Geiger Counter Ltd : Annual Financial Report

GEIGER COUNTER LIMITED

Date of Announcement: 19/12/2012

RELEASE OF ANNUAL REPORT AND FINANCIAL STATEMENTS

The Directors announce the release of the Annual Report and Financial Statements for the year ended 30 September 2012.

CHAIRMAN'S STATEMENT - FOR THE YEAR ENDED 30 SEPTEMBER 2012

A year that disappointed after offering much.  January and February 2012 saw markets rediscover enthusiasm and an appetite for risk, and your Company's net asset value increased by 27 per cent to 81 pence.  The euphoria did not last, and a torrid few months saw these gains much more than reversed.   The Company's net asset value ended the year to 30 September 2012 down 34.7 per cent at 44.1 pence.   The share price fared even worse, falling by 47.2 per cent to 32.75 pence as the discount at which the shares traded widened to 25.8 per cent.

The sector, then, ended the year friendless. The question is whether such pessimism is justified?  It is not. While September saw reports that the Japanese nuclear sector would be wound down by the end of the 2030s, there was renewed support for the new nuclear regulator, the Nuclear Regulation Authority, in October, alongside a green light for three unfinished nuclear reactors to be completed and put into production.  Such tacks in direction do not come as a surprise.  Is it really credible that a country where one third of all electricity production is nuclear based will accept the costs of dismissing nuclear power as an option, especially at a time of recession?  Germany may have announced that it is to abandon nuclear power, but France and Britain have restated their commitment to it, while it is the emerging economies of Asia that will drive the rise in global energy demand.  There the rapid build out of nuclear energy facilities continues, in India, in Korea - and in China.

China has announced that it is restarting the process of nuclear project approvals after an
eighteen month post Fukushima pause.   Nuclear safety issues have been reviewed, and a move to "third generation" technology (the same technology that is being sold to turkey) is under way.  The stated aim is for nuclear energy to account for 11.4% of the country's energy mix (it currently accounts for less than 2 per cent).

The reality is that the broader demand for uranium continues to rise, although you would not know this from a spot price that continues to test new lows; interestingly, the term price stands at close to a fifty per cent premium to it.  The current sector malaise has seen a number of trends (the Manager speaks at greater length on consolidation and a supply side squeeze) that can only strengthen it over the longer term.  It may be a slow road back to the energy mainstream for the sector; but, it is a sure one and current price weakness and discounts offer a significant opportunity to your Company.

Accordingly, at the forthcoming Annual General Meeting, where a continuation of the Company is proposed as a Special Resolution, the Directors recommend that you vote in favour of this resolution as they intend to do themselves in respect of their holdings of 1,157,500 shares.

George Baird
Chairman
18 December 2012

INVESTMENT ADVISER'S REPORT - FOR THE YEAR ENDED 30 SEPTEMBER 2012

Looking back over the last 12 months, uranium prices have been relatively soft.  It has moved from $52.50/lb to $46.50/lb which represents a decrease of 11.4% for the year.

It has been a difficult year particularly for the sector, as the events of Fukushima continue to linger in investors' minds.  This is reflected in the softness in the spot uranium price and also in the performance of the underlying uranium mining shares.

Whilst the events of Fukushima cannot be undone, there are signs of green shoots in the sector. In Japan, almost all of the nuclear reactors but two are currently running.  However, there seems to be some progress as a new nuclear regulator (Nuclear Regulation Authority) has been formed in Japan.  This body is currently reviewing and updating the safety standards which they will impose on the sector.  We understand that sometime after mid 2013 onwards, we would begin to see other nuclear reactors turned back on once they pass these standards.

China, a major source of nuclear growth has announced that it is restarting its approval process again for new nuclear power stations after a one and a half year pause.  This pause allowed them to fully review the events of Fukushima and implement improvements in safety standards.  Their ambitions for nuclear has not changed, if anything, they are aiming to increase nuclear power in their energy mix.  In this context, the purchase of Extract Resources and Kalahari Minerals which own a substantial uranium deposit in Namibia by Guangdong, a leading Chinese power supplier, for over $2bn is significant.  Guangdong is moving forward with the $2bn cost of commissioning this mine.

On the supply side, we continue to see major projects being delayed or postponed.  Most notably, BHP has announced that it is putting Olympic Dam's expansion back by 2 years to 2014 at the earliest.  Areva has also announced that their Trekkopje Project in Namibia has been moth balled.  These delays should add to the tightness of the uranium market going forward.

One major factor which has impeded new uranium production has been getting Government
approvals and on that front, we have had two notable developments.  Firstly, the state of Queensland in Australia has overturned its long standing ban on uranium mining in the state.  This is expected to be formalised over a 3 month period and we should get much more clarity by early 2013.  In the state of Wyoming in US, we have seen two projects receiving full permits for development, the Nichols Ranch ISR project and the Lost Creek Project.  These permits have taken roughly 4 years to materialise, indicating the barriers to entry in the sector.

Whilst all of these developments in one sense has not changed the sentiment of the investment market, we believe that the medium to long term outlook for the sector remains bullish.  We will endeavour to provide shareholders exposure in the best uranium companies to take advantage of the turn when it happens.

John Wong
New City Investment Managers
18 December 2012

For further information, please contact:

Joanna Aniol Gordon   Beth Harris  
Geiger Counter Limited        Threadneedle Communications
Telephone number: [phone]        Telephone number: [phone]
Email: [e-mail]         Email: [e-mail]

Annual Report and Financial Statements

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Source: Geiger Counter Ltd via Thomson Reuters ONE

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