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As a
general rule, the most successful man in life
is the man who has the best information
The
electricity needed to succeed in replacing fossil fuels, both for
transportation and everyday use, will have to come from nuclear generation. There
is simply no other logical alternative.
- Coal
and natural gas plants emit carbon dioxide emissions.
-
Extensive use of hydrogen is not practical due to its volatile nature and
lack of infrastructure.
- Solar,
wind and geothermal are all niche suppliers and are untried on a large scale.
Solar and wind have extremely large footprints and geothermal seems to be
limited to a few parts of the country. All three of these technologies are
extremely important and each will successfully contribute, in a small way, to
our independence from fossil fuels.
- High
emissions, a negative energy return and severe environmental costs are
associated with ethanol and make its use impractical.
- Hydro,
going to clean eco-friendly energy isn't accomplished by damming what free-flowing
rivers are left.
And this
fact, that there is no other logical alternative to going nuclear, is being
recognized. Developing countries such as China and India, with 2.3 billion
people between them, will, even while going mostly nuclear, drastically
increase their consumption of fossil fuels. Is oil going to get any cheaper
in the future? Not likely according to Dr. Fatih Birol chief economist at the
International Energy Agency (IEA) in Paris.
"In
most fields, oil production has now peaked...Even if demand remained steady,
the world would have to find the equivalent of four Saudi Arabia's to maintain production, and six Saudi Arabia's if it is to keep up with the expected
increase in demand between now and 2030." Dr Birol said.
The IEA
has estimated that the decline in oil production in existing fields is now
running at 6.7% a year compared to the 3.7 % decline it had estimated in
2007. The coming high price of energy derived from fossil fuels combined with
ever increasing competition for limited resources will make the switch to
nuclear production of our energy happen.
"Some
16 countries with existing nuclear power programs (Argentina, Brazil,
Bulgaria, Canada, France, Russia, China, India, Pakistan, Japan, Romania,
Slovakia, South Korea, South Africa, Ukraine, USA) have plans to build new
power reactors (beyond those now under construction). In all, over 100 power
reactors with a total net capacity of almost 120,000 MWe are planned and over
250 more are proposed."
http://www.world-nuclear.org/info/inf17.html
Global
warming, reducing our carbon footprints, weaning ourselves off fossil fuels
and achieving energy independence are all key issues facing us and future generations
and no one is paying attention to HOW our future power is going to be
produced, instead all seem to be concentrating on how this yet to be produced
power will be stored.
Uranium
stocks are cheap; but few new deposits are being discovered or permitted. Two
junior uranium explorers that I follow have recently announced significant
mineralization yet investors are yawning.
Uracan
Resources (URC-TSXv) announced the highest grades of uranium ever found
on their North Shore Property in Quebec.
The company
assayed a 4-meter long sample that averaged about 3.5 pounds per tonne
uranium. These samples are cut with a stone cutting saw and investors can
consider them as basically horizontal drill holes.
3.5
pounds per tonne, at a US$48/lb uranium price (I'm using $48/lb since most
investors use the spot price, but 80% of all uranium sales are done at the
term price which is US$65 per pound) equals gross metal value per tonne of
US$168.00, that's for open pittable rock. Open pit operating costs are
generally around $15-$20 per tonne and can be lower, it depends on the scale
and size of the mine.
That's
potentially very profitable rock if the company can cobble together a
compliant 43-101 resource of any significant size. Management comes from the
former Bema Gold, now B2 Gold. Clive Johnson and Tom Garagan, who are both on
the board of Uracan, are open pit mining specialists. They formed Uracan with
Frank Giustra and Gregg Sedun (both very, very successful venture
capitalists) to go after open pit uranium back in 2006 when everybody else
was chasing the deep, high-grade targets in the Athabasca Basin of
Saskatchewan.
