uranium price outlook and aussie juniors analysis

Western Nuclear renaissance hits trouble in Areva costs overuns

noreply@blogger.com (kevin) — Sun, 21 Jun 2009 22:47:00 +0000

The prospect from uranium prices are massive, but you need a line of credit to build new reactors...in the west that will be a problem going forward...

The cracks are showing in the latest atomic showpiece, writes James Kanter.

AS THE world fights climate change by seeking cleaner sources of energy, governments would do well to consider this cautionary tale of a new-generation nuclear reactor site.

The massive power plant under construction on the Finnish island of Olkiluoto was supposed to be the showpiece of a nuclear renaissance. The most powerful reactor built to date, its modular design was supposed to make it faster and cheaper to build. And it was supposed to be safer, too.

But after four years of construction and thousands of defects and deficiencies, the reactor's €3 billion price tag ($A5.2 billion) has climbed at least 50 per cent. And while it was meant to be finished this northern summer, Areva, the French company building it, is no longer willing to say when it will go online.

While the US nuclear industry has predicted clear sailing after its first plants are built, and the debate about nuclear power is returning to the agenda in Australia, the problems in Europe suggest big obstacles ahead.

A new fleet of reactors would be standardised down to the carpeting and wallpaper and that standardisation would lead to big savings, the theory goes. But early experience suggests these reactors will be no easier or cheaper to build than those of a generation ago, when cost overruns — and then accidents at Three Mile Island and Chernobyl — ended the previous nuclear construction boom.

In Flamanville, France, a clone of the Finnish reactor is also behind schedule and over budget. In America, the European experience is causing concern.

"A number of US companies have looked with trepidation on the situation in Finland," said Paul Joskow, a professor of economics at the Massachusetts Institute of Technology. "The roll-out of new nuclear reactors will be a good deal slower than a lot of people were assuming."

For nuclear power to have a high impact on reducing greenhouse gases, an average of 12 reactors would have to be built worldwide each year until 2030, according to the Nuclear Energy Agency at the Organisation for Economic Co-operation and Development. Right now, there are not even enough reactors under construction to replace those reaching the end of their lives.

And of the 45 reactors being built, 22 have encountered construction delays, according to an analysis prepared this year for the German Government by Mycle Schneider, an energy analyst and a critic of the nuclear industry. He added that nine did not have official start-up dates.

Most of the new construction is in China and Russia, where strong central governments have made nuclear energy a national priority. India wants new nuclear technologies to reduce its reliance on imported uranium.

The US generates about one-fifth of its electricity from 104 reactors, most built in the 1960s and 1970s.

France gets about 80 per cent of its power from 58 reactors, but has not completed a new reactor since 1999.

After designing an updated plant with German participation in the 1990s, the French had trouble selling it at home because of a saturated market and opposition from Green Party members in the government.

So Areva, the largely state-owned energy company, turned to Finland, where utilities and energy-hungry industries such as pulp and paper had been lobbying for 15 years for more nuclear power. The project was initially budgeted at $A4.9 billion and Teollisuuden Voima, the Finnish utility, pledged it would be ready in time to help Finland meet its greenhouse gas targets under the Kyoto treaty.

Areva promised electricity could be generated more cheaply than from natural gas plants. Areva also said its model would deliver 1600 megawatts, or about 10 per cent of Finland's power.

In 2001, the parliament narrowly approved a reactor at Olkiluoto, an island on the Baltic Sea. Construction began four years later. Serious problems arose over the vast concrete base slab for the foundation of the reactor building, which the country's Radiation and Nuclear Safety Authority found too porous and prone to corrosion. Since then, the authority has blamed Areva for allowing inexperienced subcontractors to drill holes in the wrong places on a vast steel container that seals the reactor. In December, the authority warned Areva that "the lack of professional knowledge of some persons" at Areva was holding up work on safety systems.

Areva has acknowledged that the cost of a new reactor today would be as much as €6 billion, double the price offered to the Finns. Areva announced a steep drop in earnings last year, which it blamed mostly on mounting losses from the project.

In addition, nuclear safety inspectors in France have found cracks in the concrete base and steel reinforcements in the wrong places at the site in Flamanville. They also warned the utility building the reactor that welders working on the steel container were not properly qualified.

On top of such problems come the recession, weaker energy demand, tight credit and uncertainty over future policies, said Caren Byrd, an executive director at the global utility and power group at Morgan Stanley in New York.

"The warning lights now are flashing more brightly than just a year ago about the cost of new nuclear," she said.

NEW YORK TIMES

Time to buy Uranium stocks ~ Even UNX has signs of life

noreply@blogger.com (kevin) — Wed, 22 Apr 2009 21:34:00 +0000

China's need for uranium could be worth billions to Australia following an announcement it will start building five extra power plants this year.

This comes on top of 24 already under construction and 11 that are in operation.

Australia offers the most obvious solution to a shortage of uranium to fulfil its nuclear power ambitions, according to a Chinese analyst.

``There are not enough uranium resources in China to support the aggressive nuclear power development plan for the next 20 to 30 years,'' Professor Liu Deshun, of China's Institute of Nuclear and Energy Technology told Fairfax Media.

``Australia has the uranium resources that could be exported and in China we have the demand.''

The fast-tracking of China's nuclear power plans stems from mounting concerns about climate change, energy security and the more immediate task of kick-starting the economy.

Minister for Resources Martin Ferguson told Fairfax he welcomed China's move to fast-track nuclear power.

``It is this government's policy to encourage the further development of the Australian uranium industry,'' he said.

The move could prove a windfall for WA, following the Liberal government's ending of a ban on uranium mining in the state shortly after their win in the September state election.

China ups target for nukes

noreply@blogger.com (kevin) — Sun, 09 Nov 2008 23:59:00 +0000

News wires in China were yesterday reporting that China is considering increasing its total installed nuclear power generating capacity to 70 GW by 2020. According to the reports Huang Li, head of energy conservation and equipment at the National Energy Administration has indicated at a meeting in Chengdu, Sichuan province that "The severe winter weather earlier this year in southern China that paralyzed electricity supplies and coal transportation exposed risks and vulnerability in the traditional power supply system." She added, "The global efforts to reduce greenhouse gas emissions had prompted China, which relied heavily on coal, to revise its energy strategy and increase the proportion of clean energy."
The current installed capacity of nuclear power is only about 9 GW, or 1.3% of the total installed electricity generating capacity. Huge capacity for nuclear generation growth...which is good for near term uranium producers....eg AGS

Uranium looking up here

noreply@blogger.com (kevin) — Tue, 15 Jul 2008 21:15:00 +0000

Increased corporate action in the global uranium sector, and indications that spot prices may have troughed, could signal the end of a vicious bear market, according to some top investment ideas coming off specialised trading desks on both sides of the Atlantic.

There are rumours that specialist physical uranium trade entities Ux Consulting and TradeTech will likely report spot uranium prices rising to around USD 64/lb in latest weekly fixings, from multi-year lows of USD 58/lb reported last month, a level well less than half the peak USD 138/lb reported in June 2007.

On the corporate front, London-listed Nufcor Uranium is known to be involved in the marketing of a possible Toronto listing for its uranium investment vehicle. This follows last week's news that mining major Rio Tinto, itself a significant uranium producer, had reached agreement to sell its unlisted Kintyre uranium project in Western Australia to a joint venture consortium comprising subsidiaries of Cameco, the world's biggest producer, and Mitsubishi Development, for USD $495m.

This has left more than 100 listed explorer and developer uranium stocks in the cold for the meantime, but the Kintyre deal was the biggest in the global uranium sector since the August 2007 acquisition by Areva, the world's No 3 uranium miner, of Uramin, for USD 2.5bn.

Analysis of portfolio flows over the past month or so shows that investors have increasingly been switching selected funds into listed uranium stocks, suggesting that sentiment towards the beleaguered sector may have turned. Just a month ago, specialist analysts at RBC Capital Markets warned that the-then spot market price level for uranium "will likely have far reaching implications if it remains at such low levels for too long.

"Most importantly" RBCCM continued, "in our view, will be disinterested equity markets that might cease funding uranium exploration and development. We believe that the absence of equity market participation in the uranium industry would constrain the ability of uranium supply to meet the growing demand, which, in turn, could threaten the ability of global utilities' new reactor build programs".

According to a London-based sales-trader, speaking on Monday, uranium term (contract) prices have remained at USD 85 to 90/lb for most uranium volumes, for many months in a row. He added that "an oil price approaching USD 150 a barrel on the threat of an Israeli strike on Iran's nuclear facilities demands a re-rating of the entire energy complex and uranium has been unfashionable for a year now".

1000 new reactor builds by 2050

noreply@blogger.com (kevin) — Tue, 24 Jun 2008 11:10:00 +0000

Deutsche Bank Uranium Sector: Using IEA's 2050 IEA calls for 1000 new reactor builds by 2050 - Thanks to a subscriber for this enlightening report by Paul Young, Joel Crane and Brendan Fitzpatrick which focuses on Australian uranium companies. The full report is posted in the Subscriber's Area but here is a section:

Energy mix targets we estimate that uranium demand could increase by 215% under the ACT Scenario, and by 290% under the BLUE scenario, to 243kt and 300kt of U3O8 per annum respectively (see Figures 3 and 4). Even if either scenario is achieved, which is heavily reliant on international legislation and government willingness to adopt and embrace change, we believe that world is on the verge of a uranium renaissance. In our opinion, the financial markets continue to underestimate the potential for a rapid increase in uranium demand going forward. Saying that, we do acknowledge that the increase in demand may be slow, and we forecast just a 2% demand increase between 2008 and 2010, but a 17% increase between 2010 and 2015.

In our opinion, the biggest impediment to achieving the IEA's ACT and BLUE targets is not global legislation change but the potential inability of uranium supply to respond to a likely spike in demand from 2015 onwards. To put it into context, the world's largest uranium development project is the well documented expansion of the Olympic Dam mine, located in South Australia, with a total uranium resource (measured, indicated, inferred) of ~2,240kt of uranium. We believe that the proposed expansion of Olympic Dam involving a large open cut mine and expanded processing facilities could deliver an additional 15ktpa of uranium from 2016 onwards. However, the world would need to find and develop an additional ten Olympic Dam sized mines by 2050 to supply sufficient uranium to the world's nuclear reactors under the ACT scenario and an additional 15 Olympic Dam sized mines under the BLUE scenario. Severe under investment in the uranium sector has resulted in few if any significant new uranium discoveries since 1980. Therefore we believe that supply could struggle to respond to the potential increase in uranium demand between 2010 and 2050.

We note that uranium is significantly underperforming other energy commodities in 2008 (shown in Figure 6). In our opinion, the current spot price of US$59/lb may not be high enough to encourage new uranium supply, from both greenfields and brownfields projects, particularly from projects in high cost construction countries such as Canada, Australia and the US.

Over the past week Ux Consulting has reported that two utilities are seeking uranium in the spot market (one for 100,000 pounds and the other for 300,000 pounds), and that they may have found suppliers only willing to offer at or above the $60 level. We believe that continual supply issues and the likelihood of increased demand from utilities should drive the spot price higher in 3Q 2008.

My view - The speculative excesses that fuelled the massive run up in uranium-related companies ended when the commodity price had its first downtick, following a spectacular advance which climaxed in 2007. We have long said that uranium is the best of the long-term energy plays; however it remains in a predictable medium-term correction which has yet to bottom conclusively. A large number of speculative stocks were IPOed on the back of the initial run-up, and those that had much less uranium than they claimed have disappeared during this correction. Stocks with no earnings remain considerably higher risk than those with a steady income, in this, or any other sector.

Since mid-2007 uranium has more than halved and remains in a medium-term downtrend which is losing momentum. An upward dynamic would indicate that at least a short-term floor has been reached; while a sustained move above $95 is needed to break the progression of lower highs and suggest that the bulls are regaining the upper hand.

All of the companies mentioned in this report can be found in the Chart Library. While most uranium related equities are unlikely to outperform other commodity related stocks, before the uranium price shows signs that it is recovering, a number have weathered the current drawdown better than others.

Commercial use of thorium in light water reactors

noreply@blogger.com (kevin) — Sun, 01 Jun 2008 03:29:00 +0000

The term considered most apt by the nuclear industry to describe the next 20 to 30 years for their business is “renaissance”. Not growth, or revival; these words are not large enough. In terms of scale and cultural associations, as a transformation from what came before, this is going to be a rebirth.

For several reasons, “the global nuclear renaissance”, to use the full, preferred title, is well named. To be born again, you need to have died; and from Chernobyl onwards, with exceptions such as France, Japan and South Korea, the nuclear power industry has been impressively still. The last time planning permission was granted for a nuclear reactor in the UK was 1987. No new reactor has been built in the US since 1979, when an accident at the Three Mile Island power plant caused the reactor core to melt. Of the 439 nuclear power plants in the world today, 70 per cent are more than 20 years old. While global electricity demand grew by more than 60 per cent from 1980 to 2004, the number of new nuclear reactors being built halved every 10 years. During the 1990s, early developers of nuclear power such as Italy and Germany promised to phase out their nuclear energy altogether, while the United Kingdom Atomic Energy Authority became a decommissioning body.

