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Monday
Feb082010

Uranium Prices Update 09 February 2010

Longer term price for Uranium.JPG

The chart above shows the current price of uranium standing at $60.00/lb according to TradeTech having come down steadily from around the $95/lb level. In a news release on January 1, 2010, TradeTech had this to say:

A declining trend in uranium prices that began in 2008 continued into 2009, as TradeTech’s uranium spot price fell 15 percent from US$52.00 per pound uranium oxide (U3O8) at year-end 2008 to $44.50 on December 31, 2009.

The uranium market attempted to recover from the effects of a global financial crisis that began in late 2008, and the spot price strengthened by mid-year. However, this trend was short-lived as several sellers competed aggressively to conclude sales and the spot price fell again in the second half of the year.

In early October, the spot price climbed briefly as BHP Billiton reported damage to the main shaft of its Olympic Dam that would take months to repair. The company declared force majeure on certain uranium deliveries, which brought a number of buyers, primarily traders and financial entities, to the market and the price rose to $50.00 per pound U3O8. By December, however, the spot price retreated as the US Department of Energy’s sale of uranium to fund cleanup of the Portsmouth uranium enrichment facility overshadowed the market.

“Buyers are expected to return to the market during the first quarter of 2010 as a number of utilities have indicated they can justify discretionary purchases for inventory at current price levels,” Klingbiel added. In addition, buying from Asia is expected to remain strong as India and China, in particular, forge ahead with plans for expanded nuclear energy programs to meet rising energy demand.

Well it would appear that we can take one or two positives out of their statement, however, uranium could take some time in convincing us that it is becoming everyones favourite play. We are half way through the first quarter and the spot price for uranium stands at $42.25/lb as the chart from U308.com shows. We will observe uraniums progress and look for positive signs of activity before going on the acquisition trail.

Uranium Chart 09 Feb 2010.JPG

All the best.






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Friday
Feb052010

Vintage Wine Turns Sour for Financiers

By Alex Daley and Doug Hornig, Casey Research

When the folks at a private equity firm gather at the holiday party refreshment table to talk about “vintage,” they aren’t commenting on the Château Pétrus.

The world of private equity financing doesn’t have high visibility, but it is big business behind the scenes. Unlike venture capital outfits – which provide startup money to very early-stage companies – those who play this game grab existing private companies, often through leveraged buyouts (LBOs). Each year’s investments are referred to as vintages, with some being more highly drinkable than others.

Now, some of the recent vintages look like they’ll turn out to be little more than vinegar.
Private equity investing has never been for the faint of heart. But investors continue to engage in it, because the payoff can be substantial. And for the first few years of the new millennium, it was a go-go place to be. With so much easy money sloshing around, the number of PE deals exploded, totaling over half a trillion dollars at the manic peak in ’07.

Then came the crash:

Cap Invest.JPG


It’s important to remember that credit was not a single bubble. It was a bubble machine. It created the housing bubble, which fueled the personal debt bubble (which in turn popped the housing bubble, but that’s another story). The mortgage market gave birth to a whole new range of derivatives, things like collateralized debt obligations (CDOs), mortgage-backed securities (MBSs), and the rest of the acronyms we’ve all become familiar with, even if we don’t quite understand what they do. (Don’t be embarrassed, neither did the financial geniuses who swapped them like baseball cards.)

Frantic trading in these newly printed scraps of paper created its own bubble, manufacturing an incredible amount of seeming liquidity in a very compressed time frame. We know the ultimate consequences to the balance sheets of our banks, and our government, by now. But there was more to it than that. The capital these transactions threw off had to go somewhere, and suddenly well-capitalized investors were pouring their phantom profits into something perceived as more solid: private equity firms. Presto, yet another bubble.

In a mania, all investments are at the mercy of the greater fool. As in: if you can’t find one, you’re it. Doesn’t matter if we’re talking housing, stocks, commodities, or whole companies. The last man standing is left staring into an abyss in which there are no buyers.

With PE deals, investors don’t acquire companies because they want to own them. They buy in because they expect to sell to a higher bidder. Here are their three exit strategies:
wait until the company goes IPO and clean up when you sell your stock into the liquid public markets; arrange for a takeover by a corporate entity; or, pawn it off on another PE firm in a secondary transaction.

And this is what’s happened in those areas over the past eight years:


Corp acq.JPG

Compare the two graphs, and it’s immediately apparent that PE firms are sitting on a lot of properties that’ll be difficult to move. They invested an unprecedented amount right at the same time as the bottom was falling out of an overheated exit market, returning back to normal levels of deal flow in just two short years.

Furthermore, while it looks like IPOs in general recovered a bit in 2009, they still totaled just 25 from the ranks of PE-backed companies. And even that number may be misleading. According to PitchBook, a respected industry analyst, “a number of these IPOs did not represent full exits but were used as a means of raising capital to pay down debt and provide investors with partial returns.”

It Only Gets Worse

At the same time, much of the huge money stack they piled up through ’07 is still there. It doesn’t move because, in the current environment, there’s no point in adding more companies when they can’t profitably dispose of the pile they already have. And that’s led to a boatload of uninvested capital – a massive cash overhang estimated at some $400 bill.

overhang.JPG


Excess Funding + a Bloated Portfolio = ??

Well, that is the question. First of all, you can save the pity you might slop onto these firms. They are, after all, making some kind of return on the money they hold. Beyond that, though, we’re looking at the potential for some pretty vinegary vintages.

Generally, the wait time for a vintage to mature – i.e., for the investment to show a profit – is about five years. So the more than $1 trillion thrown into PE firms between 2005 and 2007 will be expected to yield fine wines from now through 2012.

Whether, instead, we’ll hear only whines, no one can say for sure. But for comparison purposes, we can look at PE’s sister market, venture capital. In a recent analysis of VCs, investment advisor Cambridge Associates reported that returns were off steeply from their heyday in the early ’00s, falling from 36% to 14% just following a similar flood of increased inflows during the early part of last decade. A similar decline in returns from private equity investments – with lower risk and lower expectations than VCs – could take them down into the single digits, if not close to or below zero. You might as well be in T-Notes.

The takeaway is this: Private equity fuels the IPO market, as well as the growth pipeline for big companies that can't grow only organically. But PE firms are sitting on the equivalent of a bunch of drunken Vegas marriages, having pledged “till death do us part” at the top of the frothy debt market. All those unwanted spouses in the portfolio mean lower gains.
Add in the excess capital, much of which may end up being recalled by investors tired of waiting for it to be invested, and the big firms – which grew cocky playing with billions in this once-lucrative market – are likely in for some lean years.

