Geiger Counter Ltd : Miscellaneous

GEIGER COUNTER LIMITED

Date of Announcement: 05/06/2013

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 2013.

CHAIRMAN'S STATEMENT

Your Company's net asset value fell by 9.1% to 40.08 pence during the six month period ended 31 March 2013. The share price fared better, rising fractionally by 0.8% to 33.0 pence as the discount at which the Company's shares trade narrowed from 25.7% to 17.7%.

This has not been the greatest six months in the history of world mining. Precious metals have been subjected to huge selling pressure, while base metals continued to drift. Bulk commodities such as iron ore have been the object of major downgrading although the physical prices have proved resilient.

One metal which has bucked the trend is uranium. The US$40 per pound level has proved of great resistance and while there have been few signs of any material improvement; the relevant shares are certainly anticipating better times. Perhaps this is best exemplified by CAMECO which of the time of writing is the better part of 30% higher than at my last report 6 months ago. In fact, all of our top five holdings have started the calendar year promisingly.

One of the great disappointments since the Tsunami in Japan has been the way that events have been represented as a tragedy for the uranium industry. Just to reiterate the more salient facts; the plants in question were over 40 years old and in spite of the radiation which followed, the actual fatalities which have been recorded are zero. Nobody would underestimate the justifiable anxiety following the disaster but there has been virtually no acknowledgement that technology has changed enormously and almost certainly modern plants would have withstood the pressures involved.

Not only in Japan, but in many places around the world, there was a knee jerk reaction with many countries announcing that they would either abandon or slow down their nuclear programs. In every case there was no mention of where that new energy would be sourced. Not surprisingly, the one country that continued to build new reactors was China; while America, realising that the Russians would no longer supply them after the end of this year has shown a much more positive attitude to applications from potential producers.

The Japanese government has announced that a new code of safety will be implemented on 18th July this year. The utility companies will then have to pass safety inspections before they can apply to restart their reactors. This might well take place in some circumstances by the end of 2013 with more to follow next year. If this does eventuate, sentiment will receive a much needed boost.

It is a dangerous exercise to predict the turn in a bear market, but as a Board, we share in the cautious optimism as expressed by our fund manager. We have to acknowledge that the Trust has been a disappointing investment in recent times but are firmly of the opinion that this is no time to lose faith in the uranium industry and Geiger Counter in particular.

George Baird
Chairman
May 2013
INVESTMENT ADVISER'S REPORT

Introduction

Over the last six months, uranium prices have fallen $46.50 per lb to close at $42.25 per lb at the end of March 2013. In terms of its trading range, the volatility of prices has been relatively narrow and hence they have been range bound.

There are some notable developments in the uranium space over the last six months. Firstly, there is some progress in Japan. Post -Fukushima, the temporary closure of almost all of their nuclear fleet, has caused softness in the uranium prices. For a start, a new nuclear regulator, the Nuclear Regulation Authority ("NRA") was formed in Japan. This new body is responsible for establishing and monitoring safety standards for nuclear power stations. They have recently announced that they will be issuing their new safety requirements on July 18, this year. This is a positive step forward as we are now able to anticipate the timing of the re-starts of the idle reactors. We expect up to 5 reactors to restart later in 2013 with more to follow thereafter.

There was also a change in Government in Japan, with the Liberal Democratic Party ("LDP") taking the reins. The LDP has historically been more supportive of nuclear power and hence they have stated that the Government should determine the best mix of energy sources for the country. Whilst they may not have made an outright support for nuclear, we are seeing early signs that they are trying to reverse any decision to phase out nuclear power altogether.

On the company news front, ARMZ, a 51.4% shareholder of Uranium One made a formal offer to acquire the balance of the outstanding shares which it does not own in the company. The offer is in cash amounting to $1.3bn, equating to a share price of C$2.86 per share. We view this as an interesting development, as ARMZ is a quasi-government body of Russia and we can infer by their proposed acquisition that the Russians are bullish of uranium and nuclear power in the longer term. From our perspective, we are slightly disappointed as Uranium One is our largest position in the portfolio and it is one of the lowest cost producers of uranium, with decent growth prospects. This offer is due to complete in the next few weeks. It is conceivable that once completed the attraction of other uranium assets to investors may increase.

As I look forward, I am still convinced that the best days for uranium are ahead of us. The secondary supply from the Russian HEU agreement will finish at the end of this year. At these prices, we are seeing major uranium projects either deferred or scrapped altogether. An example of this is BHP's Olympic Dam, which seems to be postponed for now. As a result, with the Japanese nuclear power reactor re-starting (albeit slowly) from the end of this year, and increasing demand from new nuclear power reactors being built (particularly from China), we expect prices to follow.

John Wong
CQS Asset Management Limited
May 2013

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]

Geiger Counter Limited Interim Accounts 31 March 2013

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Source: Geiger Counter Ltd via Thomson Reuters ONE

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