Tuesday 23rd July 2019

Resource Clips


Posts tagged ‘kazakhstan’

Washington continues critical inquiries into rare earths and uranium supply chains

July 15th, 2019

by Greg Klein | July 15, 2019

While somewhat relaxing its concern about uranium, the U.S. appears increasingly worried about rare earths supply. A Reuters exclusive says Washington has begun an inventory to itemize domestic RE projects.

Washington continues critical inquiries into rare earths and uranium supply chains

With an inventory of domestic RE projects
already underway, the U.S. called for a study
of uranium supply chain potential.

“The Pentagon wants miners to describe plans to develop U.S. rare earths mines and processing facilities, and asked manufacturers to detail their needs for the minerals, according to the document, which is dated June 27,” the news agency reported. “Responses are required by July 31, a short time frame that underscores the Pentagon’s urgency.”

The request mentions the possibility of investment by the military, Reuters added.

The move marks another development in American plans to reduce the country’s dependency on critical minerals from economic and geopolitical rivals. Last month the U.S. announced a new critical minerals strategy calling for closer co-operation with allies. Out of an official list of 35 critical minerals, rare earths repeatedly come up for special attention. China supplies 80% of American demand for this economic and military essential, with more imports coming indirectly from China. Compounding the conundrum is the fact that America’s only rare earths mine, Mountain Pass in California, ships its entire output to China.

Last month Reuters stated that U.S. President Donald Trump and Prime Minister Justin Trudeau instructed their officials “to develop a joint action plan on critical minerals collaboration.”

But if heightened American urgency about some critical minerals looks positive for Canadian projects, so does a reduction in urgency about U.S. uranium supplies.

Cameco Corp TSX:CCO expressed itself pleased with Trump’s decision not to introduce new trade restrictions on uranium imports.

The president disagreed with a July 12 report stating that the country’s heavy reliance on imports threaten to impair U.S. national security. The secretary of commerce found the country’s foreign dependency now accounts for 93% of American uranium supply, up from 85.8% in 2009. The secretary attributed the number to “increased production by foreign state-owned enterprises, which have distorted global prices and made it more difficult for domestic mines to compete,” the White House stated.

But, citing significant concerns nonetheless, Trump called for the creation of a nuclear fuel working group “to develop recommendations for reviving and expanding domestic nuclear fuel production” within 90 days.

Cameco president/CEO Tim Gitzel said the company “also sees tremendous value in increasing co-operation between the United States and Canada to address critical mineral issues and strengthen security of supply on a North American, rather than strictly national, basis.”

Trump and Trudeau’s commitment to a joint action plan “is an excellent initiative, and we see uranium being a key component of that strategy,” Gitzel added.

The U.S. report results from a petition by Energy Fuels TSX:EFR and Ur-Energy TSX:URE, who together took credit for over half of U.S. uranium production in 2017. Yet their estimates for last year showed total domestic production supplied only about 2% of U.S. demand.

The companies called for a 25% domestic quota on uranium purchases in the U.S., suggesting state-owned companies in Russia, Kazakhstan and Uzbekistan keep prices below a profitable threshold for American producers. The Eurasian trio provided about one-third of U.S. demand in 2017.

“If Russia and its allies take control of this critical fuel, the threat to U.S. national and energy security would be incalculable,” the companies maintained.

Got the minerals?

March 4th, 2019

A new book says self-imposed obstacles block U.S. self-sufficiency

by Greg Klein

“The Middle East has oil, China has rare earths.”

Deng Xiaoping’s 1992 implied threat became all too real eight years later in the Senkaku aftermath, when RE dependency put Japan and the West at China’s mercy. But just as the United States overcame the 1973 OPEC embargo to become the world’s leading oil producer, that country can overcome its growing reliance on dodgy sources of mineral production and processing. So say authors Ned Mamula and Ann Bridges in Groundbreaking! America’s New Quest for Mineral Independence.

Their country’s problem isn’t geology but policies, the book argues. Repeatedly pointing to Canada and Australia as role models, the authors say their own country’s mining potential can restore mining self-sufficiency, or at least minimize a crippling dependency.

A new book says self-imposed obstacles block U.S. self-sufficiency

Indeed, the mighty nation has a mighty problem with minerals: Imports supply many critical minerals and metals in their entirety, with heavy reliance on Russia and especially China, “countries we consider at best our competitors, and at worst our adversaries.”

Rare earths stand out as the “poster child for U.S. critical mineral vulnerability.” As the authors note, REs remain “essential for military and civilian use, for the production of high-performance permanent magnets, GPS guidance systems, satellite imaging and night vision equipment, cellphones, iPads, flat screens, MRIs and electric toothbrushes, sunglasses, and a myriad of other technology products. Since they offer that extra boost to so many new technologies, these rare earth metals rival energy in importance to our 21st century lifestyle.”

Industrial countries not only surrendered rare earths mining and processing to China, but gave up technological secrets too. That happened when China forced RE-dependent manufacturers to move their operations to China. After Apple transplanted some of its manufacturing to that country, China copied and reproduced the company’s products, at times outselling the iPhone with knock-offs.

A new book says self-imposed obstacles block U.S. self-sufficiency

Other intellectual property faces threats. “U.S. companies—Intematix, GE (Healthcare/MRI Division), Ford (Starter Motor Division), and Battery 1,2,3—have all added manufacturing capacity in China, and so has Japan’s Showa Denko, Santoku, and scores of other global electronics companies.”

