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MPs object to EDF takeover of British Energy

EDF Logo 28 July 2008

The proposed takeover of British Energy by the French company EDF is not yet a done deal. EDF’s bid which is in the order of £11 billion has ran into a number of problems including some voiced by British Members of Parliament.

A report compiled by the Commons Business and Enterprise Committee, warns that:

“The expected takeover threatened to reduce significantly price transparency in Britain's electricity market and to create an overly dominant player that would add to upward pressure on prices paid by consumers.”

Peter Luff a Conservative MP and the committee's chairman, has said the deal would restrict competition in an already tightly held market with only half a dozen big suppliers. The report goes on to say that investment must not come at the expense of competition or market transparency.

British Energy has eight nuclear power plants and one coal-fired power plant, which produce around 16% of Britain's electricity. However the government regards these nuclear power plants as key to the future as they are the sites that the new plants will be built on.

Someone needs to alert them to the fact that it will take about ten years to construct one of these new nuclear plants and that the old ones will be de-commissioned in 2015, so this programme is already late. Any further delays to the process will only exasperate the situation and increase the possibilities of rotational blackouts in the United Kingdom. We can only hope that the rules appertaining to ‘fair play’ don’t manifest themselves into no progress whatsoever as the various interest groups protect their rights.

Have a good one.

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Denison Mines Corporation: Heading towards the buy zone!

Denison Chart 18 July 2008

As we can see from the above chart Denison Mines Corporation has oscillated between $9.00 and $6.00 over the last six months. We can also see that the stock has formed a series of higher lows in an attempt to break through to higher ground. The chart also shows that the technical indicators are heading south so a buying opportunity could soon present itself.

As the environment improves for uranium and uranium stocks, Denison should be one of the beneficiaries. As regular readers will know we don’t own this stock but would like to own it. We almost bought in February this year when things were looking rather gloomy and Denison was trading at $6.25. (See our article Denison Mines Corporation Revisited) however we missed it and it subsequently galloped to the $9.00 level and back again. The volatility continued with this stock hitting $9.10 a few weeks ago, however it is once again heading south and closed at $7.63 yesterday.

We still intend to buy this stock in order to add it to our core position but it also offers traders the opportunity to play and profit from these oscillations. We will continue to monitor Denison closely and signal a buy as soon as we have determined that it is appropriate to do so. However, don’t be put off by us as we have missed it a few times in the past.

Denison Mines Corporation trades as DML on the TSX and DNN on the AMEX, has a market capitalisation of C$1.45 billion, a P/E of 36.94 with 189.78 shares outstanding.

Have a good one.

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Russia climbing the uranium producers table!

President Putin 17 July 2008

Russia has recently climbed up the table of uranium producers and slipped into fourth place behind Canada, Australia and Kazakhstan having produced 3,527 tons of uranium in 2007.

We have to hand it to the Russians for taking an aggressive proactive stance in developing opportunities both within and outside of their own geographical borders

They have some interesting deposits in Eastern Siberia, but it is the relationships that they have established with other countries that are propelling them up this league.

In Kazakhstan they now own a 49% stake of a 19,000-ton uranium deposit. In Australia they have a bilateral agreement whereby Australia will supply $1 million worth of uranium every year for civilian purposes. Throw in an agreement with Cameco undertaking uranium prospecting and extraction in both countries and possibilities with Armenia and they have some impressive opportunities.

This is a quote from an article by Tatyana Sinitsyna carried on Energy Daily:

“Experts believe Russia's total uranium potential (natural and weapons-grade) will enable it to enrich 45 percent of the world's uranium for nuclear power plants by the year 2030.”

It also goes on to remind us that:

“One cubic centimeter of uranium is equivalent to 60,000 liters of gasoline, 110 to 160 tons of coal, or almost 60,000 cubic meters of natural gas”

Have a good one.

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Footnote: The spot price of uranium has moved up to $60/lb.

Uranium Chart 17 July 2008

Fast-track approval for the United Kingdom nuclear plants

Telegraph logo 16 July 2008

Eight new nuclear power stations are to built throughout England aided by new planning laws that will enable these projects to be fast-tracked. Well, what can we say, they are getting there and this should help the United Kingdom to get to the construction stage a little faster than the normal process would allow. The planning process for another runway at Heathrow took six years to unfold and heaven only knows how much it must have cost all concerned.

