Wednesday 17th October 2018

Resource Clips

February, 2014

Standpoint on uranium

February 28th, 2014

Energy expert Thomas Drolet looks at nuclear power from a global point of view

by Greg Klein

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This is the second of a two-part interview. Read part one here.

Uranium stocks surged on the February 25 news that suggested Japan was reinforcing its long-term nuclear commitment. In part one of an interview with, energy expert Thomas Drolet discussed the Japanese situation and its effect on uranium prices. In part two of this interview, he covers several other aspects of nuclear energy from the perspective of a chemical engineer whose career with electrical utilities, including a term as president/CEO of Ontario Hydro International, gives him insight into the global energy picture.

Uranium prices in perspective

While miners understandably fret over uranium’s dismal price, the commodity itself means very little to the cost of nuclear power. Drolet says uranium contributes about 1% of the price of Candu energy, and about 2% to 3% of electricity produced by the average light water reactor, which requires enriched fuel.

Therefore utilities aren’t overly concerned about uranium’s price—“except do they want to keep all their cost inputs down? You’re darn right they do.”

Megatons to Megawatts has ended—or has it?

The Highly Enriched Uranium agreement ended in December, an event that was predicted to threaten supply. So far it hasn’t, Drolet maintains.

Energy expert Thomas Drolet looks at nuclear power from a global point of view

“One of the common opinions in the media is that that would mean an instantaneous falloff of 26 million pounds of U3O8 a year. That’s not true,” he says. “There were some amendments to the original contracts that allowed some continuing supply to the world, not just the U.S., to continue for about three to eight years. It’s not 26 million pounds that were lost to the world, mostly the U.S. It’s something like 14 or 15 million pounds.”

But he adds, “In several years that will be a major event.”

The source of that HEU supply has ambitious plans

“Russia’s into a very aggressive internal nuclear building program and exports to former East Bloc countries, south Asian countries and Turkey,” Drolet points out. “That will sop up a lot of supply from Kazakhstan and from Russia itself, and probably from Africa, where Chinese and Russian buyers get a lot of their sourcing. The very fact that Russia is building so much for itself and for export means that the world will have to get replacement uranium from somewhere else. And that’s why I think eventually all these shuttered mines will come back.”

Chinese nuclear expansion, he emphasizes, will be the primary reason for increased uranium demand. Russia holds second place, both for domestic use and export. The country’s state-owned Rosatom builds and operates reactors, enriches fuel and, through its subsidiary ARMZ, mines uranium in Russia and abroad.

“They have a marketing strategy that’s unique in the world, in that they’re supplying a turnkey service,” Drolet says. “Not only do they supply the reactors but they operate them or train local operators to work along with their staff. They supply the fuel and they’ll take back the spent fuel for disposal. It’s a very marketable package. Nobody else has adopted that, but I think some people will start to consider that model.”

Other countries ramp up nuclear

India ranks third for global uranium demand. “They have four or five reactors coming online this year and something like 13 under construction. Close behind them are the new commitments by South Korea in the UAE, for example, where they’ve sold four reactors. The first of those will be coming online in a couple of years. Saudi Arabia announced they’re going to construct 10, and they’re currently out with preliminary bid documents to the world suppliers. I can assure you that people like Toshiba, Westinghouse, General Electric, the Russians, the Chinese and the South Koreans are likely preparing to have a go with Saudi Arabia. Then there’s Jordan and Turkey, but we’re getting back to smaller numbers.”

What about the U.S.?

Ambivalence might characterize American policy. “The current administration has said it supports a balanced mixture of energy supply, including nuclear power,” Drolet says. “The Nuclear Regulatory Commission is a very strong institution with a prescriptive set of policies and procedures. It’s a very onerous burden for reactor operators but good for the public.”

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The need for commodities is “as solid as a rock”

February 28th, 2014

by Michael Allan McCrae | February 27, 2014 | Reprinted by permission of


While the head of the International Council on Mining and Metals doesn’t believe anyone will see the big run-up in metals we did a few years ago, the miners should be optimistic about the economy.

“While there are not fantastic times ahead, there are very positive signals in the world economy,” said Dr. Anthony Hodge, who spoke to in Vancouver at Roundup 2014.

“The growth projections for China are solid at 7% to 7.5%, although we may see a shrinkage in the early part of 2014, but it’s almost guaranteed that it will pop back up and China will meet those targets.”

Hodge expects 3% growth from the U.S. and middling growth from Europe. Put it all together, Hodge says the economy going forward is impressive and that stronger economy will propel commodities.

“The need for those commodities [is] as solid as a rock: population is growing, urbanization is continuing. The signals for the future are very, very good.”

Hodge is particularly impressed with Africa, pointing to the sub-Sahara, which he says is really perking along.

“Africans are taking a hold of their own future. It’s a change of spirit as much as anything. They understand they can do it, and they are doing it.