Compare this slow death with the promise of the years ahead. Almost by process of elimination, nuclear power has emerged, once again, as the energy of the future. With world electricity demand forecast to double by 2030 – and about 25 per cent of all existing power stations due for replacement in the same period – nuclear power stands alone in its ability to deliver massive quantities of energy without carbon emissions. For countries without oil and gas supplies, it offers energy security; and for those with their own natural resources, it provides a way of diversifying their energy mix while preserving their fossil fuels for export. After years of not doing very much, the nuclear industry is now looking forward to building reactors on every inhabited continent. In Europe, Finland is leading the way: its first new plant since 1982 is scheduled to open in 2011. Britain is considering 10 new reactors, and the US Nuclear Regulatory Commission is expecting as many as 32 applications for new reactors by 2010 – after a 20-year pause.

And if that still sounds like a mere revival, then it is in India and China, as well as in countries still outside the pale of atomic technology, that something grander is starting to stir. India, despite being outside the Non-Proliferation Treaty, making it unable to trade in nuclear wares, plans to quintuple its nuclear capacity by 2020. China, which has 11 reactors, wants 10 times that number. And then come countries hoping to go nuclear for the first time. According to the World Nuclear Association, these include: Chile, Nigeria, Vietnam, Ireland, Turkey and Indonesia. In the past few years, nearly 30 governments have announced their intentions to launch peaceful nuclear programmes and most of them (not including Yemen) are being taken seriously. There is little doubt, for instance, about the likelihood of nuclear power in the Middle East. Between February 2006 and January 2007, no fewer than 13 governments in the region announced a need for nuclear reactors.

But does a lot of activity constitute a renaissance? And will nuclear power and all the concerns attached to it be any different this time round? Right now, there is no way of knowing, but there are certainly some doubts. One of these centres on the fact that technology changes slowly in the nuclear world. Most of the reactors built in the first half of the 21st century will look a lot like the ones built in the 1970s and 1980s. The long-promised “fourth generation” of nuclear plants – with “breeder” and “fast” reactors that use recycled fuel and make less waste – remains a distant promise. Only one such reactor currently operates on a commercial scale. Of the 34 reactors under construction in the world, 26 of them are based on designs largely unchanged since the 1960s.

This caution reflects how expensive nuclear power plants are – about £1bn each – and a reluctance to tinker with something that has been rendered largely safe. But it also means that some of the problems bound up in traditional nuclear technology will remain. The first of these is waste. Even after 51 years of commercial nuclear power, Britain has no long-term strategy for dealing with the concoction of unburned fuel and radioactive isotopes that emerge from conventional reactors. Likewise the US, which in 1977 suspended “reprocessing”, in which plutonium and other valuable elements are separated from waste to be burned again. Instead, America decided it would bury all its nuclear waste deep underground, within Yucca Mountain, 100 miles north-west of Las Vegas. But even that hasn't happened: nine years after the site was supposed to open, the plan is still stuck in Congress.

The reason the US halted nuclear-fuel reprocessing was that the products can also supply the ingredients needed for nuclear weapons. In 1974, India used spent fuel from a Canadian-built reactor to detonate a nuclear bomb. This is the second great awkwardness of nuclear power, and its legacy from the military-industrial complexes of the 1950s: the overlap between what you need to have a peaceful nuclear programme and what you could be using to make a bomb. It's the ambiguity currently personified – not very convincingly – by Iran.

Resolving the questions of waste and proliferation will help make the second life of nuclear much happier than its first. But there is plenty of scepticism about whether the existing companies, technologies and international institutions can achieve it. “The people who say they are going to bring us this renaissance are the people who brought us the Dark Ages,” one industry critic told me. “This is Torquemada bringing us the idea of the Renaissance.”

. . .

Where, then, is nuclear's Leonardo da Vinci? What if there was, say, a small technology company that claimed there was a different way of doing things? What if it was developing a nuclear fuel that produced 70 per cent less waste and nothing that you could use to make a bomb? Let's say it was chaired by one of the world's leading non-proliferation experts and advised by Hans Blix, former head of the International Atomic Energy Agency (IAEA) and UN weapons inspector. What if it had just been appointed consultant to the United Arab Emirates, which is expected to be the first Middle Eastern country, after Iran, to generate nuclear power? That might sound promising. But it would also probably sound too good to be true.

The company is called Thorium Power, and I met Seth Grae, its president and CEO, on a damp April morning in Moscow. Grae is a lawyer from Staten Island, New York, who became a nuclear entrepreneur in his late twenties after studying Soviet law and representing a Russian refusenik scientist in the late 1980s. Now 45, he has wavy, receding hair and, although not tall, stands with a slight hunch that gives him a permanent urgency, as if he is forever on the point of saying something or darting somewhere.

Thorium Power has been working in Moscow since the mid-1990s, when it was part-funded by the US Department of Energy as a way of keeping former Soviet scientists occupied. Now privately funded, it is testing a new nuclear fuel, based on the chemical element thorium, in a research reactor on the edge of the city.

In the back seat of a car on the way to the company's laboratory, Grae explained what Thorium Power was trying to achieve. He compared its work, which has cost more than $20m so far, to the development of unleaded petrol in the 1980s. The company is not trying to build a new kind of reactor or power plant, he said, just a new fuel element that can be retro-fitted or placed into conventional uranium-run reactors, which make up about 80 per cent of the world's nuclear power stations. Once the technology is proven and its benefits shown, the plan is to license it to the world's big nuclear manufacturers.

“When you try to develop a new nuclear technology, it's a lot like drug development,” said Grae. “You can't just leap to the latter stages, to human testing. You have to start with the lab work, years of experiments.” Now just two years away from using its fuel technology in a commercial Russian reactor, the company is beginning to sense the rewards.

Grae is aiming his hopes at the furthest edges of the nuclear renaissance: those countries going nuclear for the first time. According to Thorium Power's calculations, one-third of the new light water reactors expected to be built by 2027 – or about 40 – will be in countries that have not had atomic energy before. It is in these countries, which do not have weapons programmes but may have sceptical neighbours or international lenders, that Grae thinks a proliferation-proof nuclear fuel will be attractive, a guarantee of good intentions. “The issue of weaponisation relates to financing,” he said. “People need to know the political risk. Is a country's reactor going to get bombed because its neighbours think it is trying to develop a bomb?”

After half an hour, we arrived at the Kurchatov Institute, where the thorium fuel cycle is being tested. Glowering over the car park was a bust of Igor Kurchatov, the father of the Russian nuclear weapons programme, who grew a beard in 1941 and swore not to cut it until the Nazis were defeated. (“The Beard”, as he became known, ended up sticking with it.) Because of a problem with my paperwork, I was not allowed inside IR-8, the 50-year-old nuclear reactor where the thorium fuel cycle has been running for the past five years. Instead, an in-house photographer was sent to take pictures, and I was introduced to Yaroslav Shtrombakh, the first deputy director of the Kurchatov Institute, who agreed that the great potential for thorium lay in new nuclear settings. “We must not give these new countries dangerous toys like uranium and plutonium to play with,” said Shtrombakh. “In this case, thorium is a very promise-able thing.”

Over lunch, Grae described the early days of Thorium Power, which was incorporated just outside Washington in 1992. As he spoke, it became clear not only that the group's non-proliferation idea had been around for some time, but that it had an unlikely first proponent.

The founding myth of Thorium Power is a meeting organised 25 years ago by the reputed model for Dr Strangelove, Edward Teller, the maker of the hydrogen bomb. Teller is not a familiar pin-up for the non-proliferation movement; he is better known for his decade-long labours that led to the explosion of his 65-ton “super” bomb in 1952, offering a glimpse of Armageddon and catalysing the cold war.

But by 1983, a 75-year-old Teller had undergone a change of heart. He arranged to meet a former student, Alvin Radkowsky, one of America's most prolific reactor designers, to talk about his fears about the next age of nuclear power. Teller foresaw more and more countries adopting atomic energy and the spread of uranium-fuelled reactors to all corners of the world – and with them their by-product: plutonium.

Teller had contacted Radkowsky, an Orthodox Jew from New Jersey who designed reactors for the world's first nuclear submarine and America's first commercial nuclear power plant, because Radkowsky had worked with an element called thorium. A radioactive metal long considered a possible alternative fuel to uranium, thorium does not produce nearly as much plutonium when it is irradiated in a reactor. At their meeting, Teller suggested that Radkowsky use it to design a proliferation-proof fuel cycle.

After eight years of work, Radkowsky, who was by now in his seventies, was ready to set up a nuclear technology company. He approached Grae, then recently qualified in international commercial law. Grae initially refused the quiet scientist. “It didn't sound like billable hours,” he recalled, “even if he was who he said he was.”

Radkowsky died in 2002, Teller a year later. Grae now believes their conversation in 1983 was highly prophetic. A standard uranium light water reactor produces about 200kg of plutonium a year. Although far from being ideal for use in a nuclear weapon, reactor-grade plutonium can be reprocessed or at the very least used to make a “dirty bomb”. It is the prospect of dozens of plutonium-producing reactors in countries and regions of the world where there has never before been nuclear power that alarms Grae, despite the safeguards and inspections of the International Atomic Energy Agency.

But the wider nuclear power industry disagrees about the risk of proliferation. Before I went to Moscow, I spoke to John Ritch, director general of the World Nuclear Association, which represents the industry. He told me that the vast majority of reactors built in the 21st century would be in countries that already had nuclear power, and that the IAEA regime was well equipped to monitor new nuclear players. “I do not think the global nuclear renaissance carries with it an inherent proliferation risk,” he said. “Weapons do not arise by accident, and we can expect IAEA safeguards to give early warning of any illicit programme.”

But when I mentioned this to Grae, he asked why the plutonium had to be there in the first place. “It's the same as if these plants were producing massive amounts of arsenic. [Ritch's] argument would be that it is controlled. That we are in a world that knows how to handle this... How would you feel about hundreds of new plants in tens of new countries making massive amounts of arsenic? This [plutonium] is much more dangerous. This can destroy cities.”

It was not until that evening that I learned more about the science of Radkowsky's thorium fuel cycle. Back at Grae's hotel, I met Alexei Morozov, the Russian physicist who has been testing the technology since 1994. Morozov, who is 62, worked for 25 years on the Soviet nuclear ice-breaker programme and other advanced reactors before being hired by Thorium Power. For most of our conversation, he sat rigidly in his chair, but he relaxed when I asked him to choose a Russian word to describe Radkowsky's designs. “Elegantni,” he replied.

. . .

Thorium has always intrigued nuclear physicists; the question has been how best to use it. A silvery metal, it has similar radioactive properties to Uranium 238, the isotope which makes up the bulk of all nuclear fuels. But it is thought to be between three and four times more abundant in nature. Named after the Norse god of thunder by Jons Jacob Berzelius, the Swedish chemist who discovered it in 1828, thorium occurs in mineral-rich monazite sand, of which the world's largest deposits are in Australia, north America, Turkey and India.

Thorium and fission

Since the early 1950s, when uranium was in short supply, physicists have designed fuel cycles to run on thorium. Like U-238, thorium (T-232) will absorb neutrons from another fissile material, such as enriched uranium (U-235), and start to break down, releasing huge amounts of energy. The difference comes in the family of radioactive elements and isotopes that are created as a result. The key absence from the thorium reaction is large quantities of the manmade element plutonium, particularly in the Pu-239 form favoured as a weapons material.
Instead, thorium breaks down into several unstable uranium isotopes, chief among them U-233, and, to a lesser extent, U-232, an unpleasant, gamma-radiating by-product. These provide what physicists call thorium's nuclear “burn” – a process made attractive by U-233, which degrades efficiently, and by thorium's high boiling point (about 500°C higher than uranium's) which has potential safety advantages.

Thorium's behaviour has enticed scientists for a variety of reasons – not all wholesome. John Simpson, a historian and non-proliferation expert at the University of Southampton, believes that Britain first experimented with thorium in the 1950s because of mistaken rumours that it had been used in the hydrogen bomb. The intentions of India, the only country to have maintained long-standing research into thorium because of its large domestic supply, are also viewed as ambiguous: it focused on breeding as much U-233 as possible, reprocessing it for use elsewhere. U-233 on its own is considered a proliferation risk.

According to Thorium Power, Radkowsky's fuel cycle design is unique because it is intended to use up as much of the fuel as possible in a single stage, making it impossible to extract any weapons-usable isotopes afterwards. “It's not the thorium, it's the design that matters,” said Grae. A “seed” of enriched uranium starts a chain reaction in a “blanket” of thorium, which is then “spiked” with U-238 to prevent the U-233 from being easily separated afterwards.

........................................................................................................................

How a nuclear reactor works

1. The heating unit The nuclear reactions take place in the fuel rods. In traditional power plants, this involves uranium. In Thorium Power's model, a “seed” of plutonium kick-starts a nuclear reaction in a “blanket” of uranium and thorium surrounding it.