The Government has previously stated that it was committed to building a new generation of nuclear power stations as the existing facilities are due to be de-commissioned and demolished.

However, not all are in favour as a spokesperson for Greenpeace, Jean McSorley, said:

"If there is a list that has already been signed off on for sites for new-build nuclear power stations then it makes a complete mockery of the Government's consultation on siting. It calls into question the legality of the whole process.”

This is not an open and shut case as we can see and there is more opposition from The Scottish Executive who have blocked any of the new nuclear stations being built north of the border. So just how do they intend to keep the Scottish people warm then? The ‘not in my back yard’ thank you is really quite a selfish attitude. Why should other people have to provide the land and the infrastructure for these power plants to supply Scotland with electricity without the Scots themselves taking some sort of responsibility for the location and operation of these plants?

As the Prime Minister, Mr Brown said:

"When North Sea oil runs down, both oil and gas, people will want to know whether we have made sure that we've got the balance right between external dependence on energy and our ability to generate our own energy within our country."

You have to admit that he does have a point, however also remember that the Government went to court last year accused of failing to carry out a proper consultation on nuclear plans before they were announced and lost!

This article was carried by the Telegraph to read it in full please click this link.

Have a good one.

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Peak oil!

Occasionally we receive requests in our mailbag regarding various oil companies as possible investment vehicles, which unfortunately we do not cover. However the team over at Casey Research has sent us their latest take on the subject, which we are posting for your perusal. The views expressed are the views of the author and not necessarily the views of the team here at uranium stocks.

Securing the Insecure: U.S. Oil Imports
By: Marin Katusa
Casey Energy Speculator

Calls for national security to the contrary, America's appetite for energy is stronger than its caution. In the last 15 years, the United States has steadily increased its dependence on imported crude oil by some 60%. Part of the reason is declining production, as displayed in the chart below.

American production vs Imports 11 July 2008

Declining production has been matched by the country's declining reserves. A decline that comes against the backdrop of increasingly extraordinary efforts to turn things around, including deep-sea drilling far off the coast in the Gulf of Mexico. Put simply, regardless of America’s strategic concerns over energy security, any large increase in domestic production or reserves is unlikely.

US Crude Oil Reserves 11 July 2008

To a superpower that imports nearly 70% of its oil, it's more than a mental exercise to evaluate the reliability of its sources. Any economic or geopolitical risk with the potential to disrupt supplies could have a destabilizing and even devastating impact on investment markets and the economy. In the pie chart here we’ve separated the countries exporting crude oil to the United States into three categories: friendly, potentially hostile/hostile, and unsure/neutral.

Countries exporting crude oil to the US 11 July2008

Those countries portrayed in black and gray are the allies, countries that have usually shown a willingness to work in concert with the United States on numerous issues. These countries are Canada (geographic proximity), Mexico (geographic proximity), Nigeria (much improved relations over the past 15 years) and Iraq (very close ties with the United States, for obvious reasons).
Countries depicted in shades of red are countries that are either openly hostile or have previously been hostile with the United States: Venezuela (Hugo Chavez… say no more), Algeria (issues remaining from Algerian Civil War), Angola (U.S.-funded anti-government rebels), Russia (lingering Cold War effects) and Ecuador (the new president is a friend of Chavez). We list Saudi Arabia as a wildcard, with the potential to go either way.

Adding up the numbers, a bit less than half of U.S. imports are from countries that are either politically unfriendly or have the potential to be. Now let's take a closer look at the “allies” of America, since even they have problems providing a stable stream of oil.
The Allies, Such As They Are

In the last 15 years, Canada has taken honors as one of the top crude oil exporters to the United States. However, conventional reserves of crude oil in Canada are in decline, and the only reserves that Canada has in abundance are the oil sands, which are expensive and difficult to extract.

Furthermore, Canada already consumes 90% of the crude oil it produces, and this number is growing. Finally, the Canadian dollar currently puts a great hamper on the growth of Canadian exploration companies: they have to pay their costs in Canadian dollars, but sell their commodities in American dollars, an unfavorable arbitrage.

Mexico has less of a currency conundrum than the Canadian exploration companies, but they face a much larger problem – their reserves are dropping quickly, with little ability to replace them. For example, production at Cantarell, one of the world’s largest oil fields, is conservatively estimated to fall to half of its 2003 peak by the end of 2008.