What does all this mean to you as an investor?

Well, you need to be wary of IPOs; many of the dogs will be trotted out, with tails wagging and mouths closed to hide the rotting teeth. Also on the way are diminished returns for the banks and insurance companies that back the PE guys. And if equity prices remain at recent highs, there will probably be a shakeout in the industry, as increasing numbers of companies look to global public markets to raise money, instead of turning to private equity. A trend that’s already apparent with the incredible number of secondary offerings over the past few months (in just two days this past September, nine were filed or priced on U.S. markets), and the thawing global IPO market.

But remember that every crisis holds danger as well as opportunity. That’s the specialty of the editors of The Casey Report: to analyze emerging mega-trends and find the best opportunities to profit from them. And if you go along for the ride, you will be able to do the same. To learn more about how to make money in a roller-coaster economy, click here.



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Thursday
Feb042010

Britain Faces the Prospect of Blackouts

Ofgem.JPG

We draw to your attention an interesting report which appeared in the Daily Mail regarding the bleak future for the UK unless they spend two hundred billion pounds

Britain faces the dire prospect of blackouts and higher bills in the years ahead unless radical action is taken.

Today's stark message from energy regulator Ofgem came with the warning that many people would struggle to pay power bills of up to £2,000 a year.

Setting out its plans for safeguarding Britain's power supplies, Ofgem warned that sticking with the current market was 'not an option'. he regulator said the industry needed £200bn of investment by 2020 but

In its report, which took a year to complete, it said the financial crisis, increasing gas import dependency and the closure of aging power stations demands far-reaching energy market reforms to meet tough environmental targets and keep the lights on.

One of the options recommended by Ofgem is as follows:

4)Subsidise new nuclear power plants. The government has so far refused to help pay towards their construction. But it may be preferable to pay out as the alternative is higher energy bills for the taxpayer.

To read the report in full please click here.

As it takes eight to ten years to build nuclear power plant the UK is now up against it. Obtaining the permits will be a battle on its own, it took six years to get planning permission for an extra runway at Heathrow airport, anybody care to take a punt at just how long it will take to get planning permission for a NUKE?


Have a good one.


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Thursday
Feb042010

Victor Goncalves: Fundamental Shifts on the Horizon for Energy

Victor Goncalves.JPG
Victor Goncalves.JPG

Source: Interviewed by Karen Roche, Publisher, The Energy Report  2/4/10
http://www.theenergyreport.com/pub/na/5580


Equities and Economics Report writer Victor Gonçalves, in this exclusive interview with The Energy Report, talks with us about what he thinks "being green" means for energy. It's more than having a smaller carbon footprint, and more about using energy efficiently. He's enthusiastic about the prospects for rare earths, saying they are going to be a "huge phenomenon."

The Energy Report: Victor, your Green Money Report website focuses on the fundamental shift in the use of energy. I'm interested in your impressions of what's happened recently at the global climate conferences, specifically Stockholm, and if you think the world will ever come to some type of climate treaty in the next decade.

Victor Goncalves: It's going to be a tug of war. A lot of the controversy that's coming out now with respect to climate change is a question of, is it actually a product of human behavior, or is what's happening normal in a multi-billion or a multi-million-year cycle? Even with the controversy, the fact is we are polluting our own environment and I think something's got to be done about that. Based on that, yes, I think we will come to some sort of agreement and probably in the next ten years.

TER: What will be the driving factor? If you look at countries like China and India, they're in a huge growth pattern. This is one of their big sticking points. They need cheap energy. What's going to motivate them to come to the table?

VG: At the end of the day, they need to see that there's going to be a positive impact for going green. Going green is going to have to make more economic sense than staying dirty, effectively. There are a few ways you can do that. You can just say, okay, India and China, either clean up or we'll get our goods elsewhere. That's a little hard to do, but if it came down to doing something like that, I'm sure that would nudge them in the right way. I think the other factor, and more importantly, is the fact that just the price of green is going down.

The price of solar power has gone down a ton. The price of wind energy has gone down something like 60% in the past two decades, so we are in a pattern where the price of these energies is going down. Now the other issue which I'd like to bring up, is something that I've been trying to focus on a bit more in the newsletter. When "green" is talked about it's been in the context of creating energy in a greener fashion. I think that's a fair synopsis of what most people are trying to see green as. But we forget to look at green also as "let's use less" or "let's take the energy we do create and use it more efficiently." For example, thermal power that is used to create electricity is very inefficient. Probably 20% to 30% of the energy created through coal burning or uranium burning will actually convert into energy that comes out at out power outlets. That is, I think, a massive issue.

TER: So you're not looking at energy per se, but looking at technology or process changes.

VG: We're looking at both, to be quite fair. For example, with the amount of coal-fired power plants going up in China or India, it would be nice to see fewer of them built. But they're probably not going to tear down the coal-fired power plants that are up now and say "let's spend all this money to do something else." What we probably can do is make the ones that exist operate at a much higher efficiency. And instead of building new ones, let's build something greener. So I think it'll be a dual process just because tearing down existing plants that have 20 or 30 year life probably isn't going to happen.

TER: Any companies out there that you're following that are pursuing some interesting energy-saving concepts?

VG: I've been following a company called Legend Power (TSX.V:LPX). What they do is quite impressive. Most commercial buildings have the ability to access a regular power, electricity plug in, or peak power, but you pay for the peak power just to have that available. They pay for all this extra power to be available to them. What Legend Power does is install modulators, which reduce the power on demand at the plug when it's not being used. They calibrate the amount of power to the outlet for the demand you're going to use. That's what I think is a brilliant move, especially when it comes to a big box store, Best Buy, for example. They're closed between 10 o'clock at night and eight in the morning; that's 10 hours of peak power that they could be reducing. Legend Power's gotten a lot of work orders and they're just developing the business. I think this is patented technology and systems, so they'll be a big player in the system and probably the leader. So, again, huge, huge innovations in saving energy.

TER: You mentioned earlier we were talking about the price of green going down. You specifically mentioned solar and the prices coming way, way down. What's causing that? Are there actually improvements in technology of the batteries or is it just merely because the government's subsidizing?

