Subscribe for 12 months with recurring billing - $199

Buy 12 months of subscription time - $199

 

Search Uranium Stocks
Uranium Price
Our RSS Feed

Uranium Updates

Enter your email address:

Follow Us on Twitter
Sunday
Mar212010

Regime Change in Niger Prompts Audit of Mining Contracts

Map of Niger 22 March 2010.JPG


The new military government in Niger has decided to instigate an audit of the mining contracts starting with the uranium and gold sectors, which usually means that they would like a larger share of the cake. Companies such as Areva SA and Semafo Incorporated operate in Niger and no doubt will be concerned as to how these changes will impinge on their operations.

Niger, the world’s sixth-largest uranium producer, will review mining agreements with companies including Areva SA to ensure they’re fair to the West African country, a mines ministry official said.

Minister of Mines and Energy Souleymane Mamadou Abba, appointed by Niger’s military rulers on March 1, hasn’t yet set a schedule or format for the audit, Mahaman Laoun Gaya, an official at the ministry and a former government minister, said by phone today from the capital, Niamey.
“The military authorities have decided to audit all the uranium and gold contracts,” Gaya said. “These are the most important ones to look at. The new government has only just taken office, so we don’t have any details yet.”

Niger made up about 6 percent of world uranium output in 2008 and it may reach 9 percent by 2015, BMO Capital Markets analyst Edward Sterck wrote in a Feb. 19 note. Most of the output is managed by Areva, which is investing 1 billion euros ($1.36 billion) in its third mine in the country, he wrote.

Salou Djibo, a squadron leader in the military, on Feb. 18 overthrew President Mamadou Tandja, who changed the constitution to allow himself a third term in office. The military junta hasn’t set a date for the democratic elections it promised.

Areva, the world’s biggest supplier of nuclear reactors, “is ready to meet the Nigerien authorities if they wish to review the mining agreements signed with their government,” the company said in an e-mailed response to questions.

‘No Problem’

Chief Executive Officer Anne Lauvergeon said March 4 that Niger’s president “clearly stated that there was no problem” with Areva. “My understanding is that some announcements have suggested that certain mining permits, with other companies, were not established in a completely transparent way.”


Nigerien transparency campaigner, the Network of Organizations for Budgetary Transparency and Analysis, on March 12 called for a review of all mining and oil deals in the country. The group “strongly recommends a commission of inquiry on the mining and petroleum contracts as soon as possible,” it said in an e-mailed statement.

Canadian gold producer Semafo Inc. operates the Samira Hill mine in Niger, which produced 56,900 ounces in 2009, Jean-Paul Blais, the company’s vice-president of corporate affairs, said by phone from Montreal, Canada today.

To read the article in full please click here.



Have a good one.

Got a comment then please add it to this article, all opinions are welcome and appreciated.


If you would like to get a bit more bang out of your your buck, then check out our Options Trading Service please click here.


To stay updated on our market commentary, 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.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.


Thursday
Mar182010

John Kaiser: Game-Changer on Rare Earths Horizon?

John Kaiser.JPG

Source: Interviewed by Sally Lowder of The Energy Report 3/18/10
http://www.theenergyreport.com/pub/na/5856

Kaiser Bottom-Fish Report editor John Kaiser, caught for this exclusive Energy Report interview as this year's PDAC was winding down, suggests that the bigger the event grows, the fewer the opportunities to pick up buzz during informal networking. Still, he did come away from the 2010 Prospectors & Developers Association of Canada International Trade Show & Investors Exchange in Toronto last week with a bit of news that may be a game-changer in the rare earth space.

The Energy Report: You're a long-time participant in the annual PDAC convention. Everybody who wasn't able to be there wants to know about any compelling stories or particularly interesting tidbits that you learned this year, when the event brought people into Toronto from more than 100 countries around the world.

JK: In the past few of the 20 years I've been going to this conference—and this year is no exception—it has become increasing difficult to pick up any prominent buzz, be it about a sector being red hot or be it about a major new discovery.

TGR: Why do you suppose that's happening?

JK: The reason is simple; this conference has become so big, so global. What in 1994 would have been the big Voisey's Bay's buzz that everybody was talking about or Bre-X in the following year, even if something like this did come along now, the collective size of 400 companies exhibiting would dwarf it. . .There are several hundred trade show exhibitors; numerous talks covering everything from country-focused issues to deposit models to new discoveries and so on. It's very difficult for any single thing to stick out.

Even worse, because it is now so large and dispersed, you do not have that intensity of networking of the past, the random networking where you would bump into people you hadn't seen for a long time and hear about this or that. By the end of the conference you had all these bits and pieces gelling in your head and you could say, "Oh, yeah, this was what was interesting." No, now it's more you know in advance what you're looking for; you make the sessions; you track down those companies, and you have the face-to-face you planned with these. So, the old aspect of serendipity of bumping into stuff and stuff floating to the surface just does not happen in this environment.

TER: Did you come away with any sense of how people are feeling about the economy?

JK: There was no irrational exuberance at all at this conference. In fact, it's a bit like a teeter-totter poised to go either way. There is hope that China will pull the global economy back on track and reinvigorate Europe and the United States. On the other hand, there also is concern that this will fall apart, and that as the fiscal stimulus packages come to an end interest rates start to rise that we will see a double-dip recession in the North American markets. And if that happens to coincide with a problem in China, which has been going hell-bent at an incredible pace thanks to its $585 billion fiscal stimulus program, there is concern that this could end very badly.

So we are almost in the eye of a hurricane, and everybody's wondering where we will be next year.

TER: Which way are you leaning?

JK: My own feeling is that if we come out of this with the global economy back on track and the disparate signs of life that we see in the North American economy are actually more than just flickers, next year we should see the supercycle that dominated the talk at this conference from '03 to '08. This time it will be taken seriously, and massive amounts of money will flow into the sector. But as I say, it all hinges now on where the global economy goes.

TER: Anything else that stands out from your PDAC experience this year?

JK: Quite a few of the rare earth companies were represented, there were several rare earth receptions and a whole morning devoted to talks about the rare earth deposits, geology, market and so on. These were surprisingly well-attended for a Wednesday morning, when traditionally 90% of the delegates are still in bed. So that is actually a pretty good indicator of the interest in this space.

Particularly with the assistance of one of the stocks listed going up during the days of the conference, I would say that the rare earth space is probably on the threshold of achieving a whole new level of serious attention from investors.

TER: Any companies in that space that you find particularly interesting?

JK: The interest has been a lot of talk and a lot of tire-kicking, but not really a lot of money going into the treasury. This may change in the not-too-distant future, though.

TGR: How so?

JK: I had an interesting meeting with a representative of Molycorp Minerals, who explained their timeline of activities. If I understand it correctly, we could see a Molycorp IPO before the summer. What the institutional market is missing in the rare earth sector is a vehicle large enough for serious investments. There has been incredible media buzz about the rare earth space. The Chinese are very clearly interested in seeing rare earth deposits developed outside of China to take the pressure off them to export what they consider a resource they need to hoard for the long term.

