The five month natural uranium futures price rose by 3.8% to USD 54.85 per lb, while the nine month price increased by 4.5% to USD 55.80 lb. The five month contract was up by 10.9% since the August 29th low, while the nine month contract was up by 11.3%. Futures have climbed to the highest level since June, although the five month price is still 22% below the March 1 price, while the nine month contract price is 21% lower.

Decline may be over. Rising futures prices indicate that the market is recovering from the bottom reached after the Fukushima crisis in Japan in mid-March. Given the strong fundamental outlook for the natural uranium market, we believe the price decline may be over.

In our view, market sentiment is improving as China, India and South Korea continue their nuclear build out plans while Saudi Arabia, the United Arab Emirates, Turkey and Vietnam have also announced plans for new nuclear facilities. Consequently, by the end of 2011 we could see gradual recovery in natural uranium prices.

Impact on Priargunsk Plant's stock price. Although recovery in the price for natural uranium benefits natural uranium producers, we expect only a moderate increase in Priargunsk Plant's stock price, since unexpectedly weak RAS financial results for 1Q 11 and 1H 11 (showing a y-o-y decrease in gross and operating profit) suggested that Atomredmetzoloto, the holding company that owns Priargunsk, may have shifted the profit center to the holding.

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