“There is tremendous possibility there, and that is where the excitement stems from.”

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February 28th, 2014

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Canada’s New Prosperity decision: AME BC, regional politicians, Tsilhqot’in chiefs, Taseko Mines respond

February 27th, 2014

by Greg Klein | February 27, 2014

While native opponents welcomed the federal rejection of Taseko Mines’ (TSX:TKO) New Prosperity project, the Association for Mineral Exploration British Columbia defended the proposal, two B.C. Conservative backbenchers slammed their own party, a local mayor expressed despair and the company vowed to pursue a judicial review.

“We are concerned that this decision is primarily based on the recommendation of the independent federal review panel, which may not have reviewed or included all of the best available scientific evidence,” said AME BC president/CEO Gavin Dirom in a February 27 statement.

There are tens of thousands of people in the Cariboo who were looking at this project as a lifeline and an opportunity in communities that have been very hard hit.—Conservative MP Cathy McLeod, as quoted by Canadian Press

The news release adds, “It appears to AME BC that the federal review panel used an incorrect model that predicted seepage from the New Prosperity tailings storage facility.”

Calling the project’s deposit “one of the largest of its kind in the world,” the association cited estimates that it would provide “over 20 years of economic development and nearly $10 billion in government revenues by creating 700 jobs during construction and 500 jobs throughout the mine’s operational period.”

Meanwhile two Conservative backbenchers from the region have denounced their own party, according to a Canadian Press dispatch published by CTV. Cathy McLeod, whose riding would have hosted the mine, and Dick Harris, who represents a neighbouring constituency, both spoke of opportunities lost to a struggling region.

“There are tens of thousands of people in the Cariboo who were looking at this project as a lifeline and an opportunity in communities that have been very hard hit,” McLeod told CP. “I really am feeling incredibly disappointed.”

The news agency quoted Williams Lake Mayor Kerry Cook saying, “There’s shock, there’s anger, there’s frustration, there’s disillusionment with the decision. We need to find a way to move forward.”

But native leaders celebrated the federal government decision, calling Taseko’s proposal an “open-pit disaster.”

In a joint statement Tsilhqot’in chiefs called for “the end of a costly, pointless battle that has dragged on since at least 1995, when Taseko Mines Ltd was first told by the federal Department of Fisheries and Oceans not to waste any further time or money pursuing this unacceptable project.”

The group said two environmental review panels found “the project was unacceptable environmentally and in terms of its impact on first nations’ rights and culture, and that these impacts were immitigable.”

The group “will be making public a Tsilhqot’in mining policy about how engagement in our territory must occur,” stated Chief Joe Alphonse. “In this case, it was the wrong project in the wrong place.”

In another February 27 statement, Taseko said the company will continue with an application launched in December for a federal judicial review into the panel’s findings “and the panel’s failure to comply with principles of procedural fairness.”

Read more.

February 27th, 2014

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Canada rejects Taseko’s B.C. New Prosperity copper-gold mine

February 26th, 2014

by Greg Klein | February 26, 2014

What was more controversial—the mine proposal or the environmental process?

For the second time, Canada’s federal government has rejected a Taseko Mines TSX:TKO proposal to build a copper-gold operation in central British Columbia. In a February 25 decision made public late the following day, the federal cabinet declared that “the New Prosperity mine project is likely to cause significant adverse environmental effects that cannot be mitigated.” No mention was made of Taseko’s claim that the environmental review studied a mine plan much different than the actual proposal.

Last November the company stated that a two-year federal review panel issued a negative report largely based on a tailings storage plan that was “completely different” from what Taseko had proposed. At the time the Canadian Environmental Assessment Agency declined to respond to inquiries from

The panel’s report went to Environment Minister Leona Aglukkaq. A negative decision from her requires cabinet backing.

Defending the cabinet decision, Aglukkaq’s February 26 statement noted the review panel’s criticisms:

  • “significant adverse effects on water quality and fish and fish habitat;

  • significant adverse effects on the current use of lands and resources for traditional purposes by certain aboriginal groups, on their cultural heritage and on their archeological and historical resources;

  • significant adverse effects on wetland and riparian (interface between land and a river or stream) ecosystems; and

  • significant adverse cumulative effects on the regional grizzly and moose populations, unless necessary mitigation measures are effectively implemented.”

Opposition from six native chiefs had emphasized concern about how the tailings plan would affect the 118-hectare Fish Lake. In November 2010 those criticisms killed Taseko’s original proposal to drain the lake. After that first federal rejection, the company came back with a $300-million revision to save Fish Lake by moving the tailings dump. Opponents weren’t satisfied.

But in December John Meech, head of the University of B.C.’s Centre for Environmental Research in Minerals, Metals and Materials, told a public rally that Taseko’s plan “will not only protect Fish Lake, but it will enhance the quality of the fish that reside in that lake.” He added, “Anyone who tells you the [tailings’] seepage rates are in error is not telling you the truth.”