VG: Government subsidy does not make the cost of energy go down. It causes the end user cost to go down, but it's still costing X amount of dollars; it's just subsidized. The actual true costs have been coming down a lot and that's of key interest to me. Yes, there are subsidies and so on that are making it very affordable, but the true cost has been coming down a lot, too. Solar panels have been becoming thinner and thinner, able to retain more electricity, and they've been using more things such as lithium, rare earths. They've been using all these types of rare metals that can capture and store the energy better or retain it, instead of the sunlight bouncing right off. All these different types of metals are being used to really increase the efficiency. I think we've just really scratched the surface on this based on what can happen. I think solar will be incredibly viable and we're in the process of doing that. That's, again, the situation of not necessarily creating more, but taking the square footage of solar panels and making it more efficient.

TER: I'd like to move onto rare earths in a minute, but have another question about solar. Any companies in that arena that you think are well-positioned?

VG: Yes, Acro Energy Technologies (TSX.V:ART) is one. In the solar space the part that isn't really talked about very much is installation. After all, they have to put these things in and it's not exactly like trying to change oil in a car; there's a lot more to it.

The process is quite complicated in the sense that you've got the panels, you've got your generator station, you've got your capacitors, you've got all these things and you need a group that can do this to scale. Acro has really been trying to become that "go-to" installer and become more of a consolidator to get that scale. It's really one-stop shopping for the potential end user.

So I think Acro is going to be quite impressive. Exactly when, I don't know, but it's something I'm watching at the moment.

TER: Let's move on to rare earths, which have been getting a lot of buzz at the various mining conferences. What's your viewpoint on them and the investment opportunities they represent?

VG: Rare earth elements and rare earth metals, in general, are going to be a huge phenomenon. It's like in '07 when we had a uranium boom and uranium went from $8 to $136.

What it comes down to is these rare earths are needed for so many things. For example, hybrid cars are really the driver for rare earths' increase in price. But not just hybrid cars. You've got tantalum and niobium being used in a lot of other things and these rare earths are going to be in huge demand.

I don't think we've gotten ahead of ourselves with the demand or with the price of these rare earths. We don't have enough to supply the markets fast enough. That's partially what's causing the price to move up. There's also supply constraint out of China. China controls 95% of the rare earths and says, okay, we'll just keep them for ourselves, thanks. You've got to fight for the rest of the 5% of them out there. So that's obviously causing major upswing in the price of rare earths. That has been the main driver. But that coupled with a shift in how we do things — we're going to see a ton more hybrid vehicles go on the road over the next couple of years and each one of them is going to require 50 pounds of rare earths. That's going to add up.

TER: Jack Lifton, who speaks at conferences about the rare earths, asserts that it's really a rush to production. When the next two or three companies actually get to production, the amount they produce will probably satisfy demand for decades to come.

VG: Yes, it is a race to production. Like with uranium, for example, there's plenty of uranium out there for the market. It's just whoever does it first will obviously satisfy a lot of the market and I think that's quite the possibility for rare earths.

The best part for an investor is that it's not going to happen today or tomorrow or next year. We've got a little bit of time. We've got some idea as to which companies have been in the space for a long time and have had more lead time to develop a project and get to the stage where they're working the economics of it. Those are the companies I'm really interested in. Obviously, there's a lot of brand-new companies coming out of the gate who will represent an excellent investment opportunity because of the sizzle in the market, but I would have to hear something incredibly compelling from a very small junior to sway myself from some of the larger companies.

TER: So who are you following, then, in the rare earths?

VG: Avalon Rare Metals (TSX:AVL) is kind of a darling because I bought it so cheap. I've been following that from around the 40 cent range. It had a very impressive run to over $4. The most important thing is not the tenfold run in price. It's also the increase in market valuation because a $4 market cap on a company with 80 million shares outstanding is a company that's worth a lot of money and is representative of what they've got.

They've got one of the largest deposits, they're working on feasibility, they're working on all the things it's going to take to put it in production. Based on its size, I don't think the fact that it's in the north is going to be a major hurdle. If anything, due to the relationship with the native communities up there, I think that's actually going to be a benefit. So Avalon I personally believe is going to be probably the first or second company to attain that status, and they're very well funded, working towards their end goal. They're considering actually using wind power to power their project because they are located in one of the windiest places up in the Northwest Territories. So I think that really attests to a legitimately green company. This company is the type that's just going to keep moving up and up and up because they're going to keep hitting the milestones without anything hindering it.

TER: So they're one of the first one or two to get to production. Are there other ones that you are following that are in a similar situation?

VG: I think Rare Element Resources Ltd. (TSX.V:RES) is certainly in a similar situation. I have a personal bias towards Avalon just because I have so much more of Avalon stock, but that's not to say by any means that Rare Element Resources is not in a situation where they can really progress. They've had a similar run in their stock from give or take 40 cents to $4 as well. They have a tighter share structure, but they also have a bit of a small project. However, it's not in the remote situation (i.e., it's not in the Northwest Territories), so that's kind of nice. But I think both these companies are going to be real winners in this situation. It'll be like having a Goldcorp and a Barrick. It's not necessarily one or the other. I think it'll be really both.

TER: On BNN you mentioned a company named Threegold Resources Inc. (THG:TSX.V) that seems to be in a similar space.

VG: Threegold is in the rare earth space. And, again, not a lot of the companies that are really in a low, low market cap (i.e., 15 cents and lower with not very many shares out) compel me in the rare earth space, but Threegold certainly did for multiple reasons. I've actually followed this company for quite a while, since inception actually, just haphazardly because somebody presented it to me. When I saw them come out with these rare earth numbers, I was quite intrigued and I sat down with the president probably a couple of months ago. He told me in University his Masters was on rare earths. A lot of these rare earths companies, especially the ones just sprouting up now, have nice projects, have good consultants, but the people who actually work for the company don't always have the highest expertise in the area.

Well, this is a company who has a guy in charge that spent most of his academic career working on and researching the rare earth space and that, to me, makes a big difference.

I think it's around 17 cents today. Right now we're still waiting on news on their gold project which could end up being a new discovery. If it comes back positive, I think it'll be a game changer for the company. This could have major potential. That's my opinion.

TER: Are there other sources of energy or energy phasing alternatives that you can discuss?

