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Tuesday
Mar032009

Uranium Price Update

Uranium Chart 04 March 2009.JPG


Chart courtesy of u308.biz.

A quick look at uranium prices across the board reveals a fairly steady situation as we can see with the spot price, the long term price and the futures price.

We start with the spot price which is depicted by the above chart and has slipped slightly to $47/lb according to TradeTech and to $45/lb according to UxC.

The longer term uranium price remains steady at $70/lb which is depicted by the chart below kindly provided by TradeTech

Long term uranium price chart 04 March 2009.JPG

Over at NYMEX the futures prices for uranium range from $45/lb for March 2009 to $56/lb for December 2009 delivery.

The difficulty as we see it is that the broader markets are still taking a pounding as demonstrated by the DOW which has halved from 14000 to sub 7000 as the sell off continues and the market expresses its displeasure at the myriad of bailouts and stimulus packages that are seen as having little effect on the economy. This situation and negativity could exist for some time rendering any progress in the price of uranium subdued with uranium stocks going sideways in a consolidation pattern. Apart from the occasional pop northwards by a stock that genuinely has some good news or has been highly recommended the order of the day will be a fairly static one.


Have a good one.

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Sunday
Mar012009

Hot Rocks Equals Hot Stocks?

This is an essay very kindly sent to us By Marin Katusa, Chief Investment Strategist, Casey Energy Opportunities which we hope that you find interesting and informative.


Practically every major source of power generation in the world involves the production of heat, which eventually becomes the electricity that we use. Nuclear, coal, natural gas – the direct end result of all of these processes is heat, which is usually then transferred to water. This water is then turned into steam, which drives the turbines that give us our electrical end product.

It’s undeniable that making things hotter is one of our most ancient and reliable methods of getting things done – from cooking food to making cars run, the energy often associated with or directly resulting from an increase in temperature is an old and true friend. As it turns out, so is generating power from one of the biggest sources of heat around – around, not out in space... yes, our own planet.

Mantle, Magma... Money!

The Earth, much like an onion, is layered – chemically, though, rather than physically. The temperature of the inner core has been estimated at values of nearly 7,000 degrees Celsius, or 12,000 degrees Fahrenheit.

Geothermal power is an alternative energy source, and as such claims less than 1% of the world’s energy supply. Understandably, while estimates of globally exploitable geothermal reserves vary, they tend to be fairly encouraging. Total worldwide production of electricity in 2005 was 65 exajoules (EJ); that’s a 65 with 18 zeroes next to it. On the other hand, according to a 2006 report on geothermal power by MIT, the world’s total reserves were calculated to be over 13,000 zettajoules (ZJ) – that’s a 13 with a whopping 24 zeroes! Of this, at least 200 ZJ were estimated to be exploitable, with the potential for a further 1,800 ZJ to be extracted through technological advancements.

Other groups, such as the International Energy Agency (IEA), have figured the numbers differently but come to the same conclusion – there's enough geothermal energy for thousands of years. Current geothermal production is only 0.2 EJ, so there’s clearly plenty of room for geothermal power to grow as an alternative energy source.

Now that we know there’s a future for geothermal energy generation, that brings us to the next most important question: how economic is it? The following chart tells an interesting tale:

C1

Geothermal certainly holds its own with the best of them at about 6.5 cents per kilowatt-hour. Coal and nuclear power are still powering the way ahead with their 4-5 cent/kWh generation costs, but geothermal has already proven itself to be a viable alternative, not just on the environmental front but also the economic one.

So, how does the forecast for geothermal energy look? With 75 new geothermal power projects over twelve states underway in 2007 in the United States alone, the answer is: pretty good.
It’s a Small World After All

Geothermal plants are, perhaps fortunately, nothing special. They don’t require any particular manufacturing concerns or exceptionally location-specific design considerations, much like, say, a coal-fired plant. So it's little surprise that most geothermal companies are already as “vertically integrated” as one can get, offering complete geothermal plant solutions or even getting contracts to drill their own wells and build over them, as a private utility.

That’s more or less the extent of the differences between companies. On one hand, you have the problem solvers, the retailers, the companies that sell and operate geothermal systems as their primary business. On the other hand, you’ve got the utilities, the companies that stake geothermal deposits, get licensed, build plants, and sell their electricity. That’s all there is to the geothermal industry – very simple, no frills attached.