Other speakers at the December event included former Tsilhqot’in National Government chief Ervin Charleyboy, who stated that New Prosperity’s native supporters had been intimidated into silence. He challenged opposing chiefs to call a general assembly to vote on the issue.

Also present was B.C. mines minister Bill Bennett, who later lobbied Ottawa parliamentarians on behalf of the mine.

Unavoidable to the discussion is the nebulous topic of native rights, potential rights, potential title, tradition and culture. Those concerns came up repeatedly in the first environmental review. Since then the federal government has granted “interested party” status in environmental reviews to a number of political and ideological groups.

This time around, did non-environmental concerns trump Taseko’s claim that the review panel studied the wrong model?

Regardless, Aglukkaq left the door open to a continued rigmarole, inviting “the submission of another proposal that addresses the government’s concerns.”

Update: In a February 27 statement the company said it will continue with an application launched in December for a federal judicial review into the panel’s findings “and the panel’s failure to comply with principles of procedural fairness.”

Read more:

Backing New Prosperity: Supporters make their case, challenge critics of Taseko Mines’ B.C. gold-copper proposal

Taseko Mines publicizes critique of federal environmental review

No comment from Ottawa as Taseko alleges environmental report based on wrong info

Federal environmental review screwed up, Taseko charges

Defining a problem: Canada continues to expand its interpretation of environmental issues

Protestors at an illegal blockade claim B.C. has no authority on Crown land

B.C.’s New Prosperity inches forward

Who owns B.C.? Indian mining rights are powerful yet vague

Prosperity for whom? Taseko’s B.C. mine hangs in the balance

East dominated M&A in 2013, expect overall uptick this year—PwC report

February 26th, 2014

by Ana Komnenic | February 26, 2014 | Reprinted by permission of

East dominated M&A in 2013, expect overall uptick this year—PwC report


The bad news first: 2013 was the worst year for mergers and acquisitions in recent history, with the volume of deals dropping 33% to the lowest level since 2005.

Now for the good news: According to PricewaterhouseCoopers’ latest Global Mining Deals report, the mining industry can expect an uptick in M&A throughout 2014.

Though these deals will be “smarter, more conservative,” 2014 will be characterized by joint ventures, mid-tier buyers and more mergers or sales from juniors, PwC predicts. The gold price drop will also make buying gold assets more appealing—especially in Canada.

“You aren’t going to see the big dollars in riskier jurisdictions,” PwC wrote, quoting Brett Mattison of Gold Fields NYE:GFI.

As evidence of a strong start to the year, PwC points to Goldcorp’s TSX:G hostile takeover bid for Osisko TSX:OSK—though Osisko has called the offer “opportunistic” and some say Goldcorp is trying to take advantage of a weak gold market.

“The turnaround won’t mirror the surge in movement we saw back in 2011, but expect deal making to resurface in most parts of the world this year as both an opportunity and in some cases a necessity for companies across the sector,” PwC global mining leader John Gravelle said in a statement.

“Companies have been cleaning up their balance sheets and putting off decisions, waiting for the right time to act—that timing is near.”

Overall, PwC expects deal activity to increase this year—reaping “long-term gain” from “short-term pain.”

While it’s well known that M&A dropped off in a big way last year, PwC revealed something new in its latest report: The Eastern world dominated M&A activity last year. In fact, “the East accounted for nearly half of the deals by value in 2013, or about 45%, while the West represented about 36%,” PwC wrote.

East dominated M&A in 2013, expect overall uptick this year—PwC report

“Looking ahead, many Western-based majors are still going to wait for commodity prices to stabilize, concentrating on cash costs, rationalizing their assets and trying to divest assets as a way to pay down debt and fund existing operations,” Gravelle said.

The rich and powerful from Russia and Kazakhstan in particular bought up assets while major mining companies such as Rio Tinto NYE:RIO and Barrick TSX:ABX were selling.

The biggest deal of 2013 was in Russia, where Gavril Yushvaev and Zelimkhan Mutsoev purchased nearly half of Polyus Gold from billionaire Mikhail Prokhorov.

Reprinted by permission of

February 26th, 2014

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Japan reinforces nuclear commitment, M&A speculation resumes

February 25th, 2014

by Greg Klein | February 25, 2014

Japan has strengthened its commitment to nuclear energy in a draft policy document released February 25, the Financial Times reports. While Shinzo Abe’s pro-nuclear efforts have so far focused on the short term, the document indicates a more far-reaching strategy, according to the FT: “The energy plan, expected to be approved by Mr. Abe’s cabinet by the end of March, could open the door to a nuclear revival, possibly even including the construction of reactors.”