Having said that, nobody wants to buy stocks such as Quest Uranium Corporation (TSX.V:QUC) to any large degree. With these smaller players, there are so many uncertainties about whether the feasibility study will indicate a profit margin, whether they'll ever get a permit to get to production, or whether the metallurgical process actually will work. An aversion to investing in these very risky single-asset projects has inhibited the serious money coming into these plays. If a major company such as Molycorp does an IPO and lists on the New York Stock Exchange, though, it will validate the space and pull a lot of money into all the smaller companies. So I sense the timeliness for this improving over the next two or three months.

TER: Do you see any other companies besides Molycorp with an asset base that could actually pull off something as significant as an IPO and list a rare earth play on the New York or Toronto Exchange?

JK: A counterpart is Lynas Corporation Ltd. (ASE:LYC), listed on the Australian Stock Exchange. This company has a market cap of AU$815 million, and last year raised AU$450 million basically from institutional investors around the world after the Australian Foreign Investment Review Board said no to a Chinese proposal to put up debt and equity financing in exchange for majority control of Lynas. So this has already happened in Australia, but that market is not as liquid and popular as, say, the New York Stock Exchange.

I wouldn't be surprised if Lynas Corp. also seeks a New York Stock Exchange listing; however, the significance of Molycorp is that this is a home-grown, American deposit, and on April 1, we're supposed to hear the results of the RESTART bill proposal, an analysis of what America's vulnerabilities are to rare earth supply. If they decide that we have a problem here, the intensity of the hand-wringing about what to do about it would increase and companies such as Molycorp will receive a lot of attention as at least a major part of the solution to the problem. As you may know, Molycorp has been in the process of getting its Mountain Pass deposit back into production, and it also has the ability and the knowledge base necessary to acquire other projects elsewhere in the world to beef up its rare earth supply potential.

TER: Thank you, John. You also mentioned RESTART in a previous Energy Report interview a couple of months ago ("John Kaiser: Balancing Security of Supply Worries with Optimism on the R&D Front"). We recently saw a news release about this recently, and for readers who aren't familiar with it, RESTART stands for "Rare Earth Supply-chain Technology and Resources Transformation" (for more information, see below).

John Kaiser, a mining analyst with 25-plus years of experience, produces the Kaiser Bottom-Fish Report. It specializes in high-risk Canadian resource sector securities and seeks to provide investors with a framework for intelligent speculation. His investment approach integrates his "bottom-fishing strategy" with his "rational speculation model." After graduating from the University of British Columbia in 1982, John joined Continental Carlisle Douglas, a Vancouver brokerage firm that specialized in Vancouver Stock Exchange listed securities, as a research assistant. Six years later, he moved to Pacific International Securities as research director and also became a registered investment adviser. Not long after moving to the U.S. with his family in 1994, John cast his own line in the water, so to speak, with publication of the premier edition of the Kaiser Bottom-Fish Report.

******
Note: RESTART, proposed as a means of reviving a competitive rare earths industry in the U.S., has been put forward as potential legislation by an organization known as USMMA, the United States Magnet Materials Association. USMMA reported submitting this proposal, designed to create a path forward toward "a ‘whole-of-government' approach to resolving the Rare Earth Elements (REE) supply crisis," to a number of federal entities—the U.S. Department of Commerce, U.S. Department Energy, U.S. Department State, U.S. Department of Defense, Office of the U.S. Trade Representative, and Office of Science and Technology Policy within the Executive Office of the President. The RESTART proposal calls for up to $1.2 billion in funding to reestablish domestic rare earth mining as well as U.S. facilities for refining, alloying, melting and production of rare earths and rare earth-based products.

USMMA said that it has already successfully advocated for inclusion of a congressionally-mandated study of the rare earth supply-chain in the FY10 National Defense Authorization Act. The organization was founded by three high-performance magnet producers and suppliers in 2006: Thomas & Skinner, Inc. (Indianapolis, IN), Hoosier Magnetics (Ogdensburg, NY) and Electron Energy Corporation (Landisville, PA) in 2006. U.S. Rare Earths, Inc. (a private company) joined the group in 2009.
******

Want to read more exclusive Energy Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Expert Insights page.

DISCLOSURE:
1) Sally Lowder of The Energy Report conducted this interview. She personally and/or her family own none of the companies mentioned in this interview.
2) The following companies mentioned in the interview are sponsors of The Gold Report or The Energy Report: None.
3) John Kaiser—From time to time, Streetwise Inc. and its directors, officers, employees or members of their families, as well as persons interviewed for articles on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise. John Kaiser, personally and/or his family is not paid by any of the companies mentioned in this interview.

Streetwise - The Energy Report is Copyright © 2010 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.
The Energy Report does not render general or specific investment advice and does not endorse or recommend the business, products, services or securities of any industry or company mentioned in this report.
From time to time, Streetwise Reports LLC and its  directors, officers, employees or members of their families, as well as persons interviewed for articles on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.
Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.
Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.
Participating companies provide the logos used in The Energy Report. These logos are trademarks and are the property of the individual companies.
Streetwise Reports LLC
P.O. Box 1099
Kenwood, CA 95452
Tel.: (707) 282-5593
Fax: (707) 282-5592
Email: jmallin@streetwisereports.com


Have a good one.

Got a comment then please add it to this article, all opinions are welcome and appreciated.


If you would like to get a bit more bang out of your your buck, then check out our Options Trading Service please click here.


To stay updated on our market commentary, 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.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.



Wednesday
Mar172010

Canada Relaxing Foreign Investment Rules in the Uranium Sector

Uranium Chart of Countries 17 March 2010.JPG


With uranium prices continuing to slump, what's the outlook for one of the world's largest uranium producers? And how will relaxing foreign investment rules for uranium mining in Canada change the industry's dynamics?

Jerry Grandey, president and CEO, Cameco.JPG


BNN speaks to Jerry Grandey, president and CEO, Cameco, please click here to watch the clip.

Jerry Grandey argues the case for reciprocity in that he would like to see other countries offer Canada the same terms for investment in their countries.

There is also an interesting chart showing one analysts opinion of the possible oversupply going forward, to which Gerry responded that we are still producing 125 million pounds a year and using 175 million pounds a year.


As for new nuclear plants in Ontario he reckons it could be towards the end of this decade or the next one and will be driven by the demand for clean air.

Uranium Glut 17 March 2010.JPG


Have a good one.

Got a comment then please add it to this article, all opinions are welcome and appreciated.


If you would like to get a bit more bang out of your your buck, then check out our Options Trading Service please click here.


To stay updated on our market commentary, 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.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Tuesday
Mar162010

New Baghdad and the Collapse of Capitalism

Dubai 17 March 2010.JPG


By Doug Hornig, Casey Research

Forty years ago, it was a small town on the Persian Gulf, merely one of seven sheikdoms joined in federation in 1971 to create the United Arab Emirates. Basically, there was nothing there but sand. Yes, oil had been discovered under that sand, and the city/state was enjoying its first economic boomlet. From about 60,000 in 1968, population tripled by 1975, doubled in the next ten years, and nearly doubled again by 1995.