2. The steam Thorium Power's Kurchatov reactor is not attached to a steam generator or turbine. But the technology is designed to fit into existing power plants, so a thorium-fuelled plant would look much like this one: only the fuel rods would be different.

3. The waste Traditional uranium reactions – which take place in a power plant's fuel rods – produce a range of isotopes, many of which don't break down for hundreds of thousands of years. Thorium produces similar material but in smaller quantities – and in forms that can't be used to create nuclear bombs

........................................................................................................................

Morozov told me that, with the fuel arranged this way, he has achieved a yield of 100MW days per kg of fuel, which compares with an average of about 60MW days in most uranium-run reactors. As well as being more efficient, Morozov repeated the company's central claims about the fuel: that it produces 70 per cent less waste by weight (50 per cent by volume) and 85 per cent less plutonium than standard light-water reactors, none of it viable for making a weapon.

Because of rising uranium demand and the long time that the thorium “blanket” can be burned in a reactor – up to nine years, as opposed to three for ordinary uranium fuel – the company also believes that a thorium cycle could be as much as 10 per cent cheaper than a uranium-run process. I asked Morozov if his experiments could really work on a commercial scale. “This is not an unrealistic idea,” he replied.

Still, Thorium Power faces a sceptical public. According to Grae, once the fuel has run for three years in a Russian VVER-1000 reactor (the standard Russian uranium reactor), it will be commercially proven. That should happen in 2013. But this is the cautious world of nuclear. Mujid Kazimi, the director of MIT's Center for Advanced Nuclear Energy Systems, is one of the few scientists to study the Radkowsky design in detail, and he believes the company must do more publicly to demonstrate its claims. “They should be reporting on it more in the open literature than there has been thus far,” he said. “I think that's obviously the dilemma here. How do you gain the confidence [and] at the same time retain the commercial edge?”

Kazimi said his own experiments show the Radkowsky design to be feasible and support its central claim – that it reduces the amount of plutonium generated in the reactor. But he said there were other complications, particularly related to the smaller but highly radioactive quantities of waste, that were yet to be resolved. “This is an arena where the risk of the unknown is taken very seriously,” he said.

If scientific support for the fuel is one thing, political support is another. Just as Grae has tended Thorium Power's team of Russian scientists, so he has spent years nurturing politicians on Capitol Hill and assembling a group of non-proliferation experts to sell thorium to the world. He hired Tom Graham, the American diplomat who led the indefinite extension of the Non-Proliferation Treaty in 1995, to be the company's executive chairman in 1997. Hans Blix joined the company as a consultant in February. Since last year, the company has also been working with opponents of the Yucca Mountain repository plan, including Harry Reid, the US Senate majority leader, on placing a bill before Congress supporting more research into thorium.

Not everyone appreciates this assertiveness. The argument for thorium, particularly on non-proliferation grounds, can sound like an argument against the dangers of the nuclear industry as a whole. Ritch, of the World Nuclear Association, stopped short of accusing Thorium Power of scare-mongering, but not by much. “People who are commercially active in the area of thorium will of course advertise the non-proliferation characteristics of their technology as an advantage,” he said. “That's fair enough, but I don't like to grant that a fundamental problem exists.” And even Blix stressed that building a nuclear weapon is more than just a crime of opportunity – it takes more than a spare pile of plutonium. “The basic thing that drives proliferation, I think, is not the possession of fuel or spent fuel but fear and perceived security risks,” he said. “And so, while in Washington they might feel that practically anyone outside the Beltway is a proliferation risk, the world does not look that way.”

Nonetheless, it is Thorium Power's spotless non-proliferation credentials – enhanced by Graham and Blix – that are winning its first commercial work. Earlier this month, the company announced that it was advising the United Arab Emirates on how to implement what a senior US State Department official described to me as “a model civilian nuclear programme”, just 50 miles from Iran. Thorium Power has already collected about $10m in consulting fees on the deal and is advising the Executive Affairs Authority of Abu Dhabi, which is overseeing the programme, as it aims to build its first reactor by 2017. Although there is no guarantee that the reactor will run on thorium, Grae insists the technology will be ready to install. “Given that we started with a vision that seems to be coming true,” he had told me in Moscow. “There's no reason for us to stop now, to not seize this.”

Revisiting Some Radioactive Ideas:

noreply@blogger.com (kevin) — Wed, 16 Apr 2008 05:18:00 +0000

What's next for U308? - Part II

BY FRANK BARBERA, CMT

While we all know that China is ascending as the world's premiere growth economy, with GDP growth rates scaling low double digits, the forward view for China has many serious concerns. Within China today, Oil and Natural Gas supplies are running low, with China now the second largest imported of Crude Oil behind the United States. For China, a decade of rapid fire industrialization and urbanization is threatening rolling blackouts and flicking factory lights. All over the country, old style coal fired power plants belch pollution on a scale seen almost nowhere else in the world. Last year, China became a net importer of coal for the first time. For the world's most populated nation, 16 of 20 major cities top the list of the world's most polluted.

To attempt to combat what seems like a looming environmental catastrophe, China's leadership is reaching out to employ as much alternative energy as possible. Within this realm, no alternative is more front and center than nuclear energy, with China's leaders traveling the world to arrange contracts for nuclear reactors, technology and fuel. As things presently stand, China has already announced plans to construct 30 nuclear power plants committing over 60 billion dollars with a goal of having much of this power on line by 2020. With China, a team of leading scientists have suggested that by 2050, the People's Republic will require nearly 300 gigawatts of nuclear power, a figure which could entail as many as 200 power plants dotting the landscape. While many of these may end up being large scale Western style power stations, China is also considering the potential for building a large number of smaller so called, pebble-bed reactors, which owing to their unique physics do not have the same potential for a Chernobyl or Three Mile Island fiasco. These small scale power plants have not been seen by western eyes, but are said to use a bath of inert Helium to cool the uranium, with total generation of 10 megawatts, enough for a small town.

We ponder the outlook for China because, when it comes to long term demand of Uranium, it is now believed that China's future demand for the radio-active metal could well easily equal the current demand seen by the entire rest of the world combined. Already, over just the last few years, the emergence of Chinese Uranium demand has forced the price of U308 from a low near $6 per pound to a high last June just over $135 per pound. In our view, while Uranium prices have now corrected the initial advance, chances are high that over time the huge demand from developing nations for power hungry industries will continue to sustain and support even higher prices. Thus, the general view of Uranium is that of a secular bull market, with global demand exceeding global supply for years to come. On the charts, the correction in U308 when viewed on an arithmetic scale shows up as a rather normal 50% bull market retracement while on the more important logarithmic chart, we see less then a .25% correction. Using a Fibonacci retracement, the pull back to date has been a minimal .236 fibonacci retracement which is highly indicative of a strong upward underlying trend.

Above: long-term monthly chart U308 has now retraced 50% of the prior 2000-2007 advance
(linear-arithmetic scale).

Above: U308 on a semi-log scale with Fibonacci logarithmic retracement, only a .236 modest Fibonacci retracement.

While the market for Uranium prices has been 'thin' to say the least, and to that end, much technical analysis hasn't mattered as much as it would with a more actively traded commodity, with the pull back in U308 over these last few months we see that the 12 month RSI for U308 has now retraced back to the neutral 50 level. This is precisely the kind of routine correction which would be considered normal within the confines of a continuing bull market advance. In our view, we believe that prices are likely to stage a recovery rally in the months ahead, possibly moving back up to retest resistance at the former highs in the low $100 dollar range. It may even be a year or two, perhaps during the next synchronized global economic recovery, before U308 breaks out cleanly to new highs, but new highs likely lie ahead before this decade is out.

So how can US investors potentially play a continued boom in Uranium prices and nuclear energy in general? As always, several approaches present themselves. For those who want somewhat steadier growth less tied to the violent swings of Uranium Miners, which tend to swing widely with the price of Uranium, engineering companies can be one approach. For US investors, the Shaw Group (SGR) is perhaps the best establish power plant contractor with a partnership in place with Westinghouse Electric, a major contractor for the Chinese. Shaw Group is also hard at work on a number of US power generation projection and has a stable maintenance business servicing a number of nuclear plants here in the USA. Fundamentally, Shaw Group currently sports a .92 PEG Ratio and a .71 Price to Sales Ratio with a 14.88 Trailing P/E and a 25% estimated five year growth rate. On the chart below, we plot the daily bars for Shaw Group overlaid against one of the U308 mining leaders, Cameco Corp. (CCJ). As can be seen on the chart, while shares of Cameco are quite volatile, Shaw Group tends to trade directionally with CCJ, but with somewhat less amplified swings.

Above: Shaw Group (thick) versus Cameco (thin)

Above: Areva of France (converted to US Dollars) and Cameco (CCJ) of Canada

Aside from a few scant engineering plays, the larger proposition available for US investors are the U308 miners, which include majors such as Cameco (CCJ) on the NYSE and Areva Ltd( CEI-Paris), which trades on the Paris Bourse.

From Reuters Nov. 2007
France's Areva seals record $11 bln China deal

SURPRISE! A year ago Areva appeared in danger of losing out on China's nuclear rush, when U.S.-based Westinghouse Electric, now owned by Japan's Toshiba Corp, won a two year battle for a contract to build four "third generation" reactors, which are promoted as safer and more efficient than current ones. But Beijing later surprised both sides by expanding the original tender to six plants from four, giving the French company a fresh chance at pitching its new European pressurized reactors to China, where it has long had a presence. In return for the flow of funds to France, the firm is transferring its technology -- a key demand Beijing also made of Westinghouse -- through a consortium they are setting up with their Chinese partner, Lauvergeon said. The announcement was part of a raft of deals agreed during Nicolas Sarkozy's first visit to China as president of France, which included a framework pact to sell 160 Airbus planes, the planemaker's largest order to date. Sarkozy has pressed Beijing to help curtail Iran's nuclear plans. But a brace of deals announced during his visit showed France is eager to court China's own atomic power sector. Areva and the China National Nuclear Corp agreed to study whether to build a spent nuclear fuel reprocessing-recycling plant in China that could be worth 15 billion euros and to create a joint venture in zirconium.

In recent months, Areva, considered one of the best pure play investments for Uranium, is a monster engineering and construction giant, and a leader in nuclear fuel fabrication. As can be seen on the next chart, Areva trades in very similar price patterns to Cameco (CCJ) and fortunately, for US investors, is now a leading component (3.4%) for the DAX Nuclear Energy Index. For US Investors, a new ETF is now listed on the NYSE known as the Market Vectors Global Nuclear Energy ETF (symbol: NLR) which aims to track as closely as possible, the DAX Nuclear Energy Index. Other major companies within the Holdings of this ETF include Cameco (CCJ), British Energy (BGY), Denison Mines (DNN), and Energy Resources of Australia (ERA). In the 8 months since the ETF has begun trading, we have noticed a good correlation to our own GST Uranium Index with both the GST Index and the "NLR" ETF sporting potential double bottom type patterns.

Above: the GST Uranium Index and Below: the NLR Marketvectors Uranium ETF

While on the subject of ETF's, we should also note that since the beginning of April, Invesco Powershares has also listed a new Uranium oriented Global Nuclear Energy Portfolio which trades as a competing ETF under the symbol PKN. For investors in PKN, France's Areva is the top holding, with other major commitments to Japan's Toshiba (owner of Westinghouse Electric), Thermo Fischer Scientific (TMO) and Emerson Electric (EMR). With the Utilities and Industrials segments comprising nearly 71% of the total fund, and the volatile mining stocks just 13% of the portfolio, this new ETF is likely to have a higher overall stock market correlation and deliver more stable, but likely less leveraged long term results. Thus, between the two new ETF's, there appears to be something for everyone to meet the needs for Uranium investors with different risk profiles. Still, when we reflect upon the potential future demand for U308 and the tight supply outlook, one can't help concluding that a strong emphasis on emerging producers is the formula which will probably result in the greatest overall returns. For the GST Uranium Index, composed entirely of mining stocks, once a bottom is potentially in place in coming weeks, the next move should be a reversion to the secular bull.

Above: GST Uranium Index could be bottoming Primary Wave II in preparation for an even larger, more extended Third Wave advance spread out over many years.

In this vein, we would be surprised to see an initial recovery rally carry Uranium Miners back up across the range of the last 18 months toward the former highs. While those highs are likely to produce yet another medium term top and a downside reaction off the highs, overall such a move offers good upside potential. In the years ahead, once the sector is able to clear the early 2007 peak, I wouldn't be at all surprised to see a large scale third wave advance unfolding over a period of several years with Uranium stocks following an upward 45 degree angle as illustrated in the chart above using an Andrews Pitchfork. Such an extended bull market advance could easily see share prices rising well into the middle of the next decade with compound annual return in excess of 20%.