RE dominance has also allowed China to lead the world in technology for electric vehicles, renewable energy and next-generation nuclear power. And America relies on its rival for defence: “Most of the U.S.’ advanced weapon systems procurement is 100% dependent on China for advanced metallurgical materials.”

Foreign dependency includes tantalum, “critical to the economy and national defense,” gallium, cobalt, uranium and the list goes on.

According to a just-published report from the U.S. Geological Survey, “in 2018, imports made up more than half of U.S apparent consumption for 48 non-fuel mineral commodities, and the U.S. was 100% net import-reliant for 18 of those.

“For 2018, critical minerals comprised 14 of the 18 mineral commodities with 100% net import reliance and 15 additional critical mineral commodities had a net import reliance greater than 50% of apparent consumption. The largest number of non-fuel mineral commodities were supplied to the U.S. from China, followed by Canada.”

The takeover of former TSX listing Uranium One by Russia’s state-owned Rosatom brings threats worse than most observers realized, the authors say. The acquisition granted the Russian government membership in trade organizations and therefore valuable intel formerly available only through espionage. Uranium One also gives Russia the ability to curtail future American uranium production and use its influence on Kazakhstan, the world’s top producer, to flood the U.S. with cheaper, subsidized supply. That could put both U.S. production and processing out of business in a tactic reminiscent of China’s RE machinations.

China’s communist government uses a ‘debt trap’ model of economic development and finance which proffers substantial financing to developing countries in exchange for an encumbrance on their minerals resources and access to markets. This predatory model has been particularly effective in countries characterized by weak rule of law and authoritarian regimes.—Ned Mamula
and Ann Bridges

The Chinese “are now masters at securing and controlling core natural resources globally, especially minerals.” The country uses long-term contracts, equity investments and joint ventures, as well as the “debt trap” that provides “substantial financing to developing countries in exchange for an encumbrance on their minerals resources and access to markets. This predatory model has been particularly effective in countries characterized by weak rule of law and authoritarian regimes.”

The U.S., meanwhile, suffers not only from naivete and short-term thinking, but from self-induced challenges. The authors devote an entire chapter to Alaska’s Pebble project, maybe the world’s largest undeveloped copper-gold-molybdenum deposit. After more than two decades and over $150 million in spending, “Pebble is still more about politics than geology, much less mining the minerals known to exist there.”

The story stands out as “the classic cautionary tale in U.S. history of how a powerful federal regulatory agency can go rogue and impose its will on an unsuspecting permit applicant.”

Suggestions to alleviate these ills include streamlining the permitting process, among other recommendations to open up domestic production and re-build supply chains. One of the authors’ more interesting ideas concerns teaming up with environmental activists to promote ethical green supply chains that would shut out conflict minerals.

The book’s marred by repetition, sloppy English and some bold-faced typographical shouting. It’s also cluttered with a few questionable information sources and excerpts from a novel that would have been better left unwritten. The portrayal of Canada as a role model, moreover, might induce bitter laughter from this side of the border. But Groundbreaking offers a vital message to general readers. In doing so, it could reinforce a growing awareness in the U.S. about the need to minimize foreign dependency.

Read more about U.S. efforts to secure critical minerals here and here.

Critical Quebec commodities

January 11th, 2018

Saville Resources moves into Commerce Resources’ niobium-tantalum target

by Greg Klein

A rare metal find on a property hosting a rare earths deposit becomes a project of its own under a new agreement between two companies. With a 75% earn-in, Saville Resources TSXV:SRE can now explore the niobium claims on Commerce Resources’ (TSXV:CCE) Eldor property in northern Quebec, where the latter company advances its Ashram rare earths deposit towards pre-feasibility.

Saville Resources moves into Commerce Resources’ niobium-tantalum target

A map illustrates the mineralized boulder
train’s progress, showing its presumed source.

Grab samples collected by Commerce on a boulder train about a kilometre from the deposit brought assays up to 5.9% Nb2O5. “That’s right off the charts,” enthuses Saville president Mike Hodge. “People in the niobium space hope for 1%—5.9% is excellent.”

He’s no newcomer to the space or even to the property. Hodge helped stake Commerce’s tantalum-niobium deposit on southern British Columbia’s Blue River property, which reached PEA in 2011.

“I did a lot of the groundwork for Commerce in the Valemount-Blue River area and I was one of the first guys on the ground at the camp that now supports Ashram,” he points out. “I’ve been involved with these two properties since 1999.” That’s part of a career including field experience on over 25 projects as well as raising money for junior explorers.

Miranna’s grab samples brought tantalum too, with a significant 1,220 ppm Ta2O5. Forty of the 65 samples graded over 0.5% Nb2O5, with 16 of them surpassing 1%.

The company describes the sampling area as a “strongly mineralized boulder train with a distinct geophysical anomaly at its apex.”

The 980-hectare Eldor Niobium claims have also undergone drilling on the Northwest and Southeast zones, where some wide intervals gave up 0.46% Nb2O5 over 46.88 metres and 0.55% over 26.1 metres (including 0.78% over 10.64 metres).

Samples from Miranna and the Southeast zone also show that niobium-tantalum occurs within pyrochlore, described by Saville as the dominant source mineral for niobium and tantalum in global mining. That’s the case, for example, at Quebec’s Niobec mine, one of the world’s three main niobium producers, with 8% to 10% of global production. Moreover, pyrochlore on the Saville project “is commonly visible to the naked eye, thus indicating a relatively course grain size, which is a favourable attribute for metallurgical recovery,” the company added.

Hodge already has a prospective drill target in mind. “I pulled the rig around with a Cat for a lot of the holes on Ashram itself so I’m very familiar with the ground. We’d of course do more prospecting and try to prove up some more numbers while we’re drilling.”