This problem is exacerbated by Mexico's increasing domestic consumption. Its population already consumes 60% of its crude. Mexico, and its rapidly dwindling resources, could become a net importer of crude oil in the near future. (Jeffery Brown’s Export Land Model estimates that this reversal will occur no later than 2014… six short years from now.)

Nigeria, the African continent's largest oil exporter, has impressive oil reserves. Unfortunately, the country is marred by not only the misappropriation of oil funds but also the ethnic clashes between the Ibo, Housa and Yoruba tribes. The multinational oil companies are either stuck in the middle or contributing to the mess, depending on your point of view. Ongoing supply unrest mean that Nigeria is less than a reliable source of crude.

Iraq contains large known fields, and the potential for more large fields yet to be discovered. As long as the United States maintains a strong presence in the area, it should continue to provide a steady supply to the United States. A long-term presence, however, is very much in doubt. And, should the U.S. leave, the direction of Iraq’s flow of oil could change overnight. So, a big question mark here.

The Axis
Countries such as Angola, Algeria and Ecuador are obviously willing to sell to America now – as they need the money they’ll sell to the highest bidder. But at the same time they have been ramping up their production and exports to other countries. As time goes on, however, these countries may begin to pick and choose to whom they sell such an increasingly precious commodity.

This trend is evident in Venezuela, a more mature oil-producing country, which, under the leadership of Hugo Chavez, has already begun to reduce exports to the United States.The Exxon Mobil suit against Venezuela is the latest, but far from the last jab in the sparring going on between America and Venezuela. The bad blood, combined with increased international competition for Venezuela's oil increases the possibility of a Venezuelan oil embargo on exports to the United States.

Russia has the potential to possess one of the most abundant sources of crude oil on the planet. But the tap-twisting that Russia has recently pulled with its natural gas exports strongly suggests it sees its energy as a tool for gaining geopolitical power, as the Europeans are discovering.

The Wildcard
Even though the Saud family and the United States have enjoyed a relatively stable relationship, rising tensions in the region and increasing Islamic militarism could potentially trigger another oil embargo such as in the 1970s, particularly if Israeli-Palestinian troubles remain unresolved. We can thus see both sides of the coin. On the one hand, Saudi Arabia could be the American bastion of supply over the next few decades; on the other, through its power in OPEC, it could increase the price of crude oil even more. The overthrow of the Saud family, dourly predicted for years, would in all likelihood be unfavorable to U.S. oil supplies.

So What’s the Solution?
The squeeze on supply is only getting worse as the ascendant economies of China and India ramp up their demands for oil. At some tipping point, exporters unfriendly toward the United States will be happy to sell their oil to these growing markets. So where can the United States expect to turn instead?

What about the former Soviet Republic countries (the “-stans”)? Offsetting their vast potential and anti-Russian leanings is their geographical proximity to China, which is increasingly eager to exert as well as secure power. In any case, the possibility of finding a new significant reserve of light oil in most of these countries is unlikely.

There is, however, a much better solution – a proven and plentiful resource in an area friendly to the United States and in geographical proximity: the heavy oil fields in Alberta. While available in abundant supply, it is not without its challenges. That’s because heavy oil is more viscous, more dense (low API gravity), and often has contaminants such as sulfur; it's usually purchased at a discount to light oil due to its increased cost to pump and transport.
The United States already uses heavy oil in some of its refineries, and increasingly so:

Canada could ramp up its heavy oil production relatively easily, since the reserves in the country have already been proven. Transportation of this fuel is also less of an issue since Canada is quite stable politically, and can easily construct new pipelines or twin their existing ones (to reduce the costs) to pump much-needed crude oil into the United States – provided the price is right.

The Opportunity
Why is heavy oil suddenly so much more popular? The main reason is that the demand for heavy oil from the refineries around the world is beginning to outstrip the supply of heavy oil. BP Inc, for example, is investing $3.8 billion to upgrade its Whiting Heavy Oil Refinery outside Chicago, in large part to handle more heavy oil from Canada; and countries like China, India, Syria and Saudi Arabia are also beginning to build more heavy oil refineries.

This shows that the United States is beginning to use more heavy oil in its refineries, and is willing to pay a premium for a source of oil in a safe and friendly country.

So how do we profit? A logical answer would be to buy into prospective heavy oil companies, those that are cheap producers with good potential upside. Unfortunately, with oil prices well over $130 per barrel, most producers come with a very high premium attached. These companies will begin to correct once they are unable to economically replace their current production with new reserves or when the impending American recession gains traction.