Above: Uranium Index with 20% Compounded Line

In the final chart above, we ink in a 20% compounding line as the thick middle line for the Andrews Pitchfork Channel. Impossible? We think not. Among the Emerging Producers, Denison Mines (DML-TSE, DNN-Amex) is definitely an up and coming leader which for those with a speculative appetite should be watched closely in the days ahead. In June of last year, when the share price was near $14.00, we suggested that a pull back in the stock could see prices tumble toward the $6.00 to $8.00 range. Since then, the stock has plunged to a recent low of $6.12 on February 8th and is now in a potential basing process. At the present time, the share price is below key resistance at $7.90 and would need to move above that level in order to 'prove itself' and confirm that an important bottom has been seen.

Above: from FSO Update August 2007 – "THEN"

Below: NOW, Denison Mines today…

Above: Denison Mines, any move above the nearby downtrend line at about $7.90 would probably be a pretty good indication of a completed base, with a move above $8.90 full confirmation of a completed base.

Within the realm of Junior Uranium mining companies, other names of potential interest include Paladin Minerals (PDN-T), Strathmore Minerals (STM-V), Pinetree Capital (PNP-V), JNR Resources (JNN-V), Uranium One (UUU-T) and Mega Uranium(MGA-V), Laramide (LAM-T).

At the close, the S&P 500 ended with a gain of 6.11 to finish at 1334.43, with the DJIA ending higher by 60.41 to close at 12,362.47. On the NASDAQ, prices moved higher to gain 10.63 index points finishing at 2286.45, while the 10 Year Bond moved higher on the yield, with yields edging up by .07 basis points to finish at 3.57%.

That's all for now,

Frank Barbera

swords to cores

noreply@blogger.com (kevin) — Fri, 14 Mar 2008 02:59:00 +0000

March 13 (Bloomberg) -- From a windswept corner of Hokkaido, Japan's northernmost island, Japan Steel Works Ltd. controls the fate of the global nuclear-energy renaissance.

There stands the only plant in the world, a survivor of Allied bombing in World War II, capable of producing the central part of a nuclear reactor's containment vessel in a single piece, reducing the risk of a radiation leak.

Utilities that won't need the equipment for years are making $100 million down payments now on components Japan Steel makes from 600-ton ingots. Each year the Tokyo-based company can turn out just four of the steel forgings that contain the radioactivity in a nuclear reactor. Even after it doubles capacity in the next two years, there won't be enough production to meet building plans.

``If there are 50 to 100 reactors or more to be built, there will be a real shortage and real delays in deliveries, so it's a good hedge to get in line now,'' said Ron Pitts, senior vice president for nuclear operations at the construction and engineering company Fluor Corp. in Irving, Texas.

Pitts estimated the cost of heavy forgings, including reactor containment vessels, steam generators and pressurizers, at $300 million to $350 million for each generating unit. Japan Steel wouldn't comment on the size of the down payment, which Pitts estimated at $100 million.

Right Now

UniStar Nuclear Energy LLC in Baltimore, a venture between Constellation Energy Group and Electricite de France SA, reserved slots for Japan Steel gear in 2006, even though it doesn't expect to complete its first reactor until 2015. It plans to build reactors based on technology from Areva SA of France.

``You need metal on the ground right now to make 2015,'' said Ray Ganthner, senior vice president of new plant deployment at Areva NP Inc. in Lynchburg, Virginia.

Orders for nuclear generators are multiplying as electricity use surges worldwide and governments pressure companies to cut carbon emissions to fight global warming. As many as 237 reactors may be built globally by 2030, an average of more than 10 a year, according to the World Nuclear Association in London. That compares with 78, or fewer than four a year, started since the 1986 Chernobyl meltdown in Ukraine.

Given Japan Steel's limited capacity, the math just doesn't work, said Mycle Schneider, an independent nuclear industry consultant near Paris. Japan Steel caters to all nuclear reactor makers except in Russia, which makes its own heavy forgings.

Competitors' Moves

``I find it just amazing that so many people jumped on the bandwagon of this renaissance without ever looking at the industrial side of it,'' Schneider said.

It would take any competitor more than five years to catch up with Japan Steel's technology, said the company's chief executive officer, Masahisa Nagata.

Rivals are working to break the Japan Steel stranglehold, including South Korea's Doosan Heavy Industries & Construction Co. and Japan Casting & Forging Corp., a joint venture of Nippon Steel Corp. and Mitsubishi Steel Manufacturing Co.

Doosan may make the heavy forgings for the second of Westinghouse Electric Co.'s reactors being built in China, while subcontracting those needed for the first reactor to China First Heavy Industries, said Dan Lipman, senior vice president for nuclear power plants at Westinghouse. Doosan and China First Heavy Industries may ``potentially'' be able to produce them in the future, Lipman said in an e-mail.

Areva, the world's biggest reactor builder, is considering modifying its newest design to be able to make the central reactor-vessel part from a 350-ton ingot instead of more than 500 tons as required today, said Pascal Van Dorsselaer, manager of an Areva plant in France's Burgundy wine region.

`Definitely a Bottleneck'

Areva would be able to produce the ingot itself with an investment of about 100 million euros ($155 million), he said as workers coated the inside of a Japan Steel reactor shell part with stainless steel to prevent rust.

``There is definitely a bottleneck,'' Van Dorsselaer said. ``It's a real issue for us.''

Another alternative is to turn back the technological clock and weld together two smaller forgings, said John Fees, CEO of McDermott International Inc.'s Babcock & Wilcox Co., which built the Three Mile Island reactor. That technique was used over the past 40 years in the U.S. and France and is still applied in China.

``It shouldn't be off the table,'' he said at Babcock's headquarters, also in Lynchburg, Virginia.

Even with the appetite for its nuclear products, Japan Steel is cautious about expanding too rapidly. Orders plummeted after a German coalition government including the Green Party pledged in 1998 to phase out nuclear power. Japan Steel was unprofitable for three straight years.

`Concern Is the U.S.'

The company will decide by June whether to further expand production, said Ikuo Sato, a manager of the Muroran plant on Hokkaido.

``Our concern is the U.S.,'' Sato said. President George W. Bush's ``administration is aggressive in building nuclear plants, but we wonder how many plants will actually be built.''

On Feb. 13, NRG Energy Inc., the second-largest Texas power producer, put its application for two new reactors on hold while it works out pricing and other details with suppliers. It has already reserved forging slots at Japan Steel for the plant.

``We want to make sure it's done exactly right and we have the right roles for our vendors and the right costs,'' NRG Energy spokesman David Knox said.

Blackened by Soot

Japan Steel stock more than doubled from the start of last year to 2,080 yen in July, before dropping, partly because of a plan to issue shares in case of a hostile takeover bid. They now trade at 1,602 yen, valuing the company at 595 billion yen ($5.8 billion). Hiroshi Chano, who helps manage $7.3 billion at Yasuda Asset Management Co. in Tokyo, sold his shares in July.

``Nuclear demand seems like it won't grow as expected because of safety concerns and a slowing U.S. economy,'' Chano said.

The Japan Steel factory's rusting, corrugated-metal warehouses, blackened by soot, belie the precision and patience required to fashion a 600-ton steel ingot into a tube with walls 30 centimeters (12 inches) thick. Blue-clad workers, some wearing balaclavas to keep warm, draw on knowledge built up when Japan Steel made the 18-inch gun barrel -- the world's largest at the time -- for the World War II battleship Yamato. A 1945 attack on the Muroran plant killed more than 200 workers.

``Our accumulated technology for cannon barrels helped us make this technical breakthrough in forging,'' plant manager Sato said.

The company's basic product, steel of the highest quality, has the same enduring appeal as the samurai swords still fashioned in limited quantities by craftsmen at the plant.

15,000 Tons

To make the 600-ton ingot, workers heat steel scrap in an electric furnace to as high as 2,000 degrees Celsius (3,600 degrees Fahrenheit). Then they fill each of five giant ladles with 120 tons of the orange-hot molten metal. Argon gas is injected to eliminate impurities, and manganese, chromium and nickel are added to make the steel harder.

The mixture is poured into a blackened casing to form ingots 4.2 meters wide in the rough shape of a cylinder. Five times over three weeks, the ingots are pressed, reheated and re-pressed under 15,000 tons applied by a machine that rotates them gradually, making the floor tremble as it works.

The heavy forging is needed to make the steel uniformly strong by aligning the crystal lattices of atoms that make up the metal, known as the grain. In a casting, they would be jumbled.

`More Art Than Science'

``What they do is an art more than a science, and that's why they're the critical path,'' said Steven Hucik, senior vice president for nuclear plant projects at GE Hitachi Nuclear Energy in Wilmington, North Carolina. His company has already reserved sufficient capacity at Japan Steel's plant to cover its first wave of new reactors, he said.

Japan Steel's most prized products also include samurai swords, with price tags of about 1 million yen.

They're made in a traditional Japanese wooden hut, up a steep hill from the rest of the Muroran factory. It's decorated with white zigzag papers called ``shide'' used in Shinto shrines, creating a sense of sanctity in the workshop.

Inside, as the factory clangs and hisses below, Tanetada Horii hand-forges broad swords from 1 kilogram (2.2 pound) lumps of Tamahagane steel.

``Making a sword emanating peculiar beauty from the dull substance of stone-like Tamahagane steel is bliss,'' he said.

CEO Nagata says the process goes to the company's heart.

``Samurai swords contain the essence of steelmaking technology,'' he said. ``We've inherited this technology and we don't want it to spill outside of Japan.''

Nuclear power the cheapest by far...

noreply@blogger.com (kevin) — Tue, 12 Feb 2008 03:47:00 +0000

World Nuclear News reported Friday that Canada's uranium output dropped five per cent in 2007. Production from Canada's three uranium mines fell largely due to Cameco's flooding troubles at its underground Rabbit Lake mine and digging through low-grade ore at the Areva- and Denison (AMEX: DNN, Bullboard) / (TSX: T.DML, Bullboard) -owned McClean Lake mine.

Canada's 2007 total was 11,046 tonnes of U3O8. The country just inched out Australia's production of 10,145 tonnes U3O8 and Kazakhstan's total of 6,637 tonnes.

The Nuclear Energy Institute in the U.S. also reported some interesting news: according to preliminary figures, American nuclear power plants posted all-time record highs in electricity production and efficiency in 2007.

The report states U.S. nuclear plants generated about 807 billion kilowatt-hours (kwh) of electricity last year, beating by two per cent the past record-high of 788.5 billion kwh set in 2004.

And, according to the data, the industry's average electricity production cost is dropping. The average production cost (which looks at expenses for uranium fuel and costs of operations and maintenance) was a record-low 1.68 cents/kwh in 2007.

The previous low was set in 2005 at 1.72 cents/kwh. This marks the ninth straight year the industry's average electricity production cost was below two cents/kwh and the seventh straight year that nuclear plants had the lowest production costs of any major source of electricity, besting coal- and natural gas-fired power plants.

Instability remains in global markets and analysts now predict a few years will pass investors will begin reaping the benefits of uranium's strong long-term fundamentals. The metal's spot prices are now expected to hit US$110 in 2010—compared to earlier estimates of US$50 for that year.

For now, the Ux Consulting long-term price is sitting flat at $95 per pound U3O8 through February. Contracts this month are priced at $78. As for the rest of 2008, March futures are trading at $80, April to May contracts are worth $75 and July to December contracts are worth $85.

Nuclear power is the 'way forward'

noreply@blogger.com (kevin) — Mon, 05 Nov 2007 02:06:00 +0000

Adjust font size:

The growth of nuclear power in China and India over the next two decades will outpace other countries, a senior International Atomic Energy Agency (IAEA) official said Monday.

"China has developed quite fast in the nuclear power industry in the past 20 years," said Yury Sokolov, IAEA's deputy director-general and head of the department of nuclear energy.

"In China, in India, you have very definite plans for increasing the nuclear capacity six to 10 times for 20 years, this is really fast growth.

"The growth of the world is not so fast."

Sokolov said he remained positive about the future of nuclear power.

"Now nuclear power exists in 30 countries," he said.

"And 30 to 40 other countries have expressed their willingness to explore nuclear power."

He made the remarks on the sidelines of an IAEA symposium on nuclear power plant management, which opened on Monday.

China started nuclear power operations in 1991, when Qinshan-I, a 300-megawatt (MW) presurized-water reactor unit, independently developed by China, plugged into the grid.

China has fast-tracked development of nuclear power in recent years with a target to take its nuclear power capacity from about 9,000 MW in 2007 to 40,000 MW by 2020, according to China's long-term development plan for the nuclear power industry.

The Indian Department of Atomic Energy also had plans to increase the country's installed nuclear power capacity, expected to reach 20,000 MW by 2020.

Some Chinese experts said nuclear power was the best choice for China to satisfy its thirst for clean power amid pressure to sustain economic growth.

"The needs for energy consumption as well as for environmental protection are both pressed," Zheng Mingguan, vice-president of Shanghai Nuclear Engineering Research and Design Institute, said.

"Nuclear power is the most suitable choice to meet both needs."