Problem is, especially compared with many of its Gulf neighbors, it didn’t have all that much oil to begin with, and its reserves were falling fast. What it did have was Sheikh Mohammed bin Rashid Al Maktoum, the most influential member of the family that had ruled for more than a century and a half. And the sheikh had a vision.

Sheikh Mohammed believed that the Muslim world needed a New Baghdad, a center of commerce and learning and culture that would shine like the hub of the old caliphate, which had dominated the civilized world a thousand years earlier. He was determined to erect a dazzling, ultra-modern new metropolis, starting from scratch.

On the sands of Dubai.

The rest of the story is pretty well known. The crown prince, and later ruler, of Dubai had his way. His emirate became one of the richest and gaudiest places on the planet. Population shot to almost 1½ million, about 90% of them immigrants – from unskilled Bangladeshi laborers to software engineers from the U.S. – all lured by the promise of better-paying jobs than they could find at home.

Even more striking was the explosion of construction projects. Up went mansions, office skyscrapers, artificial islands, stadiums, a speedy Metro, a busy international airport, and the world’s only 7-star hotel, among other things. And the capstone was, of course, the Burj Khalifa, formally opened on January 4.

The Burj Khalifa is the tallest manmade structure on earth. Not by a little, mind you; halfway is not a word in Sheikh Mohammed’s vocabulary. Tallest by so much that it boggles the mind. It’s 2,717 feet high. That’s more than half a mile. For comparison purposes, take New York’s late Twin Towers. Stack them one atop the other. Now you’ve got the Burj Khalifa.

Begun in late 2004, the building was originally budgeted at US$869 million. Final tally as we entered 2010 was something north of a billion and a half. That bought the first luxury hotel to bear the Armani name, four swimming pools, a 158th-floor mosque, 57 elevators, and an observation deck at 1,450 feet, along with 52,490 square meters of office space and 288,000 square meters divided among 900 apartments.

Its coming-out party, with 10,000 fireworks and synchronized fountains shooting jets of water 150 feet into the air, was a spectacular light show, worth watching if you haven’t yet seen it, here http://www.youtube.com/watch?v=yRxxv6AZ_xg&feature=fvw . Hard to believe that you’re looking at a bone-dry desert.

You may also be looking at a gargantuan white elephant. Although every unit in the Burj Khalifa has supposedly been sold, some unknown percentage of buyers (likely very large) was speculators who opted in during the height of the world real estate boom. Properties were flipped like it was Southern California. At the market peak, modest flats were fetching more than $2,700/sq. ft. No wonder Emaar Properties, developer of the project, claims it has already recouped its capital outlay from these suck--, er, investors.

Those prices have now plummeted by up to 50%. Of the folks left holding the bag, how many of the 25,000 slated to live in the building will actually do so? We don’t know, and no one who does will talk vacancy rates. In terms of transparency, Dubai makes the Bush administration look like an ad for Window World.

What we do know is that at the moment the structure is the Big Empty. Western critics have limbered up their keyboard fingers in order to pound out expressions of disdain, everything from “The Final Monument to Excess” to “Bling City Is Dead” to “The End of Capitalism.” The first may be apt, as we’ll probably not see the likes of the Burj Khalifa again, but the last? That’s something we want to look at more closely. There is a lesson to be learned.

The truth of the matter is that there were two key, and contradictory, elements to the Dubai miracle, and when the world recession hit in 2007, one overrode the other and the whole thing came tumbling down.

First: As noted, Sheikh Mohammed didn’t have a river of oil money to rely on. So how did he manage to build his gleaming city by the sea? On the surface, it was simple. Turn Dubai into one of the world’s premier places to do business. Make it essentially tax free. Create investment incentives. Attract entrepreneurs from all over. Enlarge and capitalize on the city’s status as a deep water port. Replace traditional smuggling with legit import/export operations. Become a world financial center.

In short, install the best aspects of free-market capitalism, then send an Open for Business letter to the world.

It worked. Capital, resources, and personnel flooded in. By 2005, oil and gas were responsible for only 6% of the emirate’s GDP. Property and construction was the biggest contributor at 22.6%, followed by trade at 16%, entrepôt (duty-free import/export business) at 15%, and financial services at 11%.

No one, apparently, thought it ominous that nearly a quarter of GDP was generated by the construction and trading of properties, nor paused to consider what would happen when the music stopped and supply exceeded demand. Dubai was riding high, a model for other resource-poor, developing nations, showing them how to get rich.

Today, the hot desert wind blows through half-buildings that will never be finished. Immigrants, their work visas rescinded, are rounded up and sent home. Mercedes Benzes and Jaguars have For Sale signs taped to their windows or are just abandoned at the airport. Real estate prices tanked by 50% in 2009 and are projected to suffer another 30% haircut this year. The stock market has plunged 70%. Unmaintained, the artificial islands designed as millionaires’ playpens have begun to sink beneath the sea.

The glorious ride is over. But just in case there was any doubt, the point was hammered home last November, when Dubai World – one of the country’s leading development conglomerates – told creditors it was declaring a six-month moratorium on repayments it could no longer make.

That sent shock waves through financial markets the world over. Everyone, it seems, had invested in Dubai during the boom times. Now they’re staring at a very unfavorable restructuring at best and flat-out default at worst.

Dubai’s debt, or at least as much of it as its rulers will reveal, is about US$80 billion, or 140% of GDP. Bad enough, but it may well be significantly understated. One local investment banker puts the real number in the $120-150 billion range; with no balance sheets to pore over, we can’t know. Dubai will ask oil-rich fellow emirate Abu Dhabi for help, but there are no guarantees help will be forthcoming. Abu Dhabi has always cast a disapproving eye on Dubai’s helter skelter expansionism, and if it does step in, it will probably demand a whole lot of collateral.

Critics of a certain bent have pounced. History’s grandest experiment in unfettered free-market capitalism ran aground, they cry. Therefore the system doesn’t really work.

Which brings us to the second element in the Dubai miracle. It was built on a mountain of debt that couldn’t survive an economic downturn. And who supported that debt? The government. All of those go-go corporations, like Dubai World, are essentially government owned. Sheikh Mohammed wanted his New Baghdad, no matter the cost.

Granted, private enterprise businesses are imperfect. When in trouble, they will lie and cheat like anyone else. But in the end, they have a bottom line that they have to reveal at some point. Accounting tricks are eventually exposed. Capitalism, like a computer, is strictly binary. A company with sound finances prospers; a company that fails in the marketplace simply disappears.

Government-sponsored entities have no such limitations. They’re actively encouraged to overreach, to take risks that no sane CFO would approve. Because if they bleed red ink, the government is there to step in and prop them up. All of Dubai’s corporations were “too big to fail.” But fail they did, and in the process pushed the government into insolvency as well.

The takeaway from this story is simple. Dubai was no more free-market capitalist than Soviet Russia. Or the U.S., for that matter. If the government is the guarantor of last resort or just perceived as the ultimate reliable source of bailout money, a business has no incentive to be well run. When government (with taxpayer funding) takes a stake in even that most American of corporations, GM, capitalism truly has collapsed. Not, however, because of its shortcomings. Because government has not allowed it to function properly.

