Securities Law & Instruments

Headnote

National Instrument 81-106 Investment Fund Continuous Disclosure -- Revocation and replacement of existing decision -- Exemption from requirements to (i) prepare financial statements using Canadian generally accepted accounting principles; (ii) audit those financial statements using Canadian generally accepted auditing standards; (iii) review interim financial statements using standards in Handbook Section 7050; (iv) have an auditor's report signed by a Canadian auditor; and (v) calculate net asset value weekly -- Issuer is an existing investment fund in the Channel Islands that already produces financial statements in accordance with International Financial Reporting Standards and its auditors in the Channel Islands audit the financial statements using International Standards on Auditing -- Portfolio is comprised of uranium. Net asset value cannot be calculated weekly because the price of uranium (UF 6 ) is published monthly -- Issuer listed its securities on the TSX and is a reporting issuer in Ontario.

Applicable Legislative Provisions

National Instrument 81-106 Investment Fund Continuous Disclosure , ss. 2.6, 2.7, 2.8, 14.2(3).

Securities Act , R.S.O. 1990, c. S.5, as am., s. 144.

January 18, 2010

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

AND

IN THE MATTER OF

URANIUM LIMITED (the "FILER")

DECISION

Background

The Ontario Securities Commission (the "Decision Maker") has received an application from the Filer, formerly known as Nufcor Uranium Limited, for a decision under the securities legislation of Ontario (the "Legislation") granting the following:

Accounting and Auditing Relief

    • relief to use International Financial Reporting Standards ("IFRS"), rather than Canadian generally accepted accounting principles ("GAAP") in preparing the Filer's financial statements as required by section 2.6 of National Instrument 81-106 Investment Fund Continuous Disclosure ("NI 81-106");

    • relief to use International Standards on Auditing ("ISA") rather than Canadian generally accepted auditing standards ("GAAS") in auditing the Filer's financial statements as required by section 2.7 of NI 81-106;

    • relief to allow reviews of interim financial statements to be conducted in accordance with International Standards on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board rather than Section 7050 Auditor Review of Interim Financial Statements in the Handbook;

    • relief to allow PricewaterhouseCoopers CI LLP, Chartered Accountants, Guernsey Channel Islands ("PwC CI") to prepare and sign the Filer's audit reports, once the Filer is a reporting issuer, rather than a person or company that is authorized to sign an auditor's report by the laws of a jurisdiction of Canada and that meets the professional standards of that jurisdiction, as required by section 2.8 of NI 81-106;

    (together, the "Accounting and Auditing Relief")

NAV Frequency Relief

    • relief to calculate the net asset value ("NAV") of the Filer on a monthly basis rather than on a weekly basis as required by Section 14.2(3) of NI 81-106 (the "NAV Frequency Relief"); and

Revocation Relief

    • revocation of the Decision Document granted by the Decision Maker on November 5, 2008 in favour of Nufcor Uranium Limited (the "Existing Decision") (the "Revocation Relief").

Interpretation

Terms defined in National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined in this decision.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is incorporated under the Companies (Guernsey) Laws 1994 to 2001 and registered on June 28, 2006. The Filer's registered office is located in Guernsey, Channel Islands.

2. The Filer is a non-redeemable investment fund created to invest substantially all of its assets in U308 and UF6 (collectively, "Uranium Assets" or "Uranium"). The investment objective of the Filer is to provide long-term capital appreciation by buying and holding Uranium Assets. The strategy of the Filer is to acquire long-term holdings of Uranium and not to actively trade or speculate with regard to short-term changes in the price of Uranium. The Filer uses the funds that it raises from the public to purchase physical quantities of Uranium. The Filer also lends some of its Uranium Assets to third parties and uses the proceeds of such loans to meet a portion of its operating expenses. The Filer does not invest in securities of other issuers, investment funds or mutual funds, or otherwise invest in securities or commodity futures contracts.

3. The ordinary shares of the Filer are admitted for trading on AIM of the London Stock Exchange plc under the trading symbol "UML".

4. The Filer filed a preliminary prospectus dated June 27, 2008 (the "Preliminary Prospectus") in each of the provinces and territories of Canada and applied to list its securities on the Toronto Stock Exchange (the "TSX").