Juniors account for a very large portion of the geothermal pie. Geothermal juniors are all junior utilities, companies with tenements on hydrothermal reservoirs looking to get licensed or raise enough money to build their first geothermal plant.
So out of these three constituents, which one should we be betting our money on? Well, the answer should be fairly obvious; much like with, say, uranium, our best hope of profiting from the market lies with the juniors, the ones looking to develop into full-fledged utilities that sell electricity.

So let’s take a look at how the geothermal market shapes up.

Hot Potato

The United States is currently the largest producer of geothermal energy in the world. Nonetheless, geothermal still accounted for less than 1% of U.S. energy production last year. Perhaps surprisingly, the Philippines come in second place, with Mexico holding up third. Geothermal holds a lot of potential in the United States, China, Hungary, Mexico, Iceland, Australia and New Zealand, but that doesn’t necessarily mean said potential is being exploited.
More so than many of its fellow alternatives, geothermal has kept fairly low-key in the last few years, garnering very little interest despite being a clean and renewable source of energy. As a matter of fact, between the U.S. and Canadian exchanges, there are only ten geothermal companies. Even if you include the Australian exchange, which sees a lot of geothermal action thanks to its abundance of HFR-type deposits, the count only gets brought up to 23 companies.

C2 02mar09

As we’ve previously seen, most of the companies in the geothermal sector are juniors, a statistic that is reflected in these market cap charts. Many have nothing more than a couple of stakes in the ground as far as development is concerned, but that’s where every junior starts out in this industry.
In any case, the geothermal market is certainly a small one, but even in a small sector there are bound to be winners. And with the increasing demand for clean, green energy, it’s only a matter of time before more people pick up on the fact that geothermal is not a strange and rare form of alternative energy, but rather a source of power just as viable as its cousins hydro or wind – perhaps more so, because geothermal plants tend to stay off the radar screens of nature lovers grumping about their spoiled views or ecosystems. Low-key works both ways.

Getting Warmer

What do we anticipate for geothermal in the future? Will there be a surge in popularity, a sudden eureka as people and governments alike flock to geothermal as the next savior in this current energy crisis?

Probably not. Geothermal has always been one of those technologies with very low public awareness, and we see nothing to indicate how that might change anytime soon. So, barring some kind of strange series of coincidences, a geothermal bull is not in the cards for now.

Still, does that mean that geothermal is a dead-end market? By no means – as previously mentioned, there were 75 geothermal projects being developed last year in the United States alone. With less than 75 plants currently operating in five states, that’s a significant number. Just because there’s no public awareness doesn’t mean it’s not happening.

In fact, it's the plain-Jane doggedness of geothermal that we're counting on: despite lack of knowledge about it, despite the extremely small value of the market as a whole, geothermal still happens. And it will keep on happening because it hits on the three hot buttons of today's energy market: it's tested, economically viable, and environmentally acceptable.

***

Aside from money, energy makes the world go around... it’s a commodity we can’t do without. Therefore, top-quality energy stocks and ETFs are assets that will only increase in value over time, as emerging markets raise their energy demand and Peak Oil looms on the horizon.

With the right timing, energy stocks can provide huge gains: in 1998, Doug Casey advised to buy uranium stocks – at a time when no one wanted to hear about uranium. Within a few years, Doug’s subscribers were looking at returns of 660% on Strathmore… 895% on Cameco… and 1,333% on Paladin Resources.

Right now, many energy stocks are extremely undervalued. Click here to learn more about how to seize this opportunity and prosper.

Got any comments? Fire them in!

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Monday
Feb232009

Hyperion offers Clean Fix for Canada’s Tar Sands

Tar Sands.JPG

Environmentalists Lobby President Obama to Stop 'Dirty Oil,' but Emissions Solution via Super 'Thermal Battery' is Already Underway:

SANTA FE, N.M., February 19, 2009 — As President Obama wings his way to the U.S.'s northern neighbor today, environmentalists on both sides of the border are pummeling the new administration with demands to stop the production of oil from Canada's hefty tar sands deposits. The beef?  While still creating fewer carbon emissions than U.S. coal-fired plants, the extraction of oil from the Canadian deposits is problematic because the power for the mining and processing typically comes from burning fossil fuels.  The process can be cleaned up and made emission-free however, by use of the new Hyperion Power Module currently under development in the U.S.

"We have the solution to concern about the additional emissions generated by the mining and retorting of Canadian tar sands," explained Hyperion CEO John R. Grizz Deal.  "The new Hyperion Power Module, metaphorically a 'super thermal battery' for distributed power, was designed with this problem in mind.  The HPM can be transported into remote locations to provide huge amounts of emission-free power. Further, a recent study reveals the average oil field can save as much as $2 billion a year by using the HPM technology instead of burning natural gas to run operations."  