Though we lack a symbolic last gasp like the Burj Khalifa, make no mistake about it: we’re all fellow travelers with Dubai now. Washington would do well to study what happened there and hopefully learn a thing or two. Because we’re speeding toward the same crack-up.

The U.S. economy is like an out-of-control sports car in search of a tree, and the government is not “here to help you.” Take matters in your own hands and prepare as best as you can for the crash that will come. To find out what to expect in 2010 and how to bullet-proof your assets, read our FREE special report “The Good, the Bad, and the Ugly.” More here


Have a good one.

Got a comment then please add it to this article, all opinions are welcome and appreciated.


If you would like to get a bit more bang out of your your buck, then check out our Options Trading Service please click here.


To stay updated on our market commentary, 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.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Sunday
Mar142010

The reemergence of world nuclear energy

President Sarkozy 15 March 2010.JPG

An interesting 'take' on the financing of nuclear power by the French President, Nicolas Sarkozy, who advocates the deployment of funds from The World Bank for such purposes.


Hosting a meeting at the headquarters of the Organization for Economic Cooperation and Development (OECD) in Paris, French President Nicolas Sarkozy said on 8 March that international organizations such as the World Bank should begin financing the non-military use of nuclear energy. “I don’t understand and I don’t accept the exclusion of nuclear energy from international finance,” Sarkozy, a proponent of nuclear power, said at the opening of a two-day conference in Paris on making atomic power more widespread.

Representatives from some 60 nations gathered at the Paris nuclear energy conference. Iran, whose nuclear program is the target of international concern, was not invited to the talks. But Syria, whose nuclear interests have stirred controversy, was present.

The French President noted that international organizations do not finance nuclear energy. “This condemns countries to using energies that are more expensive and dirtier,” Sarkozy said.

France has 58 nuclear reactors - and two modern EPR reactors under construction - which currently meet about four-fifths of the country’s electricity demand. He said that financing for countries that want to build nuclear reactors would help France’s nuclear energy industry, including Areva and EDF.

The French president told more than 700 conference participants from 65 countries that “the responsible development of non-military nuclear energy” was vital to combating global warming. Sarkozy made a number of proposals to promote the availability and use of nuclear power, including the allocation of carbon credits to non-carbon emitting energy projects after 2013.

He also said that France plans to set up an international institute of nuclear energy to produce skilled engineers and technicians, in addition to establishing a Franco-Chinese centre with a campus in Canton. Sarkozy also proposed the creation of an independent authority on nuclear safety and an evaluation system to rate available reactors on their safety.

To read the article in full please click here.


Have a good one.

Got a comment then please add it to this article, all opinions are welcome and appreciated.


If you would like to get a bit more bang out of your your buck, then check out our Options Trading Service please click here.


To stay updated on our market commentary, 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.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Thursday
Mar112010

Rick Rule: Energy Bull



Source: The Energy Report 3/11/10
http://www.theenergyreport.com/pub/na/5809

Rick Rule and Sam Kirtley in Auckland recently.JPG
Rick Rule and Sam Kirtley in Auckland recently

Having had the privilege of talking to Rick on a one on one basis we can tell you that he is very interesting and knowledgeable and well worth listening to, uranium bugs, don't miss his 'take' on Urani-Mania Rerun, in this article.

Rick Rule probably could draw an audience if he were talking about the weather, but combine his presence with knowledge, understanding, experience and a track record of success, particularly in the resource arena, and the crowd falls silent. Founder and chairman of Global Resource Investments, Rick recently made himself available for a brain-drain, the foundation of the piece that follows. . .

Economic Indicators

Lest you think the rallying stock market serves as a leading indicator that good times will soon roll again, along comes Rick Rule to rain on your parade. "The greatest bull market in history, beginning in 1982," he says, has trained people "to believe things will do well and get better"—training he considers lethal—and conditioned them to "buy the dips." Furthermore, he adds, "The amount of liquidity being injected into the system is truly spectacular. A lot of the stock market rally has been liquidity-driven." Interestingly, he notes, that liquidity is short term; while banks are still avoiding long loans that they can't resell to the federal government, Rick sees plenty of short-term money, lots of margin, ample lending to hedge funds, capital markets firms and individual investors.

He considers the markets "seriously overvalued" with the economy in no condition to support the capitalization rates, but expects the rally to continue on the basis of those two reasons plus the gradual thawing of bank credit for merger and acquisition activity.

Bottom line, though, Rick calls it "a bear market trap, a real sucker rally. . .driven by liquidity rather than valuation. And when the inevitable shock to liquidity hits—from additional foreclosures, a collapse in commercial real estate, implosion of municipal markets or wherever—this bull market will be over in a tremendous hurry. He sees a variety of potential catalysts that could take this market down. There's no way of knowing when it will happen and how bad it will be, but he compares the likelihood of it happening to walking through a minefield. The odds are you'll step on a mine and it will explode. "This is a minefield that it would be helpful if you were extremely drunk to stagger through. I do not like the probability of us getting through this without a couple more ugly, ugly, ugly shocks. The idea that we're going to get through this unscathed just doesn't make any sense."

What could go wrong? Leveraged buyout loans in a weak economy. Additional reset loans in the residential market. Commercial real estate lending and commercial real estate capitalization rates. Municipal bond markets.

Rum to Treat Tequila Hangover

As Rick sees it, "The entire set of circumstances that led us into the crash 18 months ago is before us again. . .None of the underlying causes of the problem have been dealt with at all. We had a balance sheet problem; as a society we'd lived beyond our means and our liabilities exceeded our assets both in short and long term. As a society, we've decided to spend more and borrow more. We had too much collective debt, so we took debt from $2 trillion to $9 trillion. We've exacerbated the problem. It reminds me of a mathematical truism—you cannot add a column of negative numbers and get to a positive. That's not the way it works. This is the equivalent of trying to cure a tequila hangover by switching to rum."

Speaking of mathematical truisms, Rick referred to the "cashless earnings" recently reported by a major financial institution. Though he's much smarter than the average bear, Rick confesses that he has "a very difficult time understanding the concept 'cashless earnings,' but the idea that people are excited about it from a bank whose assets are largely ephemeral and whose deposit liabilities people believe are real—that seems very, very problematic."

The idea of ephemeral assets leads to the topic of the U.S. dollar. Isn't its recent strength an encouraging sign? Rick repeats a wisecrack he hears (and makes): "The dollar is in fact the worse currency in the world except all the others." He also alludes to Doug Casey's description of the dollar: "IOU Nothing" (and the euro "Who Owes You Nothing"). As Rick sees it, "currency crises in the last couple of years have always been kicked off by the dollar because people understand its counterfeit nature. For example, if one measure of value is scarcity, they've made the dollar substantially less scarce in the last 18 months by printing so many of them. But so has everyone else. The race to the bottom in the context of the debasement of currencies is a hotly competitive arena. . .the descent will be gradual but punctuated by air pockets. I can't tell you when we'll hit dollar or euro or yuan or peso air pockets, but I guarantee it won't be pleasant on the way down."

