that react negatively to the situation

in Japan and sell uranium equities. If the Japanese can recover from the

current problems without a meltdown or significant release of

radiation, we think investors should maintain their uranium

investments.

• In the near-term we think investors will prefer stable producers with

solid balance sheets and price protection. In this report, we have

included an analysis of uranium price sensitivity and balance sheet

strength for the companies in our coverage universe.