Sun Libin, a scholar with the Institute of Nuclear and New Energy Technology of Tsinghua University, said: "Other forms of new energy, such as wind power and solar power, carry energy density much lower than nuclear power, and are unable to meet the tremendous power demand in China".

(China Daily October 16, 2007)

Price of energy value of Uranium: $20,000 a pound

noreply@blogger.com (kevin) — Mon, 29 Oct 2007 10:57:00 +0000

As I had predicted in my earlier article, OPEC is now blaming speculators for high prices. Regardless what OPEC is saying now or will in the future, it will not derail in the oil bull market. Oil will eventually reach over a $1000 a barrel. No that is not a typo. In the next 10-15 years the export market will contract by over 70%. Assuming essential services required to keep society functioning at whatever level feasible are still around, that would mean that the average person in the US would have to cut his consumption by 90%. I think it will take prices at least 4 fold higher from here to achieve that. That multiplied with the Fed's aim to use the US dollar to put “Charmin” out of business will result in at least $1000 a barrel. But the road will a long and jagged one. Prices will spike and dip at every turn. Rumors of alternate energies being developed will cause “limit down” down days and threats on oil infrastructure will have the opposite effect. Through it all Joe Kernen and his his band of illiterate merry men on CNBC will keep trying to tell you that speculators are destroying your life. Sharron Epperson will keep telling you that oil is going down on a particular day because 2 and half weeks of world oil consumption were discovered somewhere. Although production should start after 5-8 years will make little difference to her astute explanations. (Those who saw her reaction after Devon's Jack discovery know exactly what I am talking about).

Finally I would like to add that in spite of the long term outlook for oil prices being incredibly bullish it is possible that a pullback to $70 -$80 could happen at anytime. This does not negate the long term fundamentals. I have stated my case above for why oil could go up 10 fold or more over the next 10 years. The fundamentals for uranium are even better than that for oil. Although uranium is used exclusively for electricity whereas oil is hardly used for that purpose, in an energy starved, global warming aware world it is also highly likely that Uranium will eventually trade at about BTU parity with oil. That means uranium at over $20,000 a pound. Seems a bargain at $80 a pound.

Paladin Says Uranium May Rise to $110 a Pound in First Quarter

noreply@blogger.com (kevin) — Sat, 20 Oct 2007 02:53:00 +0000

By Claudia Carpenter

Oct. 18 (Bloomberg) -- Paladin Resources Ltd., which runs a uranium mine in Namibia, expects the price of the metal to rise to as much as $110 a pound in the first quarter of next year, a gain of about 40 percent.

``Availability is the issue,'' Paladin Chief Executive Officer John Borshoff said at a BMO Capital Markets meeting in London today. He forecast first-quarter prices at $105 to $110.

The spot price of the metal that's processed as fuel for nuclear reactors rebounded to $78 a pound last week, halting a decline from a record $138 a pound in June, according to TradeTech LLC, a Denver-based pricing service.

``I heard a utility participated'' in the transaction, Borschoff said. ``It wasn't just some hedge fund.''

Perth-based Paladin plans to produce 900,000 pounds of uranium this year and 2.6 million pounds next year, he said.

Macquarie Bank Ltd., Australia's largest investment bank, this week lowered its 2008 forecast for uranium to $100 a pound, from $140.30, citing in part stockpile sales by the U.S. government in August.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net .

Palladin looks to correct more

noreply@blogger.com (kevin) — Wed, 29 Aug 2007 07:37:00 +0000

Above: Palladin Mining (PDN-TSE) another high quality name now down almost 50% from the absolute highs… one day, this will be an outstanding repurchase candidate, and one day this stock will soar again to dwarf the highs seen in the first half of 2007… long term investors, no worries, it's just a question of following the stock down and letting it tell us when the bottom has been seen.

So what’s next for Uranium and Uranium Miners? In our view, both Uranium and Uranium stocks are in a primary degree correction, meaning a correction that can last many months. In addition, with the prospect of a global recession, if not an outright depression looming directly ahead, we feel that it is best to use a cautious approach and not try to pick a final low. To help clarify this point, on all of the updated charts shown above, the “AFTER” charts through today’s trading we include the three most important moving averages for each stock, the 50 day, the 100 day, and the 200 day. In all cases, the moving averages have rolled over and experienced downside cross-overs, with the slow poke of the group, the 200 day moving average in most cases just turning down. That is a sign that it could still be very early in the downtrend, as normally, declining markets tend to see the 200 day moving average trending down week after week after week after week, until eventually, the darn thing starts to flatten out.

As I write this, I am reminded of Stan Weinstein and his terrific stage analysis, wherein these stocks would all be in stage four declines. For those of you who like to read up on Technical Analysis, Stan is both a gentleman and a scholar, and a number of years ago turned out a first rate tome entitled, “Stan Weinstein’s - Secrets for Profiting in Bull and Bear Markets” -- still a Barbera, “House Favorite.”

Putting a slightly different spin on the Uranium Sector, I note that my GST Uranium Index (which includes about a dozen names among the likes of Cameco, Denison, Strathmore, Paladin, Pinetree, Crosshair, JNR Resources, Mega Uranium, Laramide, UEX Corp., Fronteer Development and SXR Uranium) is now down 51.02% from its April 10th, 2007 peak. Now there are those that would say that’s the entire bear market. Yet, what is common in situations like this is for prices to retrace a proportional amount in relation to the advance which came before. In the case of the Uranium stocks, the percentage increase seen in the last few years is measured in the thousands of percents. When viewed on a semi-logarithmic scale, we note that to date, the very steep percentage decline off the high has only approached a minimum .236 Fibonacci retracement. More common, would be a .382 fibonacci retracement which could carry the index even lower toward the 420 level, with index closing today at a reading of 902.50.

Ok, we can hear the cringe, and readers should understand that while that type of move is possible, it may not in fact develop. What we are trying to point out is even if the entire sector were to be cut in half again from present levels, it would still fall into a clear cut “Wave 2” type of outcome, and would not change the very long term secular bull market view. Admittedly, a move down to the low 400 level on this index would be an unbearable amount of pain, but it is possible within the context of a major crash in the global markets that readings like that could be seen in the months ahead.

For now, the best approach is to be a trend follower and recognize that the trend is now definitively down. Until we see the kind of basing action that would suggest momentum divergences and downside deceleration, readers are advised to remain cautious and ideally on the sidelines and out of harm's way with regard to this group. In many cases, corrective Wave Two patterns traces out an A-B-C structure, within which it is possible that Intermediate Wave A of Primary Wave (2) has just recently bottomed. In this vein, a counter-trend “B” Wave advance could provide those holding these stocks with a loss, the opportunity to reduce the loss into strength and then stand aside as prices move down in Wave C, and into a more important final low.

Correction, not a rout!

noreply@blogger.com (kevin) — Wed, 11 Jul 2007 01:21:00 +0000

http://www.theaustralian.news.com.au...-18261,00.html

BEING unashamedly and firmly one of the glass-is-half-empty crowd, Pure Speculation needs to detect only a zephyr of doubt to begin looking on the gloomy side of life. And being able to smugly throw in a "we did warn you" rider does add lustre to a spot of bad news.
The latest quarterly report from Sydney-based Resource Capital Research reminds us that the present uranium spot price is $US136 a pound; that's 45 per cent up from the $US95/lb level three months ago and a 111 per cent gain on the $US65.50/lb six months back. RCR is bullish, saying indications are for $US148/lb in the near term and $US165/lb by September 2008.

But we're now seeing a growing tide of reports from Canada saying there is concern the uranium price may have already peaked - although you have to factor in that power utilities are anxious to talk down the price. Buy orders are drying up, and some uranium for sale has been withdrawn from the market. Cameco, the world's biggest producer, saw its stock take a terrific hammering on the Toronto exchange early last week.

But it will be a correction, not a rout. The usual pattern is for buyers to re-emerge once prices come off a little, and there's no doubt that uranium demand will be strong in the years ahead. But those investing in companies with low-grade or unexplored tenements might like to pause for reflection.

NO doubt a good many investors are already scratching their heads at the price retreat in a range of uranium stocks.

Having one mine in operation and another on the way hasn't stopped Paladin Resources falling from $10.70 in April to $8.26 on Friday. On the exploration front, the once hot Toro Energy closed at 95c, compared with $1.28 two months ago. Alliance Resources has a slice of an advanced 15,000-tonne deposit in South Australia, with more high-grade hits last month. No good: its shares are at $1.74 compared with $2.85 in May.

And reports of further high-grade hits at Bigrlyi haven't restored Energy Metals to its April high of $8.34. Other recent market darlings have also suffered share price pain - Crossland Uranium Mines, A-Cap Resources and Black Range Minerals among them.

Yet a few continue to do well. Marathon Resources, one of the better fancied South Australian plays, was $3.88 at the start of April, $6.75 on Friday.

THIS all suggests that buying a uranium project might no longer be the quick fix for a lagging share price. But this hasn't stopped more from leaping in. The latest entrant is Pacific Enviromin. This company has previously been concentrating on bentonite, which, among other things, makes good cat litter. Now it has acquired 22,000sqkm of uranium tenements in the Northern Territory and a smaller parcel in Queensland.

But we still like something a bit more advanced. Thatcher Soak in Western Australia is living up to promise, with Uranex reporting intersections up to 0.82 per cent U3O8.

BACK in 1958, Don Walker acquired the Herberton assets of the Great Northern Tin Co, which had been a Queensland producer of that metal since 1881. He was subsequently Australia's representative on the former International Tin Council. Without him and his tenement holdings, North Queensland Metals would probably not exist.

NQM was a modest float last December, going to market for just $2.5 million with Walker on the board. It has just picked up another 13 tenements in the old tin mining area inland from Innisfail. And the company has an interesting strategy.

Tin mining in the area boomed until the 1930s, revived in the 1960s and then closed down again when the tin market went bust in the 1980s. There were several big companies mining their own deposits as well as buying ore from the hordes of small-time players (there being about 400 recorded mines in the area).

There are still plenty of prospectors with their own piece of turf, and NQM's plan is to develop several deposits on their own to supply one central treatment plant, but then go back to the strategy of the old days in terms of buying from any individuals who want to start producing ore.

The company hopes to have its core Baal Gammon project producing by late 2008 as a copper-tin proposition. But the 5.8 million tonne resource also has indium, used in electronics, at an average grade of 29 grams/tonne. NQM has received a lot of calls from Chinese companies about the indium.

INVESTORS in iron ore players getting up and running in Western Australia's mid-west might soon need to re-crunch their numbers. It had been assumed that companies not near railways would have to build their own and, indeed, Murchison Metals is working on such a study. There is also the Yilgarn Infrastructure Group, which fancies itself as the big port-rail player in the region, but it now faces having its nose put out of joint.

Babcock & Brown Infrastructure Group has entered the picture. It controls WestNet Rail, the 5100km railway network in WA. And it wants to build its own iron ore lines in the mid-west - serving Murchison's Jacks Hill mine near Meekatharra, passing the proposed Midwest Corp Weld Range development, with a branch out to Wiluna where Golden West Resources is working up a resource.

This means B&B would be putting up the capital for rail developments, not the individual mining companies - a huge slice off mine capital costs.

THIS column has always had a soft spot for energy juniors chancing their arm in the US. So it is heartening to see Redfork Energy believing it has a company-maker. This junior reports an initial coal seam methane reserve in Oklahoma of 37.5 billion cubic feet, worth about $270 million at present prices. Pipelines riddle the area, and the city of Tulsa is in close proximity.

Redfork is presently pumping about 600,000 cubic feet of gas a day with prices running at about $US7 per 1000 cubic feet. That's about three times what gas goes for here and the Bank of Oklahoma's long-term forecast is for prices to stay around that figure.

Redfork's David Prentice says margins are "very high". On top of that, each well - which has an expected 15-year life - pays back its capital within a year.

ALISTAIR Cowden wouldn't be the first resources boss with an overseas project to feel the local market is not exactly simpatico. His Vulcan Resources has been building up a considerable portfolio in Finland and needs some big money to develop the Kylylahti copper-cobalt-nickel project and get an idea of how much nickel there is at Kuhmo.

So $49 million of Scandinavian money will be coming in the door and Vulcan will list on the Norwegian Stock Exchange. Companies such as Vulcan are too small for the London and New York main exchanges, and London's AIM is seen as lacking liquidity.

But the Oslo bourse is patronised by a big swag of retail investors and is buoyed by Norway's equivalent of the Future Fund, the Norwegian Pension Fund, the biggest in Europe and primed with billions of krone from North Sea oil.

Kylylahti is particularly interesting because its cobalt element averages 0.24 per cent, which is high for that metal. Cobalt is now fetching $US61,000 a tonne and in high demand. Future supply growth depends on the large nickel laterite projects now in various stages of development (all experiencing delays) and on future mining in the Congo, which also has its problematic elements. In other words, supply is likely to be tight.

The Australian implies no recommendations regarding any of the stocks mentioned. The author does not own shares in any of the mentioned securities.