When it comes to the debate about whether the current environment is inflationary or deflationary, he thinks the coin falls in favor of inflation. "From a traditional economic viewpoint, you'd have to say the circumstances are deflationary. We are in the midst of a balance sheet recession. We have lived beyond our means and can't service our debts. The normal way to get out of that would be to stop consuming, start earning, paying down debt, defaults and foreclosures—that's clearly deflationary."

The Yield-to-Politician Factor

But ours is a political economy, he argues, and therefore "If you look at inflation-versus-deflation in yield-to-politician (which is what matters), you find a politician has no yield whatever from deflation. A politician who presides over foreclosures and unemployment will get kicked out of office."

Looking ahead to the effects of this economic climate on the resource sector, it's not too surprising to hear Rick say he anticipates a mixed bag. He does expect resource stocks to face some trouble, because "when liquidity is drawn out of the market, either intentionally or as a consequence of hitting an iceberg, there's no mercy. When speculators have to sell, they sell what they can, not necessarily what they want to."

For those reasons, Rick sees "extraordinary volatility. . .with a downward bias in equities markets in general" over the next 12 months. He's been increasing his energy exposure, though; even in a weak economy, "I'm attracted to all forms of energy."

Energy: Powerful Attraction

He describes his outlook on oil prices over the next five years as "very, very bullish." The primary reason is that major oil producers are busy "reducing supply while stimulating demand." Contrary to popular belief, Rick explains, the familiar names we see on the gas pumps aren't culprits here; the major producers are the national oil companies of the world. For an extended period of time, he says, many of the those companies have diverted too much cash flow to "politically expedient domestic expenditure, including starving the oil and gas businesses for reinvestment capital while at the same time subsidizing gasoline, kerosene and heating oil prices." Even if they change direction now, he adds, it's "already too late to forestall declines that are built into their production."

The upshot? "Important exporting countries, especially Mexico, Venezuela, Peru, Ecuador, Indonesia and Iran, could very likely cease to export any oil at all within five years. A market where export demand is growing at 1.5% a year and export supply falls by 25% is in very dangerous imbalance. So without the influx of substantial new production from only three jurisdictions—Saudi Arabia, Kuwait and Iraq—much higher world prices are inevitable."

Rick isn't worried that the oversupply of natural gas will be a serious dampener of the crude oil price in that timeframe. While the infrastructure investment necessary to substitute liquid natural gas for gasoline as a motor fuel is coming, he doesn't see it on the near horizon. In the meantime, "demand for motor fuel will pull up residual fuel oil prices, which will steady the natural gas price." That's as good as it gets for as an energy investor, in Rick's opinion: "Steadily rising prices with moderating costs of production."

Energy investors may also be interested in Rick's take on the future of Canadian income trusts. Although he expects tax law changes taking effect next year to lead to restructuring, he also expects some of the corporations that emerge to remain active in plays that have presented unusually good opportunities to recycle free cash flow. Although investors who purchased trust units for yield might not like it, Rick says, "In the context of energy prices I see five years from now, I forecast actually a relatively bullish future for these companies. In particular, companies with large land exposure in areas where new technology has led to the revitalization of historic plays will grow their asset base by recycling the cash that they would otherwise distribute to unit holders," he says. He specifies four such plays:

The Viking light oil play in Saskatchewan, where the advent of horizontal drilling and multi-stage frac completion techniques are enhancing oil recovery.

The Bakkan in southern Saskatchewan, where wells tend to produce upwards of 200 barrels a day of sweet, light crude oil with 41 degree gravity—higher quality than Saudi oil.
The Cardium in central Alberta, which is somewhat similar to the Bakkan, and where—also similar to the Bakkan—companies are using new horizontal drilling technologies and hydraulic fracturing techniques to exploit the formation's light oil assets.

The various shale gases—Horn River and Motney shales in the Deep Basin in British Columbia, for instance. The potential of the Deep Basin in western Canada, on the eastern flank of the Rocky Mountain foothills was recognized in the late '70s, but only a fraction of that potential has been realized, because gas prices didn't rise the way they had to in order to justify exploration and development spending. Now, escalating gas demand and rising prices—plus the widespread availability of the aforementioned advanced drilling and completion technologies—are changing the economics.

Speaking of economics, Rick foresees North American natural gas trading in the range of $4 to $8 or $8.50 per million BTU, with occasional spikes lower or higher "over an extended period of time." At the lower end, few of the North American shale plays can produce economically, so drilling and production will fall off dramatically when gas prices are low, spot shortages will result and prices will rise in response. The higher price will re-stimulate drilling and production because it would be economic once more, until the price drops to the lower end of the band again and the cycle repeats.

"If you assume the middle of that band ($6 per million BTU) and fully loaded that the industry will be able to deliver gas in the shales for $4.50," Rick says, "the recycle ratios—the ability to redeploy earned capital to grow reserves and production" should make the North American natural gas industry be very lucrative for 10 to 15 years for the most efficient producers.

Furthermore, he states that the "very stable nature of the supply. . .will lead to increasing utilization of gas in North America across a variety of activities, including peak power generation but also ultimately as a motor fuel. In fact, he expects that with "incredible increases" in transmission infrastructures—largely out of Russia and North Africa into Europe and for LNG—natural gas will come to substitute for oil, at least in generation and petrochemicals. "And I think you'll see within five years fairly widespread adoption of natural gas as a motor fuel."

Rick acknowledges that North America has a systemic oversupply of natural gas, but he calls this "a really wonderful thing—good for investors, good for consumers, good for producers, good for everybody."

In summary, he says, "I feel better about the oil and gas sector than I do any other resource sector, with the sole exception of alternative energy."

Size, Scale and Mass Matter

While Rick sees constraints on the supply side (particularly in crude oil) over the next five years, he also sees energy demand (particularly from emerging markets) continue to climb. Societies are now competing for energy supplies that didn't have the financial wherewithal to do so 20 years ago. The increasing demand for energy crosses the spectrum from traditional fossil fuels to renewable resources. Of course, as he points out, alternative energy has an advantage over conventional energy in being politically correct. "You can permit this stuff; there is social and political acceptance of all forms of alternative energy. Because credit delivery is increasingly controlled by governments that have bailed out banks), financing is available for alternative energy projects.

Rick divides the alternative energies into basically two camps—those that work in an economic sense and those that work only in a political sense. He puts certain hydroelectric projects and many geothermal propositions in Camp A. Solar and wind occupy Camp B.

He considers geothermal the best of the bunch for major utilities because it generates baseline power consistently. It provides 24/7 power. Other alternatives present challenges: "Hydro, which I also like, has problems during a drought, during the summer. It requires water flow. Wind requires that the wind blows, and places where wind is a very efficient energy source are lousy places to live—the plains of North Dakota. Solar has this overarching problem—night."

