Uranium anyone?

[Guest broxburnboy]

I did some basic research into the Uranium space and ended up buying some  TAS-V (Terra Ventures on TSX). Basically a penny stock but with a 10% carried interest in a property being explored by Hathor (HAT-TSX). This is highly speculative but I believe has a good shot of being a 10 bagger or so. I'm prepared to buy and hold for the long term given the recent success of HAT in exploring and the turn in the spot price of Uranium.

Anyone else care to do some due diligence and challenge my admittedly flimsy thesis?

I'd hate to have to hoard my share of production waiting for spot prices to improve...it makes the cat glow in the dark.

 

[Guest broxburnboy]

Here's a good primer on the world Uranium supply/demand situation from Terra's website:

http://terrauranium.com/english/uranium101/default.aspx

[UhuruPeak]

thx

[doc75]

Thanks for the info.  HAT has some very attractive properties and has been on a tear lately.  Your idea to get in by the backdoor is interesting.

 

I've held a small position in Strateco Resources (RSC in Toronto) for a few years now.  If you're interested in uranium, it's worth looking into.  Their Matoush property is in the Otish mountains of Quebec and contains some of the highest quality uranium assets outside of the Athebasca basin.  The percent grade is FAR less than the grade in the basin, but by world standards is very high and viable for mining.  

 

They're moving steadily towards production and all appearances are that they're dedicated to bringing a mine online by 2014.   An updated scoping study was released in late summer.   If I remember correctly they have over 20M lbs of inferred and indicated  U3O8 at at average grade over 0.6%.  They're currently in the final stages of getting a permit to carry on underground exploration, hoping to increase the resource to approximately double today's numbers.  A first round of community meetings was held in the spring.  A number of questions were raised, and Strateco responded in September.  Another round of community meetings have recently been scheduled for mid-November.  After this, the permitting decision will be made.

 

Some of the economic assumptions in the scoping study seem aggressive to me, such as a low Canadian $ and a somewhat optimistic uranium price.  But the company will be worth a lot more than it is today if they can access what's in the ground.

 

I've held a few shares since their initial exploring successes.  I've been uniformly impressed by their commitment to the project.  Here are some things I like:

 

- The CEO has been buying shares consistently over the years and hasn't sold at all, even during huge run-ups.  He has a fine history of mining success.

- Ned Goodman (of Dundee Securities) has taken a large personal position in the company.

- They have delivered on their promises in a timely manner.  They've been aggressively pursuing all the necessary permits and have a very organized plan in that regard, even as they work to prove up more resource.  

- They've been careful about heavy dilution and don't appear to be burning cash more than necessary.

- Quebec is mining friendly.

- Mining should be profitable at today's uranium prices.

 

Things I don't like:

 

- There's risk that one of the many necesssary permits won't be granted.  People don't want uranium mines near to them.

- It costs a lot to start up a mine, so there will be further dilution, and they're at the whim of the markets as to how much.

- The CEO gets paid as a consultant through his personal company, and it's a pretty tidy sum of total compensation.  I don't mind him taking home a good paycheck because it seems he's working hard.  But I don't like the whole consulting business arrangement.  I'm not sure if this is just a tax loophole thing, but it stinks a little.

- They're in the midst of a large drilling program and there have been no updates as to progress in some time.

- They still don't know exactly what's in the ground and the plan seems to hinge on outlining more resource.

- I'm not convinced of the uranium bull market.  I expect some serious volatility between now and a mine opening.

 

Disclosure:  I sold a lot of my position when it ran up to over $3 back in the crazy uranium days.  I hold a small position now and am happy to see how far these folks get.

 

Sorry if this should be moved to the investment ideas board.

[Guest broxburnboy]

Thanks for the input.. I did mean to post this in the investment ideas board but I obviously mucked up...