Therefore, we should be looking for well-cashed-up companies that can withstand difficult capital market conditions and has their operations in a jurisdiction that stands to benefit from America’s crude oil shortfall, and increasing reliance on heavy oil.

The world of energy is changing forever… and not just the prices at the pump.
Peak Oil is changing everything about the energy markets… including where to invest. But where do you look for investing inspiration in this brave new world of Peak Oil?

Well, the editors at Casey’s Energy Speculator have put together a special five-part course, Understanding Peak Oil, and How to Profit From It. In it, you’ll learn all about the phenomenon that’s reshaping the world. And you’ll also discover the best places to make money in this quickly changing energy market. The course is absolutely free. It couldn’t be easier to get started. Simply click here now, and you’ll be on your way in seconds.

Have a good one.


Uranium: Signs of life!

Uranium Chart 12 July 2008
Chart courtesy of

One of our readers alerted us to slight increase in the spot price of uranium today with The UX Consulting Company and Tradetech putting the price at $60/lb. Although we should be focused on the long-term price we are grateful for these small mercies!

Scanning the horizon we came across an article on by Peter Grandich, which is well worth reading, and so we pulled this snippet from the article about uranium:

Uranium –
To those who once had such high hopes only to be dashed in the recent sharp correction, try to regain your confidence—nuclear power just has to be a primary source of energy going forward. It’s pretty clear now that fossil fuel is a “dinosaur.” We won’t likely see a sharp run-up, but prices can make a new high in the next 12-24 months and the uranium players who more than survive the recent swoon are likely to get another good at-bat.

A new high in the next 12-24 months would certainly go a long way to repairing our portfolio as we decided some time ago to grin and bear it and see it through. However, although we remain optimistic we do need to see some more positive signs of uranium stock price increases before we would dare to venture into the water again with our hard earned cash. When we look at the charts for Denison, for example, we can see that this stock has tried three times to breakout above the $9.00 level only to fall back again. But, we are encouraged to see that this stock appears to have bottomed at around the $6.25 level and is currently trading at $8.00. So don’t be put off by our unwillingness to invest at the moment as we can be over cautious at times.

Over on the futures market the NYMEX has uranium at $60/lb for July 2008 delivery and $62/lb for December 2008 delivery. It’s a thinly traded market and doesn’t really give us a lot to go on, but one day it will mature.

Have a good one.

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.


Biofuels: United Kingdom having second thoughts!

Ruth Kelly
Ruth Kelly

The United Kingdom is at last becoming aware of the dangers and the downside to the production of Biofuels.

Professor Ed Gallagher, head of the Renewable Fuels Agency and his team of experts have produced a report looking at the impact of energy policy on land use which concludes that Biofuels should be introduced more slowly due their damaging effect on forestry and agriculture.

We regret that the report, in our humble opinion does not go far enough and state the concept of burning food is an idea that belongs with the Muppets.

Ms Kelly, the government spokesperson stated that:

"that biofuels can have an important role in reducing carbon emissions and combating climate change and that we need to proceed cautiously until we can be certain that their expanded growth and use maximises the benefits and minimises the risks to our world."

The opposition party, the Conservatives, said policy had to change “right now and that mere slowdown of the targets would not address problems.”

The Liberal Democrat transport spokesman Norman Baker added:

"It has done nothing to close the loopholes which support unsustainable and inefficient US corn-based ethanol."

Well, maybe they are not all Muppets in Westminster which gives us some hope for the future.

Never mind the US, the Brits should be taking their lead from France and pushing ahead with a nuclear programme of sufficient capacity to meet 80% plus of the United kingdoms energy needs. This is pussy foot policy by politicians who dare not grasp the problem and make a clear determined decision to resolve it. The clock is ticking and Britain has about seven years before the majority of its nuclear power plants are de-commissioned. By not replacing these plants, which means starting construction now, Britain runs the risk of entering a period of rotational black outs in 2015. Fiddling while Rome burns, no, fiddling while Britain shivers!

To read this article in full and also to watch a short video clip of Ruth Kelly delivering her speech please click this link.

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Coal-fired power station blocked!

Judge Thelma Wyatt Cummings Moore
The construction of a new coal-fired power station has been blocked by the US state of Georgia, as the issue of carbon dioxide emissions becomes a hot topic.

