TSX Commentary

Uranium Participation Corp. (U) – $6.62 – Buying Uranium Limited: Buying More Pounds at a Good Price
Sector Perform, Average Risk, Price Target: $7.25
On January 11, 2010, Uranium Participation Corporation (UPC) announced that it signed an implementation agreement with Uranium Limited (UL), previously named Nufcor Uranium Limited, to acquire all of the issued ordinary share capital of UL in an all-stock transaction. UL shareholders will receive 0.50 UPC shares for each UL share held on the closing of the transaction. Using the January 8, 2010, closing prices of UL and UPC, RBC CM estimates the total value of UPC’s bid is approximately $139 million, representing a 27.9% premium to UL’s market capitalization. According to UPC, the transaction represents a 7.0% premium to UL’s net asset value. On closing of the transaction, UPC will issue a total of 20.6 million shares, representing 19.4% of the total pro-forma shares outstanding, to acquire the uranium holdings of UL.. Upon closing of the transaction, UPC’s uranium holding will increase by approximately 26.3%. The closing of the transaction is subject to approval of UL and UPC shareholders and is expected to take place at the end of March, 2010, and no later than May 10, 2010. In addition to the above announcement, UPC announced that it plans to implement a normal course issuer bid (NCIB) program that will allow UPC to buy back UPC shares in situations where the board of directors deems appropriate. RBC CM believes that UPC’s implementation of an NCIB may represent a change to its strategy of not actively speculating in regard to short-term changes in uranium prices. RBC CM believes that UPC will successfully acquire UL and that the potential for a competing bid is very low.