[StubbleJumper]

Quebec is mining friendly, but it's also environmentally risk averse (and excessively politically correct on any environmental issue!).  There's a large chunk of the population that recoils in horror at the idea of potentially polluting water sources, and there are few pollutants more frightening that uranium.  There is a public groundswell against natural gas development in the province, despite the obvious economic benefits....the fear of pollution through the fraccing process scares the crap out of people.  There was a moratorium on hog farm development a few years back due to fears about nutrient loading (ie, too much phosphate intensive manure on too little farm land) and the impact on water courses.  Hydro Quebec wanted to build a natural gas generating station in Becancour, and abandoned the idea when people protested that it was not environmentally friendly (WTF???  natural gas is about as clean as it gets!)

 

All of this to say that Quebec has always been a bizaare paradox.  The province has no problem with continuing to run asbestos mines and exporting that cancerous crap around the world.  Quebeccers have no problem cutting down trees to produce paper.  And there is no issue about a host of other polluting industries that are already in place.  Just do not propose a *new* project that might happen to constitute a risk (imagined or real).

 

IMO, for uranium exploitation, there's less political risk in Saskatchewan.

 

SJ

[doc75]

Quebec is mining friendly, but it's also environmentally risk averse (and excessively politically correct on any environmental issue!).  There's a large chunk of the population that recoils in horror at the idea of potentially polluting water sources, and there are few pollutants more frightening that uranium.  There is a public groundswell against natural gas development in the province, despite the obvious economic benefits....the fear of pollution through the fraccing process scares the crap out of people.  There was a moratorium on hog farm development a few years back due to fears about nutrient loading (ie, too much phosphate intensive manure on too little farm land) and the impact on water courses.  Hydro Quebec wanted to build a natural gas generating station in Becancour, and abandoned the idea when people protested that it was not environmentally friendly (WTF???  natural gas is about as clean as it gets!)

 

All of this to say that Quebec has always been a bizaare paradox.  The province has no problem with continuing to run asbestos mines and exporting that cancerous crap around the world.  Quebeccers have no problem cutting down trees to produce paper.  And there is no issue about a host of other polluting industries that are already in place.  Just do not propose a *new* project that might happen to constitute a risk (imagined or real).

 

IMO, for uranium exploitation, there's less political risk in Saskatchewan.

 

SJ

 

Agreed!  When I said "mining friendly" I was referring to the various financial incentives that Strateco enjoys as a developer in Quebec. The environmental paradoxes (asbestos!) are simply bizarre.

 

There is definitely opposition to Strateco's development.  Lots of people without any scientific knowledge talking about radium pollution, in particular (a total non-issue).  If there was a junior company this far along in development in Saskatchewan, my money would be there instead.  And it may still be safer to invest in high quality assets in Sask and wait for a major to buy you out.

 

We'll know more about Strateco in the near term.  If they get a permit for underground exploration, it will be the first one issued in something like 25 years.  The environmental assessment is elaborate and the first town hall meeting raised over 200 questions to which the company had to formally respond.  The second meeting will be telling. 

 

Once underground exploration begins, it will be much more difficult to halt the project over bogus concerns (provided the various assessments required for permitting are airtight).  The opposition knows this and are trying to stop development at an early stage. 

And... for the record... if Strateco actually is going to be an environmental monster, then I hope this is discovered sooner than later, even if  I lose some cash. 

 

 

 

 

[BargainValueHunter]

USEC (USU) up over 150% today.

 

One of the largest squeezes of the decade.

[Guest Dazel]

http://www.marketoracle.co.uk/Article41481.html

 

I posted this to the Altius thread this morning...Altius was a big winner during the last rise in uranium prices.

 

Dazel.

[Phaceliacapital]

Dazel,

 

I read your link in the Altius thread (as fellow stockholder) and afterwards read this piece:

 

http://www.businessweek.com/articles/2013-07-18/the-u-dot-s-dot-nuclear-power-industrys-dim-future

 

What's your take on this?

 

Thanks

[Guest Dazel]

 

You will notice that in all my posts I do not refer to the u.s in my thesis....the u.s have 100 reactors approx...China has 36 under construction right now....the u.s has a Nat gas advantage over the world for now...what happens when Nat gas prices rise? India and the middle east are moving very quickly to nuclear...They have no choice.

