Geiger Counter Ltd : Interim Report & Financial...

GEIGER COUNTER LIMITED

Date of Announcement: 18/06/2014

RELEASE OF INTERIM REPORT AND FINANCIAL STATEMENTS

The Directors announce the release of the Interim Report and Financial Statements for the Six Months to 31 March 2014.

CHAIRMAN'S STATEMENT

Blooded But Unbowed

In my last half yearly report, I expressed the sentiment that the uranium market might be very close to its nadir, but in the event, the price has continued to drift albeit in minimal turnover.  Shares followed that pattern, but, once again with below average turnover.  I still very much adhere to the view that at current levels there will be virtually no new production so that existing producers Cameco and Denison would bounce sharply on any improvement in the physical price.

Japan remains the enigma.  There is still resistance to restarting existing plants until there is absolutely no danger or any contamination.  In the meantime there is no indication of what alternative energy source might be considered.  The turning point might be some weather extremes; a very hot summer followed by a very cold winter might well polarise some action.  In the meantime the Chinese expansion programme continues unabated and it would be no major surprise if various Chinese authorities use the current depressed market conditions to build up stakes in potential producers.  One of our investments, ACAP, which has over 300 million pounds at various grades in Botswana is now one third owned by a Chinese company.

On the house keeping front, Terry Ward announced his resignation as he felt that most of his time was spent in Australia and he was not able to fulfil his duties as a director.  I would like to thank him for his wise council over the years.  It is proposed that, subject to the necessary conditions being fulfilled, James Leahy will take his place.  James has spent most of his professional career in the natural resources sectors and we look forward to him joining the board.  I would confirm that we intend to be fully compliant with the forthcoming introduction of the Alternative Investment Fund Manager Directive and the Foreign Account Tax Compliance Act.   In January, we announced that Keith Watson would join Will Smith to work jointly on the management of the Company's portfolio.  Keith has many years of experience in the uranium market and we look forward to his involvement in the development of the Company's portfolio.

The Board continues to monitor the discount at which the Shares currently trade and in this respect I am pleased to report that Edmond de Rothschild Securities (UK) Limited were appointed during the period to act as corporate broker to the Company. Turnover in the Company's Shares has, once again, been low and most of our major shareholders have maintained their positions.  It might sound like we are playing an old record to say that when the value of a commodity reaches a level where no new projects are considered worth developing means that we are very close to the bottom of the market.  I make no apologies for repeating my view of last time by saying this is no time to abandon ship.  When recovery eventually takes place, there could easily be an explosion in the better quality shares.

George Baird
Chairman
June 2014

INVESTMENT ADVISER'S REPORT

News of industry supply curtailment, anticipation of "fast tracked" Japanese nuclear reactor restarts and risk of supply disruption as a result of possible sanctions against Russia helped lift the spot U3O8 price by 6% to US$36/lb and drove a pronounced rerating of many uranium mining equities during the half of year to end-March.

The well flagged December expiry of the US-Russian Megatons-to-Megawatts agreement, which historically supplied the market with over 10% of its uranium needs sourced from decommissioned nuclear weapons, had minimal impact on prices with consumers contracting future purchases well ahead of time.

Of the fund's top five holdings, which represented around 40% of the fund at the start of the period, notable strong performances were registered by Denison Mines, which announced encouraging drill assays from its Wheeler River exploration project, and whose share price increased 45%. Similarly successful exploration results and merger with its 50% partner in the world class Patterson Lake South exploration project, helped Fission Uranium gain 28% over the six month period. The share price of producer Cameco increased by 26% while the Uranium Participation ETF gained approximately 12%. Countering this, the fund absorbed a 40% decline in the share price of UEC, which predominantly occurred during the month of March, though the impact on fund performance was mitigated by a substantial reduction in the fund's holding during January. Importantly, Sterling's 10% appreciation against the Canadian dollar, in which approximately half of the fund's shareholdings are denominated, also acted as a substantial drag on performance. As a result the fund NAV increased by a modest 4% to 33.00p during the first half of the year while the share price discount narrowed to around 6% at the period end.

Denison's all share funded acquisition of explorer Rockgate and Fission's scrip funded consolidation of project partner Alpha Minerals, both of which were held in the fund, contributed to the increase in fund concentration with the top 5 holdings representing nearer 50% at the period end.

Unfortunately the promising industry news flow during the first half year has not been sustained. In particular, the pace of Japanese reactor restarts remains glacial while a recent local court ruling against the restart of two reactors located at Oi further sapped investor enthusiasm for the fuel. Following the modest US$2/lb grind upwards in the U3O8 spot price from late September 2013 to US$36/lb in February 2014, uranium has retreated 22% to US$28/lb. After their strong performance equities sagged, giving-up their first half gains and the fund NAV has similarly fallen back to 29.46p down 7% year-to-date.

Immediate action to curtail mine supply such as Areva's decision to halt development of its Imouraren mine, Paladin ceasing production from its Kayalakera mine 6 months earlier than anticipated and Cameco halting development of its Millennium project are supportive, helping to address short-term market imbalances. Importantly, Rio Tinto's recent remarks on the marginal viability of its Rossing mine, illustrates industry inertia to respond to the new price environment with potentially deeper production cuts may be limited, particularly as the protection afforded by higher priced term sales falls away.

On a positive note the introduction of more stringent carbon emission controls in China, as the nation seeks to reduce chronic air pollution, should underpin expansion of the regions nuclear generating capacity, a process made easier by the nation's standardised reactor designs. Proposals announced by the US Environmental Protection Agency should also underpin the future role of the nuclear industry to provide reliable base load power as the nation similarly recoils from coal fired power generation.

Keith Watson
CQS Asset Management Limited
June 2014

For further information, please contact:

Lisa Neil
Geiger Counter Limited
Telephone number: [phone]
Email: [e-mail]

Roddy Watt
Threadneedle Communications
Telephone number: [phone]
Email: [e-mail]

Interim Report & Financial Statements at 31.03.2014

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Source: Geiger Counter Ltd via Globenewswire

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