VG: There's lots we can discuss, but primarily I've been sticking to those just as an area where I've been comfortable with. Geothermal is obviously something that's done well and going to continue to do well. I still think the major geothermal phase is yet to come because we've seen a bit of a bump in it a while back and it's taken the back burner again. I think we're probably due for something. Exactly when, I can't really say, but I think the geothermal phase is going to start seeing some appreciation. Some companies such as Western Geothermal and Nevada Geothermal are probably going to see some appreciation based on that.

TER: We appreciate your time, once again, Victor. This has been very interesting.

A proud and avowed Keynesian, Victor Gonçalves developed a strong background in economics at the University of Winnipeg, where he served as a Professor's Assistant as well as earning his degree. His Equities and Economics Report has been accurately picking winners and calling market direction. In 2007, for instance, he correctly predicted the Dow Jones topping 14,000 points and pegged uranium reaching $136 per pound and many more. In addition to EER, Victor also produces the Green Dollar Report, as well as writes for a number of print and electronic publications including CIM Magazine (Canadian Institute of Mining), Western Standard, Barron's and Kitco. He also has been featured on BNN, Mining Industry TV and at numerous industry events and conferences.

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) Karen Roche 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: Acro Energy Technologies, Avalon Rare Metals, Rare Element Resources.
3) Victor Gonçalves: I personally and/or my family own the following companies mentioned in this interview: Avalon. Threegold I or my family has been paid by the following companies mentioned in this interview: Avalon Rare Metals, Acro Energy Technologies and Legend Power.

Streetwise - The Energy Report is Copyright © 2010 by Streetwise Inc. All rights are reserved. Streetwise Inc. 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 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.
Streetwise Inc. does not guarantee the accuracy or thoroughness of the information reported.
Streetwise Inc. 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.
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Wednesday
Feb032010

Uranerz Energy Corporation Up almost 50% in a Week

URZ Chart 04 Feb 2010.JPG

A recent news release from Uranerz (URZ) has helped to stimulate interest in this uranium stock as the the price has rose dramatically over the last few days.

January 28, 2010 -- Uranerz Energy Corporation is pleased to announce that it has received an independent National Instrument 43-101 ("NI 43-101") technical report (the "Technical Report") for the Doughstick Project, Powder River Basin, Wyoming. The Technical Report estimates a "measured and indicated" mineral resource of approximately 967,883 pounds of uranium (eU3O8) at an average grade of 0.082% and an "inferred" mineral resource of approximately 87,981 pounds at an average grade of 0.055%. This mineral resource estimate was completed using accepted methods mandated by NI 43-101 and Canadian Institute of Mining, Metallurgy and Petroleum standards using a GT* cut-off of 0.20.

The properties comprising the Doughstick Project include the Company's wholly-owned Doughstick properties and the Doughstick and North Jane properties held by the Arkose Mining Venture ("Arkose"). Arkose is a joint venture operated by the Company and owned by the Company (81%) and United Nuclear, LLC (19%). Of the estimated measured and indicated resources for the Doughstick Project, 882,736 pounds at an average grade of 0.081% and an inferred mineral resource of approximately 86,909 pounds at an average grade of 0.055% are wholly-owned by Uranerz and the remainder by United Nuclear, LLC.


Details of the resources estimate are set out in the news release, please click here.

As the above chart shows recent news has helped URZ to make good gains, also note the increased volume. The indicators have spiked on these gains, however, there could be further to go.


Uranerz Energy Corporation trades on the NYSE Amex: URZ; TSX: URZ and in Frankfurt: U9E.


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

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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 that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.






















Monday
Feb012010

Denison Forecasts Uranium Sales of 1.8 Million Pounds U3O8

DNN Logo.JPG

Just a quick note in case you missed this news release form Denison Mines Corporation (TSX: DML) announces that its 2010 operating plan and budget is expected to result in the sale of 1.8 million pounds of U3O8. Operating cash flow from mining activities of $19.5 million and net cash flow of $1.0 million after the of $16.7 million on business development activities and other net cash outflows of $1.8 million, according to a recent article on Tradingmarkets.com.


"Our 2010 plan and budget will not only generate positive cash flow from our operations, while keeping us debt free in a weak uranium price environment, but will also generate sufficient cash flow to fund an aggressive exploration and development program to increase Denison's production and profitability for the years ahead" said Ron Hochstein, President and CEO of Denison. Unless otherwise stated all figures are in U.S. dollars.

In 2010 Denison is expected to have cash flow from its mine and milling operations in Canada and the United States of $19.5 million after capital expenditures of $17.5 million at its mines and mills. Business development expenditures of $15.1 million are planned on new mine development and exploration projects as well as $1.6 million on the search for new acquisitions designed to increase Denison's annual uranium production to at least 10 million pounds per year by 2020.

After accounting for all administration and other expenditures net cash flow is expected to be approximately $1.0 million in 2010. Cash balances are forecast to be $19.2 million at December 31, 2010 and Denison is expected to remain debt free throughout the year. There will be fluctuations in production and sales on a quarterly basis.

Denison Mines Corporation trades on the AMEX under the symbol of DNN and on the Toronto Stock Exchange as DML.


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Sunday
Jan312010

$54 billion in additional loan guarantees for nuclear power

Energy Secretary Steven Chu.JPG
Energy Secretary Steven Chu

One of our readers has alerted us to this article in The Huffington post regarding President Obama's support for the nuclear industry which is encouraging news for investors in uranium stocks.

President Barack Obama is endorsing nuclear energy like never before, trying to win over Republicans and moderate Democrats on climate and energy legislation.

Obama singled out nuclear power in his State of the Union address, and his spending plan for the next budget year is expected to include billions of more dollars in federal guarantees for new nuclear reactors. This emphasis reflects both the political difficulties of passing a climate bill in an election year and a shift from his once cautious embrace of nuclear energy.

He's now calling for a new generation of nuclear power plants.

During the campaign, Obama said he would support nuclear power with caveats. He was concerned about how to deal with radioactive waste and how much federal money was needed to support construction costs. Those concerns remain; some say they've gotten worse.
His administration has pledged to close Yucca Mountain, the planned multibillion-dollar burial ground in the Nevada desert for high-level radioactive waste. Energy Secretary Steven Chu has been criticized for his slow rollout of $18.5 billion in loan guarantees to spur investment in new nuclear power plants, and the administration killed a Bush-era proposal to reprocess nuclear fuel.