The u.s still relies heavily on nuclear power.

 

[Guest Dazel]

http://www.businessweek.com/articles/2013-02-21/china-wants-nuclear-reactors-and-lots-of-them

 

 

Here is what I am looking at...

[Guest Dazel]

http://www.world-nuclear.org/info/Facts-and-Figures/World-Nuclear-Power-Reactors-and-Uranium-Requirements/#.Ue3cqaN5mSM

 

 

The numbers are different from some other places but they are pretty close...I was wrong the U.S os down to 19% power generation from nuclear.

 

You will notice what China's growth path looks like with 118 proposed reactors surpassing the U.S....India and Russia are very aggressive as well...

 

With uranium only being a small portion of the cost nuclear power because of the upfront costs...once yhye are built they need uranium no matter what the price...

[Otsog]

http://imgs.xkcd.com/comics/log_scale.png

[Guest Dazel]

 

Phaceliacapital,

 

 

The article about uranium in the U.S is effecting short term pricing for sure...because Japan's 48 reactors are offline they are the only game in town. So yes there is pain in the spot market. Long term pricing at $57 a pound is also light for production. You also have Cigar Lake coming on stream..so spot prices are under pressure. China et all have demand coming but it is not here yet. Unlike other commodities uranium has to be bought in advance to make sure plants have adequate supply for years. Smart players will lock supply on the cheap but they are not being pushed yet because Japan's offline, china et all are not there yet and the U.S Russia agreement is not over until the end of this year.

 

 

[Palantir]

http://imgs.xkcd.com/comics/log_scale.png

 

100% U235 or lowly enriched uranium for powerplants?

[Guest Dazel]

http://www.the-weinberg-foundation.org/2013/03/11/bill-gates-excellent-case-for-new-types-of-nuclear-power/

 

 

[dowfin1]

The environmental intelligentsia may be changing their minds about nuclear.

 

 

 

[Liberty]

100% U235 or lowly enriched uranium for powerplants?

 

I think it's 100% U235, otherwise it would read just "uranium" and would represent the energy density of a mix of U235 and U238. This comic is drawn by Randall Munroe, a former NASA guy. He tends to get the science right.

 

 

Wikipedia has the energy density of U235 at 83,140,000 MJ/KJ, so the comic was apparently being conservative.

[EngineeringIncome]

100% U235 or lowly enriched uranium for powerplants?

 

I think it's 100% U235, otherwise it would read just "uranium" and would represent the energy density of a mix of U235 and U238. This comic is drawn by Randall Munroe, a former NASA guy. He tends to get the science right.

 

 

Wikipedia has the energy density of U235 at 83,140,000 MJ/KJ, so the comic was apparently being conservative.

 

Most US Powerplants (Pressurized Water Reactors) run at low enrichment (say around 4%).  Submarine reactors are really the only reactors that run with very high U-235 enrichment levels for a number of reasons.  Spot price is typically quoted for natural uranium.

[Liberty]

Most US Powerplants (Pressurized Water Reactors) run at low enrichment (say around 4%).  Submarine reactors are really the only reactors that run with very high U-235 enrichment levels for a number of reasons.  Spot price is typically quoted for natural uranium.

 

Indeed. U235 occurs naturally at about 0.7%, if I remember correctly, and even nuclear weapons only need to go to about 90% enrichment.

 

Nobody would ever quote the price of pure U235 on the market (if anyone did, I'm sure Iran would be very interested) :)

 

That's an aside, but what I'd like to see commercialized eventually is the thorium LFTR reactor:

 

https://en.wikipedia.org/wiki/LFTR

 

It seems like a better, safer, more efficient model than the uranium reactors that we have, and if the military hadn't needed to make so many bombs, thorium would probably have been picked over uranium from the start...

[Palantir]

Yeah, energy density of pure U235 wouldn't be a very useful metric as we only use lightly enriched U (I think about 20% most).