This could well set a precedent for future coal fired power plants as the judge, Fulton County Superior Court Judge Thelma Wyatt Cummings Moore, cited a decision by the Supreme Court ruling recognising CO2 as a pollutant, before putting a halt to this project.

Dynegy will no doubt challenge this ruling as they are the largest coal plant developer in the US and this ruling could jeopardise the construction of future plants.

Bruce Nilles, director of campaign group the Sierra Club, said:

"Coal-fired power plants emit more than 30% of our nation's global warming pollution, thanks to this decision, coal plants across the country will be forced to live up to their clean coal rhetoric."

Scott Segal, director of the Electric Reliability Coordinating Council, a Washington based industry organisation, said:

The judge's assumptions "do not square with the facts or the law the Georgia state court has written an opinion fully in uncharted territory,"

So it looks as though we are in for a legal tussle before we get a resolution to this issue, but the fact that someone has opposed and stopped a coal-fired power plant must bode well for nuclear power.

To read the whole article please click here.

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PS: The spot price of uranium has clicked up $2.00, which is nice to see but it is the long-term price that is important.

Uranium Chart 03 July 2008

Queensland Resources Council for lifting a ban on uranium mining

Croc 02 July 2008

Michael Roche, chief executive of The Queensland Resources Council has argued today that:

“Lifting a ban on uranium mining could expand the state's economy and through its use in nuclear power generation help to avoid huge greenhouse gas emissions.”

Three cheers for this man!

Mr Roche goes on to sat that:

“It's estimated that Queensland uranium exported for nuclear power generation could in 2030 alone avoid the annual production of some 120 million (metric) tonnes of carbon dioxide, this is equivalent to around 70 per cent of Queensland's 2006 greenhouse gas emissions”

A Deloitte Insight Economics’ report has stated that:

“Australia has 36 per cent of the assured global uranium resources in ground and was the source of 19 per cent of primary global supply in 2006, with known deposits in Queensland of 135 million pounds estimated to be worth $US12.2 billion at a $US90 per pound spot price, according to Deloitte's report.”

Well we all know that the spot price for uranium is not $US90/lb but the long-term price is, so the figure of $US12.2 billion of uranium in the ground, that most of the world would happily pay for, has got to get them thinking.

As regular readers will know we have only two companies on the ‘buy’ list at the moment and one of them is Laramide Resources Limited where it flagship asset, the Westmoreland Uranium Project is situated in Queensland. They have also found some gold there so it could be very interesting if they ever get the green light.

Laramide Resources Limited has a market capitalization of $287 million, a P/E ratio of 187 with 59 million shares outstanding, Laramide closed recently at $4.88 per share and trades on the Toronto Stock Exchange under the symbol of LAM.

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Khan Resources Incorporated: Up 23.81% Today!

Khan Chart 01 July 2008

Today Khan Resources Incorporated put on $0.20 to close at $1.04 on turnover of 163,000 shares traded. As we are not aware of any new developments we can only imagine that this move is part of the sporadic buying that we have witnessed over the last few months in the uranium sector.

On the 19th June 2008 the company had this to say about their interest in Western ProspectorGroup:

Khan Resources Inc. (TSX: KRI) announced today that its offer (the "Offer") to acquire all of the outstanding common shares of Western ProspectorGroup Ltd. for 0.685 of a Khan common share for each common share of Western Prospectorwill be extended to 8:00 p.m. (Toronto time) on Tuesday, July 15, 2008.With this extension, Khan's Offer will remain outstanding for 64 days. Not only does Khan believe that this gives Western Prospector and its board of directors more than adequate time to consider the Offer and any alternative transactions, but this also provides Western ProspectorShareholders with more than the 60 days requested by Western Prospector in its shareholder rights plan.

Although this does not explain today’s move as this news piece is a couple of weeks old.

Taking a quick look at the chart we can glean the following:

A large jump in the stock price on a moderate increase in volume, nothing dramatic here. The stock price has now moved above the 50dma, which is a start. A nice crossover by the MACD, which should be positive for the stock going forward.

Again we are not complaining and are extremely grateful for any advance in price of all uranium stocks.

We will continue to look for value and bargain buys in readiness of the upswing. We are also taking a look at the possibility of trading a few options in this sector in order to capture a little leverage when a uranium stock gets its turn in the sun. However the stocks are thinly traded as we all know and the trading in the options arena is also pretty thin, but we will see if we can uncover the odd profitable trade.

Have a good one.

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