This
discovery is located in a new zone, about 5 km north of their Double S
deposit. The Double S already has 40 million pounds of uranium but the grade
is a quarter of a pound, or 0.012% U3O8. While it is the same grade as Forsys
Metals (FSY-TSX) Valencia deposit in Namibia investors have been shy
about giving Uracan even a remotely similar valuation.
Uracan
can drill year round at their North Shore Property, it's right on the coast
of the St. Lawrence Seaway in the Province of Quebec, Canada, which year
after year is named one of the best mining jurisdictions in the world by the
highly respected Fraser Institute. Power and a highway run through the property.
The other
junior high on my radar screen is Kivalliq
(KIV-TSXv). CEO John Robins is one of the top exploration geologists in
the world. Aside from Chuck Fipke and his DiaMet diamond discovery in 1992 in
northern Canada, nobody has been responsible for raising more money and doing
more exploration than John. He goes where nobody else is and seems to make
the discoveries.
KIV just
released scintillometer (a Geiger counter) counts off the core of seven holes
at their Lac Cinquante project in Nunavut, with all holes showing more than
9000 counts per second (cps), these are very high grade readings.
A
scintillometer reads radioactivity levels. It really is impossible to equate
cps to an assay of uranium - to say that 9000 cps = X% U3O8 doesn't work, but
investors can expect that a cps count of 9000 will result in a measurable
percentage of uranium, i.e. management will report results not just as
"ppm", or parts per million, but the assay will be good enough to
show as a percentage.
The
overall historical grade of the Lac Cinquante project, drilled in the
mid-1980s by Pan Ocean, a multi-national oil and gas company, is 1% U3O8. Pan Ocean drilled over 100 holes and even developed a mineable reserve, but the data is,
unfortunately, lost. There is a historical resource (not 43-101 compliant) of
20.4 million pounds of uranium oxide with grades averaging 1.03%.
1% =
22.04 pounds uranium, which at the current spot price of US$48 per pound,
equals a gross metal value per tonne of $1057. This deposit is close enough
to surface to likely be an open pit for the first two - four years before
going underground, it would need a lot of overburden removed but I'm thinking
at $1057 a tonne rock it would get done!
As a
higher grade deposit, it will by definition have some very high grade
sections right beside some very low-to-no grade mineralization, which means
investors should expect to see some holes miss ore completely. Uracan's
mineralization has been much more evenly disseminated, as you would expect
from a lower grade deposit, but this new zone could be different. I'll be
watching the upcoming drill program closely.
Conclusion
Both of
these companies have just released high grade, but early stage results. For Uracan
drilling doesn't start at the new zone until mid-September. Kivalliq
won't have new drill results out until mid-October at the earliest.
But it
will only take a couple weeks of upticks in the uranium price for investors
to start flocking back to the sector, and as always, those companies with the
highest prospects for discovery will take the lead.
Put these
two companies on your radar screen and watch the charts.
Richard Mills
Aheadoftheherd.com
Also
by Richard Mills
Richard
is host of www.aheadoftheherd.com and invests in the
junior resource sector. His articles have been published on over 60 websites
including - Wall Street Journal, 24hGold, Kitco, USAToday, Safehaven,
SeekingAlpha, The Gold/Energy Reports, Gold-Eagle and Financial Sense.
Legal
Notice / Disclaimer: This document is not and should not be construed as an
offer to sell or the solicitation of an offer to purchase or subscribe for
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from sources he believes to be reliable but which has not been independently
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accepts no responsibility or liability as to its accuracy or completeness.
Expressions of opinion are those of Richard Mills only and are subject to
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guarantee for the current relevance, correctness or completeness of any
information provided within this Report and will not be held liable for the
consequence of reliance upon any opinion or statement contained herein or any
omission. Furthermore, I, Richard Mills, assume no liability for any direct
or indirect loss or damage or, in particular, for lost profit, which you may
incur as a result of the use and existence of the information provided within
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Richard
Mills may from time to time, have long or short positions in, and buy and
sell the securities or derivatives (including options) of companies mentioned
in this article
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