The Hyperion Power Module (HPM) offers 70 MW of thermal energy per unit. Converted to electricity, that is enough energy to power 25,000 average-size American-style homes or the industrial equivalent.  Once sited, the units can be ganged together to create as much power as needed. Transportable by truck, rail or ship, the units are only about 1.5 meters wide and 2 meters high.  

The HPM was invented by Dr. Otis Peterson. Inherently safe and proliferation-resistant, the HPM utilizes the energy of low-enriched uranium fuel in a technology unlike any other currently in use or in development. Approximately 4,000 units of the same design will be produced, sealed and shipped from company manufacturing sites. The company expects to begin delivery of the units in 2014.


Its not impossible but the above news release sent to us by Hyperion is certainly food for thought, although for an ex-oilman it sounds strange that an energy problem on an oil site can be solved by nuclear energy!

Got any comments? Fire them in!

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Thursday
Feb192009

Japanese Consortium’s stake in Uranium One

The Tokyo Electric Power Company logo
The Tokyo Electric Power Company logo

A Japanese industrial and financial consortium formed by The Tokyo Electric Power Company, Incorporated, Toshiba Corporation, and The Japan Bank for International Cooperation are providing for the private placement of an aggregate of 117,000,000 common shares of Uranium One, for gross proceeds of approximately C$270 million for a 20% stake in Uranium One.

BNN interviewed Jean Nortier, president and CEO, Uranium One, to find out what this means for the miner, which has been beaten down badly in the past year. Click here to watch the clip.



Part of this deal has 20% of future production allocated to the new partner however the price for that supply was not stated which we found difficult to grasp.

Longer term Jean Nortier is bullish on Uranium prices however he did not expect to see much improvement in the near term price.

To read the recent press release in full please click here.


Uranium One Incorporated trades on the Toronto Stock Exchange under the symbol of UUU, has a market capitalization of $920.25 million with 469.52 million shares outstanding and closed in Toronto at a $1.96.

Got any comments? Fire them in!

If you are new to this web site and wish to receive our free newsletter regarding investment in uranium stocks and updates regarding uranium, then please click here to subscribe.

To stay updated on our market commentary regarding gold, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

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Monday
Feb162009

Cameco Corporation: No Production in 2011 for Cigar Lake!

Cigar Lake Diagram 17 feb 09


The ingress of water at Cigar Lake continues to be problematic as Cameco anticipates that production from this project is somewhere beyond 2011. How far beyond 2011 is not clear as this type of work presents engineers with an enormous and complex task.

From Cameco's February 13, 2009 Report entitled Record Annual Revenue and Earnings for 2008 an update on Cigar Lake is given as follows along with the above diagram
:

We have confirmed that the main source of the increased water inflow observed on August 12, 2008, is from a fissure located in the top of the tunnel on the 420 metre level.
Cameco has developed a remediation plan to seal the tunnel. The plan includes remotely installing bulkheads on either side of the inflow location and then injecting concrete and grout into the tunnel and ultimately into the rock through holes drilled from surface. The equipment necessary to accomplish this has been mobilized and some initial work both on surface and on the 420 metre level has started. The work on the 420 metre level involves removal of pipes, doors, ventilation ducting, loose sand and other miscellaneous items. This is being done using submersible, remotely operated vehicles (ROVs) that are commercially available for this type of work. We estimate that sealing of the August 12, 2008, inflow will take most of 2009.

During the fourth quarter, dewatering of shaft 2 commenced. The water level was pumped down to the 260 metre level and held there for several weeks. The inflow measured during this time was very low and stable, confirming that the sources of the inflow have been sealed. In preparation for further lowering the water level, the installation of ventilation and water pumping infrastructure began in the shaft. It is anticipated that the removal of all water in the shaft will be complete in the second quarter of 2009.

Cameco has incurred $359 million in capital costs to develop Cigar Lake to the end of 2008. We no longer anticipate production in 2011 and are assessing the impact of the August 2008 inflow on the planned production date and capital cost estimate. We will provide new estimates, after the mine has been dewatered, the condition of the underground has been evaluated, and the resulting information has been incorporated in a new mining plan.


In addition to capital costs, Cameco's share of remediation expenses is now expected to total $92 million, of which $46 million has been expensed to the end of 2008. In 2009, Cameco expects to spend $21 million on remediation expenses for Cigar Lake.

