Dr. Richard Spencer reports

PEA SHOWS U3O8 CORP'S LAGUNA SALADA DEPOSIT IN URANIUM INDUSTRY'S LOWER QUARTILE OF CASH COSTS

U3O8 Corp. has released a favourable preliminary economic assessment on its Laguna Salada deposit in Argentina. The PEA shows that uranium at Laguna Salada would be produced at an average life-of-mine cash cost of $21.62 per pound of U3O8, net of a vanadium byproduct credit, and the total capital cost of $134-million would be paid back in 2.5 years. All figures in this press release are in U.S. dollars, unless otherwise noted.

"The PEA achieved our main goal of showing that Laguna Salada's cash cost would be well within the lower quartile of the uranium industry -- an important achievement that bodes well for the deposit's potential to ride out cyclical lows in the resource sector," said Dr. Richard Spencer, U3O8's president and chief executive officer. "With a life-of-mine cash cost of $22 per pound, Laguna Salada would be competitive with low-cost in situ recovery uranium projects and with high-grade deposits in the Athabasca basin. Secondly, the project has a short payback with an average cash cost of $16 per pound of uranium over that period. This is because the shallow, flat-lying nature of the Laguna Salada deposit allows us to start production in the higher-grade zones where profit margins are greatest. Thirdly, the project's economics would be significantly enhanced by increasing the resource size -- therefore, our immediate goal is to expand the current resource into our adjoining La Susana area."

PEA highlights (pretax base case at $60 per pound U3O8):

• Low cash cost: average cash cost of $16.14 per pound of uranium over the payback period; LOM cash cost of $21.62 per pound, net of a vanadium credit, and including a 3-per-cent net smelter royalty payable to the state. Therefore, the project would have a healthy operating margin even at current uranium prices and is favourably leveraged to a strengthening uranium price;
• Value of initial current resource: net present value, at a 7.5-per-cent discount rate, of $55-million, and a pretax internal rate of return of 24 per cent and posttax IRR of 18 per cent;
• Return on capital: total capital cost of $134-million (including start-up capital of $109-million to build the mine and processing plant plus $3-million in sustaining capital for the life-of-mine and $22-million for a 20-per-cent contingency on the total capital cost estimate). The payback period is 2.5 years;
• Initial production: 1.3 million pounds of uranium produced in year one, while the average annual production would be 640,000 pounds per year over the 10-year mine life from a continuous surface mining operation. Average annual vanadium production would be 960,000 pounds over the life of the mine.

Dr. Spencer added: "The Laguna Salada PEA marks a key milestone towards positioning U3O8 Corp. among the few companies that could be in production heading into a sustained and growing global uranium supply deficit forecast to start in 2019. Furthermore, the study shows that Laguna Salada is well placed as one of the most advanced uranium projects in Argentina that could satisfy the immediate needs of the country's current nuclear reactors that presently rely on imported uranium for fuel. Argentina's third reactor has just come on stream and deals were signed in the last month related to building a fourth reactor, with talks under way on a fifth. And with district-scale uranium potential evident in the Laguna Salada region, we could serve Argentina's growing nuclear fleet as well as export to other utilities, supported by the large number of nuclear co-operation agreements that Argentina has signed."

The PEA is preliminary in nature as it includes inferred mineral resources that are considered too speculative geologically for economic consideration that would enable them to be classified as mineral reserves. Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no certainty that the results of the PEA will be realized.

Low cost of uranium production

The PEA estimates an LOM cash cost of $21.62 per pound of uranium, net of a byproduct credit from vanadium, and including a 3-per-cent NSR to the state. The vanadium contributes an average of 14 per cent of revenues. This would put the Laguna Salada deposit well within the lower quartile in terms of cash costs in the uranium industry and competitive with operating costs of uranium mines in the Athabasca basin and low-cost in situ recovery operations.

A beneficial feature of Laguna Salada is that the mineralization is contained in an unconsolidated, flat-lying sheet just below surface, which allows production to start in the richest part of the deposit where revenue would be maximized so that the capital cost can be paid back in 2.5 years. This attribute of the deposit also provides us with flexibility to maintain positive operating margins by tailoring the mining plan to prevailing uranium prices throughout the life of the mine. By taking this approach, initial uranium cash cost averages at $16.14 per pound during the payback period or $11.66 in year one and $14.05 in year two, gradually rising as uranium grades decrease over the 10-year mine life for an average cash cost of $21.62.