Saville Resources moves into Commerce Resources’ niobium-tantalum target

Should Saville find success, a ready market would be waiting. The company cites niobium demand growth forecasts of 7.66% CAGR from 2017 to 2021. A December U.S. Geological Survey report lists niobium and tantalum among 23 minerals critical to American security and well-being.

The country relies on foreign exports for its entire supply of both minerals, according to an earlier USGS study. From 2012 to 2015, 80% of America’s total niobium imports came from Brazil, where one mine alone produces 85% to 90% of global supply. Looking at tantalum imports during that period, the U.S. relied on China for 37% and Kazakhstan for another 25%. A troubling source of tantalum remains the Democratic Republic of Congo, from where conflict minerals reach Western markets through murky supply chains.

Days after the USGS released its December study, American president Donald Trump ordered a federal strategy “to ensure secure and reliable supplies of critical minerals.” Although he emphasized the need for domestic deposits and supply chains, Trump also called for “options for accessing and developing critical minerals through investment and trade with our allies and partners.”

Meanwhile Saville also sees potential in Covette, the company’s other northern Quebec property. Historic, non-43-101 grab samples reported up to 4.7% molybdenum, with some bismuth, lead, silver and copper. A 1,402-line-kilometre VTEM survey in late 2016 found prospectivity for base and precious metals. “The VTEM and some sampling that we did indicates that drilling could find something valuable,” Hodge says. “Although it is early-stage, the Geotech guys that did the VTEM survey said they hadn’t seen targets like that all year.”

Still, “the niobium claims are my first priority,” Hodge emphasizes. “I’m very excited about this. I believe we can have a winning project here.”

Subject to approvals, a 75% interest in the new property would call for $25,000 on signing, another $225,000 on closing and $5 million in work over five years. Commerce retains a 1% or 2% NSR, depending on the claim, with Saville holding a buyback option.

Last month the company offered private placements totalling up to $500,000, with insiders intending to participate.

Read more about the U.S. critical minerals strategy.

Paved with mineralization

October 27th, 2017

Norman B. Keevil’s memoir retraces Teck’s—and his own—rocky road to success

by Greg Klein

Norman B. Keevil’s memoir retraces Teck’s—and his own—rocky road to success

Profitable right from the beginning, Teck’s Elkview mine “would become
the key chip in the consolidation of the Canadian steelmaking coal industry.”
(Photo: Teck Resources)

 

“We were all young and relatively inexperienced in such matters in those days.”

He was referring to copper futures, a peril then unfamiliar to him. But the remark’s a bit rich for someone who was, at the time he’s writing about, 43 years old and president/CEO of a company that opened four mines in the previous six years. Still, the comment helps relate how Norman B. Keevil enjoyed the opportune experience of maturing professionally along with a company that grew into Canada’s largest diversified miner. Now chairperson of Teck Resources, he’s penned a memoir/corporate history/fly-on-the-wall account that’s a valuable contribution to Canadian business history, not to mention the country’s rich mining lore.

Norman B. Keevil’s memoir retraces Teck’s—and his own—road to success

Norman B. Keevil
(Photo: Teck Resources)

Never Rest on Your Ores: Building a Mining Company, One Stone at a Time follows the progress of a group of people determined to avoid getting mined out or taken out. In addition to geoscientific, engineering and financial expertise, luck accompanies them (much of the time, anyway), as does acumen (again, much of the time anyway).

Teck gains its first foothold as a predecessor company headed by Keevil’s father, Norman Bell Keevil, drills Temagami, a project that came up barren for Anaconda. The new guys hit 28% copper over 17.7 metres. Further drilling leads to the three-sentence feasibility study:

Dr. Keevil: What shall we do about Temagami?

Joe Frantz: Let’s put it into production.

Bill Bergey: Sounds good to me.

They schedule production for two and a half months later.

A few other stories relate a crucial 10 seconds in the Teck-Hughes acquisition, the accidental foray into Saskatchewan oil, the Toronto establishment snubbing Afton because of its VSE listing, an underhanded ultimatum from the British Columbia government, getting out of the oyster business and winning an unheard-of 130% financing for Hemlo.

Readers learn how Murray Pezim out-hustled Robert Friedland. But when it came to Voisey’s, Friedland would play Inco and Falconbridge “as though he were using a Stradivarius.” Keevil describes one guy welching on a deal with the (apparently for him) unarguable excuse that it was only a “gentleman’s agreement.”

Norman B. Keevil’s memoir retraces Teck’s—and his own—rocky road to success

Through it all, Teck gets projects by discovery or acquisition and puts them into production. Crucial to this success was the Teck team, with several people getting honourable mention. The author’s closest accomplice was the late Robert Hallbauer, the former Craigmont pit supervisor whose team “would go on to build more new mines in a shorter time than anyone else had in Canadian history.” Deal-making virtuoso David Thompson also gets frequent mention, with one performance attributed to his “arsenal of patience, knowledge of the opponents, more knowledge of the business than some of them had, and a tad of divide and conquer…”

Partnerships span the spectrum between blessing and curse. International Telephone and Telegraph backs Teck’s first foray into Chile but frustrates its ability to do traditional mining deals. The Elk Valley Coal Partnership puts Teck, a company that reinvests revenue into growth, at odds with the dividend-hungry Ontario Teachers’ Pension Plan. Working with a Cominco subsidiary, Keevil finds the small-cap explorer compromised by the “ephemeral response of the junior stock market.” And smelters rip off miners. But that doesn’t mean a smelter can’t become a valued partner.