Compelling Economics

The economics factor in the equation is compelling, too. In the U.S., Rick says that geothermal practically locks in secure near-term internal rates of return. "Utilities are being forced to offer feed-in tariffs for alternative energy that makes solar and wind economic. And the economic threshold of geothermal is much lower, so the impact of those feed-in tariffs on geothermal companies is a huge explicit subsidy. The other subsidy is even more explicit: gifts and subsidized loans from the Department of Energy." Rick posits that a geothermal operator can earn a 22% internal rate of return with a cost of capital less than 5%—far better than returns generated by solar or wind projects. "Cost of capital as a consequence of subsidies in the 5% range while unleveraged project and IRR can exceed 20% seems like an opportunity too good to forego," he says.

Penalties, too, add weight to the geothermal case. While it appears that Washington has put cap-and-trade legislation on the back burner for the time being, Rick says that penalties on coal are coming to the U.S. "Despite the political strength of senators and representatives from the coal states, who are doing whatever they can to forestall it, it is absolutely inevitable. And when it comes, major power producers who generate a lot of power from coal will need to diversify their energy sources to non-carbon-generating production. The best baseline non-carbon generating production out there, at least in the alternative sphere, is geothermal."

The economics are convincing enough that Rick says geothermal companies of "the correct size, scope and scale should focus most of their near-term activity in the U.S. while at the same time providing a pipeline in other areas of tertiary volcanic activity that will give them growth three to five years out. "In terms of security of cash flow and ease of financing, the low-hanging fruit is in the U.S.," he says. "The chances for quantum improvements, however, come in parts of the world where the geothermal resource has been less thoroughly explored and exploited. There are gigawatts of energy to be discovered and exploited in places like the Philippines, Indonesia and in particular Chile."

In his opinion, the geothermal arena does not appear to favor small players. Consolidation makes sense, at least in the U.S., and Rick says that's largely because the combination of the direct subsidies and incentives the utilities offer via power purchase agreements to meet government mandates put a premium on organizations with experience in financing, developing and operating plants. They have to attract management teams that have done it in the past and can do it now. Obviously, according to Rick, this doesn't lend itself well to market capitalization of $50 million or $100 million. "Size, scale and mass matter." For that reason, from economic point of view, small geothermal operators that can't raise money in $100 million and $200 million chunks are nonviable. As he sees it, "The only thing that could change the equation for the small entrants would be a real near-term boom in alternative energy stocks, that sort of rising tide that floats all ships."

Absent that rising tide, the thinks the consolidation up the food chain would be rational: "the micro-juniors absorbed into the mere juniors and the juniors themselves absorbed either by utilities or global power producers" until the whole sector is ultimately "upstreamed into the power generation sector, which is a very large, global, multi-billion dollar sector."

A potential geothermal spoiler arose in December. The day after the Swiss government permanently shut down a geothermal project in Basel blamed for causing earthquakes, a supposedly similar California project that was part of the administration's geothermal development program came to a halt. Although the two were not linked explicitly, the timing led to speculation that the California project ended for the same reason.

"People get cause-and-effect back-asswards," Rick states. "Geothermal activity that works engages in areas of tertiary volcanics and very young volcanic rocks. Young volcanic rocks are there because the areas are tectonically active. They have earthquakes. Apparently you can create micro seismic activity by changing the flow of water through subterranean rocks," he adds, "but the idea that a 12,000-foot hole 6 or 8 inches in diameter will be the catalyst that unlocks the San Andreas Fault is one of the silliest scientific rumors I've been exposed to in my life."

Unfortunately, he goes on, "Given the fact that our society seems to make all kinds of decisions based on how they feel as a substitute for having to think, I guess I can see this being a political issue. People tend to lend a lot more credence to the easy thing rather than spending 10 to 15 hours acquainting themselves with the basic tenets of geology or even thinking about how much 12,000 feet of strata weighs on top of a zone that might be impacted by the withdrawal of water. Ninety-nine percent of the people don't reflect. They react."

Still, the geothermal space holds great appeal for Rick and he thinks it remains politically correct. "It's useful to see that a major U.S. utility got an $8 billion subsidy from this administration to build nuclear plants in Georgia. If nuclear is going to be politically acceptable, I cherish the thought of well geothermal producers will be regarded."

Run-of-River Works, too

In addition to geothermal, run-of-river hydroelectric projects constitute the other alternative energy that works for Rick. Conventional hydro means building great big dams that not only cost a lot but do a lot of environmental damage. "In run-of-river hydro," he explains, "you are allowed, to store no more than 24 hours' flow, which means you don't do a lot of damage to the riparian environment."

Because run-of-river projects require cascading water to work, the best places are (not surprisingly) mountainous, such as North America's West Coast, with the Sierras and the Rockies, works well, as do the Andes in South America, the Himalayas in Asia, the Central African Rift. "You're taking water out of the water course in a cascade and returning it to the river at the bottom of the cascade. This doesn't impact fish life, either, because they don't live in places where the water pressure is so great," Rick says.

"There are many, many gigawatts of undeveloped run-of-river hydro projects around the world. The financing to put them in production is available, the technology is off-the-shelf, the engineering talent to build and operate these things is freely available." He expects junior companies to be able to build themselves over a period of eight to ten years, and when they reach critical mass because of the incredible stability of the cash flows they exhibit and the incredible ease of obtaining project financing, these companies will be sold at good multiples to power users."

Sounds a bit like a no-brainer, but Rick finds that it doesn't appeal to speculators. "The idea that somebody would put money in the face of a rational rate of return over an extended period of time in a bull market rather than gamble wildly to try and discover which penny stock the tooth fairy's going to alight on, sadly pulls capital from run-of-river toward tooth fairies. For me, that's wonderful. That I can buy stabilized internal rates of return more cheaply is a very good thing."

If? Or When?

According to Rick's analyses and observations over the years, "In bull markets at least, most speculators prefer 'if' questions. 'If' questions regard a fundamental speculation as to whether there will be a return of capital rather than a return on capital. So to the extent I can involve myself in undervalued speculations that have 'when' rather than 'if' answers, I prefer those. I consider a run-of-river project in terms of a 'when' question. When will project financing occur? When will the project go into production? Having gone in production, when will somebody else pay more for the cash flow that the company's current shareholders are paying?

Rare Earths: Too Much Ado?

Rick considers rare earth metals the latest of a fairly interesting, basically North American phenomenon, sector rotation. In a bull market, where sectors get ahead of themselves, promoters make money dreaming up new stories, and stories in a sector where people haven't been burned before are the easiest to sell. "Nobody had ever lost money in niobium or gallium or germanium because nobody could pronounce them or spell them" until these stories came out, he notes. "I think this is an enormous bubble that's going to crash. I have been delivering a lecture at some conferences about the real emerging minerals in this market—storium, fraudium, scamium, or for those who saw Avatar, my new favorite, unobtainium."

'"Yes, this stuff can be used in cell phones (in miniscule amounts). Yes, lithium has some future in batteries." But the fact is, Rick says, the worldwide market for rare earth elements is about $2 billion. As he works out the math, it doesn't work. "If you assume a 30% margin (which I don't know is reasonable number)," he figures, "you are talking about $600 million in EBITDA. At a 10 times EBITDA number, you're talking about a $6 billion prospective market cap of that industry."