Analysts estimate the average marginal cost of production for today's uranium producers is approximately $40 per pound, and that about 50 per cent of the world's current production is likely to be uneconomic at the present spot price of $28.50 per pound. The PEAs on U3O8's Laguna Salada deposit and its Berlin deposit in Colombia show that the company's lead projects have a combined weighted average cash cost of $6.08 per pound -- one of the lowest in the industry.

Net present value and internal rate of return

The PEA demonstrates that the project should generate healthy operating margins relative to analysts' uranium price forecasts. The economic model was based on a $60-per-pound uranium (U3O8) price and $5.50-per-pound for vanadium (V2O5) to yield an NPV of $55-million at a 7.5-per-cent discount with a pretax IRR of 24 per cent and posttax IRR of 18 per cent. At the consensus uranium price forecast of $70 per pound, the project's NPV (at a 7.5-per-cent discount rate) would increase to $98-million, the IRR would increase to 35 per cent and the payback period would shorten to 1.9 years.

U3O8 undertook this PEA before the full extent of the deposit is known in order to have independent verification that Laguna Salada's production cost would be comparable with the uranium industry's lowest-cost producers. As both of the IRR and NPV are sensitive to deposit size, the company's next step is to increase the resource, which would significantly improve both of these economic measures. For example, doubling the size of the Laguna Salada resource from mineralized areas that have a similar grade profile to the current resource and doubling the production rate, would result in the NPV (at a 7.5-per-cent discount) increasing to $180-million and the IRR to 44 per cent. The capital cost of a plant and mining operation that has double the capacity would be approximately $55-million more than the current plant design (or a total of $189-million including contingency and sustaining capital) and would produce an average of 1.2 million pounds of uranium and approximately two million pounds of vanadium per year over a 10-year mine life. Therefore, the clear priority is to double the resource -- and the company's immediate target to achieve this is the contiguous La Susana area (Dec. 4, 2013, press release).

The company's La Susana exploration area has the potential to increase the current resource to 20 million to 25 million pounds of uranium with an exploration budget of approximately $1.8-million. La Susana lies adjacent to the current resource and appears to be an extension of the Laguna Salada deposit. The La Susana footprint is about the same size as the current Laguna Salada resource and exploration indicates that it has a similar grade profile to Laguna Salada.

Based on the initial resource and exploration of the La Susana mineralized area, there is an initial conceptual uranium target of 150 million to 225 million tonnes at 50 parts per million to 60 parts per million U3O8 (approximately 20 million to 25 million pounds U3O8) identified in the Laguna Salada district to date. Potential quantity and grades are conceptual in nature. There has been insufficient exploration to define a mineral resource beyond the current resource, and it is uncertain if further exploration will result in additional mineral resources being delineated in the region.

              DISCOUNTED CASH FLOW ESTIMATES ON THE LAGUNA SALADA 
                         NPV AND IRR TO URANIUM PRICE
                                                                 $60
                                                               (base
Uranium price                                      $45    $50  case)    $70

Discount rate                                 0%   $16    $47   $109   $170
(in $ millions)                               5%   ($3)   $22    $70   $118
                                            7.5%  ($10)   $12    $55    $98
                                             10%  ($16)    $4    $43    $82
                                             15%  ($25)  ($10)   $23    $55
IRR                                                  4%    11%    24%    35%
Payback period (years)                             4.7    3.7    2.5    1.9

Value per fully diluted share of U3O8

U3O8 has now demonstrated positive economics on its lead projects in Argentina and Colombia with both deposits open for further expansion. Based on an initial NPV of $55-million (7.5-per-cent discount) as estimated in the current PEA, Laguna Salada equates to a value of 23 cents per fully diluted U3O8 share. In addition, the company's flagship Berlin project in Colombia has an NPV (7.5-per-cent discount) of $338-million based on only one-third of its resource potential for a value of $1.41 per fully diluted U3O8 share. These two projects together equate to a value of $1.64 per fully diluted U3O8 share.

Mineral resources

The Laguna Salada PEA is based on the initial resource prepared in accordance with National Instrument 43-101 by independent consulting company, Coffey Mining Pty. Ltd., 2011.