5. On or about September 17, 2008, the Filer's Board of Directors, pursuant to advice from its banking syndicate, led by Canaccord Capital Corporation and including Deutsche Bank Securities Limited, CIBC World Markets, BMO Capital Markets, TD Securities and GMP Securities, decided to discontinue the initial public offering of the ordinary shares of the Filer in each of the provinces and territories of Canada (the "Offering"), as described in the Preliminary Prospectus, on account of market conditions and movements in the price of uranium affecting the Filer's net asset value and in turn, affecting the Filer's ability to issue ordinary shares under the Offering.

6. On October 7, 2008, the Filer filed a notice of withdrawal of the Preliminary Prospectus with the Decision Maker. The Filer did not withdraw its application to list its securities on the TSX.

7. The Filer received conditional listing approval to list its securities on the TSX. The Filer satisfied certain listing conditions, including a requirement that the Filer file on SEDAR a current annual information form ("AIF") in accordance with the requirements of Part 9 of NI 81-106 and form requirements in Form 81-101F2 Contents of Annual Information Form, and its securities were listed on the TSX on December 30, 2008. The Filer's securities currently trade on the TSX under the symbol "UML".

8. Upon the listing of its securities on the TSX, the Filer became a reporting issuer in Ontario and is subject to the continuous disclosure obligations imposed on reporting issuers in NI 81-106, and the requirements of National Instrument 81-107 Independent Review Committee for Investment Funds.

9. The Filer's representation in the Existing Decision that it would become a reporting issuer in each of the provinces and territories of Canada was not realised.

10. The Filer is registered and regulated under the laws of the United Kingdom and/or Guernsey and is subject to a regulatory regime that is similar to that which exists in Canada. As noted above, the Filer was incorporated under Guernsey Law. From a corporate law perspective, the level of skill and care required of a director under Guernsey Law is similar to that required of directors of companies incorporated under the Canada Business Corporation Act.

11. The Filer was contractually obligated to change its name following the termination of its advisory services agreement with Nufcor Capital Limited and Nufcor International Limited on June 24, 2009. Prior to the termination of the advisory services agreement, Nufcor Capital Limited was the Filer's advisor and Nufcor International Limited was the Filer's storage consultant. The Filer filed a material change report and press release on July 3, 2009 announcing the termination. The Filer changed its name from "Nufcor Uranium Limited" to "Uranium Limited" by special resolution on September 17, 2009.

12. NuCap Limited (the "Storage Administrator"), a private company limited by shares, was incorporated in England and Wales under the Companies Act 2006. The Storage Administrator, pursuant to instructions of the Filer's Board of Directors and to the terms of storage account administration services agreement between the Filer and the Storage Administrator dated September 22, 2009, provides the Filer with specific services related to the storage and custody of the Filer's Uranium, including administering the Filer's storage accounts with various Uranium storage facilities.

13. The Filer's Board of Directors acts as the manager of the Filer and has assumed the advisory function of the Filer. The Filer's Board of Directors may engage brokers, on a case-by-case basis, to identify commercially attractive opportunities for the Company to acquire, sell and lend Uranium and advise the Company on the terms of any such acquisition, sale or loan, as the case may be. On September 22, 2009, the Filer entered into a transactional services agreement (the "Transactional Services Agreement") with the Storage Administrator. Pursuant to instructions of the Filer's Board of Directors, the Storage Administrator identifies commercially attractive opportunities for the Filer to acquire, sell and lend Uranium. The Storage Administrator has no obligations to identify investment opportunities other than in response to requests from the Filer's Board of Directors. The Storage Administrator is not paid a monthly retainer under the terms of the Transactional Services Agreement. The Filer's Board of Directors has the discretion to engage the Storage Administrator on a transaction-by-transaction basis.

14. The Filer complies with all requirements applicable to reporting issuers under Ontario's securities laws and regulations, subject to any exemptions the Filer may receive from such requirements. Canadian investors in the Filer have statutory rights of action under applicable securities legislation, including secondary market liability in connection with its continuous disclosure materials, including the AIF. Canadian investors may bring actions against the Filer and its directors in Ontario's courts and if successful, those judgments would be enforceable in jurisdictions where the Filer currently has assets, namely, Canada, the United States, the United Kingdom, France and, subject to certain conditions, Guernsey.