In order to keep our stakeholders informed on the progress of remediation activities, we will provide updates with each quarterly MD&A or more frequently if there are significant developments.

If you wish to read the report in full then please click here.


Other than informing us that the sealing of the August 12, 2008, inflow will take most of 2009 it appears to us that it is still too early in terms of assessing the problem to be able to compile a programme for the remedial works and thus we have no idea of what the end date is.

For the holders of Cameco stock this is a difficult time however once this problem and its solution is clearly identified with a doable schedule of the works in place this uranium stock could zoom. We will remain on the sidelines for now but keep a watching brief as the engineers and consultants tasked with this challenge may well pull a rabbit out of the bag in the form of a devilishly simple idea which accelerates the production date. No pressure, eh!

Got a comment, then fire it in.

Stay tuned folks..

If you are new to investment in the precious metals sector then you may wish to subscribe of our FREE newsletters regarding gold stocks, silver stocks and uranium stocks, just click on the links.
Sunday
Feb152009

Uranium Stocks February Update

Uranium Chart 16 feb 09
Chart courtesy of u308.biz.

As the above chart shows the current spot for uranium stands at $47/lb according to both the leading sources TradeTech and UxC, with the long term price indicator holding steady at $70/lb. Over at NYMEX the data remains spasmodic at best with the December 2009 contract trading at $56/lb and the December 2010 contract trading at $58/lb.

The battered uranium stocks sector has more or less been consolidating in a sideways motion following a recent hike in stock prices. It was good to see this increase however we need to see both the spot price and the long term price head north before this portfolio will look anything like respectable.

However there are a few bright spots such as this one reported by u3o8.biz

And just this week Uranium One [TSX: UUU] announced it has entered into a long-term agreement with a Japanese consortium, which includes Toshiba Corp., the Japan Bank for International Cooperation and the Tokyo Electric Power Company Inc., to purchase 117 million common shares of the uranium miner at $2.30 per share for a total of nearly $270 million.

Japan intends to build 13 nuclear reactors over the next ten years and is the world's 3rd largest nuclear power generator.


We will continue to look for bargains in this sector with the intention of picking up a few stocks here and there. 'Go gently' being the order of the day for us, however this sector looks extremely oversold and if there is a uranium stock that you have always wanted to add to your portfolio then starting now with a small purchase should work out well over the next two years.

Have a good one.

If you are new to this web site and wish to receive our free newsletter regarding investment in uranium stocks and updates regarding uranium, then please click here to subscribe.

For our latest commentary and trading signals on gold and silver, click here to subscribe to The FREE Gold Prices Newsletter and click here for The FREE Silver Prices Newsletter.

Friday
Feb132009

Government Bailouts: A Comical View!

Wanda Sykes 14 feb 09



Its been a better week for owners of gold and silver despite the turmoil that exists in the financial markets. To put it into perspective and to end the week on a lighter note we turn to actress and comedian Wanda Sykes (read more…)

Tuesday
Feb102009

Bank of America: Long Straddle Options Strategy


Back in November we published an article on an options strategy called The Long Straddle, Double and Quits. This was essentially a tactic designed to generate profits from volatility (something that is the order of the day in the current market climate) and we mentioned that we would be giving the theory a go to see if it worked in the reality of today’s markets. Well we have been giving it a go and this is how it has worked out so far (read more…)
Sunday
Feb082009

Scotland Dithering over Nuclear Power Plants

Chimera 09 feb 09
Chimera


It saddens us to read an article today carried by the news.scotsman.com, by Environment Correspondent, Jenny Haworth, regarding whether or not nuclear power stations should be built in Scotland. By 2015 the UK will be entering a very tricky period of DE-commissioning the current crop of nuclear plants along with a few old coal burning power plants with no operationally ready power source to bridge the gap. There is no more time for discussion, these power plants should be under construction right now!






This is a snippet from from the article:



THE head of a new climate-change body that will advise the Scottish Government has disagreed with Alex Salmond's decision not to build nuclear power stations.

Lord Adair Turner, chairman of the Committee on Climate Change, said he thinks all options for providing electricity should be left open, including the creation of new nuclear power plants.

Speaking to The Scotsman ahead of a visit to Scotland on Monday, when he will give a talk on climate change, Lord Turner said: "It is an emotive issue, but at the UK level, there will be a commitment to nuclear. We think it should not be ruled out.