The paper cautions, however, that the plan to recommission some existing plants “still faces hurdles and any restarts must be approved by safety regulators and local governments.”

While polls show a majority of Japanese oppose nuclear energy, a February 23 local government election saw a pro-nuclear candidate defeat rivals who campaigned against a proposal to build a reactor in the region, the FT states.

Abe’s predecessor Naoto Kan opposed nuclear energy but with only limited backing from his own cabinet. Business groups support nuclear power for its relatively low cost. Even so, Japanese industry minister Toshimitsu Motegi “sought to play down the degree of change in energy policy, noting that the energy plan still committed the country to ‘reducing its reliance on nuclear power as much as possible,’” the FT points out.

The paper adds that Japanese re-starts could affect global liquefied natural gas markets. Japan’s post-Fukushima imports pushed up LNG prices in Asia and Europe. “Any moderation in Japanese demand could take some of the heat out of the global LNG market.”

We’ve only been about one year into this project and we’d hate to have a situation where we sell and the best drill hole comes afterwards.—Fission Uranium CEO
Dev Randhawa, as quoted by Bloomberg

Meanwhile anticipated Japanese restarts have renewed interest in mergers and acquisitions, Bloomberg reported on February 21. “The rebound in uranium demand may fuel takeovers as buyers try to get ahead of rising prices,” according to a Bank of Nova Scotia statement quoted by the news agency.

“Now is a great time for cherry-picking good assets,” Cantor Fitzgerald analyst Rob Chang told Bloomberg. “We think 2014 is going to be really the kick-off year for the uranium space. The timeframe for cheap acquisitions may be running out.”

Denison Mines TSX:DML and Fission Uranium TSXV:FCU figure prominently in analysts’ speculation. Denison holds interests in exploration and development projects as well as the Athabasca Basin’s McClean Lake mill, one of the world’s largest uranium processing facilities. Fission Uranium’s sole asset is Patterson Lake South, an early-stage sensation that has yet to produce a resource estimate.

David Sadowski, an analyst at Raymond James, told Bloomberg, “If you’re Rio Tinto [NYE:RIO], you just bought a bunch of pounds in the Athabasca Basin and you’ve got nowhere to process those pounds. Why not buy Denison right now?”

The news agency cited Cameco Corp TSX:CCO as another possible suitor.

Fission Uranium chairman/CEO Dev Randhawa told Bloomberg his company has signed three non-disclosure agreements, one with a Chinese interest.

His own company recently acquired joint venture partner Alpha Minerals, presumably to make PLS a more attractive takeover target. Even so, Randhawa said an acquisition of Fission Uranium might be premature. “We’ve only been about one year into this project and we’d hate to have a situation where we sell and the best drill hole comes afterwards,” Bloomberg quoted him. “Our investors don’t want us selling with uranium at $35 a pound, but at the same time we don’t control the people who are buyers.”

See a roundup of last week’s uranium news.

Largest bitcoin trading platform, along with 700,000 bitcoins, disappears

February 25th, 2014

by Ana Komnenic | February 25, 2014 | Reprinted by permission of

What goes up must come down: Bitcoin has been on a losing streak lately, shedding more than 50% of its value over the past month.

Bitcoin’s troubles have a lot to do with the meltdown of Tokyo-based MtGox—what used to be the largest trading platform for the crypto-currency.

In early February MtGox suspended bitcoin withdrawals, though announcing soon after that it was working on resolving the issue. But on February 25 the site went offline and now shows a blank page.

According to Associated Press, the site went bust after “racking up catastrophic losses.”

A release titled the Crisis Strategy Draft which appears to come from the troubled site, though this is unverified, stated that 744,408 bitcoins went missing due to “theft which went unnoticed for several years. The cold storage has been wiped out due to a leak in the hot wallet.”

In other words, the bitcoins MtGox was storing offline—cold storage—are gone.

“The reality is that MtGox can go bankrupt at any moment,” the draft reads.

MtGox will apparently re-brand itself as GOX.

In a statement issued by the “bitcoin community,” CEOs and founders of various bitcoin businesses said MtGox had violated the trust of its users and that the company’s failure “does not reflect the resilience or value of bitcoin and the digital currency industry.”

“As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today,” the statement reads.

One bitcoin investor with holdings in MtGox told MarketWatch he’s lost about 200 bitcoins—worth more than $27,000 as of February 24.

“My feeling is [that] they’re never coming back,” he said.

According to the Winklevoss Index, the price of one bitcoin on February 25 was $513.59.

A popular bitcoin forum on Reddit was bustling on February 25. One post emphasized that the “lesson is not that bitcoin is broken.”

“We are building a new financial order, and those of us building it, investing in it, and growing it, will pay the price of bringing it to the world. This is the harsh truth. We are building the channels, the bridges, and the towers of tomorrow’s finance, and we put ourselves at risk in doing so.”

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