                RESOURCE ESTIMATE FOR THE LAGUNA SALADA DEPOSIT

                     Lower                                 Contained metal
                   cut-off        Average grade              U3O8       V2O5
Category of           (ppm      Tonnes     U3O8   V2O5  (millions  (millions
resource              U3O8)  (millions)    (ppm)  (ppm)     of lb)     of lb)

Indicated resources
Guanaco                 25        44.6       55    530        5.5       52.0
Lago Seco              100         2.7      145    840        0.9        5.0
Total indicated                   47.3       60    550        6.3       57.1
Inferred resources
Guanaco                 25        19.4       80    555        3.4       23.7
Lago Seco              100         1.3      130  1,065        0.4        3.1
Total inferred                    20.8       85    590        3.8       26.9

(i) Removal of pebbles and coarse sand by screening results in uranium 
grades increasing by 11 times over the in situ grade of gravel from the 
Guanaco area and seven times from the Lago Seco area. Vanadium grades
increase 3.8 times through beneficiation of gravels from both areas.

The recommended cut-off grades for the two mineralized areas, taking into account their distinct beneficiation characteristics, are: 25 parts per million U3O8 for Guanaco and 100 parts per million U3O8 for Lago Seco.

Mining and processing methods

Laguna Salada would produce an average of 640,000 pounds per year over the 10-year mine life. The mining operation contemplates the use of two Wirtgen SM2200 (400-tonne-per-hour capacity) continuous surface miners that cut a 30-to-40-centimetre layer of unconsolidated gravel with each pass along a trench. Gravel cut from the leading edge of the trench would be trucked a short distance by 50-tonne truck-trailers to one of two mobile beneficiation units (360-tonne-per-hour capacity) where the gravel would be washed over screens to separate the pebbles and coarse sand from the fine uranium-bearing material. Approximately 90 per cent of the damp gravel would be returned to the trailing edge of the trench to be levelled to the land's original topography and replanted with indigenous flora. This reclamation would be continuous throughout the mine life and ensures that no open excavation would be left on completion of mining.

The fine mineralized material derived from the gravel (8 per cent of the original mass from the Guanaco area of the deposit and 11 per cent from the Lago Seco area) would be mixed with water and pumped to a central hydrometallurgical plant. Fine material from Lago Seco would enter a hydrocyclone system for further beneficiation and the fine material in the overflow, containing the majority of the uranium, would then be mixed with fine material from the Guanaco sector for further processing. Residual gypsum in the combined fines would be leached with saline shallow groundwater from the property and the sulphate would be separated from that solution in a membrane system so that the saline water can be recirculated. Extraction of uranium and vanadium would be by alkaline leach at a temperature of 80 C, followed by the precipitation of a uranium-vanadium intermediate product. The PEA contemplates separation of the uranium and vanadium and calcining of the uranium to produce a high-grade uranium oxide as well as recovery of the vanadium as ammonium metavanadate (calcining of which would produce vanadium pentoxide).

The next steps toward development of the Laguna Salada deposit would be further hydrometallurgical testwork and an on-site pilot plant in which beneficiation tests would be undertaken, both of which would be to feasibility standards.

Capital costs

The PEA estimates a $134-million capital cost, the main constituents of which are $14-million for mining and beneficiation equipment, $79-million for the processing plant, indirect costs of $11-million and contingency of $22-million.

                          SUMMARY OF CAPITAL COSTS
                       (in millions of U.S. dollars)
Items                    
Working capital                                                     $  2.5
Mining                                                                14.3
Sustaining capital                                                     3.3
Mine closure(i)                                                        2.0
Process plant and infrastructure                                      79.1
Indirect costs (EPCM, insurance, temporary works,
first fills and spares, and the rest)                                 10.9
Contingency of 20%                                                    21.9
                                                                    ------
Total                                                               $134.0

(i) Mine site reclamation and closure would be continuing during the life 
of the mine and the majority of this cost is captured in operating costs.

Operating costs

Revenue of approximately $10 per tonne of mineralized gravel against operating costs of $5.56 per tonne would generate operating cash flow of $4.43 per tonne.