15. The Filer and each of its directors and officers provided undertakings to the Decision Maker to irrevocably and unconditionally submit to the non-exclusive jurisdiction of the judicial, quasi-judicial, and administrative tribunals of each of the provinces and territories of Canada and any administrative proceedings in any such province or territory, in any proceedings arising out of or related to or concerning the conditions and representations of the Existing Decision or its activities as a reporting issuer (the "Undertakings").

16. As a reporting issuer in Ontario, the Filer will require the same manner of exemptive relief from certain provisions of NI 81-106 as were granted under the Existing Decision.

17. The Filer is not in material default of any requirements under securities legislation in Ontario.

Accounting and Auditing

18. The Filer prepares its financial statements in accordance with IFRS and the interpretations of the International Financial Reporting Interpretations Committee as adopted by the European Union and has its financial statements audited in accordance with ISA.

19. The essential books and records of the Filer required for an audit are primarily located in Guernsey.

20. The Uranium Assets are valued in the financial statements using the fair value basis for valuation of assets. The Board of Directors believes that the fair value method with respect to the valuation of its Uranium Assets in the Filer's financial statements provides investors with more relevant information as to the value of the Filer's assets.

21. Under National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency ("NI 52-107"), a "foreign issuer" is permitted to prepare its financial statements in accordance with IFRS and to have its financial statements audited in accordance with ISA, provided that an auditor's report describes any material differences in the form and content of such auditor's report as compared to an auditor's report prepared in accordance with Canadian GAAS, and indicates that an auditor's report prepared in accordance with Canadian GAAS would not contain a reservation.

22. The Filer would qualify as a "foreign issuer" under NI 52-107 but for the fact that it is an investment fund.

23. The Filer's year end is June 30th of each calendar year.

Auditor

24. Section 3.3 of NI 52-107 permits an auditor's report filed by an issuer to be prepared and signed by a person or company that is authorized to sign an auditor's report by the laws of a jurisdiction of Canada or a foreign jurisdiction, and that meets the professional standards of that jurisdiction.

25. NI 52-107 would apply to the Filer but for the fact that it is an investment fund.

26. PwC CI audits the financial statements of the Filer in accordance with relevant legal and regulatory requirements of Guernsey and ISA. PwC CI is authorized to prepare and sign the Filer's audit report under the laws of Guernsey, and PwC CI meets the professional standards of Guernsey and the United Kingdom.

27. PwC CI is registered with the Canadian Public Accountability Board.

NAV Frequency

28. It is standard industry practice for Uranium funds to calculate NAV on a monthly basis.

29. The price of UF6, one of the two types of Uranium in which the Filer invests, is only published on a monthly basis and there is no intra-month price indicator. U308 prices are published on a weekly basis. Intra-month UF6 prices can be imputed based on general assumptions about U308 prices and conversion prices; however, conversion prices (from U308 to UF6) are also only published on a monthly basis.

30. Section 14.2(3) ensures that securities issued by investment funds that are redeemable on demand are liquid and that holders of such securities will be able to dispose of them on a regular basis with knowledge of the redemption proceeds that they will receive.

31. The ordinary shares of the Filer are not redeemable.

32. The Filer's ordinary shares are traded on AIM of the London Stock Exchange plc and listed on the TSX. Shareholders have the opportunity to trade the Filer's ordinary shares on a daily basis on the TSX, thereby maintaining the liquidity of the Filer's ordinary shares.

Decision

The Decision Maker is satisfied that the decision meets the test set out in the Legislation for it to make the decision.

Provided that the Undertakings from the Filer and each of its directors and officers that were provided to the Decision Maker before the Filer's securities were listed on the TSX remain in full force and effect, the decision of the Decision Maker under the Legislation is that:

(a) the Revocation Relief is granted;

(b) the NAV Frequency Relief is granted provided that:

(i) the NAV calculation is available to the public upon request; and

(ii) the public has access to the Filer's website for this purpose;

for so long as:

(iii) the ordinary shares of the Filer are listed on the TSX; and

(iv) the Filer calculates its NAV at least monthly;

(c) the Accounting and Auditing Relief is granted; and

(d) the decision with respect to the Accounting and Auditing Relief ceases to apply as of the date that NI 81-106 requires financial statements of investment funds to be prepared in accordance with IFRS as issued by the International Accounting Standards Board.

"Rhonda Goldberg"
Manager, Investment Funds Branch
Ontario Securities Commission