What has changed is the outlook for climate and energy legislation, a White House priority. The House passed a bill in June that would limit emissions of heat-trapping gases for the first time. But the legislation led to a Republican revolt in the Senate, where the recent election of Republican Scott Brown from Massachusetts has made the measure even more of a long shot.
Obama reaffirmed his commitment to a bill in his State of the Union speech as a way to create more clean-energy jobs, but added that "means building a new generation of safe, clean nuclear power plants in this country."

To back that up, he is expected to seek $54 billion in additional loan guarantees for nuclear power in his 2011 budget request to Congress on Monday, according to an administration official who spoke on condition of anonymity because the request has not been made public.
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Interesting stuff, have a good one.

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Friday
Jan292010

Tom MacNeill: Saskatchewan Leading the Resources Boom

Tom MacNeill.JPG

Source: Interviewed by Karen Roche, Publisher, The Energy Report 1/28/2010

Tom MacNeill, Chairman and CEO of 49 North Resources Inc. (TSX-V:FNR), is gung-ho about the prospects for Saskatchewan and the early-stage opportunities in the now-flourishing resources sector. As he tells readers in this exclusive Energy Report interview, he's thrilled to be facilitating the inflow of investment capital to further dynamic junior resource projects in everything from oil and gas to uranium and coal.

The Energy Report: Your website's home page points out that Saskatchewan has everything the developing world needs except for the capital markets to support projects. You created 49 North specifically to fill that gap. Can you update us on 49 North, progress you've made in the last three years and challenges you're facing over the next couple of years?

Tom MacNeill: Actually I think the greatest challenge is behind us. The world capital markets are now less volatile.

It's true that Saskatchewan has everything that the developing world needs. We're geologically blessed. Half of Saskatchewan lies in the Western Canadian Sedimentary Basin, with all the hydrocarbons and sedimentary resources you could imagine, potash being our primary asset so far. The northern half of the province is underlain by the Precambrian Shield, so we also have just about every hard rock mineral asset known to man that can be exploited economically.

The only downside is that we never had a capital market that caused a great deal of development in those resources. As some people know, we are the birthplace of socialism in North America. In the 1940s we elected the first socialist government ever in any North American jurisdiction. We made some extraordinary choices—to some degree along the path that Barack Obama is taking the U.S. these days—in that we had tremendous government oversight of all facets of life, including resource exploration and development.

Government hooks in business spook away a regular capital market. Much like Hugo Chavez expropriating assets in Venezuela today, it tells the rest of the world "stay out" because there's too much sovereign risk. We did that to ourselves. We went through a whole period where we ruined our economic activity because we thought socialism was the neat thing. We came out of it, but we're still living the hangover.

That means that we have an opportunity suite unparalleled in the world because we simply didn't develop it even though we knew it was there. The inroads that 49 North has been making are to develop a capital market. Several hundred companies are exploring for various resources in Saskatchewan now, and while I'm developing local interest and awareness, there's a tremendous investment opportunity for people external to the province.

TER: Do you see the direction in which Obama is taking the U.S. as additional opportunity for capital markets in Saskatchewan? Or might Saskatchewan catch socialist fever again from the U.S.?

TM: No, we won't. Been there, done that. We know what happens when you have government oversight in resource development and the backbone of our economy is resource development. We're the largest exporters of uranium and potash. We have incredible undeveloped hydrocarbon resources in light oil and gas, heavy oil, bitumen in the oil sands that is equal to if not greater than Alberta's. Also, immense resources in coal.

We're not going to screw up a second time. We watched Alberta develop from a base of 800,000 people to a population of 3 million people while we stayed stagnant at one million people over the last 50 years. It's not going to happen again. Saskatchewan is immune now because of our previous experience, so to some degree that will make us very attractive to capital worldwide.

Canada has always been mining- and resource-friendly. The U.S. is becoming more and more restrictive. Put a green stamp on something and everybody loves it; put a mining stamp on it and everybody hates it. That's becoming a very challenging environment, so we see a tidal wave of money flowing into Saskatchewan to take advantage of opportunities we have kept in the ground.

TER: You're in the catbird seat of having all these untapped resources.

TM: And we couldn't be happier about that. We are in the best place of any jurisdiction in the world. We have virtually zero sovereign risk because of our previous experience, tremendous undeveloped resources, more roads per capita than anywhere because we have all the infrastructure that socialists like to build. Power lines and gas lines run everywhere. Even our left-wing friends in previous administrations started developing good policy and resource royalties. We've set the playing field such that we'll be the belle of the ball for the next 100 years.

We've got it all and we're happy to be a part of early-stage development. That's what 49 North is about, pointing fingers at good projects. We invest in third-party projects through equities or other instruments, and we also develop our own. We're absolutely tickled about the opportunities ahead.

TER: You develop your own projects?

TM: Yes. Because we have a corporate structure, we can actually develop our own projects, which we do. We go out and stake ground, we tender for oil and gas leases, and all of that. We don't just develop things in Saskatchewan, either. We have a strong focus on Saskatchewan, but we look anywhere in the world.

TER: Your site talks about ensuring that all stakeholder interests are well managed, including local stakeholders. Can you elaborate on that?

TM: Typically a mantra with local stakeholders is that if external capital comes in and develops a resource, it's "exploitation"—with the negative connotation. I think of exploitation as making the highest, best use of a resource, but oftentimes the word conveys abuse instead. If you're going to mine large tracts of land with an open pit or go underground, you have to make sure that all stakeholders are well-served. How do the locals feel about it? What does it mean with regard to job creation? Will there be drags on infrastructure? We have to make sure it's done right. Cameco Corp. (TSX:CCO) has proven in spades that it can be done right.

TER: And how do you ensure that the interests of financial stakeholders are well managed?

TM: With regard to those who put up the capital, government policy fixed a lot of that internally already. Most people aren't aware of it, but PotashCorp (NYSE/TSX:POT)—one of the most successful companies in the world and certainly the most successful potash mining company in the world—was created through legislation that virtually expropriated half the industry. That was unwound when Potash was taken public again in the 1980s, but it's probably the best example of how badly Saskatchewan ever treated any financial stakeholder. We're not going back there.

The best way to treat financial stakeholders is to have their dollars well-spent on a project and make sure the project attracts further capital. It's a kiss of death when a good project cannot raise money, so 49 North's sponsorship and capital resources can get projects from very early-stage exploration into the development phase, where larger sums can be raised by others without it being hyper-diluted.

