In mid-September, Mitchell Dong, chief investment officer of Solios Asset Management told a news wire service, “I think we are seeing the tip of the iceberg of financial investors entering the physical uranium market.” The Platts Nuclear Fuel Strategies conference in Washington last week, Mitchell Dong was a pit bull. Not only has to take his extensive notes during the speeches, but he was the first-in-line to the majority of speakers questions after their presentations.
It is clear that, regardless of initial purchases had made his fund or funds in entering the physical uranium and equity markets, he probably was not ready trays. Nearby, a trio of Greenwich, Connecticut hedge fund managers quietly listened to the presentations. Later, they only had lunch at their table while we saw them huddled in deep discussions about what bets they can place in the uranium bull market.
Long time insiders have kept trying to put this bull market in what context they could. A difficult task, since many of them endured a twenty-plus-year uranium drought, which only from hibernation in recent years. Some admitted they had almost given up on the sector as the years pass. Now, she and everyone else involved trying to figure out how to make the Big Score on this amazing nuclear renaissance.
Of course there were opposing views on how to deal with the price of uranium. Charles Peterson, DC-based lawyer with Pillsbury Winthrop Shaw Pittman LLP, hinted at a more transparent market, hoping uranium would be offered. At a future exchange He compared the accessibility of other metals where traders use speculators. Later in the day, Patricia Mohr, Vice President for Economics, at the Canadian Scotiabank warned the industry that if uranium were traded on a futures market, the volatility already trading at $ 100/pound.
Again, the price of uranium worried many at the conference. Ending the HEU hung around at the back of the minds of utility executives probably because many wondered where future SWU would come from, the Russians terminate supplies to U.S. utilities. Preparations would not currently be taken, it would not surprise us to see in the price of uranium which Sprott Asset Management Kevin Bambrough has now warned us. Super-peak U.S. utilities remain complacent, assured the Department of Energy will come to the rescue at the last minute. But will they?
On the outside chance we can gain insight into the complex and mysterious Russian soul, we cornered Andrey A. Orekhov, advisor to the Science and Technology Department at the Embassy of the Russian Federation. He briefly listen to what Ronald Lorentzen, Director of the Office of Policy within the U.S. Department of Commerce, had to say in his presentation regarding current Russo-American negotiations attended the conference. Away We tested the waters by talking about the new generation of nuclear reactors, and to ask him whether he brashly introduces us to Sergei Kirienko, head of Russia’s atomic energy agency, Rosatom. Instead, he referred us to a smaller light for interview.
Then we asked him if we had been. Accurate in reporting that aggressive nuclear ambitions of Russia would drive the price to $ 100/pound uranium Reflecting our question for a while, as roads or the wrong answer would lead to his next meal in a Russian prison, Orekhov looked off in a far corner of the room and said, “Who knows?”
His question concisely summarized the collective thoughts of the conference. No one really knows how much higher the price of uranium will run, whether it will reach $ 100/pound (and higher) and how quickly it could come at the century mark. As we noted in a previous part of this series, Dustin Garrow of a possible run in the $ 80 to $ 100/pound level. The Florida Power and Light spokesman believed $ 52/pound was too high.
Can Renaissance against a wall
Garrow made an interesting point at the beginning of his presentation, announcing, “There are now more than 400 uranium companies.” The implications of his comments are very diverse, one must pause to think what he meant. Fuel Cycle Week editor Nancy Roth addressed this in the October 3rd number. She reported the events and revelations in the Platts conference, writing, “Several speakers mentioned serious technology and equipment deficits inherited from the rest (the uranium depression: 1980-2003), together with the lack of nuclear personnel from uranium miners to nuclear engineers. ”
These observations swipe at both sides: uranium producers and utility end-users of the uranium. If the labor and material shortages fail to provide sufficient uranium for utilities, then the price is likely to rise much higher. At the same time, nuclear power plants should not staffing their operations, or construction delays affect the construction of new reactors, a smaller amount of the offer is less than what is projected, will be required.
To put it briefly, and to make simple: this industry is still too “new” for all the complications that are necessary to realize forward. As Mrs Roth wrote in an e-mail to us, “I think the uranium industry has a real chicken-and-egg problem in reinventing itself, and I think an important indicator of the severity of the problem might its costs in this production. ” The charges to which it refers, is the expense was necessary to uranium out of the ground. In the United States, there are a handful of in situ recovery. That is insufficient to adequately be the average production for a mining operation.
What happens when another half dozen uranium properties commence new mining operations? One of the hidden problems within the uranium sector development is the lack of proven miners. In the past year, some existing producers in the U.S. uranium experienced worker raids by the newly arrived development companies. We suspect more will take place, as several companies closer to mine development. Raids take place because of a shortage of trained personnel and proven.