Keevil argues the case for an almost cartel-like level of co-operation among miners. Co-ordinated decisions could avoid surplus production, he maintains. Teck’s consolidation of Canada’s major coal mines helped the industry stand up to Japanese steelmakers, who had united to take advantage of disorganized Canadian suppliers. “Anti-trust laws may be antediluvian,” he states.

Keevil admits some regrets, like missing Golden Giant and a Kazakhstan gold project now valued at $2 billion. The 2008 crash forced Teck to give up Cobre Panama, now “expected to be a US$6 billion copper mine.” Teck settled a coal partnership impasse by buying out the Ontario Teachers’ share for $12 billion. Two months later the 2008 crisis struck. Over two years Teck plunged from $3.6 billion in net cash to $12 billion in net debt.

But he wonders if his own biggest mistake was paying far too much for the remaining 50% of Cominco when an outright purchase might not have been necessary. Keevil attributes the initial 50%, on the other hand, to a miracle of deal-making.

For the most part Keevil ends his account in 2005, when he relinquishes the top job to Don Lindsay. By that time the company had 11 operating mines and a smelting/refining facility at Trail. A short chapter on the following 10 years, among the most volatile since the early ’70s, credits Teck with “a classic recovery story which deserves a full chapter in the next edition of Never Rest on Your Ores.” Such a sequel might come in another 10 years, he suggests.

Let’s hope he writes it, although it’ll be a different kind of book. As chairperson he won’t be as closely involved in the person-to-person, deal-to-deal, mine-to-mine developments that comprise the greatest strength of this book—that and the fact that the author grew with the company as it became Canada’s largest diversified miner.

Meanwhile, maybe Lindsay’s been keeping a diary.

The author’s proceeds go to two organizations that promote mining awareness, MineralsEd and Mining Matters.

Visual Capitalist: What’s needed to sustain uranium’s resurgence?

January 27th, 2017

by Jeff Desjardins | posted with permission of Visual Capitalist | January 27, 2017

What’s needed to sustain uranium’s resurgence?

 

Uranium miners up 59% on pro-nuclear hopes since U.S. election

The Chart of the Week is a Friday feature from Visual Capitalist.

Uranium’s spot price had a rough ride throughout the course of 2016, but for many investors there is suddenly a new aura of optimism around the troubled metal.

It all starts with Donald Trump’s “America First” strategy, which is being perceived by many as a potential boon to the uranium sector. Official details are slim, but industry executives are currently speculating that the Trump administration will be better for nuclear power than the previous government.

If that’s true, then it would mean far less regulatory hurdles for nuclear power, and likely even funding to bring more power plants online in the United States.

A shot in the arm

Perhaps such a catalyst is just what the metal needed. The spot price and the share prices of uranium miners have been in a gruesome bear market ever since the 2011 Fukushima incident in Japan. The prolonged pain has worn down investors and companies alike, but everything has to bottom at some point.

As David Erfle from Kitco pointed out last week, the chart for the Global X Uranium ETF (URA) makes any other downturn look like a piece of cake. The ETF, which tracks global uranium miners, has lost a whopping 90% of its value over the last six years, including two rollbacks (in 2013 and 2015).

Lately, thanks to the “Trump bump” and a 10% production cut in Kazakhstan announced earlier this month, the URA is suddenly buzzing with volume. The ETF is now back up on its feet, gaining a solid 59% since the election.

But can uranium be great again?

A bounce in uranium stocks is something that was way overdue. However, if nuclear-related announcements aren’t made soon from the Trump administration, the newfound optimism could fade pretty fast.

Statistically speaking, the World Health Organization says that nuclear power kills less people per terawatt hour than any other major source of power, even rooftop solar. Nuclear is also friendly from an emissions perspective: using a life-cycle emissions analysis, nuclear generates similar emissions to wind or hydropower.

The problem, of course, lies in the fat tail risk of a nuclear catastrophe, which is something that is still fresh in people’s minds in the wake of Fukushima.

Whether nuclear and uranium can be great again depends on the public’s tolerance for such projects, as well as a significant amount of support from the government to push new projects through. The rally is much welcomed by uranium investors—but it will remain unclear if it has any long-term legs until these two considerations are met.

Posted with permission of Visual Capitalist.

An expert view

October 27th, 2016

ALX Uranium’s new CEO Mark Lackey discusses the commodity and the company

by Greg Klein

Thirty-six years in key positions give Mark Lackey a well-rounded perspective on the uranium sector. Added to that is an investor’s outlook gained by experience in the brokerage industry. A prolific media commentator—with over 300 TV appearances—he’s frequently asked to discuss commodities, often focusing on uranium trends and uranium companies. Lackey spoke with ResourceClips.com on October 26, the day he joined ALX Uranium TSXV:AL as president/CEO/director.

Industry expert Mark Lackey takes the helm at ALX Uranium

Mark Lackey brings extensive
expertise to ALX Uranium.

Lackey has served as Bank of Canada economist responsible for U.S. economic forecasting and senior commodities manager at the Bank of Montreal. Stints with Gulf Canada, a uranium producer like many other oil companies of the time, and Ontario Hydro, a major uranium consumer, enhanced his supply/demand insight.

That uranium career includes his 16 years in the brokerage industry, serving with Brawley Cathers, Blackmont Capital, Hampton Securities and Pope & Company. More recently he’s been executive VP at CHF Investor Relations and technical adviser at Presmont Group.

To those who watch uranium, its underachieving price hasn’t just been an ongoing disappointment. It’s a source of frustration to those who’ve made bullish forecasts. Lackey has been less surprised than others, however.