"The Scottish Government has to make its own decisions, but we think the challenge of dealing with climate change is so big that we should be very wary of ruling out any option that is available."

The Scottish Government is aiming to rely on a mix of renewables and "clean" fossil fuel power stations – which use technology to capture and store carbon dioxide emissions – to provide the country's electricity.


We have been talking about these alternative solutions since I was a school kid in short pants! They just don't get it do they? If and when these new technologies become available and are able to provide large quantities of power then we can give it a shot, but they are not proven and to our way of thinking they are not even on the list for consideration.

However, Mr Salmond, Scotland's First Minister is quoted as saying:

"Anything you invest – and it will be billions – in nuclear power is billions taken away from clean technology and in renewable technology,"

Jim Mather, the energy minister, added that renewables backed up by "clean thermal baseload" could meet Scotland's energy needs many times over and create thousands of jobs.

The building of nuclear power stations also creates lots of jobs! Scotland could build a number of nuclear power stations and sell the surplus electricity to England and Europe, just as the French do now, and create an income stream for the next three decades. This is an opportunity which will be regretted by the Scots.

Meantime over in Sweden they have decided to scrap the 30-year ban on new nuclear power stations. Three cheers for the Swedes, at long last another country sees the light.

Swedish public opinion polls have shown growing support for nuclear energy due to the lack of alternatives to replace the country's ten nuclear plants, that supply about 50 per cent of the country's electricity.

And finally a word from Duncan McLaren, chief executive of Friends of the Earth Scotland, said: "Other countries making decisions to pursue the nuclear chimera makes it all the more important that Scotland doesn't get caught up in that game."

For those of you who's first language is not English and wonder what a chimera is, its a mythical monster, on that note we will leave you.

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Friday
Feb062009

Cameco Corporation: Cigar Lake Re-visited!

Cameco logo

Friday, February 13, 2009 is a date for your diary, as ominous as it may be, as that is when Cameco will publish its next quarterly news release containing a summary of the progress being made at Cigar Lake. As a reminder this it what Cameco said in its last quarterly news release in 2008.

On August 12, 2008, Cameco suspended remediation work in shaft 1 at Cigar Lake after an increase in the rate of water inflow to the mine.

We are continuing to investigate the source of the inflow. Based on the information collected to date, we have identified a potential source at the 420 metre level of the shaft. This area was developed many years ago to assess the practicality of developing a working level above the orebody. This proved to not be feasible due to poor ground conditions. A concrete bulkhead was put in place and the remainder of the level was subsequently used for minor mine infrastructure and storage. Our investigation is currently focused on this area. However, we continue to review the area in and around the plug that was poured subsequent to the October 2006 inflow, as well as the two areas where it was previously determined additional precautionary measures were not necessary. Information collected to date does not suggest any problem in these areas.

Submersible remotely operated vehicles (ROV) are being deployed in the mine to explore the potential sources, provide visual and sonar imaging of the mine workings and measure parameters like water flow and temperature. At the same time, we are pumping water from the mine to create water flow to assist in identification of the inflow source. While the work is time consuming (some items like doors and pipes have to be cut away to allow the ROVs access), it is progressing steadily and providing good information to the investigation team.

Once the source of the inflow is identified, we will develop a remediation plan.

Progress on the remediation of shaft 2 continues. The inflow sources have been sealed and the effectiveness of the seal has been demonstrated. The shaft is now ready for dewatering and will be scheduled as part of the overall remediation plan for Cigar Lake.

In order to keep our stakeholders informed on the progress of remediation activities, we will provide updates with each quarterly MD&A or more frequently if there are significant developments.


Hopefully Cameco will have determined the source of water ingress in shaft 1 and have compiled at least an outline plan of action for its containment. On shaft 2 its fingers crossed that the seals are still holding, however it is not clear to us just when the dewatering will commence, hopefully this next update will contain a little more detail of the engineering problems, the alternative solutions available and an outline schedule for the works to completion. The provision of a doable schedule and an achievable end date would give investors a well deserved boost. Its now a case of watch this space!

Over the last month or so Cameco's stock price has deteriorated from around the $24.00 level to close yesterday at $20.00 so we are looking for some good news in order to reverse this downward trend.

Cameco Corporation has a market capitalization of $7.31 billion, a 52 week high of C$44.38 and a 52 week low of C$14.33, turnover yesterday was 3.67 million shares and trades as CCO on the Toronto Stock Exchange and as CCJ on the New York Stock Exchange.

For disclosure purposes we do not own this uranium stock.

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