Patricia Mohr brought another of the many interesting points. Increased coal production in 2004 and 2005, but observed in the first half of 2006 Mohr, “Mine production probably declined in the first half of 2006.” She believes production was about 20 percent of the planned business. She pointed out Australia’s Ranger mine production was lower due to a cyclone; Olympic Dam because of declining ore grades. Rough granite, which Namibian uranium is mined, has reportedly caused problems in this country Rossing mine. Mohr believes output of the mine could slow in the second half of the year.
We believe that the cost of production for many of the up-and-coming projects will be greater than expected. When was the last time a new uranium mill was built? Not in this century. When was the last major uranium deposit discovered? Twenty years ago. How to calculate its start-up and operating mining and milling costs in today’s dollars? A new business Some might think they know the answer, but we will not really know until the actual production scenario takes place. And maybe two years down the road at the earliest. Factors such as doing puzzles forecasters, analysts and industry insiders. They really do not have a proven benchmark against which to make. Accurate evaluation The last time they could was during the uranium bull market of the 1970s.
How about those 400 uranium companies? “Do you have to read the press releases” asked Nancy Roth. She does, we read many of them. “Are not most of them just hype?” she asked. We had to agree with her assessment. But in understanding the junior uranium companies, the press release which attracts investors support the market for their stock prices. Some have no real plans, but mine the fair, as author and long-time uranium insider Julian Steyn once told us. During dinner, Ms. Roth gave us an important insight. She covers the NRC hearings for various companies hoping to get their projects to continue. Those who are actually meeting with NRC are not doing for a free trip to Washington at the expense of their shareholders, but instead to bring. Their project in the mine development Among the most recent applicants were some of our favorites, such as Uranerz Energy (AMEX: URZ), UR-Energy (TSX: URE) and Energy Metals (TSX: EMC). Another was the privately held Concentric Energy Corp.
Coincidentally, StockInterview fan Laura Stein had email us for a meeting with Ralph Kettell, Chief Executive of Concentric Energy. Because Ms. Stein’s insistence, and our review of Mr. Kettell, we met with him about his project. Aptly, he chose the Greenbelt exit on the Baltimore-Washington Parkway. For those who are not familiar with this exit, it is the way to NASA. As an electrical engineer, was for NASA that Kettell designed the radio frequency (RF) portion of the space to Space Communications System used in the construction of the International Space Station. Kettell also like seriously dabbling in natural resources stocks, because as lead investor and director in AuEx Ventures.
No stranger to the uranium market, he had written an article for a resource website in 2003, proclaiming the coming bull market in uranium. Kettell predict that some of his favorite stock picks, such as Strathmore Minerals – then trading for about C $ 0.30/share, would jump by 1000 percent. Strathmore’s 2006 high was C $ 3.00.
Kettell had an index of five uranium stocks (there were 400 to choose from, back in 2003) which he started at a base number of 100 made. Kettel’s favorite stocks were Cameco Corp. (NYSE: CCJ), Denison (TSX: DEN), International Uranium Corp. (TSX: IUC), JNN Resources (TSX: JNR) and Strathmore Minerals (TSX: STM). He told us last spring, had the value of its index rose to the level of 3000 – up to 30 times from when he began tracking his favorite uranium stocks. Since then, the index dropped to 2200. We asked him which direction he believed was on his way to the next. He replied: “I have looked at the technical factors (technical analysis), and the need to blow through the 3000 level in 2007.”
By early 2007, Kettell believes his private company, Concentric Energy, should be publicly trading. He told us that he had completed. The support of Jim Dines, Doug Casey and other newsletter writers for his private placement stock Kettell said Pinetree Capital (TSX: PNP) was a set back his project. His company plans to develop the Anderson uranium mine about 75 miles northwest of Phoenix, Arizona. The property was about £ 33,000 produced in the 1950s. Additional exploration by Unocal and Urangesellschaft in the late 1970s demonstrated sufficient promise in the property. He told us Unocal was planning a 2,000-ton-day mill in 1978 for a proposed open pit mine.
We call this meeting to bring home. A very strong point about the future price of uranium With us Mr. Kettell asks what are the costs for the milling and mining in the property Anderson, he told us, “About $ 65/pound.” At least he was honest. This may be the price level to hear about not being American utilities but it would become the floor price for the future price of uranium. Perhaps, Mr. Kundalkar, the vice president of Florida Power and Light whom we mentioned in the first article in this series, should pay attention to what the uranium miners say. We are.
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