TER: Given such abundant natural resources, how does 49 North prioritize which resources?

TM: Everything tends to move in tandem. But we do get specific. A couple of years back we kicked out most of the uranium exposure in our portfolio and haven't really gone back into it heavily because I don't think it's quite time. Probably late 2010 or early 2011 will be time to do that. I guess what I'm saying is that we look at the commodity, where it is in the cycle, the macroeconomics around it and what the projects are.

After we figure out the macroeconomics, we answer other important questions. What do we think about the short term and short-term pricing? What will the capital market say about this? Can we finance the project moving forward? Is it the right time in the cycle? Just about everything I can imagine has seen what I'd consider the short-term bottom in its commodity price, so now is a good time to be putting things back on the books.

Potash has run its cycle in that it's gone up and down in value. We've seen a floor in that price and now it's time to start moving on to other things. The potential potash producers are very long-term stories; oil and gas aren't. The physical in uranium has been trying to make a bottom. It hasn't done that yet. Probably we're going to see the entire energy complex come off quite a bit in the first half of this year and that will likely be the final medium-term bottom in the price of physical uranium. We're usually making our investments at the bottom of the price cycle, when that commodity's out of favor. Right now we're focusing on light oil in Saskatchewan—we've been doing that for the last six months—and base metals. It's time for that.

TER: We're at the bottom of their cycles so you're starting to invest in them?

TM: I think we're near the bottom. We saw probably the absolute bottom in oil, but I think it's going to roll over significantly in the first quarter or at least in the first half of this year, for a variety of reasons based on the global macroeconomics and the perception of a lack of demand and worldwide consumption. But having said that, I don't try to pick a perfect bottom. Any time from a year ago to two years from now is a good time to put together a project for most commodities.

TER: Do you expect production from your oil investments to go to markets outside of North America?

TM: No. Saskatchewan is Canada's second-largest producer of oil and gas, and we typically ship most of our oil to the U.S. We're actually a larger exporter to the U.S. than Kuwait. Our political and economic past puts us way behind the curve, so peak oil is a generation ahead of us. Alberta's oil production has been climbing again on the back of the oil sands, but it hit peak oil on the conventional side in 1983. In 2010, we're essentially where Alberta was in the 1950s. We're far away from seeing maximum production. We produce about a half million barrels of oil a day now, and probably can get up to 3 to 5 million barrels 20 to 30 years from now.

And Saskatchewan probably has just as much bitumen as Alberta, but just started to develop it as of 2004 because we never had a policy that allowed development. We used to also have SaskOil, a crown corporation that had a prohibitive royalty structure for non-crown entities, which essentially scared away all other production.

TER: Will peak oil in Alberta (or anywhere else) help drive oil prices up to Saskatchewan's benefit?

TM: Ultimately, yes. Near term, I expect oil to go down sub $50 or so, but over the next five years, I believe we'll see $200 oil because it's easy and people consume what's easy.

The entire energy complex will pull hydrocarbon prices up. India has two days' coal supply and they're cutting back and rationing power in China. That puts tremendous pull on energy prices in the entire complex. The Dow Jones Basic Materials/Coal Index has gone from about $140 to $540 over the past year, almost a 45º climb on a chart. Any way you cut it, the rising value of one energy source puts upward pressure on the rest. Down the road, that will include uranium because nuclear generation will be the only substitute for thermal coal in countries with tremendous power needs. All of that will drive prices across the energy complex higher.

TER: How should investors play this momentum?

TM: It's hard for me to say because I'm a junior resource guy and I'm there at the very early stages. The place I live in is the 10-cent equity that we take to $3 to $5; not the $15 stock that goes to $50 because all of a sudden there are 100 years of production ahead. As an early-stage guy, I'm usually spending money when everybody else is shunning a particular commodity or project or area. In some ways what we do at 49 North is either countercyclical or ahead of the cycle.

TER: In terms of being countercyclical and focused on junior resources, what are some interesting junior resources plays that investors should look at?

TM: Definitely pay attention to potash. It's absolutely a necessary nutrient for growing crops. You can't do without it. The salt beds in Saskatchewan contain 50% of the world's mineable supply, so Canpotex (Canadian Potash Exporters) has become the world's largest supplier, with a bit of a monopoly or oligopoly on potash. Right now Canpotex is scuffling with China over pricing. Russian potash producers have settled a contract for $350 a ton with the Chinese and Canpotex seems in no mood to take that little. This gives juniors a tremendous opportunity to step in.

TER: Juniors such as?

TM: My two favorites are Athabasca Potash (TSX-V:API)—my number one holding—and Potash One (TSX-V:KCL). Both are world class. API trades at about $6.50 per share. It's a very light market cap with 39 million shares outstanding in the context of a conventional project that's billions of dollars in scope and can have mine life between 50 and 100 years. BHP Billiton Ltd. (NYSE:BHP) plans to build one of the world's largest potash mines right next door to Athabasca Potash's project. Likewise, Potash One has an excellent, scalable solution mining project in southern Saskatchewan that is equal in merit by my estimation.

TER: Didn't you indicate that the potash cycle is done?

TM: I meant that potash pricing has gone full cycle—from $70 a ton five years ago to a peak of $1,000 or so in 2008 to recent contracts signed at $350. Having seen the floor, for the time being 49 North doesn't need to think about the projects we hold. We can look at other things.

Even if you know the resource is there, it takes five to eight years to bring a potash mine on stream. This stuff is buried a kilometer deep. It's technically challenging and takes a great deal of time from early investigation to permitting to sinking the shafts to building the facility and extracting the potash. So I would be paying attention to junior potash explorers now because these are long-term projects and the price won't stay at $350. You can buy and hold those projects and wait and see what happens. The comment I made earlier was based on what 49 North plans to do. We're comfortable to let our potash holdings be and watch how it plays out.

TER: Is Saskatchewan's potash dominance threatened by Amazon Mining (TSX-V:AMZ), which is drilling on a big potash play at their Cerrado Verde project in Brazil?

TM: Not at all. More power to them. In my lifetime the population of this planet has doubled, growing from 3 billion to more than 6 billion. Demand growth for potash will continue. We're just realizing the shortages in the market now, and because it takes a long time to bring these things to production we'll see supplies tighten up even further.