Green nuclear power coming to Norway | COSMOS magazine

noreply@blogger.com (kevin) — Wed, 20 Jun 2007 23:31:00 +0000

Green nuclear power coming to Norway | COSMOS magazine: "Green nuclear power coming to Norway

SYDNEY: Safer, cleaner nuclear power is a step closer to reality after Norway's state-owned energy company, Statkraft, this week announced plans to investigate building a thorium-fuelled nuclear reactor.

Statkraft (which translates to 'state power') announced an alliance with regional power providers Vattenfall in Sweden, and Fortum in Finland, along with Norwegian energy investment company, Scatec AS, in a bid to produce the thorium-fuelled plant.

Thorium (Th-232), has been hailed as a 'greener' alternative to traditional nuclear fuels, such as uranium and plutonium, because thorium is incapable of producing the runaway chain reaction which in a uranium-fuelled reactor can cause a catastrophic meltdown. Thorium reactors also produce only a tiny fraction of the hazardous waste created by uranium-fuelled reactors (see 'New age nuclear', Cosmos, issue 8).

Statkraft, which is already Europe's second largest producer of renewable energy - mainly thanks to Norway's abundant hydroelectric resources - has recently made thorium-fuelled nuclear power a point of serious consideration. "It would be a sin of omission not to consider it," said Bård Mikkelsen, CEO of Statkraft, in an interview with the Norwegian newspaper Dagbladet.

To date, thorium has seen only limited application, such as by U.S. company, Thorium Power, which produces mixed uranium-thorium fuel for use in conventional nuclear reactors. However a reactor fuelled entirely by thorium would have significant advantages over conventional uranium or mixed-fuel reactors.

Besides their inability to go critical and their low generation of waste, thorium-fuelled reactors don't suffer from the same proliferation risks as uranium reactors. This is because the thorium by-products cannot be re-processed into weapons-grade material.

Thorium also doesn't require enrichment before use as a nuclear fuel, and thorium is an abundant natural resource, with vast deposits in Australia, the United States, India and Norway.

Another advantage of thorium-powered reactors is they can be used to 'burn' highly radioactive waste by-products from conventional uranium-fuelled power plants.

Over the past eight months, there has been a substantial rise in public support for thorium reactors in Norway. In June 2006, polls showed 80 per cent of the population were completely opposed to any form of nuclear technology. Then in February 2007, the same percentage were in favour of investigating thorium reactors as a potential energy source.

"It is an absolutely incredible surprise that it has been possible to turn around the population in a country, just by quietly campaigning and explaining the benefits of the technology," said Egil Lillestøl, a nuclear physicist at the University of Bergen, Norway.

Lillestøl is a keen supporter of the ADS (Accelerated Driven System) technology used in thorium-fuelled reactors. Because thorium is incapable of achieving a self-sustaining chain reaction – unlike uranium or plutonium – it needs energy to be injected into the reactor to keep it running. This energy comes in the form of neutrons from a particle accelerator. For this reason, a thorium-fuelled reactor is also sometimes called a sub-critical reactor.

Statkraft is the third Norwegian company to express interest in thorium reactors this year; Thor Energi and Bergen Energi, have both applied for government licenses to build plants.

The announcement by Statkraft coincides with the first meeting of the Thorium Report Committee – an initiative commissioned by Norway's Ministry of Petroleum and Energy, in association with the Norwegian Research Council, to investigate the benefits and risks of thorium reactors.

The committee will submit its report at the end of 2007. Norwegian legislation currently bans the use of nuclear power, so the report is critical for gaining Government consent to build thorium plants in Norway.

"Norway has taken the lead on this. We are an energy nation; we have large supplies of thorium – not as much as Australia of course – but we have a very advanced energy industry, and we have a responsibility to the world," said Lillestøl. "Without nuclear energy we will destroy the world, we will spend all the coal, oil and gas, and we will be left with an energy desert."

Reza Hashemi-Nezad, a nuclear scientist at the University of Sydney in Australia agrees that thorium is a promising alternative energy source. However, while the European Union, India, the US, Japan and Russia are all working on thorium technologies, Australia is lagging behind.

"Australian industry is very interested in investing in this type of clean, safe and cheap nuclear energy," says Hashemi-Nezhad. "But I am afraid that if Australian scientists and industry do not get adequate support from the government and research institutes in Australia, they may move offshore."

Areva to Buy UraMin for $2.5 Billion - WSJ.com

noreply@blogger.com (kevin) — Mon, 18 Jun 2007 12:48:00 +0000

Areva to Buy UraMin for $2.5 Billion - WSJ.com: "French state-owned nuclear-engineering company Areva SA agreed to acquire Canadian uranium miner UraMin Inc. for $2.5 billion.

Areva said the $7.75-a-share offer 'perfectly fits' into its strategy to significantly increase its presence in the uranium market, in which it already holds a 23% share in sales. Areva's current production of uranium is 6,000 tons a year, which it plans to double by 2011-12 from existing projects, such as those in Niger and Canada, and through the increase in production of its operations in Kazakhstan.

Olivier Mallet, Areva's senior executive vice president of mining, chemistry and enrichment, said the short-term plan to double uranium production was in place before the acquisition of UraMin and therefore didn't take its production into account. He said he expects about 7,000 tons a year of uranium to be added to Areva's production by UraMin."

URANEX kinda looks promising..

noreply@blogger.com (kevin) — Mon, 18 Jun 2007 08:24:00 +0000

A couple of weeks ago Deutsche Bank bobbed up with a Buy on Uranex – the same mob that Stokes is punting on.

MD was amused to see the research note titled "Getting in Early".

No latecomer tag for this broker – it is getting in on the ground floor!

Could someone please tell Deutsche that the uranium boom has been running for a couple of years now? And Perth-based Uranex, a spin-off from Goldstream Mining, listed in October 2005.

The company is exploring for uranium at the Bahi prospect in Tanzania and Thatcher Soak in Western Australia.

The latter prospect has the obvious hurdle of being located in WA, where Premier Alan Carpenter is still firmly opposed to uranium.

And it is remote, being further inland from BHP's Yeelirrie project, to the east of Meekatharra.

But it does have at least one thing going for it: a resource estimate.

BP discovered the deposit in 1972 and calculated 6000 tonnes of uranium oxide.

However, different assaying techniques gave a resource as big as 15,000t (15 million tonnes of ore grading 1000 parts per million yellowcake), Deutsche Bank notes.

"In our opinion, one of the most appealing features of the Thatcher Soak deposit is that around 80% of the carnotite deposit is located within 6m of the surface," the broker says.

This provides the opportunity for the company to achieve "very low" mining and development costs, compared with competing deposits, it reckons.

The broker has a 12-month price target of $3.05, compared with the recent share price of $1.63.

Critical to Uranex's fortunes is an 8000m drilling program that started May 8 at Thatcher Soak. It will investigate the quality of the deposit and explore for extensions.

The other determining factor, of course, is the uranium price.

No fears there, according to yet another investment bank – Australia's own Macquarie.

The latter reckons that uranium will peak at $US150 per pound in late 2007, up from a record $125/lb in mid-May.

The window of opportunity could shut relatively quickly, though.

By the end of the decade, Macquarie expects the market to have moved into surplus as new supplies from Kazakhstan, Africa and Canada come onstream.

Still, that gives another six months, at least, of rising uranium (and share) prices for the Johnny-come-lately brigade.

Uranium hopefuls must act to maximise prices : thewest.com.au

noreply@blogger.com (kevin) — Mon, 18 Jun 2007 02:50:00 +0000

Uranium hopefuls must act to maximise prices : thewest.com.au: "“Overwhelmingly the conclusion is that the economics are real and companies should be pushing ahead full steam to develop their projects,” Mr Grigor said.

“The biggest winners on our table and in the stockmarket are those lowgrade companies that we had been dismissive of two years ago. Since then the uranium price has quadrupled, catapulting these companies into enviable positions.”

He estimates that if all 19 Australian potential uranium producers were to reach production it would increase uranium supply by 17,000 tonnes a year, or up to 30 per cent over the next five years. If combined with increasing global supply, this could drag the uranium price back below $US100/lb.

“This means that the highly leveraged, low-grade companies will need to be up and running as early as possible to maximise the peak of the uranium price cycle, sometime between today and three years time,” he said.

One of the hurdles will be the high capital costs of up to $300 million to develop many of the low-grade projects.

The report suggests that this could be a significant issue for Acclaim, Bannerman, Deep Yellow, Toro and Uranex, while better-placed companies include Contact, Energy Metals, Monaro and Uranium King.

Mr Grigor warned many of the floats now hitting the m"

Uranium sea change -- (News Ltd)

noreply@blogger.com (kevin) — Mon, 18 Jun 2007 00:28:00 +0000

STAND by for a uranium sea change -- the end of the big tenement land rush and the start of serious exploration.

This means, according to Far East Capital's Warwick Grigor, that the race is now on among the 150 or so locally listed uranium companies to find a resource while the metal's price is still in its peak phase.

Mr Grigor, who charts hundreds of resource juniors on a daily basis, said that the potential uranium supplies to be brought on to the market by Canadians and others could eventually see the price go back below $US100 a pound. The metal was still holding strong at $US120/lb last week.

But if the land rush phase is just about over, it's ending with a bang as both established explorers and latecomers scramble for projects.

And Africa seems to be the latest favourite.

In recent days, Crossland Uranium Mines has expanded its search to West Africa by joining a Canadian explorer to pick up 5000sqkm in Burkina Faso; Murchison United has begun drilling in Guinea and is raising another $6.6 million; Western Uranium has hired consultants to find it uranium projects in Africa; recent entrants New Age Exploration and Palace Resources have jointly gone hunting uranium in countries ranging from Sierra Leone to Mali; and NGM Resources is acquiring three uranium leases in Niger, a country where Canadians and Chinese companies have also been pouncing on uranium leads.

Also joining the ranks of the uranium players is Marmota Energy, a float being spun out of Monax Mining. Xenolith Gold has plumped for "nearology" and acquired tenements close to advanced projects held by Nova Energy, while oil and gas junior Rawson Resources is going looking for yellowcake opportunities in Texas, Utah, New Mexico and Colorado.

Mr Grigor, in his client note on uranium, said the uranium boom was now fact, no longer fantasy.

"This is a bull market based on hard factual economics, not fantasies and what-ifs," he wrote. "At these uranium prices, there are enormous cash flows that can be made."

And he now likes many of the companies that, two years ago, he dismissed as marginal players. These were the players with low- grade resources but -- with the quadrupling of the uranium price in that time -- had now been placed in an enviable position.

"If the uranium price keeps rising, these companies will shine even more," he added.

Mr Grigor expects the new exploration phase to last about two years, after which investors would be much better educated.

The more serious companies would be moving toward production, but the majority of exploration stocks would probably have withered on the vine.

Far East Capital's rankings have now been expanded to include two more companies in the potential producer category, Alliance Resources and Bannerman Resources.

Alliance has a stake in a 15,000 tonne resource in South Australia while last week a European consortium bought a large stake in Bannerman as that company looked to develop uranium mining in Namibia.

Geoscience Australia -overview of exploration

noreply@blogger.com (kevin) — Thu, 14 Jun 2007 02:48:00 +0000

Australia has more low-cost uranium in deposits than any other country, but finding it is not easy. While the price for uranium has been low, little was found but now exploration is starting to increase.

Australia has the largest share of the world's "reasonably assured resources" of uranium, with approximately 27% of the total resource. This is recoverable for less than US$80/kg.

There are about 85 uranium deposits in Australia, including about 20 that have been mined out or partly mined. However, approximately 94% of Australia's uranium resources that are recoverable at less than US$80/kg are within the following seven large deposits.

* Olympic Dam and Beverley in South Australia;

* Ranger in the Alligator Rivers region of the Northern Territory;

* Jabiluka and Koongarra in the Northern Territory (mining of these deposits requires approval from traditional owners); and

* Kintyre and Yeelirrie in Western Australia (mining of these deposits requires a change in state government policy.

Olympic Dam is the world's largest known uranium deposit, containing about 21% of the world's uranium resources recoverable at less than US$80/kg. Additional resources are being delineated as exploration drilling continues in the south-eastern part of the deposit. The uranium grades at Olympic Dam are very low, averaging 300-400 parts per million, but the deposit also contains copper and gold, which makes the recovery of uranium economical.

During 2005, Australia produced uranium from three uranium mines: Ranger (5906 tonnes U^sub 3^O^sub 8^), Olympic Dam (4335 tonnes U^sub 3^0^sub 8^) and Beverley (977 tonnes U^sub 3^O^sub 8^).

The record total production of 11,218 tonnes represented approximately 23% of world uranium production in 2005, the second largest level behind Canada with 28%. Although there are a number of undeveloped deposits in Western Australia, the Northern Territory, South Australia and Queensland, current state government policies only allow uranium mining in the Northern Territory and South Australia.

Australia has no significant demand for uranium, and all mine production is exported under nuclear safeguard agreements with importing countries.