“I spoke at a conference last year and might have been the only one who thought uranium was actually going to go down this year,” he recalls. “It did go down, but way more than I thought, which was about $29 or $28. I thought everybody else was too optimistic about Japan restarting all the units and we’ve seen excess supply coming out of places like Kazakhstan. So the weakness this year didn’t surprise me.”

History gives him a sense of perspective, not to mention optimism. “I’ve seen this from $8 in the late ’90s to $136 in 2007. It fell during the 2008 recession, then came back nicely to $72 in 2011, the day Fukushima was hit. So we’ve had some big moves both ways over the years but now we’re down to a price that’s not sustainable. How many new mines would you get at these prices? I can’t think of too many unless you find something huge in the Basin, because high-volume, low-grade projects in many other places have people looking for $50 to $60—not $21.”

ALX Uranium’s new CEO Mark Lackey discusses the commodity and the company

He sees a number of price catalysts over the next few years: increased buying from utilities, a possible reduction in Kazakhstan supply, Japanese restarts and nuclear expansion elsewhere.

Kazakhstan provided 39% of world supply last year (compared with Canada’s 22%). But Lackey wonders whether low prices will force the global leader to cut output. Kazakhstan has been disregarding a 2011 self-imposed production cap of 20,000 tonnes per year, the World Nuclear Association states. WNA data attributes last year’s output to 23,800 tonnes.

As for Japan, it “will have to do something ultimately,” Lackey maintains. “There are 51 of the 54 reactors idled, that’s six or seven billion dollars a plant, roughly three or four hundred billion dollars of infrastructure. Thirty of the units have been tested positively. There are political concerns and the closer you are to Fukushima the more difficult it would be to restart them, but southern Japan doesn’t seem to have the same anti-nuclear view. Japan’s burning a lot of coal, they’re burning LNG and I hear from my sources that there are brownouts and blackouts. You can’t have that in an industrial country.”

Japan’s restarts would have a symbolic effect. But it is, after all, just one country. “There are about 60 plants under construction around the world right now, and more and more of them are coming into play,” Lackey points out.

“It’s cleaner than most baseload sources and relatively cheap. The planet has 1.2 billion people with no power and another two billion with just intermittent power.”

As someone who’s been watching uranium companies for 36 years, I’ve seen it’s the team you have, the projects you have and the jurisdiction you’re in.—Mark Lackey,
president/CEO of ALX Uranium

Although near-term price scenarios can certainly influence investors, there are other priorities in assessing junior explorers. “As someone who’s been watching uranium companies for 36 years, I’ve seen it’s the team you have, the projects you have and the jurisdiction you’re in. My favourite jurisdiction’s been the Athabasca Basin. It’s got the highest grades and Saskatchewan’s a great province to work in.

“I follow the companies in this space and I can see that ALX has a very strong board, management and technical staff,” he adds. “I’m extremely bullish about uranium and extremely excited about working with such an impressive team. It’s a great opportunity and I’m glad to be part of it.”

Lackey replaces Jon Armes, who steps down to pursue other opportunities but stays on as a consultant. During his six years of leadership at ALX and its predecessor Lakeland Resources, Armes helped build one of the Athabasca Basin’s largest and most prospective uranium exploration portfolios. Most recently he negotiated the Hook-Carter transaction that benefits ALX with the budget and experience of Denison Mines TSX:DML.

Opportunities in adversity

June 9th, 2016

John Kaiser talks Trump, turmoil, gold, scandium and the juniors

by Greg Klein

It’s said to be an ancient Chinese curse: “May you live in interesting times.” Much about our own epoch obviously interests and probably fascinates John Kaiser. But he might be accused of ambivalence for the silver linings he sees among the gathering clouds. The analyst and creator of Kaiser Research Online spoke with ResourceClips.com on a range of subjects, but with mineral exploration always in mind.

On gold’s rally

This one has a stronger foundation than previous upswings, Kaiser believes. Chinese aggression, Russian expansionism, Middle East volatility, Brazilian instability, the possible Brexit and the chances of a Donald Trump U.S. presidency all mean “we’re looking at an extremely turbulent world,” he says. “There’s good reason to expect gold to go higher as capital starts to hedge against all these gloomy scenarios.”

John Kaiser talks Trump, turmoil, gold, scandium and the juniors

That could push prices between $1,600 and $2,000 in the next year, he maintains. “And if that’s happening in the absence of any inflation, that really leverages those ounces in the ground that the juniors have and makes operating mines more profitable. Even for exploration companies it lowers the bar for what counts as a new discovery.”

On the juniors’ rally

Kaiser attributes this year’s rebound partly to gold, but also to renewed interest in discovery exploration.

“I’m very pleased that the rally that started the third week of January did not succumb to the PDAC curse and slow down,” he says. “By May everything’s usually in the garbage can before the summer doldrums. We’re not seeing these substantial gains continue that we saw from February to April, but we haven’t seen the markets give up the gains either.

“We’re probably not going to see a roaring global economy driving up demand and catching supply off guard like we did during China’s supercycle. However, as this world gets more belligerent, we could see massive disruptions of supply.”

John Kaiser talks Trump, turmoil, gold, scandium and the juniors

John Kaiser: “I’m very pleased that the rally
that started the third week of January did not
succumb to the PDAC curse and slow down.”

That would bring greater concern about jurisdictional risk for vital commodities. “An opportunity for the juniors would be to seek out existing deposits of these metals. They might not be worth developing now, but they could be treated by the market as leveraged bets on these big-picture geopolitical outcomes.”

