Clock - Uranium Supply Crunch and Critical ... - Andrew Johns

Canada Research | Page 74 of 87UraniumExhibit 84: Financial and Operational Snapshot of Uranium Participation Corp.Uranium Participation Corp.RAYMOND JAMES LTD. RESEARCH Analyst: David Sadowski 604 659 8255Rating: Strong Buy 1 U-T david.sadowski@raymondjames.ca6-12 Mth Target C$ 8.00 NAV $6.66 Reporting Currency: CDN 18-Jul-12Projected Return: 38.4% YR-END: Feb 28 Market StatisticsShare Price C$ 5.78 Shares Basic (mln) 106.4Investment Thesis 52 Week High/Low 9.50/5.00 Shares Fully Diluted (mln) 106.4- Pure-play exposure to any potential upswing in uranium prices Market Cap. (mln) $615 Adj. Shares used in NAV calc (mln) 106.4- Minimal operational risk Enterprise Value (mln) $600 Avg Daily (4wk) Volume: 223,830- Low sovereign risk Total model'd lbs in DCF (mln) 13.4 Dividend $0.00Key Attributes:- Knowledgable management with industry experience in Denison Mines Financial Metrics (FY) 2011A 2012A 2013E 2014E 2015E- Strategically invests in U3O8 and UF6 to achieve value appreciation Cash ($mln) 16.7 14.3 10.8 6.8 2.8- Currently holds over 13 mln lbs U3O8e Working capital ($mln) 15.4 13.0 9.4 5.4 1.4Key Concerns Current ratio (x) 10.6 8.8 6.6 4.3 1.9- Non-diversified LT Debt ($mln) 0.0 0.0 0.0 0.0 0.0- Low liquidity in the uranium market Common Equity ($mln) 934 712 1,098 1,132 1,050- Exposure to potential FX volatility due to a US$-quoted commodity Price/book (x) 0.6 0.9 0.6 0.5 0.6LTD/(LTD + Equity) 0.0% 0.0% 0.0% 0.0% 0.0%Inventory Profile ROE 32% nm 35% 3% nm(as of 30-Jun-12) Quantity Cost Cost Market ROIC 31% -31% 35% 3% -8%(Mln) (C$mln) (US$/lb or ValueUranium Form kgU) US$/lb,kg Earnings/Cash Flow 2011A 2012A 2013E 2014E 2015EUranium oxide conc. (lbs U3O8) 7.25 342.50 43.23 $53.50 RJ Uranium Forecast US$/lb 57.09 53.50 63.00 72.50 75.00Uranium Hexafluoride (kgU as UF6) 2.37 390.00 152.06 $153.00 Revenue ($mln) 1.2 0.9 0.7 0.3 0.3Total U3O8e (lbs) 13.42 732.49 50.25 $53.50 EBITDA ($mln) 331.8 -242.5 331.6 29.6 -71.1EBITDA margin nm nm nm nm nmU3O8 Average Cost per lb: EV/EBITDA (x) 1.8 nm 1.8 20.3 nm- In Canadian dollars 47.24 EBIT ($mln) 331.8 -242.5 331.6 29.6 -71.1- In US dollars 43.23 Net earnings ($mln) 301.7 -223.5 383.0 34.2 -82.1UF6 Average Cost per KgU EPS ($) 2.88 -2.09 3.57 0.32 -0.77- In Canadian dollars 164.26 P/E (x) 2.0 nm 1.6 18.1 nm- In US dollars 152.06 Operating Cash Flow ($mln) -6.1 -3.5 -3.6 -4.0 -4.0CFPS ($) -0.06 -0.03 -0.03 -0.04 -0.04Uranium P/CF (x) nm nm nm nm nmFund implied price per lb U3O8e $44.55 Capex ($mln) 0.0 0.0 0.0 0.0 0.0EV per lb UF6 Portfolio (U3O8e) $116.27Valuation (C$) $mln $/share % of NAVUranium Inventory 697.9 $6.56 99%Inventory (mln lbs U3O8e)16.014.012.010.08.06.04.02.00.0Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11Inventory (Mlbs U3O8e)Stated P/NAV1.8x1.6x1.4x1.2x1.0x0.8x0.6x0.4x0.2x0.0xCurrent Assets 14.6 $0.14 2%Current Liabilities -4.7 -$0.04 -1%Current NAV $708 $6.66 100%Target NAV and Target Price: $855 $8.00Implied Target CurrentValuation Measures Multiple MultiplePrice/2012E NAVPS (x) 1.2 0.9Price/2013E CFPS (x) nm nmNAV Breakdown (%)52%46%2%U3O8UF6Current Assets1.21.00.80.60.40.20.0P/NAV1.150.870.680.720.630.33URE PDN DML UUU U CCOUS$/lb10.09.08.07.06.05.04.03.02.01.00.0EV/Resources44.558.24 8.252.871.720.59URE DML PDN CCO UUU USource: Raymond James Ltd., UxC, Thomson One, Capital IQ, Uranium Participation CorporationRaymond James Ltd. | 2200 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2