He cites another mystifying bit of math. "The largest lithium producer in the world is now down to 140 years' supply of lithium. The only reason they don't have a bigger supply is there's no particular sense spending money now to develop resources that you'll need in 150 years."

Urani-Mania Rerun

In contrast to the rare earth elements' tale, Rick believes that the uranium story that fed the mania three years ago remains credible. In fact, he says, "Everything that was true in the uranium story three years ago was 10 years ago and it's all true today, but it's been priced differently." That's because uranium—which first captured his attention in the early 2000s when it was pretty unpopular, trading below $10 per pound and bottoming out at $7.10 on December 25, 2000—"is a strategic fuel that has a great place in the world's energy mix. The world is consuming more uranium than it produces. . .the above-ground supply will eventually go away and there will be shortages."

He lost interest during the manic period of 2007, when the uranium price peaked at nearly $138 per pound, but is looking at uranium stocks again, with yellowcake prices pretty much confined to the $40 to $50 band since the end of 2008. Because we consume more than we produce, we will have shortages, and the competition among users who need it will drive up prices, he reasons. "Many countries are staking their energy future on uranium. I don't believe all of the plants that are planned and talked about now will be built, but enough will be built that there will be severe supply shortages. The uranium price has to go up to reflect that," he says, "and more importantly, it can go up. The price of uranium is a fairly small component of the cost of the electrical production from a nuclear power plant; the price could double and still not have too measurable an impact on the power price that comes out of the reactor."

As he surveys the uranium landscape, Rick sees a world that "hadn't looked for uranium for 20 or 25 years as a consequence of the fact that they were losing so much money on the uranium that they had found. When uranium prices rose and the uranium companies were able to attract cheap capital and deploy it to exploration, there was an amazing amount of low-hanging fruit because for all practical purposes it was a new activity. There have been some very attractive recent discoveries that haven't been rewarded with the escalation of market capitalizations that you would have seen with a discovery of equivalent value in the gold business," he adds.

A new twist to the uranium story makes it even more compelling than before, in Rick's view. "In the past, the development of a uranium mine was really the sole province of a major or a super-major," he observes, "but increasingly—due to the strategic nature of uranium deposits—juniors that discover major uranium deposits will have financing options open to them that were not open in the past." He explains that lenders increasingly are requiring plant operators to lock in supplies of uranium over the entire amortization period of the loan. For example, if an operator were to build a new reactor in for $6 billion and borrowed $4 billion over 30 years to finance it, the bank would require them to lock in a million pounds of uranium a year for 30 years. Given that there are well over 100 reactors planned for the next 10 years, probably 50 of which will be built, I believe there will be incredible demand to lock in supplies. Those off-take agreements can be used by fairly small companies to finance the construction of uranium mines."


Make Volatility Your Ally

The "extraordinary volatility" Rick foresees in the equity markets might scare some investors away, but he argues, "Volatility's good if you use it as opposed to being used by it. It allows you to pick up assets on the cheap. I don't try to mitigate volatility. I think volatility is a tool. I try to enhance it. I have learned to react with absolute delight when a stock I think is worth a dollar falls to 50 cents. I buy the hell out of it at 50 cents. I seek to profit from volatility rather than to guard against it."

Rick Rule, founder of Global Resource Investments, began his career in the securities business in 1974, and has been principally involved in natural resource security investments ever since. He is a leading American retail broker specializing in mining, energy, water utilities, forest products and agriculture. Rule's company has built a national reputation for its specialist expertise in taking advantage of global opportunities in the oil and gas, mining, alternative energy, agriculture, forestry and water industries.

Streetwise - The Energy Report is Copyright © 2010 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.
The Energy Report does not render general or specific investment advice and does not endorse or recommend the business, products, services or securities of any industry or company mentioned in this report.
From time to time, Streetwise Reports LLC and its  directors, officers, employees or members of their families, as well as persons interviewed for articles on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.
Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.
Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.
Participating companies provide the logos used in The Energy Report. These logos are trademarks and are the property of the individual companies.
Streetwise Reports LLC
P.O. Box 1099
Kenwood, CA 95452
Tel.: (707) 282-5593
Fax: (707) 282-5592
Email: jmallin@streetwisereports.com



All the best.

Got a comment then please add it to this article, all opinions are welcome and appreciated.


If you would like to get a bit more bang out of your your buck, then check out our Options Trading Service please click here.


To stay updated on our market commentary, 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.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Wednesday
Mar102010

U.S. funds new nuclear power technology

Steven Chu 11 March 2010.JPG

Steven Chu, The U.S. Energy Secretary wants the U.S. To recapture the lead in the nuclear energy industry and set the stage for a more competitive economic future as the following snippet shows:


WASHINGTON, March 10 (UPI) -- The United States needs to retake its position as the global leader in the nuclear energy sector, the U.S. energy secretary said in Washington.

U.S. Energy Secretary Steven Chu announced that Pittsburgh's Westinghouse Electric Co. and San Diego's General Atomics were selected for a $40 million effort to design and plan work for the next generation of U.S. nuclear power plants.

Chu said the investment is part of a Washington plan to build new nuclear power reactors to provide a source of clean energy.

"It's time for America to recapture the lead in the nuclear energy industry and lay the foundation for a stronger, cleaner, and more competitive economic future," he said.

The next-generation project proceeds in two phases: research and development and then a move toward the design and construction of a demonstration plant.

Chu said the project would help Washington determine the viability of the next-generation nuclear plant program. If successful, the Energy Department said, the project would demonstrate a high-temperature, gas-cooled reactor that can produce electricity and process heat.

The Energy Department said roughly 16 percent of U.S. greenhouse gas emissions come from industrial process heat applications. Steam from nuclear reactors could reduce those emissions.


All the best.

Got a comment then please add it to this article, all opinions are welcome and appreciated.


If you would like to get a bit more bang out of your your buck, then check out our Options Trading Service please click here.

To stay updated on our market commentary, 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.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.


Thursday
Mar042010

National Public Radio to interview Hyperion Power

Hyperion plant.JPG


This morning we recieved a this missive from Hyperion the mini nuclrear power people that may be of interest to you.


NPR - National Public Radio to interview Hyperion Power
CEO John R. Grizz Deal at 3:00 p.m. Eastern on Friday, March 5, 2010
 
DENVER, CO, USA, March 4, 2010 - Hyperion Power Generation's CEO, John R. Grizz Deal will be a featured guest interviewed on tomorrow's (March 5) Science Friday show on NPR: National Public Radio. Deal will be joined on the program by Dr. Richard Lester from MIT who is the founding Director of the Industrial Performance Center and Professor and Head of Nuclear Science and Engineering. The program will air live beginning at 3:00 p.m. Eastern Standard Time. Hyperion Power is the global leader in the development of Mini Power Reactors (MPRs).
 