On the Donald

A Vancouver native who’s spent 26 years in the U.S., Kaiser’s firmly among those who consider that country’s anti-establishment presidential contender an outrage.

“He’s basically touching on all the latent prejudices and biases of the country,” says Kaiser. “But another reason people will vote for him is he is not an anti-Keynesian. He and Hillary Clinton both understand that to get America cranking again we need fiscal stimulus in the form of infrastructure renewal. The Republicans have blocked anything along those lines….Trump could prove to be a giant wrecking ball for the stalemate that characterizes Washington. That could put him into power.”

But Kaiser wonders if Trump has a hidden motive to his campaign strategy.

“This guy is an extremely smart person and it’s possible that everything he says is just BS designed to manipulate the public. It’s like he’s satirizing everything. And if he ever did get into power, well first he’d have to deal with the limitations that congress imposes, but once he’s in power he might change his tune and discover all these reasons why it’s not practical to do all the stupid things he said he would do.

“The frightening thing is, what if this sub-narrative is wrong, that the man is indeed insane or worse. Or that he ends up being co-opted by the truly insane in the background, who make him the lever on all the insane stuff that he said, because he is just a human being and he has no true power structure. It would be a reverse takeover of Trump.”

Kaiser downplays the possibility of a Trump presidency meeting an extraordinary end—for example assassination, an establishment putsch or a distinctively American court order annulling the election.

But “whether it’s Hillary or Trump, tensions with China and Russia are on an increasing trajectory,” he says. “That would be good for gold and good for the juniors.”

On the scandium Field of Dreams

“The problem with scandium—and it makes me want to tear out my hair that the market doesn’t get it—is that the uses for scandium have been understood for 30 or 40 years.”

By being able to demonstrate that these deposits have long-term supply, they can produce as much scandium as you want if you’re willing to pay $1,500 or $2,000 a kilo. That will coax demand off the sidelines.

Used for aluminum-scandium alloys and solid oxide fuel cells, the rare earth element also finds its way into ceramics, electronics, lasers, lighting and radioactive isotopes, according to the U.S. Geological Survey. The stuff is widely abundant, but rarely in concentration. As a result it’s mined as a byproduct in China, Kazakhstan, Russia and Ukraine, producing just 10 to 15 tons a year, the USGS states.

But if supply could grow, so would demand, Kaiser says. The aerospace and automotive industries would be prime customers. “The highest-grade deposits have been around 70 or 100 ppm, as in the Zhovti Vody mine in Ukraine, where the Soviets got scandium to build their airforce fleet. But nobody else has been able to produce a very meaningful supply that is scalable.”

That’s changing as two advanced Australian projects lead the way, Scandium International Mining’s (TSX:SCY) 80%-owned Nyngan project and Robert Friedland-backed, ASX-listed CleanTeQ Metals’ Syerston project.

“The difference these discoveries made is their 400-ppm grades are well above the 200 or 250 ppm you need to produce the stuff at $2,000 a kilo,” Kaiser explains. “At $2,000 a kilo it starts making sense to use a scandium-aluminum alloy. By being able to demonstrate that these deposits have long-term supply, they can produce as much scandium as you want if you’re willing to pay $1,500 or $2,000 a kilo. That will coax demand off the sidelines.

“The next few years will be interesting because those companies are going to try producing 35 to 40 tonnes a year. If they can succeed in demonstrating that they’ve got the recoveries figured out, they’ve got the costs figured out, they can scale these things each to about 150 to 200 tonnes of output, that will set the stage for all kinds of plans to utilize it. It’s really a Field of Dreams where if you build it, they will come.

“But you have to understand that there are all these applications for scandium that can’t be commercialized unless there’s a reliable, scalable supply.”

John Kaiser addresses the Vancouver Commodity Forum on June 14. Click here for free registration.

U.S. doubles Kazakhstan uranium imports as domestic purchases plummet

October 6th, 2015

by Greg Klein | October 6, 2015

U.S. doubles Kazakhstan uranium imports as domestic purchases plummet

(Chart: U.S. Energy Information Administration)

 

The world’s largest producer of nuclear energy relied increasingly on Kazakhstan for uranium last year, as purchases from domestic suppliers plunged 65%. According to figures supplied by the U.S. Energy Information Administration on October 5, Kazakhstan sold the U.S. about 12 million pounds U3O8 last year, 23% of the 53.3 million pounds purchased. Imports from Kazakhstan nearly doubled over 2013.

American supply fell to 3.3 million pounds from the 2013 total of 9.5 million pounds. While domestic purchases languished at 6% of the total, imports from Australia and Canada followed Kazakhstan closely with 19.7% and 18.3% respectively.

U.S. doubles Kazakhstan uranium imports as domestic purchases plummet

Kazakhstan’s government-owned Kazatomprom
is the world’s largest uranium supplier.

Purchases don’t necessarily reflect production, however. American mine output increased to 4.23 million pounds uranium in 2014 from 3.95 million the previous year, according to the World Nuclear Association.

“Average Kazakh uranium prices have been lower than other major supplying countries’ prices for the past two years,” the EIA noted. “Uranium from Kazakhstan was $44.47 per pound in 2014, compared with the overall weighted-average price of $46.65 per pound for the 41.3 million pounds of uranium purchased from producers outside Kazakhstan in 2014.”

That country overtook Canada as the world’s leading uranium producer in 2009. Since 2007 its uranium production has more than tripled, while Canadian production has been relatively constant and Australian output dropped 42%, the EIA stated.

