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ENG GER

CEO's 2010 Year End Letter To Shareholders

December 29, 2010

 
Dear Shareholder,

I am pleased to report to you the status of the Company as of the end of 2010. The first item I would like to address is the support you have provided throughout the year. Your confidence is invaluable to us, and is very much appreciated. UEC had a superior year and is now North America’s newest uranium producer! As one of the world’s very few uranium producers, our focus is on expanding production and generating cash flow in 2011.

The Company is well positioned to act on its objectives for the next year with no debt, $35 million in cash, one of North America’s strongest technical teams, a growing base of operations in South Texas and an upbeat outlook for the uranium market. As a new uranium-producing company, UEC is ideally positioned with 100%-unhedged production.

Achievements and Highlights in 2010

• Start of production – The Company initiated in-situ recovery of uranium at our Palangana Project in South Texas in mid-November. Shortly thereafter, the first delivery of uranium-loaded resins was accepted at our Hobson plant, also in South Texas, and the processing into marketable U3O8 or yellowcake was commenced. UEC is North America’s only new uranium producer in 2010, and the first new ISR producer in the U.S. in more than five years.
   
• Financing and capital injection   – The Company received nearly $40 million in 2010 by completing a $27.5 million equity financing in October and by selling a non-core asset for $11 million in April.
   
• Goliad permitting advances – The Texas Commission on Environmental Quality (TCEQ) recently granted the Goliad project its Mine Permit and Production Area Authorization and approved both planned disposal wells. The project has one remaining Texas authorization pending, the Radioactive Material License, which is at an advanced stage of review with TCEQ.
   
• Uranium resource increases – The Company is actively drilling with 4 rigs at its Palangana and Salvo projects in South Texas, with expanded resource statements anticipated soon. At present, qualified NI 43-101 Technical Reports estimate resources in all categories at Palangana of 2.2 million pounds, at Goliad of 6.9 million pounds and at Nichols of 1.3 million pounds, plus an historical resource at Salvo of 1.5 million pounds. All four ISR projects are in close proximity to the Company’s Hobson processing plant, part of UEC’s regional production strategy in the South Texas uranium belt.
   
• Analyst and media coverage – Five recognized uranium analysts, in the U.S. and Canada, cover developments of the Company. Over the past year, these analysts have continued to raise their price targets in accordance with market and corporate developments. In recognition of the Company’s first-new-production status, Forbes magazine published a feature article on the Company in April and I was interviewed by CNBC in November. The Wall Street Journal, Bloomberg and Reuters each interviewed me during this period and each became the basis for articles that were published and distributed globally.
   
• S&P/TSX Global Mining Index - In December, the Company was added to the S&P/TSX Global Mining Index, which is composed of the world’s leading mining companies.
   
• NYSE Closing Bell Ceremony - On November 19, the Company was honored by ringing the New York Stock Exchange Closing Bell in celebration of the Company’s transition from uranium explorer to uranium producer. 

2011: Cash Flow, Production Expansion

We take pride in the two photos below which demonstrate that uranium production is now a  day-to-day activity in the operations of  the Company, both at the Palangana project and at the Hobson processing plant.

(To view the full sized images and read descriptions, please click on the thumbnail photos below)

Processing U3O8

Hauling Resins

The Company’s ISR-experienced field staff, headed by industry veteran Bob Underdown, VP Production, have brought the Phase I production area at Palangana gradually up to maximum flow rates since operations started on November 17.  Concurrently, the Phase II and III production areas are expected to be brought on-line in the First and Second Quarters of 2011, respectively. In total, more than 130 wells are expected to be in production. First cash flow is anticipated in the first-half of 2011.

The Company’s regional South Texas strategy will expand significantly in 2011:

• The Palangana ISR project is anticipated to expand its U3O8 resource with 2 active exploration drill rigs.
• The Goliad ISR project should enter the construction phase upon receipt of final permits, expected during the coming year.
• The Company’s third project, the Salvo project, also located in close proximity to the Hobson plant, is anticipated to provide an additional boost to overall resources with aggressive expansion drilling.
• Additional leases in the South Texas Uranium Belt are being negotiated for acquisition.

In addition, keep an eye out for very exciting acquisition opportunities that are outside of Texas that fit the ISR profile, an area of core competency for UEC.

Nuclear Power Expansion

Early in 2010, during his State of the Union address, President Obama called on Congress to increase the budget for federal loan guarantees for new nuclear plants from $18 billion to $54 billion. Shortly thereafter, the Southern Company subsidiary, Georgia Power, accepted conditional loan guarantees for $8.3 billion to construct the first new U.S. nuclear plant in more than 30 years. This progress in the U.S. is encouraging, while the pace of nuclear power expansion in China is stunning with 25 reactors under construction.  Globally, there are almost 60 reactors under construction in 15 countries.

Uranium producers globally will be scrambling for years to generate supplies of the magnitude needed by Asia, Europe and the U.S., as already indicated by large contractual agreements made during 2010.

The Price of Uranium

Over the past year the spot price of uranium has risen from a low of $40/lb. to a current two-year high of $62.50/lb.   The term or contracted price is $65/lb., up from $60/lb. earlier in 2010 according to Ux Consulting. Industry analysts are bullish on the price of uranium based on expanding demand for uranium globally and concurrent and ongoing tight supply. The Company is pleased with these developments and is acting to produce at a low cost based on best practices using in-situ recovery methods.

As a new uranium producer, the Company has the impetus to make shareholders very proud in 2011. Thank you again for your confidence in management. We welcome your further participation.

Stay tuned by calling us at 1-866-748-1030, emailing [email protected] and visiting www.uraniumenergy.com.

Best regards,

Amir Adnani
President and CEO
Uranium Energy Corp

About Uranium Energy Corp

Uranium Energy Corp is a U.S.-based uranium production, development and exploration company operating North America’s newest uranium mine. The Company’s fully licensed and permitted Hobson processing facility is central to all of its projects in South Texas, including the Palangana in-situ recovery project, which has just initiated production, and the Goliad in-situ recovery project which has been granted its Mine Permit and is in the final stages of mine permitting for production.  The Company’s operations are managed by professionals with a recognized profile for excellence in their industry, a profile based on many decades of hands-on experience in the key facets of uranium exploration, development and mining.

For further information about Uranium Energy Corp (NYSE - AMEX: UEC), please click: www.uraniumenergy.com or call 1.866.748.1030