More information can be found at:
Nuclear Technologies interview
 
You can listen to Science Friday live by accessing one of the sites listed at:
http://www.sciencefriday.com/about/listen/
 
Conceived at Los Alamos National Laboratory, the intellectual property portfolio for Hyperion's first reactor was licensed to Hyperion Power Generation for commercialization under the laboratory's technology transfer program. Hyperion Power's market launch design is a Mini Power Reactor (MPR), which is even smaller than a Small Modular Reactor (SMR). MPRs are not light water reactors. MPRs offer a simple design, transportability as a single unit, and a "closed" fuel system where the reactors are factory fueled, shipped to the customer site, and then returned to the factory. In addition to being physically smaller, MPRs have a smaller energy output-under 50 megawatts electric per unit.
 
Hyperion Power's Mini Power Reactor, is a liquid metal-cooled fast reactor, and offers unique safety features and efficiency. Housed in a permanently sealed container just 1.5 meters wide by 2.5 meters tall, it's small enough to be transported by truck, rail or ship. Meeting all the non-proliferation criteria of the Global Nuclear Energy Partnership (GNEP), each unit produces 70 megawatts of thermal energy or 25 megawatts of electric power- enough to provide electricity for 20,000 average American-size homes or the industrial equivalent for seven to ten years depending on usage.
 
Offering a cost-efficient source of clean, emission-free, baseload energy, the Hyperion Power Module will provide crucial independent power for military installations; heat, steam, and electricity for mining operations; and electricity for local infrastructure and clean water processes in communities around the globe.

More information can be found at the company's web site: Hyperion



All the best.

Got a comment then please add it to this article, all opinions are welcome and appreciated.

For those interested in getting a bit more bang for your buck and adding a touch more excitement to your portfolio, then check out our Options Trading Service please click here.


To stay updated on our market commentary, 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.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Tuesday
Mar022010

EXTRACT RESOURCES APPOINTS JONATHAN LESLIE AS CEO

Extract Resources Logo.JPG


The latest news release from Extract resources reveals the appointment of a new chief Executive Officer, Jonathan Leslie, as follows:

Extract Resources Ltd a uranium exploration and development company with projects in Namibia, today announces the appointment of Mr Jonathan Leslie as the Group’s Chief Executive Officer (CEO) with immediate effect. Mr Leslie will join the Board of Extract in due course.

Mr Leslie is a highly experienced mining executive, with extensive operational and management knowledge of the global mining industry which includes experience in uranium marketing and project management.

He was on the Board of Rio Tinto PLC for 9 years, and CEO of two of Rio Tinto’s major product groups. He has broad experience of uranium marketing having spent four years responsible for Rio Tinto’s worldwide uranium sales into the Far East and Asia. His involvement in uranium continued with his appointment as Managing Director of Rössing Uranium where he developed close relationships with the Namibian government and related agencies.

More recently, Mr Leslie served as Executive Chairman for the major AIM-listed mining company, Nikanor plc, formed to develop the world class KOV copper/cobalt project in the Democratic Republic of Congo. Prior to his role with Nikanor, Mr Leslie was CEO of Sappi Ltd, from 2003 to 2006.

Extract’s Chairman, Mr Stephen Galloway, said Mr Leslie had emerged as the outstanding candidate for the role following an extensive international search.

Mr Galloway said, “I am delighted to announce Jonathan’s appointment as Extract’s CEO, during this crucial stage in the company’s evolution from mid-cap explorer to a tier-one uranium asset developer. Jonathan brings a wealth of knowledge and global leadership. The networks developed by Jonathan in banking and finance, and thorough understanding of uranium mining, markets and customers, will add tremendous value to Extract as the company moves towards full production of the Rössing South deposit.”

Mr Leslie said, “The prospect of leading one of the most globally significant uranium projects is what attracted me to this role. I look forward to leading Extract as it realises its potential as one of the largest global uranium producers and a major player in the resources sector.”



Extract Resources Limited trades on both the Canadian and Australian Stock Exchanges under the symbol of EXT is based in Perth, Western Australia.


All the best.

Got a comment then please add it to this article, all opinions are welcome and appreciated.

For those interested in getting a bit more bang for your buck and adding a touch more excitement to your portfolio, then check out our Options Trading Service please click here.


To stay updated on our market commentary, 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.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.








Sunday
Feb282010

Uranium Market Outlook – First Quarter 2010

RBC Capital Markets Logo 01 March 2010.JPG



RBC Capital Markets recently released this forecast for the Uranium Market covering the demand, supply and price forecasts for uranium going out to 2019. The price is estimated to peak at $80/lb in three years time before dropping back to $60/lb in 2019.

Demand
• We foresee uranium demand growing by an average of 4.4% per year during the next 20 years, slightly lower than our previous forecast, but weighted to the 2018-2025 timeframe. The increase in demand is driven mostly by China as we expect it will lead the world in new reactor builds over the next two decades.
• Announcements continue to be made by governments and companies around the world regarding potential new nuclear plants. We believe this trend will continue as nuclear power is seen as a clean alternative for baseload generation. In the West, the expansion of existing reactor fleets has been much slower than anticipated due to the global recession
coupled with permitting delays and other government-related issues.


Supply
• We forecast the supply of uranium to grow by an average of 5% annually until 2015, but falling thereafter as reserves are exhausted. The uranium bull market of 2006 and 2007 stimulated the development of new supply, but we do not think it is enough. In our opinion, the prevailing uranium price is too low to stimulate sufficient supply to cover future reactor requirements.
• We have made two significant changes to our supply forecast: (1) we have reduced the forecast output of new Kazakh mines due to technical problems that we believe will persist; and, (2) we have moved the start year for Cigar Lake to 2013, one year later than we had previously forecast.


Market Balance
• We are forecasting deficits for every year from 2010, onward. Much of the demand we are forecasting has discretionary timing and, therefore, the market price will likely not directly reflect our view as purchases can be deferred (but not indefinitely).
• We believe there is not enough uranium production, either current or planned, to satisfy reactor needs, initial core requirements and inventories for new reactors. A sustainably higher price should help resolve this gap.
• Since the bull market for uranium in 2006-2007, we have seen a very strong supply response, in particular from Africa and Kazakhstan. Coincident to this, we have seen a substantial number of new reactor builds started globally. However, the uranium demand from these new reactors has not yet impacted the market which has resulted in a spot market that is oversupplied which has led to a low price.

Price Forecasts
• We have made no changes to our uranium price forecast.
2006A - $48
2007A - $99
2008A - $63
2009E - $46
2010E - $50
2011E - $60
2012E - $75
2013E - $80
2014E - $80
2015E - $80
2016E - $70
2017E - $70
2018E - $60
2019E - $60


Risks to Forecast
• Any major problem with a nuclear reactor could quickly curtail new reactor builds and reduce demand.
• Technical or regulatory problems could reduce mine supply.
• Material owned by speculators and investors could temporarily flood the market.

So there you have one groups opinion on just what the future holds.


All the best.

Got a comment then please add it to this article, all opinions are welcome and appreciated.

For those interested in getting a bit more bang for your buck and adding a touch more excitement to your portfolio, then check out our Options Trading Service please click here.


To stay updated on our market commentary, 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.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.