Australia’s 19.7% of the U.S. total represented a slight drop to 10.5 million pounds U3O8 from the previous year’s 10.7 million pounds. Australia’s 2014 weighted-average price came to $48.03.

Running a close third, Canada’s 18.3% marked an increase to 9.8 million pounds from 7.8 million pounds in 2013. Canada’s 2014 weighted-average price was $45.87.

World Nuclear Association data from 2013 credits Kazakhstan with 41% of world production, followed by Canada with 16% and Australia with 9%.

The U.S. holds top place for global nuclear energy, producing about 30% of the world total, according to the WNA. In 2014, 100 reactors generated over 19% of the country’s electricity. The U.S. now has 99 reactors in operation and another five under construction.

Uranium One, Canadian miners, Clintons and Russia: The New York Times looks at the “untold story”

April 22nd, 2015

by Greg Klein | April 22, 2015

An April 23 New York Times exposé sparks renewed controversy over the $1.3-billion takeover of former TSX listing Uranium One by Russia’s state-owned Rosatom. The article examines aspects of the strategically strange deal, in which Russia gained control of a Vancouver-headquartered company with uranium assets in Kazakhstan “among the most lucrative in the world,” as well as “one-fifth of all uranium production capacity in the United States.”

As the Russians gradually assumed control of Uranium One in three separate transactions from 2009 to 2013, Canadian records show, a flow of cash made its way to the Clinton Foundation. Uranium One’s chairman used his family foundation to make four donations totalling $2.35 million.—The New York Times

While the deal was winning American government approvals, the NYT states, Canadian mining heavyweights donated heavily to Bill and Hillary Clinton’s family charity. “Among the agencies that eventually signed off was the State Department, then headed by Mr. Clinton’s wife,” the story reports.

“As the Russians gradually assumed control of Uranium One in three separate transactions from 2009 to 2013, Canadian records show, a flow of cash made its way to the Clinton Foundation. Uranium One’s chairman used his family foundation to make four donations totalling $2.35 million. Those contributions were not publicly disclosed by the Clintons, despite an agreement Mrs. Clinton had struck with the Obama White House to publicly identify all donors. Other people with ties to the company made donations as well.

“And shortly after the Russians announced their intention to acquire a majority stake in Uranium One, Mr. Clinton received $500,000 for a Moscow speech from a Russian investment bank with links to the Kremlin that was promoting Uranium One stock.”

The NYT concedes that “whether the donations played any role in the approval of the uranium deal is unknown.” The paper also quotes a spokesperson for Hillary Clinton’s presidential campaign who said that no one “has ever produced a shred of evidence supporting the theory that Hillary Clinton ever took action as secretary of state to support the interests of donors to the Clinton Foundation.”

The Canadian government as well as several U.S. agencies approved the deal, he added.

Read the New York Times article.

Athabasca Basin and beyond

April 17th, 2015

Uranium news from Saskatchewan and elsewhere to April 17, 2015

by Greg Klein

Next Page 1 | 2

India’s fast-emerging market becomes a Cameco customer

What was confirmed on April 15 had been anticipated all along—otherwise, why would Saskatchewan Premier Brad Wall just happen to join the Ottawa announcement by Prime Minister Stephen Harper and his Indian counterpart Narendra Modi? Athabasca Basin heavyweight Cameco Corp TSX:CCO clinched a five-year deal to supply India with 7.1 million pounds of uranium.

The contract, valued by the feds at $350 million, completely overshadowed the day’s other 15 bilateral announcements. Yet it’s not all that big to a company that sold 33.9 million pounds U3O8 last year. Most importantly, the deal “opens the door to a dynamic and expanding uranium market,” said Cameco president/CEO Tim Gitzel. “Much of the long-term growth we see coming in our industry will happen in India and this emerging market is key to our strategy.”

Uranium news from Saskatchewan and elsewhere to April 17, 2015

An emerging economy that’s a quickly-growing uranium market,
India marked a new stage in its Canadian relations by signing
a contract with Cameco. Photo: O’SHI/Shutterstock.com

Indeed Cameco described its new customer as the second-fastest-growing uranium market in the world. India’s 21 reactors now produce 6,000 megawatts, only 3% of the country’s consumption. Six new reactors should add another 4,300 MW by 2017, Cameco noted. By 2032 India’s projected to have about 45,000 MW of nuclear capacity.

As for the impact on prices, Dundee Capital Markets analyst David Talbot told the Financial Post that the deal could cause a chain reaction for future contracts.

But the deal also aggravated an old wound. A group of anti-nuke activists meeting in Quebec—a province now considering an outright ban on uranium mining—denounced the sale to “a country that maintains an arsenal of nuclear weapons and has never signed the United Nations’ Nuclear Non-Proliferation Treaty.”

Attendees of the World Uranium Symposium reminded Canadians that “India has already broken its promise to Canada in the past by using a Canadian reactor given as a gift in 1956 to produce the plutonium for its first atomic bomb, detonated in 1974.”

Gordon Edwards of the Canadian Coalition for Nuclear Responsibility added, “Despite rules specifying no military use of Canadian materials, some uranium from Canada could well end up in Indian bombs. At the very least, Canadian uranium will free up more Indian uranium for weapons production purposes.”

Yet India plans to double its coal consumption by 2020, “overtaking the U.S. as the world’s second-largest coal consumer after China,” the Financial Post reported.

And as a supplier to India, Canada will hardly be alone.

