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Gold/Mining/Energy : Uranium Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Condor who wrote (5846)	1/1/2007 7:24:49 PM
From: LoneClone	Read Replies (2) \| Respond to of 30345

I consider Kazakhstan to be lower risk. Although the proximity to Russia and occasional kleptocratic tendencies in the ruling regime do occasionally lead to problems, Kazakhstan is among the most-developed countries outside the First World and in general operates quite transparently. Perhaps the best way to put it is that I own shares in three companies that operate in Kazakhstan, and I worry more about the companies' managements than the country they operate in. If I was the ruler I'd want to remove the 'stan' from its name so it wouldn't be unfairly lumped in with the likes of Turkmenistan. LC

To: Condor who wrote (5846)	1/1/2007 8:06:31 PM
From: Herb Duncan	Read Replies (2) \| Respond to of 30345

This report do not make a conclusive argument however it does suggest a little more diligence. Exploration has risk enough without adding bureaucratic hurdles as well. Public-Private Partnerships It is quite clear that Kazakhstan has very significant undeveloped - and underdeveloped - uranium resources, perhaps as much as 25% of the undeveloped uranium resources of the world. The bulk of the resources can be exploited by low-cost ISL methods. However, production has fallen dramatically since 1990 because of lack of capital and more economic resource management. The situation cries out for partnerships between the public sector, in the form of the state which owns the resources, and the private sector, in the form of Western mining companies. What looks ideal on paper often experiences contra-productive forces in practice. Some observations on our experiences (so far) in Kazakhstan would include the following: * There is a considerable lack of credibility as to the extent to which the mineral resources are economically recoverable. From our 18 month experience, we have found that the Soviet-style methods of exploration and recording of resources were generally quite good. However, the approach to mining these resources employed under the Soviet command economy means that stated reserves must be significantly discounted to adjust to Western views of recoverability. On the other hand we have found that there is still considerable scope for discovery of additional economic resources in the country. * What is clearly needed is a realisation and acceptance of the need for help in the proper, efficient and economic exploitation of the country's substantial uranium resources. * Even if the resources are heavily discounted they still rank ahead of any other country other than Australia. Furthermore, Kazakhstan has neither the aboriginal rights issues nor the environmental infrastructure of that country. The principal desire is for jobs. Because the future industry growth is essentially in ISL mining, the environmental impact will be minimised. * World Wide Minerals went to Kazakhstan at the invitation of the government. We tendered for the right to redevelop the TGK project and to gain access to the southern ISL mines and deposits. We have been good corporate citizens, we are ahead of our contracted financial commitments and we are making very timely progress on the redevelopment of the mines and related infrastructure. Notwithstanding this, there is a constant attempt made by the government and others to renegotiate contracts and to extract concessions that were not originally made - or even sought. * Often there is a lack of commercial reality demonstrated by much of the leadership and apparat of the government - to some extent due to the severe hardships caused by economic, political, sociological and geographical forces that are not of our making and that are largely beyond our control or influence. * The government struggles daily with the juxtaposition between the economic reality that it needs Western expertise and capital and the nationalistic pride that suggests that the country can solve its own problems. This is the ideal situation in which the creation of a true public-private partnership should be possible for the mutual benefit of both sectors. * Contracts are often signed hurriedly, presumably to get the Western company to start making its investment. Once a significant investment level is reached - at which time presumably it is assumed that there is no turning back - the leverage begins. It is clear that one should not assume the same legal or business etiquette that usually attends upon an agreement made in the West. * A word to the wise - get everything that you want down on paper, up front, and get it signed by all of the right people. Even then you are not assured of success, but at least you know what the deal was supposed to be. And then always remember: it is not a sin to make a mistake. The trick is to not make the same mistake twice! * In the case of World Wide Minerals, we were originally invited to take over TGK, to restructure and redevelop it, and to participate in development of the southern ISL mines. Previously, KATEP had been responsible for these functions. Now, Kazatomprom has been created as the successor to KATEP, and is attempting to consolidate a level of control over the industry. * It is proposed to make Kazatomprom not only a producer and marketer in its own right, but also that it be the regulator of exports of uranium by its competitors. This is an open invitation to interfere with commerce. While there is some precedent for this in the West, there at least such a situation comes with an overlay of the "rule of law" which applies a stringent code of ethics to govern how this inherent commercial conflict of interest will be resolved. * Our inability to obtain an export licence for a straightforward sales contract should be a warning to all other foreign investors looking at Kazakhstan and wanting to export their production. No trading business can survive if there is no certainty of deliverability. In the past, even KATEP has been an unreliable supplier, with persistent delivery problems. Operating in Kazakhstan requires patience, flexibility and a temperament that can withstand the shifting sands of life in that country. Unfortunately, this is inherently foreign to the uranium industry which relies on long term relationships that work, and on predictability and reliability of supply. The Kazakhstan government must ultimately come to understand this, but so far it has shown little aptitude to absorb some of the basic tenets upon which the uranium industry operates internationally. Conclusion Without risk there is no reward. World Wide Minerals went to Kazakhstan knowing that it was embarking to some extent on uncharted waters. Little did we know! However, we believe that with perseverance we will ultimately be successful. On the other hand, we do not consider ourselves captive to that country or to our investment, which we believe will ultimately be recouped profitably one way or another. In the meantime, we have begun to diversify our sources of uranium with the acquisition of operating and ownership control of Central Asian Uranium Company, the owner of the Dornod heap leachable open pit and underground uranium mines at Mardai in Mongolia. We are also considering developing some US uranium projects, preferably using ISL technology. Acknowledgements