Uranium Participation Corporation Reports Financial Results for the Period Ended May 31, 2017 - Seite 2

Operating expenses of $1.3 million, partially offset by income from lending and/or relocation of uranium of $0.1 million, for the three months ended May 31, 2017, represents approximately 0.3% of the Corporation's NAV at May 31, 2017 and 0.3% of the NAV at February 28, 2017.

Current Market Conditions

Uranium spot prices continued to be volatile during the first quarter of the 2018 financial year, ranging between a low of US$19.25 per pound and a high of US$25.50 per pound during the period. Despite the volatility, the spot price remained above a thirteen year low of US$18.25 per pound U₃O₈, which was set in November 2016. Uranium spot prices increased during the first part of the financial first quarter, reaching a high of US$25.50 per pound in March 2017, buoyed primarily by positive supply-side developments, including the impact of an announced 10% cut to 2017 Kazakhstan uranium production. The rally lost steam, however, and the spot price fell back to US$19.25 per pound U₃O₈ by the end of May 2017. In early June 2017, the spot price has improved slightly to approximately US$20.00 per pound U₃O₈, on increased opportunistic demand driven by low spot prices. The quarter was characterized by transactions involving relatively thin volumes, as utility end-users continued to delay the purchasing activities required to cover their future reactor needs. The discretionary nature of buying on the part of utilities is believed to have also contributed to a continued low spot price. Given it is expected that substantial uncovered reactor requirements will emerge as early as 2020, market observers continue to speculate when the required increase in procurement activities will materialize.

Recent nuclear industry conferences in Toronto (World Nuclear Association/Nuclear Energy Institute) and Budapest (World Nuclear Fuel Market) have highlighted the unsustainable nature of current uranium prices, which are at a level below the all-in production cost of most of the global mine supply - thus making it difficult to incentivize the capital investments needed to expand production to meet growing demand in the future. Finite secondary supplies are currently filling the gap between demand and primary sources of supply, but as these supplies are drawn down, the industry may find itself in a situation where demand exceeds existing mine capacities and additional primary production is needed. The lead-times to expand existing operations or build new operations, however, may be too long and complicated to meet this demand in a timely manner when it materializes.