Citing figures from India’s Department of Atomic Energy, the World Nuclear Association stated the country had imported 4,458 tonnes of uranium since 2008, when India appeared to regain some of its pre-1974 credibility by signing the Nuclear Suppliers’ Group agreement. Russia supplied 2,058 tonnes, Kazakhstan 2,100 tonnes and France 300 tonnes, according to the WNA. Several other countries, most recently Australia, have signed so-far unconsummated and not necessarily binding supply agreements with India.

Fission finishes winter work at Patterson Lake South

With another season of drilling wrapped up, Fission Uranium TSX:FCU reported results from multiple fronts at Patterson Lake South. The last few dispatches outlined progress at the R780E zone, as well as R00E and two areas of exploration drilling. R780E, mainstay of the Triple R resource, has been extended laterally, vertically and along strike. But four holes from R00E, scene of the PLS discovery, fell short of spectacular. Four exploration holes from Patterson Lake found no significant radioactivity while 20 others at Forest Lake presented a mixed bag of insignificant to anomalous radioactivity.

Released April 16, some step-out highlights from the eastern part of R780E showed:

Hole PLS15-330

  • 0.66% U3O8 over 33 metres, starting at 142 metres in downhole depth
  • (including 1.87% over 2.5 metres)
  • (and including 8.78% over 1 metre)

PLS15-334

  • 0.42% over 40.5 metres, starting at 61.55 metres
  • (including 2.87% over 1 metre)

PLS15-337

  • 5.4% over 4 metres, starting at 162.5 metres
  • (including 14.07% over 1.5 metres)

  • 0.23% over 7 metres, starting at 182.5 metres

PLS15-341

  • 1.6% over 10.5 metres, starting at 144 metres
  • (including 3.71% over 4 metres)

  • 0.37% over 12.5 metres, starting at 172.5 metres

True widths weren’t available.

Four holes at R00E, 225 metres west of R780E, fell short of the project’s high standards, with the best result showing 0.19% over 2 metres, starting at 67.5 metres.

About seven kilometres southeast of Triple R, four holes at Forest Lake intersected anomalous radioactivity on three basement EM conductors, Fission stated. Sixteen other holes didn’t. Nevertheless, Forest Lake remains a priority.

Four other regional holes at Patterson Lake northeast of Triple R also came up empty.

Scintillometer results announced April 8 extended Triple R’s high-grade area and increased the extent of known mineralization. The hand-held device measures radiation from drill core in counts per second. Its results are no substitute for the still-pending assays.

The standout was hole PLS15-379 which found, within a 105-metre section, a total composite of 8.01 metres above 10,000 cps, peaking up to 61,100 cps. Another five showed mineralization in areas that had little previous drilling. Of 11 holes in the April 8 batch, all found mineralization and eight hit intervals above 10,000 cps, the level once considered “offscale” due to the limitations of older scintillometers.

An April 6 batch of assays increased R780E laterally, vertically and along strike, with all 16 step-outs finding mineralization. The more outstanding assays showed:

PLS15-299

  • 1.91% over 33.5 metres, starting at 60.5 metres
  • (including 14.09% over 3.5 metres)

PLS15-302

  • 1.41% over 22.5 metres, starting at 147.5 metres
  • (including 12.03% over 2 metres)

PLS15-303

  • 3.13% over 13.5 metres, starting at 56.5 metres
  • (including 8.14% over 5 metres)

PLS15-311

  • 0.92% over 5.5 metres, starting at 83.5 metres
  • (including 2.29% over 2 metres)

PLS15-312

  • 0.53% over 27 metres, starting at 149.5 metres
  • (including 4.31% over 1 metre)
  • (and including 2.42% over 2.5 metres)

PLS15-324

  • 1.3% over 6.5 metres, starting at 160.5 metres
  • (including 7.74% over 1 metre)

  • 0.55% over 15.5 metres, starting at 183.5 metres
  • (including 3.99% over 1.5 metres)

PLS15-325

  • 8.14% over 6 metres, starting at 215 metres
  • (including 21.18% over 2 metres)

Again, true widths weren’t available.

Fission ended the winter with 88 holes totalling 28,296 metres and lots more assays to come. While R780E’s pre-eminence was confirmed by 50 mineralized holes out of a seasonal total of 51 on that zone, earlier results also brought renewed interest to the project’s R600W zone.

Read about the Triple R resource estimate.

See an historical timeline of the PLS discovery.

Purepoint finds semi-massive pitchblende in the Hook Lake JV’s last winter hole

A 40-metre step-out, the last hole of the season, added encouragement to Purepoint Uranium’s (TSXV:PTU) Hook Lake joint venture in the southwestern Basin. Announced April 15, hole HK15-33 gave up an 8.6-metre intercept starting at a downhole depth of 344 metres, averaging 8,900 counts per second with semi-massive pitchblende peaking at 32,600 cps. Another interval in the same hole averaged 1,500 cps for 4.4 metres starting at 304.5 metres in depth. True thicknesses were estimated at 75% to 85%.

The hole was collared 35 metres west of HK15-27, which last month revealed 2.23% U3O8 over 2.8 metres. Purepoint said another hole, HK15-31, backed up 35 metres from HK15-27 and found two intervals of 3.4 metres and 4.1 metres just under 0.05% eU3O8 between 387 and 396 metres in depth. The Spitfire zone remains open in most directions, the company added.

Purepoint gleaned its results from a hand-held scintillometer that measures drill core for radiation in counts per second, and two downhole probes that measure uranium oxide-equivalent. Applicable is the usual disclaimer that scintillometer results are no substitute for the still-pending assays.

Purepoint holds a 21% interest in the 28,683-hectare JV, with Cameco and AREVA Resources Canada each holding 39.5%.

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