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Company Reports >Athabasca Uranium Inc.


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 February 14, 2011

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Since their inception just a few months ago, Vancouver-based Athabasca Uranium Inc. (TSX-V; UAX) has been working diligently toward achieving their corporate goal of becoming a world-class uranium mining company. They have taken option positions on three properties; the McCarthy Lake Project, the Webb River Project and the McGregor Lake Project - all located in the famous Athabasca basin of Saskatchewan, home of some of the highest grade uranium deposits known to date.

As of early 2011, UAX continues to move forward on two fronts, acquiring additional property interests and continuing development of its core holdings. The company recently announced plans to acquire options on three properties; Key Lake East, Hodges Lake and Hamilton Lake.

At the same time, the company is advancing its exploration and development work at their McGregor Lake and Webb River properties, specifically including a 2,740 Km heli-borne Z-Tem survey, employing the latest cutting-edge technology of its kind, designed to identify discrete conductive vertical anomalies at depth.

For several years, a powerful, fundamental argument has been building for uranium resource development and two factors in particular lie behind the uranium argument. In the first case, many nations are either embarking on new nuclear power projects or extending the life of present ones. Among the important nations which have publicized such plans in recent years are China, India, Germany, France and the United States. One of the driving forces behind such decisions is the fact that nuclear power production is virtually pollution-free.

In the second case, an important source of fuel-grade uranium for nuclear power plants has been the conversion of weapons-grade uranium obtained from the dismantling of previous nuclear weapons. Virtually all recovery from this source has originated with the former Soviet Union nations but the rate of recovery from this source is in decline as the available supply of decommissioned nuclear weapons diminishes.

Strong indications have recently emerged that future demand for fuel-grade uranium is firming. In mid-November 2010 China confirmed information regarding its ambitious nuclear expansion program and that news item sent spot uranium prices higher. Postmedia News recently published estimates indicating double-digit increases in demand for uranium production as China looks for ways to guarantee their future supplies. It is also worth noting that at almost the same time, Germany confirmed its plans to extend the life of its present nuclear power plants by an average of 12 years, providing further support for the demand side of the uranium supply/demand equation.

Uranium prices have surged recently in response to firming demand indications and one source, Macquarie Group Ltd., was quoted by Bloomberg News Service stating the price for Uranium Oxide had risen to over $70 per pound by early February 2011, up from $40 in the second quarter 2010.

All of Athabasca Uraniumís projects lie along the same general trend which hosts Cameco Corporation's two major projects, the producing McArthur River Mine and their major developmental project, the Cigar Lake Mine, now scheduled to enter production in 2013.

McCarthy Lake covers 7,584 hectares (18,580 acres) and lies 40 Km (24 miles) east of Cameco's MacArthur River Mine and 29 Km (17 miles) SE of the Cigar Lake Mine along the eastern edge of the Athabasca basin, abutting Denison's South Cigar Project. A 2007 airborne Tempest MAG/EM survey was flown over the property to test for the presence and extent of graphitic zones that can host uranium mineralization and identified conductive targets described as "pearls on a string."

The McGregor Lake Project is somewhat larger, covering 18,699 hectares likewise along the eastern margin of the Athabasca basin and adjoining Denison and Hathor Exploration properties, lying just 5 kilometers (3 miles) east of Denison's Moore Lake deposit. The company closed on the first phase of its option in October, 2010 with the objective of ultimately earning a 100% interest in the project.

During the same month, UAX also closed on the first phase of its option to acquire the Webb River Property, covering 5,386 hectares and also located along the eastern margin of the Athabasca basin. Webb River lies close to two significant eastern basin uranium deposits; West Bear and Moore Lake.

Athabasca Uranium is in the process of raising capital to finance the advancement of their projects. Future plans include winter drilling programs and the company is ready to mobilize equipment almost immediately following successful completion of their financing.

During a recent interview with Athabasca Uranium President Gil Schneider, we learned that the company will be employing an exploration process utilizing high resolution 3-D seismic technology as part of its winter program. This leading-edge technology has met with previous success in uranium exploration (Hathorís Roughrider discovery) through a relationship with the University of Saskatchewan's Geosciences department for the interpretation of data.

Note: A full, in-depth study will be prepared following a property visit, scheduled to take place at the earliest opportunity

Athabasca Uranium Inc.

Suite 1040 - 885 W. Georgia St.
Vancouver, BC
Canada V6C 3E8

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The Melman Report

244 - 2465 Apollo Dr.
Nanoose Bay, BC
V9P 9K2
T. 250.947.5505
F. 250.468.7027

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