The Brazilian agriculture industry, if it isn't already the world's largest consumers of potash, is on the verge. Good on them. Amazon is doing very well and has a very large resource. I hope it will be easy for them to mine. The local supply will take out all of the transportation costs. The potash content is lower (11%) than what we mine in Saskatchewan. Typically, ours runs from 20% to 25%. Theirs uses different processing mechanisms and has a different chemical structure. But it's all potash and more potash production is a good thing.

You get much better crop yields if you apply the recommended amount of potash to the soil. The more that is mined, the more that is put on fields, the better the harvests are, and the better we can feed the growing population. That is good for the potash industry, so I have very little fear that we're going to see potash prices turn down below $350. In fact, I think that we've seen the bottom and they're going to go up indefinitely from here.

TER: Will population growth be enough to absorb the additional production, though?

TM: It takes a certain amount of potash to produce what a cow eats and seven times more if you're going to eat that animal's meat. It takes a great deal of potash to make all that feed. That's an undeniable fact of life. India has 1.2 billion people and China has 1.1 billion or more. A lot of Asians are moving up the economic ladder, which is creating tremendous demand for potash. As people by the hundreds of millions move up the food chain, it creates an exponential demand for potash. About 400 million people in China are moving into the middle class, and an extraordinary thing that happens when your standard of living improves is switching from starches in your diet to proteins—meat, for example.

TGR: What other opportunities do you see for investors in those masses of Asians moving into the middle class?

TM: Any advancement in civilization is great for commodities. China overtook the U.S. as the world's largest consumer of automobiles in 2009. They are building more cars for all these people. To build cars, you need everything from rubber, lead, zinc and tin to hydrocarbons for the plastics. You need base metals. Hybrids or electric cars need rare earth elements—lithium, neodymium, all of those hard-to-pronounce elements in the lanthanide and actinide series. Cars need roads, so they need asphalt. Roads need bridges when they come to a river, so they need concrete. That means limestone and kaolin and iron and thermal coal. And coking coal to make the steel to build the bridge.

So infrastructure development will drive the commodity cycle going forward. That's an unstoppable force. We saw that in North America in the 1800s and 1900s and we're seeing it elsewhere now. That is tremendous for virtually all commodities. It's even better for Canada because we're a commodities country and it's the best for Saskatchewan because we've got just about everything and we're ready to supply it to the world.

TER: One of your top 10 holdings, Pinetree Capital Ltd. (PNPFF.PK), is interesting in that it's almost like 49 North.

TM: The work that Sheldon Inwentash (Chairman and CEO) and his crew do is similar in a lot of ways. We did a stock swap with Pinetree, so they hold 49 North paper as well. That promotes deal flow through the two enterprises. We offer early-stage opportunities for Pinetree in western Canada and especially Saskatchewan, and part of what we gain from holding Pinetree is tremendous exposure to a bunch of junior and intermediate uranium explorers.

I've often said that if I wanted exposure to uranium, I would simply buy Pinetree because if uranium hits bottom this year and starts moving up to $50, $60, $70 per pound, Pinetree is probably the best place in the world to get exposure to that. We're happy to hold Pinetree shares for that reason, not to mention the many other great investments in their portfolio.

TER: But you also have uranium in Saskatchewan.

TM: A lot of Pinetree's holdings are companies exploring in Saskatchewan, which holds the largest uranium resource in the world. In fact, we supply 20% of the world's reactor-grade uranium. The Athabasca sandstone basin has the highest-grade uranium in the world. A couple of the mines regularly bring out ore that is 25% uranium. Hathor Exploration Limited (TSX-V:HAT)—which in my estimation has one of the best near-term potential productive resources in the world—has had intersections as high as 80% uranium over multiple feet.

That's incredibly hot rock and a tremendous resource. Hathor stepped out a couple hundred meters and found what looks to be an analog to the resource they have already and that's one of the things they will be focusing on with the four rigs they have drilling during their winter program. I would encourage people to pay attention to Hathor. They've found a tremendous, world-class resource that is probably eminently mineable, and they know what they're doing.

TER: You're enthusiastic about what you do.

TM: Hey, I've been in this business my entire life and I've stuck to the junior resource end. It's fun. It's populated with very interesting characters. It's also very lucrative. I like riding a story from initiation, whether from a nickel or a dime to a few dollars or even $10. Occasionally you'll catch a ride that takes 10 cents to $20. That's a thrilling world to be in, but you have to be a lifer. You have to know what you're doing. It's management first, resource second. Unfortunately, people usually bet on the commodity without realizing that management may not know anything about it.

TER: Is your next challenge finding the time and the people to get all these projects done?

TM: It's the people. Here's an example to help me illustrate that point. Rallyemont Energy, a potential heavy oil producer, formed last year and soon to be publicly traded. They've garnered a tremendous land position. From historical drilling, they know the oil—from 10 API to 15 API (API=American Petroleum Institute)—is there. The project probably needs about $20 million. Once that is raised, they'll need $200 million to develop it. We can't raise that kind of capital locally, so we have to raise it externally.

In Rallyemont's case, they have a tremendous management team, so we can do that, but with other companies, this is where we run into problems. The local company needs local expertise. We've been shipping people out of Saskatchewan. We educate them here and they move away, so it's hard to find good management. We need to bring some people back and that's beginning to happen already.

Even so, finding five Rallyemont-caliber management teams here would be a stretch, so one of the biggest challenges is populating the companies to develop these resources with capable people. With 49 North acting as a sponsor, we have the capital market and there's no shortage of good projects. Now we need the people to go with them.

TER: Any other projects you'd like to tell us about?

TM: One of the exciting development stories on our plate is NuCoal Energy Corporation, a private company. They have a tremendous project—billions of tons of proven lignite coal in southern Saskatchewan. They're going to build a coal-to-liquids (CTL) processing plant that probably will cost about $6.5 billion. NuCoal has a memorandum of understanding with Sinopec, China's second-largest energy company, to provide contracted services to move that project forward, with the final design, construction and commissioning of its first CTL operation in Saskatchewan.

A high-level advisor to the Chinese Sovereign Wealth Fund and I had a discussion not long ago, and my observation to her was that we have incredible projects, but they need billions of dollars in financing to move forward and we don't have that kind of money. Her response was that China's problem is the exact opposite—trillions of dollars and not enough projects to supply the country's demand for resources.