                             SUMMARY OF OPERATING COSTS

Items                                      Per tonne of mineralized gravel

Revenue                                                              $9.99
Operating costs
Revenue-based royalties                                              $0.25
Mining                                                               $0.99
Processing and general and administrative                            $4.32
                                                                     -----
Total operating costs                                                $5.56
Operating cash flow                                                  $4.43

The Laguna Salada PEA technical report, prepared in accordance with National Instrument 43-101, will be filed on SEDAR within 45 days of this news release.

Qualified persons and accreditation

The PEA was conducted under the supervision of Louis de Klerk, PrEng (South Africa), at Tenova Mining & Minerals (formerly Bateman Engineering N.V.), in Perth, Australia. TMM is part of the Techint Group, a leading global engineering firm that has been providing process design, development and construction services to the resource sector for over 90 years and has extensive and specific process and engineering experience in the extraction of uranium and vanadium. Projects undertaken by TMM include AREVA's Imouraren, Cameco's Key Lake, byproduct uranium from Harmony Gold's mines, Rio Tinto's Rossing mine, Kazatomprom's Honeymoon ISL uranium mine, Sinosteel's Crocker Well uranium project, an alkaline leach facility at UCIL's Gogi uranium project, a feasibility study on Bannerman's Etango uranium project and most recently, a feasibility study on Toro Energy's Wiluna project, which has many similarities with the Laguna Salada deposit.

Pedro Pino Veliz, director of PEK Teknep Overseas Engenharia Ltda., was responsible for the mine design and financial model. Mr. Veliz is a civil mining engineer (PE) (Brazil), EngDr (IT), SME, with over 35 years of mining operations experience. PEK has extensive experience serving its Brazilian and international clients with rock mechanics, rock characterization, underground stability and hydrological studies, feasibility studies, and designing and planning of surface mining, open-pit mines and underground mines. This has included detailed design of tunnels and stations, methods of excavation and specifications for support methods in the expansion of the Rio de Janeiro subway system for the 2014 World Cup and 2016 Olympic Games. Numerous projects for Rio Tinto included the Salobo Copper open-pit mine, the Fortaleza de Minas open-pit/underground nickel project, Rossing Uranium expansion project and study of surface Voest Alpine continuous miners for the Morro do Ouro gold mine.

Mine and tailing facility design was by PEK, with associated operating and capital cost estimates, as well as related general and administrative costs. TMM was responsible for the PEA design of the hydrometallurgical plant from receipt of the beneficiated slurry from the scrub-screen units, as well as for the associated operational and capital expenditure and general and administrative cost estimates. Pricing of reagents was done by TMM and U3O8. Product price assumptions were made by U3O8. The economic model was constructed by PEK using capital and operating cost estimates from TMM for the hydrometallurgical plant and from PEK for the mine plan and beneficiation units.

John Goode, PEng (Ontario), is an independent consultant with 50 years of experience in metallurgy and related testwork. He oversaw the metallurgical testwork carried out on the Laguna Salada project. Mr. Goode is a fellow of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) and a Fellow of the Australasian Institute of Mining & Metallurgy (AusIMM).

Johann van der Westhuysen, PrEng (Chem), managing director of Synexus Pty. Ltd., was responsible for the membrane separation developments and their integration in the overall process for the Laguna Salada project. Mr. van der Westhuysen is a professional engineer with the Engineering Council of South Africa and a chartered chemical engineer with the Engineering Council of the United Kingdom. Synexus is a process engineering company specializing in the application of membrane systems in hydrometallurgical and related processes.

Each of the individuals named above is a qualified person as defined in National Instrument 43-101 of the Canadian Securities Administrators, is independent of U3O8 and has verified his related technical disclosure presented in this press release.

The PEA has relied on the National Instrument 43-101 resource estimate prepared by Neil Inwood, a fellow of the Australian Institute of Mining and Metallurgy, and a qualified person, who was employed by Coffey Mining at the time of the writing of the report. Mr. Inwood is independent of U3O8. As Mr. Inwood is no longer with Coffey Mining, Coffey Mining has reviewed the information related to the mineral resources as derived from the original report and consents to its inclusion, form and context in this press release.

Dr. Richard Spencer, PhD, BSc (hons), PGeo (Ontario), CGeo (U.K.), is president and chief executive officer of U3O8 and a qualified person, and has supervised the preparation of, and verified the technical information contained in this press release relating to the Laguna Salada project.

We seek Safe Harbor.