Uranium Exploration

All exploration for uranium and other minerals in Australia is carried out by private companies. However, the federal and state governments carry out continent-wide geological mapping and airborne radiometric and magnetic surveys. A continental network of gravity measurements is also provided by governments as well as specialised studies of specific mineralised regions.

All of these investigations contribute towards various databases of "pre-competitive information" that are compiled to attract mineral exploration to Australia. In August 2006, the federal government announced the allocation of $134 million to Geoscience Australia over a 5-year period through its new energy security initiative for the acquisition of continentwide geoscientific data to assist companies select favourable areas for exploration of energy sources including petroleum, uranium, thorium and geothermal energy.

The main difference between exploration for uranium and other minerals is the application of geophysical radiometric techniques to detect uranium mineralisation at all stages of exploration and mining including:

* airborne and ground radiometric surveys to detect presence of uranium. Such techniques generally can only detect uranium radiation very close to the surface;

* probes to measure gamma radiation in drill holes and prompt fission neutron probes to estimate uranium grades in drill holes; and

* radiometric ore sorting in mining operations to separate uranium ore from waste rock.

However, in general, exploration for uranium does not differ greatly from techniques used in the search for other types of mineral deposits, and is organised in several stages that often merge and overlap. These techniques involve:

* global scale exploration:

- explorers consider areas that are known to be geologically favourable for uranium mineralisation, the amount of geological information available in the country, as well as the political stability of a particular country, mining regulations and taxation regimes, existing infrastructure (roads, ports etc.) and environmental factors that would affect mining if a deposit was found;

* regional scale exploration (usually hundreds to thousands of square kilometres):

- this begins with a literature search, particularly of any previous exploration results and reconnaissance surveys;

- geologically favourable areas are selected on the basis of broad regional geological criteria and are secured by exploration licence tenements;

- exploration methods at this stage include airborne radiometric and magnetic surveys, regional mapping and geochemical surveys, rock sampling and identification of rock samples' formation conditions.

* semi-regional area selection for more detailed work (tens to hundreds of square kilometres):

- results of regional scale exploration are used to reduce the size of an exploration area to smaller locations for more detailed, and usually more expensive, investigation;

- exploration methods include detailed mapping, geochemical mapping and ground geophysical surveys as well as airborne surveys such as airborne electromagnetic surveys followed by exploration drilling.

* prospect-scale delineation and evaluation of uranium mineralisation detected in the semiregional exploration (usually up to only a few square kilometres per prospect and takes place only if uranium mineralisation has been established). Exploration activities at this stage centre on an assessment of uranium mineralisation and include:

- detailed assessment drilling to establish the size of the deposit, often including digging trenches and limited underground workings to ascertain the formation of the mineralised body and consider mining options;

- studies of uranium ore mineralogy, metallurgical studies, bulk sampling and pilot plant metallurgical test to determine the appropriate method to process the ore;

- feasibility studies to establish the profitability of the mining operation;

- appropriate environmental studies and government approvals for mining the deposit.

* a mine development stage:

- make a decision to mine the deposit based on the results of feasibility and environmental studies and mining conditions specified by government authorities;

- proceed to develop the mine and commence mining activities; and * mine closure:

- rehabilitate the mine site once the mining of the deposit is completed.

Chance Discoveries

Explorers may find a uranium deposit while looking for deposits of other minerals. The best example of this is Olympic Dam, where explorers were using magnetic and gravity anomalies along with satellite imagery to identify an area in South Australia for a certain style of copper deposit that required testing by expensive deep drilling.

As a result, a previously unknown type of deposit of copper, gold and uranium was discovered. Geologists are continuing to investigate the Olympic Dam deposit to develop a better understanding of its signatures, which could then be used to discover other similar deposits.

The likelihood of explorers finding uranium deposits while looking for other mineral deposits depends on:

* the type of exploration techniques being used. A variety of mineral deposits could be detected with geochemical and some geophysical surveys. While some exploration programs will target a particular type of mineral deposit, a lookout will be kept for other closely associated deposits types that can be detected by the same methods;

* the type of area being explored. Some areas are not geologically favourable for any uranium deposits; and

* some deposits are polymetallic, such as Olympic Dam, Jabiluka and Nolan's Bore, which contain a combination of minerals

Uranium Exploration in Australia

There was a resurgence in uranium exploration in Australia in 2005 with expenditure of $41.09 million, a threefold increase on the $13.96 million expenditure the previous year.

The number of companies actively exploring for uranium increased from five at the start of 2004 to more than 34 by late 2005. The proportions of total expenditure on exploration in each jurisdiction were:

* South Australia (42%);

* Northern Territory (37%);

* Queensland (15%); and

* Western Australia (6%).

The combined expenditures in South Australia and the Northern Territory accounted for almost 80% of Australia's total. The main areas (in terms of expenditure) are given in Figure 3. They are:

* the Gawler Craton-Stuart Shelf region, tertiary palaeochannel sediments of the Frome Embayment, and palaeochannels overlying the Gawler Craton in South Australia;

* the Alligator Rivers region and western Arnhem Land, and the Ngalia Basin (including the Napperby project in Tertiary sediments overlying the Ngalia Basin) in the Northern Territory; and

* Mount Isa province in Queensland.

Further details on Australia's uranium exploration can be accessed in the Geoscience Australia publication Australia's Identified Mineral Resources at www.ga.gov.au:8500/ image_cache/GA7036.pdf

Australia's Most Likely Regions

Figure 3 shows areas that are geologically favourable for uranium and were being explored for uranium deposits in 2005. Areas of particular interest include:

* the Gawler Craton area in South Australia, which has the Olympic Dam deposit ("hematite breccia" type) that holds about 70% of Australia's uranium resources. Explorers are looking for more Olympic Damtype deposits in the area. Other areas considered favourable for Olympic Dam-type deposits include the Curnamona Craton (Mt Painter area) of South Australia and the Georgetown and Mount Isa regions in Queensland;

* the Arnhem Land and Rum Jungle areas in the Northern Territory, where companies are exploring for "unconformity-related" uranium deposits similar to those at Ranger and Jabiluka, the second most important type of uranium deposit in Australia with about 18% of the country's uranium resources;

* the Frome Embayment in South Australia is the most important area in Australia for sandstone-type uranium deposits such as the Beverley deposit. This type of deposit accounts for about 4% of Australia's uranium resources and is the most widespread; and

* the north-east Yilgarn area around the Yeelirrie and Lake Way uranium deposits in Western Australia is a promising area for "calcrete" deposits, which account for about 3-4% of Australia's uranium resources.

Recent Discoveries

The last major uranium discovery was Kintyre in Western Australia in 1985.

The discovery of uranium deposits depends on the level of funding allocated to carry out exploration. This depends on the demand and the price, which in turn is determined by the perceived supply. During the late 1960s through until the early 1980s there was a perceived shortage of uranium, which was followed by an oversupply and a sharp downturn in uranium exploration.

If explorers are looking in areas that are geologically favourable for uranium deposits, more funds will be allocated to exploration and more deposits will be found. During recent years there has been increasing concern that there will be a world shortage of uranium for nuclear electricity generators, resulting in a quadrupling of the uranium price to more than US$50/lb. This has been accompanied by a corresponding sharp increase in uranium exploration expenditure.

In constant dollars, expenditure of $41.09 million in 2005 was the highest annual expenditure on uranium exploration in Australia since 1988. However, this is less than half the comparative level of expenditure during the peak years between the late 1960s and the early 1980s, when most of the significant deposits were discovered.

From the early 1980s to 2004, when uranium prices were depressed, there was relatively little exploration either in Australia or globally. Apart from Kintyre, no significant uranium deposits were found during this period.

The recent surge in uranium exploration expenditure has led to the first recent significant uranium discovery, the Beverley 4 Mile, in 2005.

It is of interest to note that Australia's uranium resources have continued to grow for more than 20 years from discoveries made prior to 1985 despite increasing mining since 1976. In particular a lot of additional resources have been discovered in the course of ongoing exploration at Olympic Dam.

Apart from high levels of exploration expenditure, the surge of uranium discoveries also was due to a combination of additional factors including extensive highresolution, low-level airborne radiometric surveys, which picked up uranium deposits emitting radioactivity because they were exposed at the surface.

Among these deposits were Ranger, Nabarlek and Koongarra in the Northern Territory and Yeelirrie in Western Australia. The discoveries led to a better geological understanding of these deposits, and deposit "models" were developed by geologists to assist in the recognition of geological clues that indicate where certain types of deposits are present.

Conversely, the lean period of uranium discoveries from the early 1980s until about 2003 was exacerbated by other factors such as:

* government policies from 1983 to 1996 restricting uranium mining to three mines, which curtailed exploration activity because any discoveries could not be mined. Uranium mining is still prohibited in Western Australia and Queensland, and uranium exploration is not allowed in New South Wales and Victoria;

* decreasing land access to some prime uranium areas, such as the Kakadu National Park in the Northern Territory; and

* as "easily discoverable" uranium deposits are found, it becomes increasingly more difficult and more expensive to find deeply concealed uranium deposits. This is particularly the case for Australia, where about 70-80% of the continent is covered by a veneer of deeply weathered barren rock, making it even more difficult and expensive for explorers to "see through" the barren cover to search for hidden uranium deposits.

Significant factors assisting the discovery of uranium and other mineral deposits are the availability of regional geological, geophysical and geochemical data acquired by government agencies such as Geoscience Australia and state and territory geological agencies.

The data minimises the risk for explorers in areas such as Olympic Dam, where the deposit is concealed by 325 metres of rock but was discovered partly because of the interpretation of regional geophysical data acquired by Geoscience Australia's predecessor, the Bureau of Mineral Resources. Yeelirrie also was found because of the interpretation of regional radiometric data.

It was a similar case for the large uranium deposits at Ranger and Jabiluka in the Northern Territory, which were found when explorers were attracted to the area by their interpretation of the regional geological mapping.

Many of the early discoveries were found in areas of little surface cover, so the rate of uranium discoveries diminished as the value of the old data from the regional geological mapping and geophysical surveys were exhausted. The challenge for future discoveries is to assist explorers with more sophisticated regional data provided by government agencies, which allow explorers to look through the cover and locate uranium deposits below the surface layer covering 70-80% of Australia.

The geophysical and geochemical programs being launched by Geoscience Australia during the next 5 years through the federal government's $134 million new energy security initiative will play an important role in the discovery of new uranium, thorium and geothermal energy as well as other mineral deposits in the future.

Uranium overview - mid 2007

noreply@blogger.com (kevin) — Thu, 14 Jun 2007 02:42:00 +0000

What more do we know about the junior uranium companies? Firstly, it is clear that nearly all of them are involved at die early stage of exploration. It is believed that world expenditure on uranium exploration quadrupled between 2001 and 2005 and now stands at over 9200 million per year. The juniors are responsible for over half of this, the remainder being carried out by the current major producing companies. Altogether, this can be called the beginning of a second major exploration cycle for uranium, following the first in the 1970s and 1980s, when many of the current operating mines were discovered. Maybe a third of the companies are also buying up previously known deposits indeed there has been a rush to acquire the data from previous exploration activities, while share swaps and other similar corporate activity is very much part of life for such companies. Very few of the companies, no more than 20, have yet reached the next stage, which can be termed active mine development, in other words going through the regulatory process, preparing environmental impact assessments and bankable feasibility studies and beginning to invest in the mine infrastructure. What is clear is that it will still take many years for new discoveries to result in active mine production - this is true for all metals and minerals, but in uranium it tends to be prolonged. In some cases, this may be 20 years or so - it has taken that long to get current mines into operation. Of the junior companies, only a small number are now producing, such as URI and Mestena in the USA, Paladin Resources in Namibia and UrAsia in Kazakhstan.

As time goes on, however, more and more junior companies will reach the production stage. It's interesting to consider the countries where this is likely to take place. About half the junior companies have their headquarters and stock exchange listing in Canada, with about one third in Australia. Yet the geographical spread of their activities is much greater. Although Canada and Australia are both prominent at the exploration and known deposit acquisition stages, many of the companies are active in both the USA and Africa, with smaller numbers working in Asia, Latin America and Europe. So new production could come from any of these locations - indeed there are good grounds to believe that Africa and the USA may well outpace Canada and Australia, at least over the next 5-10 years.

With the exception of the Honeymoon in situ leaching mine in South Australia (which SXR Uranium One should commission by 2008), there is nothing immediately coming up from the juniors in the two big producing countries, which currently account for half of world output. One reason for this may be that the regulatory process seems to be rather more lengthy in these countries (and Australia is only now escaping from anti-uranium public policy and sentiment}. It is notable that Paladin has got the Langer Heinrich mine in Namibia up and running in a relatively short period of time, encouraged by supportive public authorities. Other African mines, in South Africa and other countries, are likely to get into production well before all the projects in Canada and Australia, currently only being talked about. The position in the USA is less clear, as the regulatory process there can also be lengthy, but there is every prospect of some of the juniors getting production moving strongly upwards in the 5-10 year timeframe, American utilities, who have been most exposed to the uranium price spike, will no doubt support this. Yet the big increase in world production before 2010 is likely to come from Kazakhstan, where operations are largely controlled by Kazatomprom, clearly a major established player in the market.

