Uranium Resources (URRE.OB)

Dear Bottarelli Research Member,

Listen everyone, I don’t typically do this, but I think it’s critical that I give you an update on our Dendreon (DNDN – NASDAQ) position. I have now spoken to three doctors about this company, and all three of them have flat out said that there is no other treatment out there for late-stage prostrate cancer patients. All three doctors want to see this drug go through — which tells me that the encouragement from the medical community and clinical studies will soon be really helping the share prices move higher. If you have yet to establish a position in DNDN, do it now!

While I’m at it, it’s also a great place to own Yellowcake Mining (YCKM.OB). Make sure you have a position in that gem as well. And finally, I’m thrilled to report that our play on Idaho General Mines (GMO – AMEX) has officially hit a 100% gain. The stock is getting a tremendous boost as it is nearing the “ok” from the federal land lease they have been working on. Remember to take half of your profits here and let the rest ride. After all, the GMO story is only going to get better and better.

Now on to today’s new pick, which is another uranium play. I see no reason to stop adding growing companies in the uranium sector, as Bryan and I both firmly believe that uranium prices are headed higher. Today’s company is Uranium Resources (URRE.OB) and they’re a junior producer with some great projects. I think we should nibble away here and on pullbacks under $7.50, but I’ll turn it over to Bryan for the low-down on this play. How about it Bryan?

Sincerely,

“In Q4 2006, Revenues Grew Almost 350%. This Alone Will be the Catalyst for Pushing URRE’s Stock Valuation Higher and Higher”

Based in Lewisville, Texas, Uranium Resources (URRE.OB) engages in the acquisition, exploration, development, and mining of uranium properties in the United States. It owns production and development properties in south Texas and New Mexico — and their strategic plan is to acquire the best-known uranium resource properties, obtain the necessary permits and licenses, and produce these properties commercially. But to fully appreciate the potential of the uranium sector, it makes the most sense to begin by looking at the current 6-month movement of uranium prices. Take a look:

As you can see, uranium prices are stuck squarely in an upside bull market — with no signs of slowing down. Why are prices moving up so fast? It’s a simple supply vs. demand equation. Based on reports by The World Nuclear Association (“WNA”), worldwide uranium production since 1990 has satisfied only 51% of the demand. And this worldwide demand is driven by the fact that uranium is used as the fuel in nuclear power plants for the generation of electricity.

During 2004, for example, 440 nuclear power plants were operating worldwide — and they consumed around 173 million pounds of uranium. But that same year, worldwide production of uranium was only about 102 million pounds. So as you can see, when you have a situation where you’re using up 173 million pounds and only producing 104 million pounds, you have a disequilibrium in the supply/demand equation which ultimately pushes prices higher. (Note: The reason I’m referencing 2004 figures is because they are the most recent for which statistics are available.)

What’s even more interesting about uranium pricing is that there is no formal exchange for uranium. Unlike other commodities like gold, oil, or even pork bellies, uranium prices are developed by a small number of private business organizations that independently monitor uranium market activities like offers, bids, and transactions. This further makes the raw asset a limited and rare commodity to own — ultimately making a strong case to participate in the asset’s continued price increase using publicly traded companies like Uranium Resources (URRE.OB).

From a revenue perspective, UURE’s numbers are going gangbusters. In Q4 2006, for example, revenues grew almost 350% to $2.9 million from $835,000 in Q4 2005. Looking ahead, the company’s future strategy is to adopt a strategic plan with the goal of becoming a 10 million pound producer of uranium by 2014. As part of its strategy, URRE intends to build its uranium base between 200 and 300 million pounds through exploration of its own properties and by acquisition. And this alone will be the catalyst for pushing URRE’s stock valuation higher and higher. So I’d like to establish a position on any price dips.

PLAY: Buy shares of Uranium Resources (URRE.OB) at or under $8.00, good for the week.

Sincerely,