 

So while he may get the science right, the way it's presented suggests propaganda....:)

 

 

Thorium would be great as it's relatively common, but I hear solar is the future. :)

[ItsAValueTrap]

Solar seems to be the cleanest and most expensive.  However, a lot of the solar panels are made in China where they use coal for cheap energy (it takes a lot of energy to make a solar panel).  First Solar's panels are made of toxic chemicals though they will likely play a smaller role in the future.

 

Wind power has problems with noise.  The noise generated by the turbines cause sleep problems in human beings.  Smart residents will viciously fight wind power in their backyard.  The blades themselves also kill birds (you can see videos of this on Youtube).  In the future, I think that wind will get a little more expensive as we recognize these costs.

 

Nuclear energy will draw a huge amount of NIMBYism (not in my backyard).  Our track record with nuclear is mediocre.  We tend to overestimate its safety and to underestimate the cost overruns.  We also haven't figured out how to store the waste safely for a very long period of time.

 

2- In Canada, we do weird and crazy things.

 

Ontario subsidizes clean energy like solar and wind.  At the same time, Ontario is also talking about subsidizing a smelter for Cliffs' proposed chromite mine.  It doesn't make sense to subsidize pollution... but Ontario politicians want to do it.

 

In Quebec, Strateco isn't allowed to advance its uranium mining project.

[Liberty]

Yeah, energy density of pure U235 wouldn't be a very useful metric as we only use lightly enriched U (I think about 20% most).

 

So while he may get the science right, the way it's presented suggests propaganda....:)

 

I disagree. Unless I'm mistaken (its been a while since I read about this), the energy source in current uranium reactors (ie. non breeders) is only the U235, not the U238. When you look at coal's energy density, you look only at coal, not at coal + the useless rock that surrounded it.

 

Maybe if he was writing in a commercial context of uranium spot prices it would have been misleading, but the comic wasn't intended in that context. It was only about the energy density of various things, and in uranium, the 'fuel' part is the U235.

[Liberty]

Solar seems to be the cleanest and most expensive.  However, a lot of the solar panels are made in China where they use coal for cheap energy (it takes a lot of energy to make a solar panel).  First Solar's panels are made of toxic chemicals though they will likely play a smaller role in the future.

 

Solar will probably eventually go the graphene route. It's basically carbon, and it could lead to conversion efficiencies much greater than silicon (because in graphene, it's possible for one photon to free more than one electron).

 

http://www.technologyreview.com/news/511751/research-hints-at-graphenes-photovoltaic-potential/

 

Some even thing efficiencies of 60% could be possible with graphene...

 

But even traditional solar technology has been falling in price very rapidly (a kind of Moore's Law) and will be very competitive sooner than most people think.

 

http://media.treehugger.com/assets/images/2013/05/cost-of-solar-power-graph-1980-2012.jpg.0x545_q100_crop-scale.jpg

 

As for any toxic materials in thin film panels, they aren't really much of a problem since they aren't going anywhere for the decades of useful life of the panel and can then be recycled. It's not like toxic materials in fuels that you burn and then release in the air.

 

Wind power has problems with noise.  The noise generated by the turbines cause sleep problems in human beings.  Smart residents will viciously fight wind power in their backyard.  The blades themselves also kill birds (you can see videos of this on Youtube).  In the future, I think that wind will get a little more expensive as we recognize these costs.

 

Offshore wind farms will play a much bigger role because the wind is stronger, more constant, and there's less complaining.

 

The birds thing is ridiculous. People suddenly become big bird defenders when they hear about wind power, yet the biggest killers of birds are power lines, buildings, cars, and house cats. Yet nobody complains despite these being many orders of magnitude bigger problems for birds. Climate change and toxins from coal also certainly kill many more birds and other animals than wind power...

 

The noise thing is also way overblown. It can be a problem with badly sited wind farms, but overall, it's like the bird thing. Not nearly the problem that wind opponents would like people to believe IMO.