To make a long story short, the developing world, especially China, knows what Saskatchewan has to offer. Over the next 25 years—or any other time period going forward—we will see our resources developed. One reason I'm so excited about the opportunities here is that we have first-mover status. We get to be in the very early-stage seed capital that can be so lucrative.

TER: You have a wonderful story and we appreciate you taking the time to share it with us.


Like many others in commodity country, Tom MacNeill of Saskatoon is a resources guy. Four years ago, based on a sentiment shift suggesting that Saskatchewan was open for business, he established 49 North Resources Inc. basically an incubator fund to raise capital for early-stage projects to develop resources throughout the province. Officially, he serves as President, CEO and Director of 49 North; unofficially he also can arguably lay claim to the Saskatchewan Head Cheerleader title too. A graduate of the University of Saskatchewan (economics with a geology minor) and a Certified General Accountant (CGA), Tom also completed the Canadian Securities Course (with honors) in 1987 and is a Chartered Financial Analyst (CFA). With 25-plus years of experience in resource investment and corporate finance, his work history includes positions as an investment advisor with a major Canadian brokerage firm, management accountant within the mining industry, Chief Financial Officer of a Canadian trust corporation, and extensive resource portfolio management. Since the early 1990s, his focus has been exclusively toward Canadian junior exploration, development and mining opportunities with particular emphasis on Saskatchewan's increasingly important resource sector.

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) Karen Roche 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: Amazon Mining
3) Tom MacNeill—I personally and/or my family own shares of the following companies mentioned in this interview: Athabasca, Hathor, 49 North. I personally and/or my family am paid by the following companies mentioned in this interview: None
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All the best.


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Wednesday
Jan272010

The Other Oil Play You Simply Can’t Ignore

Oil and Gas Investment in Alberta.JPG

By Marin Katusa, Senior Energy Strategist, Casey’s Energy Report

The biggest economic shift of our time is under way.

Cheap and easy oil is gone for good. And given our addiction to low-cost oil, the results are about to put the squeeze on your pocket book.

Increasing prices will have a huge effect on every aspect of your life, from the price of your food, to how much you'll pay at the gas pump, to the cost of heating and cooling your home.

Nearly everything in our lives revolves around oil.

While demand for oil continues to grow, we are now coming to the realization that like all other resources, oil is finite and output is now in terminal decline.

This has the oil industry stuck on a treadmill, running faster just to stand still.

The Globe and Mail reports, "conventional oil supply (the type of low-cost fuel you can afford to burn) has not grown since 2005, and may never grow again."

The U.S. Department of Energy has concluded that 2009 will be the last year that oil production will keep up with consumption. And if the government is making this admission, it's safe to say the situation is far more urgent.

On top of this, as the standard of living for people in developing and emerging countries increases, so does their consumption of oil. A recent article in Reuters said that over 1.3 million vehicles were sold in China during the month of September alone, up 77.8% from the same time last year.

Trading bicycles for brand new oil-burning cars is a trend that is quickly gaining momentum.

And so, the question becomes: if demand is already outstripping supply, where will we find the oil needed to satisfy the billions of new consumers just coming online... protect our own lifestyle... and avoid a dangerous global tug-of-war over this dwindling precious resource?

As dire as this situation sounds, the truth is, we're not running out of oil. Far from it in fact. What we are running out of is the supply of cheap, conventional oil we've grown accustomed to. And for investors, this has opened a whole new window of opportunity.

The solution for tomorrow's growing demand will be solved by the industry's other oil play — namely Canada's massive oil-sand deposits.

The promising outlook for the Canadian oil sands is two-fold:

1.the easy oil is not so easy anymore
2.the cost of oil sands production has decreased because of the improvements in technology

And as for why I like Canada (and particularly Alberta) over other sources of oil sands, the answer is simple. Canada has the best upside for oil sands in the world, with ready-available infrastructure and a stable political system. Venezuela and Russia lack important criteria, infrastructure and political stability.

The chart above from Statistics Canada tells an interesting tale. In 2008, investment in Alberta's oil sands reached a record high of $19.2 billion, a 14% increase over 2007, even after oil prices fell below $34 per barrel. Now that prices are close to $80, development and research will only increase in this proven and reliable resource.



Another noteworthy plus for Canada is a change in the accounting principles, providing the majors with a more favorable financial uptick from the oil sands reserves. Within the next few years, this should offer a tremendous upside for the majors, providing excellent growth potential.

If you're interested in learning more about the future of oil, and also which stocks I believe will have the best potential to capitalize on the coming increase in oil prices, now is the ideal time to sign up for my advisory service, Casey's Energy Report. This publication is full of must have information for investors who want to make informed decisions.

Due to extraordinary response, we are extending our special year-end offer... for one week only.

Until January 31st you can get a 1-year subscription of Casey's Energy Report for only $595 – that's $400 off the regular retail price. Plus, as a special gift, you'll receive 12 issues of Casey's Extraordinary Technology – a $995 value – FREE of charge.

In the next year or two, the price of oil will be dramatically higher. That's why there's never been a better time to get on board with my favorite stocks and stake an early positioned in the explosively profitable oil sector. For more details, click here.


All the best.


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Tuesday
Jan262010

Khan Resources Incorporated Up 15.38% Today

KRI Chart 27 January 2010.JPG


Khan Resources Incorporated put on $0.12 to close at $0.90 registering a gain of 15.38% which was on top of a similar gain yesterday.

On 3rd December 2009 we wrote the following: As we can see from the above chart an all cash offer of $0.65 per share could spell the end for Khan Resources Incorporated (KRI) as Russia increases the pressure to gain total control of this asset.

Khan Resources has been embroiled in a dispute with ARMZ over who controls the exploration license for the deposit, which was formerly a Russian open-pit uranium mine, and now that dispute has turned into a hostile takeover with ARMZ making an all-cash offer valued at C$35.1 million or 65 cents per share.

ARMZ is the world’s fifth-largest uranium producer and a subsidiary of the Russian state-owned nuclear energy corporation, Rosatom. In August of this year, Russia signed a joint-venture agreement with Mongolia on the Dornod uranium deposit. This surprisingly bad news for Khan came after the Mongolian government enacted a new nuclear law giving more control of uranium reserves to the state.



At the moment we have not found a reason behind these price increases so maybe one of our readers who is closer to the situation than we are may drop us a line and throw some light on the situation.

As holders of this uranium stock we are grateful for any increase in the price of the stock and hope that it continues to head north.



All the best.

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