Another feature to watch with the junior uranium companies is that they are often very dependent on the uranium price staying high. The average grades of many of their deposits are quite low, suggesting they may be quite high up the cost curve. While buyers are keen to diversify their sources of supply, particularly at present when they feel weak against the established producers, price is vitally important and they won't generally support those with high cost profiles.

It is clear that there will inevitably be a huge amount of consolidation in the junior uranium sector. The better companies will inevitably become acquisition targets for the major producers, particularly if these find themselves short of material to satisfy contracts. Indeed, cynics about the sector would claim that this is all most of the juniors really want to do - they have no intention of ever producing a pound of uranium themselves and are just seeking to sell out at a good profit to whoever comes along. This may be true of many, but there are clearly those who are dedicated to getting mines up and running. But of course, everything has its price. What is likely is that over the longer term, there will likely be only 10-20 survivors out of the current pool of 400 who are still involved in uranium, independently and at the mine production stage. Possibly even fewer. So a wave of takeovers, mergers and even corporate failures is now likely to ensue.

Finally, it must be said that the junior companies have brought a fresh air to a sector that, with a few exceptions, appeared to be on its last legs only a few years ago. Some would say that a lot of the fresh air is also hot air, but this U inevitable in a business such as mining, with its sharp up and down swings. Industry meetings have certainly been enlivened by the appearance of many 'characters' from the past and by the arrival of financial types, only really out to make money (and not apologetic about this). And as said earlier, the rising interest in uranium has presaged the increased focus on nuclear power as a whole, which must be a good thing.

News Limited May 21, 2007 - Uranium sea change

noreply@blogger.com (kevin) — Thu, 14 Jun 2007 02:18:00 +0000

Robin Bromby

Commodities

STAND by for a uranium sea change -- the end of the big tenement land rush and the start of serious exploration.

This means, according to Far East Capital's Warwick Grigor, that the race is now on among the 150 or so locally listed uranium companies to find a resource while the metal's price is still in its peak phase.

Mr Grigor, who charts hundreds of resource juniors on a daily basis, said that the potential uranium supplies to be brought on to the market by Canadians and others could eventually see the price go back below $US100 a pound. The metal was still holding strong at $US120/lb last week.

But if the land rush phase is just about over, it's ending with a bang as both established explorers and latecomers scramble for projects.

And Africa seems to be the latest favourite.

In recent days, Crossland Uranium Mines has expanded its search to West Africa by joining a Canadian explorer to pick up 5000sqkm in Burkina Faso; Murchison United has begun drilling in Guinea and is raising another $6.6 million; Western Uranium has hired consultants to find it uranium projects in Africa; recent entrants New Age Exploration and Palace Resources have jointly gone hunting uranium in countries ranging from Sierra Leone to Mali; and NGM Resources is acquiring three uranium leases in Niger, a country where Canadians and Chinese companies have also been pouncing on uranium leads.

Also joining the ranks of the uranium players is Marmota Energy, a float being spun out of Monax Mining. Xenolith Gold has plumped for "nearology" and acquired tenements close to advanced projects held by Nova Energy, while oil and gas junior Rawson Resources is going looking for yellowcake opportunities in Texas, Utah, New Mexico and Colorado.

Mr Grigor, in his client note on uranium, said the uranium boom was now fact, no longer fantasy.

"This is a bull market based on hard factual economics, not fantasies and what-ifs," he wrote. "At these uranium prices, there are enormous cash flows that can be made."

And he now likes many of the companies that, two years ago, he dismissed as marginal players. These were the players with low- grade resources but -- with the quadrupling of the uranium price in that time -- had now been placed in an enviable position.

"If the uranium price keeps rising, these companies will shine even more," he added.

Mr Grigor expects the new exploration phase to last about two years, after which investors would be much better educated.

The more serious companies would be moving toward production, but the majority of exploration stocks would probably have withered on the vine.

Far East Capital's rankings have now been expanded to include two more companies in the potential producer category, Alliance Resources and Bannerman Resources.

Alliance has a stake in a 15,000 tonne resource in South Australia while last week a European consortium bought a large stake in Bannerman as that company looked to develop uranium mining in Namibia.

Western Aussie thoughts on Uranium stocks

noreply@blogger.com (kevin) — Thu, 14 Jun 2007 01:45:00 +0000

Among the companies he follows are Berkeley Resources (which is exploring in Spain and has formed an alliance with France's Areva, the world leader in nuclear power development); Energy Metals, which has a high-grade deposit in the Northern Territory and is a possible takeover target; Nova Energy, 57 per cent owned by Oxiana, which has two Western Australian projects that could be out of blocks as soon as state bans on mining are lifted; and Uranex -- not for its fashionable Tanzanian exploration so much as much for its Thatcher Soak deposit in Western Australia, once explored by BP and now shaping up as the flagship project for the company.

Wilson's tips for investing in uranium stocks are:

* They should be unhedged, so they get full exposure to the soaring spot price once in production.

* They must have exploration upside. In other words, they will have already found something but can value-add by extending the size of that resource with more drilling.

* Preferably, the projects are advanced and the company has started ticking off the milestones on the road to production. A Joint Oil Reserves Committee (which sets Australian standards for resource findings) resource would be a good start.

* They have the potential to be taken over, particularly if the company is at the grassroots end of the spectrum, realising value for shareholders.

Warwick Grigor wears several hats. He sits on the boards of Monaro Mining and Peninsula Minerals and he analyses the companies through his Far East Capital investment business. He says the biggest trap for new players is being impressed by a company announcing it has "radiometric anomalies". Think geiger counter making that squawky noise.

All that means is that there may be some trace of uranium, a mineral that is pervasive and widespread. The radiometric response is not an indicator that there's an economic amount of uranium underneath.

And investors should look for companies that have done some systematic exploration.

"Isolated assays mean zilch," he says.

"Investors have to stop getting excited by these isolated assays."

Grigor argues that 90 per cent of uranium companies are not yet in a position to say they have a mineable proposition. Only when they have a bank of drill intersections are companies in a position to talk with any certainty.

However, Grigor has shifted ground on the economic threshold of projects.

As he says in his latest uranium review, sent out to clients, he had to recant his view of two years ago (when uranium was only $US30/ lb) that a deposit needed to have a minimum average grade of 0.07 per cent.

"Now, with the rise in price, even grades as low as 0.04 per cent could be profitable," he says.

Grigor ranks 23 companies as either being in production or being well on the way to that state. Some of those are -- in his view -- already fully priced.

These include Summit Resources, Toro Energy, Marathon Resources (which is starting a scoping study on its Mt Gee deposit), Arafura Resources and Berkeley Resources.

The ones he would buy now are: his own Monaro Mining, which he argues has undervalued prospects in Kyrgyzstan; Uranium King, which has projects in Nevada and New Mexico (and the Americans support uranium mining); and Contact Resources, with its project in Peru.

Grant Craighead, an analyst with Stock Resource, says one point investors should keep in mind is whether a company has geologists who know uranium well.

There are not too many of those around, and they are getting on in years, given that we went for more than 20 years without exploration for the mineral.

"There is a limited pool of talent -- to be an expert on uranium, you'd have to be at least 55," he says.

Craighead has put his own money into Energy Metals (as well as recommending it to clients).

That company has a high-grade resource at Bigrlyi in the Northern Territory which, with a new drilling program about to start, is likely to get much bigger. More importantly, though, Craighead smells a takeover in the wind.

Canada's Denison Mines is a shareholder and is keen to get a foothold in Australia. It is about to see another of its takeover bids collapse.

All the signs point to Denison then switching its takeover energies to Energy Metals.

RED HOT TIPS

WARWICK GRIGOR'S WATCHLIST

Contact Resources ............ Undervalued Peru deposit

Monaro Mining ................... Undervalued Kyrgrzstan project

Uranium King ..................... US projects

Impact Minerals ................. Inexpensive but good project

Peninsula Mining ............... New project in Wyoming

Paradigm Gold ................... Cheap buy in Queensland

Erongo Energy ................... Namibia shaping up

Xstate Resources ............... US exposure

SXR Uranium looking for Australian assets

noreply@blogger.com (kevin) — Sun, 10 Jun 2007 23:49:00 +0000

June 11, 2007 12:00am

ACQUISITIVE Canadian uranium player SXR Uranium One is sniffing for Australian assets as it moves to bulk up its production of the nuclear fuel.

Speaking to reporters after a seminar in Toronto, the company's chief executive Neal Froneman said he would like to achieve a "critical mass" in Australia, where uranium production is dominated by global miners BHP Billiton and Rio Tinto.

Uranium One is developing the Honeymoon project in South Australia, which is expected to begin production in 2008.

The company also has assets in the US, Kazakhstan and South Africa, and last week offered to buy Toronto-listed Energy Metals Corporation in an scrip deal worth about $C1.4 billion ($A1.55 billion).

Mr Froneman said the company was not currently in talks with any companies in Australia, however the Canadian miner is believed to be watching closely the efforts of local explorers, particularly in uranium-friendly South Australia.

China, which is planning to build almost 70 new nuclear power plants, is also taking a keen interest in Australia's uranium juniors.

Liu Xuehong, vice president of China Nuclear International Uranium Co, an arm of the state-owned China National Nuclear Corporation (CNNC), told World Nuclear News the company was contacting Australian explorers with the aim of forming partnerships.

CNNC will present next month at a conference in Perth, which is expected to be attended by a high-level Chinese delegation.

Six Chinese organisations are among more than 40 companies vying for a potentially lucrative uranium deposit in the Northern Territory.

The Chinese might also be buyers of uranium from Honeymoon, with just 40 per cent of the mine's production currently pre-sold.

Uranium prices have soared over the past two years, with renewed interest in nuclear energy driving demand well above supply, following years of sluggish exploration.

Spot prices hit $US138 a pound last week, up from $US7 in 2000, although producers caution that the spot market is driven largely by speculators and doesn't reflect long-term contracts agreed to by producers and utilities.

Mr Froneman said he expected demand to continue to outstrip supply, due to the long time lag between exploration and production.

"Up to about 2015, we don't see the market coming into balance," he said.

He predicted spot prices would hit $US150 a pound before the end of the year, but said prices actually paid by utilities over the long term would likely be about $US60 a pound.

Australia is home to about 30 per cent of the world's low-cost uranium reserves and moves to relax laws on developing new uranium mines have international players watching.

The Australian Labor Party recently scrapped its opposition to new mine developments, but has left the ultimate decision in the hands of the states.

Western Australia and Queensland -- home to some of the richest deposits -- are still opposed to uranium mining.

with Reuters

Grandich also sees $200 an Oz Uranium

noreply@blogger.com (kevin) — Thu, 07 Jun 2007 01:01:00 +0000

Peter Grandich sees uranium climbing to US$200, financial players yet to take profits
With the spot price for uranium rising further in the wake of two auctions last week, and another major deal with sxr Uranium One Inc.’s $1.6-billion friendly bid for Energy Metals Corp., surging investor interest in the sector continues unabated.

But is the end of this bull market for the nuclear fuel near?

Not if you ask Peter Grandich, author of The Grandich Letter, who attributes rising prices to tight uranium supplies.

Although he thinks we’re past the halfway point for uranium equities, he thinks uranium prices will rise to US$200 per pound. Market monitors Ux Consulting and TradeTech recently raised their spot prices to US$135 per pound and US$138 respectively, while long-term prices are at US$95 for both groups.

Mr. Grandich expected that a hedge fund or Uranium Participation Corp., which buys physical uranium, might have taken some profits by now and actually sold some uranium. But they haven’t.

“By them not doing that yet, it convinces me that the US$200 target is more reasonable than we could even have imagined just six months ago,” he said, adding that some of these players got into the uranium play early at US$30 or US$40 or less.

“It’s very hard to pass up on 300% and 400% gains, and they are doing that at the moment.”

What about the suggestion that uranium speculators may be driving up spot prices to boost the value of their mining stocks?

While the amount of institutional money out there makes these sort of manipulations relatively easy, Mr. Grandich thinks this was more likely a year or two ago because shares had not yet risen dramatically. He also pointed out that since the beginning of 2007, uranium prices have climbed, but many uranium stocks have corrected.

Not only does Mr. Grandich expect there will be more consolidation in the uranium sector among current producers, he thinks advanced-stage exploration companies will also be acquired in the next stage of deals as prices continue to rise.

As far as the ‘nuclear renaissaince’ sxr Uranium One chief executive Neal Froneman expects in the U.S., Mr. Grandich thinks the recognition of an acute need for energy both globally and in the U.S., has opened the door again for nuclear energy to become a viable energy source there.

“If someone were to have told me as late as three or four year ago that anywhere in the continental United States we would have been speaking about a nuclear plant again, I would have told them ‘not in my lifetime’ and I’m 51 year old.”