Wednesday 19th December 2018

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How to flog glitter to the young and affluent: A De Beers special report

September 14th, 2018

by Greg Klein | September 14, 2018

Last year’s global market for diamond-encrusted jewelry rose 2.2% to a new high of $82 billion, largely due to the planet’s most populous age groups, says the world’s largest purveyor of the bling. But as “consumer power” shifts from elderly Boomers and middle-aged Generation X to Millennials and Gen Z, manufacturers and retailers must meet a new set of consumer expectations, De Beers’ Diamond Insight Report warns.

Americans again demonstrated the largest demand for diamond jewelry, splurging $43 billion, up 4.2% from the previous year’s $41 billion extravagance in a market that’s expected to show steady growth.

How to flog glitter to the young and affluent: A De Beers special report

(Photo: Matt Crabb/Anglo American)

Looking at diamonds’ pre-jewelry market, rough sales to cutting and polishing facilities rose 2% to $16.6 billion. De Beers claimed 34% of the total, down from its 2016 portion of 37%. Alrosa’s share came to 25%, compared with 27% the previous year. This year’s H1 sales to cutting centres, however, have surpassed the same period in 2017.

Last year’s global production climbed 15% in value to $17.5 billion and 14% in volume to 164 million carats. De Beers took credit for the largest increase of 6.1 million carats, followed by Rio Tinto NYSE:RIO with 3.7 million and Alrosa with 2.3 million carats. The top three diamond mining countries remained Russia, Botswana and Canada.

Forecasts see this year’s global production slipping “due largely to Alrosa’s suspension of operations at the Mir mine and Rio Tinto’s guided fall in production at its operations. Looking further ahead, production is expected to continue falling as new projects and expansions fail to replace lost output from closing mines. By 2025, several large mines will reach the end of their life, while only a few new projects are in the pipeline.”

With the younger consumers’ desire for qualities that diamonds can perfectly embody—including love, connections, authenticity, uniqueness and positive social impact—the most exciting times for the diamond industry are still ahead of us if we can seize the opportunities.—Bruce Cleaver,
De Beers Group CEO

Much of the report focuses on Millennials and Gen Zedders, and why they matter more than those doddering old Boomers and clapped out Gen Exers. Not only are the newcomers more numerous than their predecessors (64% of the planet’s 7.39 billion potential customers) but they’ll soon have more money to splash around. Additionally “they represent more than two-thirds of total diamond jewellery demand value in the four largest diamond-consuming countries,” the U.S., China, India and Japan.

But don’t mistake these affluent upstarts for status-conscious materialists with more money than values, the report emphasizes. Those who would sell to them must recognize four key traits: “Love is meaningful to them in many ways; they are digital natives; they value authenticity, individuality and self-expression; they are engaged with society and social issues.” Indeed, crass marketing’s passé as enlightened purveyors appeal to young adults’ desire for “love, connections, authenticity, uniqueness and positive social impact.”

Still, differences persist between the two groups. Millennials multi-task across two screens and think in 3D. Gen Zedders do that stuff across five screens and in 4D. Now-focused, idealistic and expectant Millennials contrast with future-focused, pragmatic and persistent Gen Z. The divide continues, pitting Millennials’ Harry Potter/armchair activist lifestyle and their team orientation versus Gen Z’s Hunger Games/active volunteer approach credited with collective consciousness.

De Beers doesn’t divulge the methodology for its detailed but seemingly subjective analysis. Buried in the report, however, might be one of the most important traits for a marketing pitch to consider.

Millennials boast an attention span reaching all of 12 seconds, 50% higher than Gen Z’s eight-second feat of endurance.

Related: Could synthetics bring death to diamond mining? Or a kind of reincarnation?

WGC says gold poised to bounce back; GATA asks what’s going on

August 23rd, 2018

by Greg Klein | August 23, 2018

Even with prices floundering around 20-month lows, the World Gold Council sees technical and fundamental reasons for optimism. But a sustained recovery would depend on consumers and long-term investors, the industry organization stressed.

WGC says gold poised to bounce back; GATA asks what’s going on

A strong U.S. dollar helped push gold below $1,200 this month for the first time since early 2017. Yet given past performance, the “increasingly short” futures positions bode well for a sharp rally, the WGC stated. Other positive factors include larger consumer and investor gold markets in emerging countries, where demand in those two areas has doubled over the last 20 years. Central banks in emerging markets have also been expanding their holdings, now accounting for about 500 tonnes of annual demand.

Russia bought more gold in July than any other month since November, Bloomberg reported. Citing IMF data, the news agency said the country bolstered its reserves by 26.1 tonnes in July, for a total of 2,170 tonnes that the central bank values at $77.4 billion. Last spring Russian First Deputy Governor Dmitry Tulin called gold “a 100% guarantee from legal and political risks,” Bloomberg added.

Discussing possible catalysts for a gold rally, the WGC included expansion or long-term application of trade sanctions, higher inflation resulting from nationalist economic policies, and European risks ranging from Brexit to the continent’s exposure to emerging market debt. Although growing strength in the U.S. dollar might continue to keep gold down, the organization said geopolitical risks to the global economy might overcome the dollar’s effects.

As usual, a different perspective came from the Gold Anti-Trust Action Committee. Earlier this month GATA’s Robert Lambourne questioned recent activities by the Bank for International Settlements. The gold broker for most central banks increased its use of gold swaps and gold derivatives by about 17% in July. “The bank’s total estimated exposure as of July 31 was about 485 tonnes of gold versus about 413 tonnes as of June 30,” he stated.

The increase came as there increasingly appeared to be a correlation between the gold price and the valuation of the Chinese yuan, both of which fell substantially during the month. The BIS refuses to explain what it is doing in the gold market and for whom, engendering suspicion that it is helping one or more of its members to manipulate the currency markets through deception.

To place the bank’s use of gold swaps in context, its current exposure of 485 tonnes is higher than the gold reserves of all but 10 countries.

Speaking with Kitco News, Avi Gilburt of ElliottWaveTrader.net expressed caution about a possible rally. “Until there is clear bullish direction in the market, investors who want to trade gold should stick with GLD,” he emphasized.

Gold fell from this year’s high of $1,357.70 in January to $1,173.78 last week, before moving up to a press time price of $1,185.03.

Some Sprott takeaways

July 20th, 2018

Among them, Rick Rule foresees “the absolute heyday of prospect generators”

by Greg Klein

Miners have suddenly become “lean and mean” but not in a good way, according to Rick Rule. Twenty years of under-investment, an over-correction to a previous binge of M&A “insanity,” have left companies with declining resources. “This can’t continue,” the career contrarian contended. “Every day you mine, you shrink.” But the people who build and run mines prefer to outsource exploration. As a result, he says, “we are coming into the absolute heyday of prospect generators.”

Rick Rule foresees “the absolute heyday of prospect generators”

Rule presented his remarks at the Sprott Natural Resource Symposium, held in Vancouver this year from July 17 to 20 for an audience of gold bugs and resource investors. The two strategies can often be employed by the same individuals, showing a stark contrast between hedging against uncertainty and searching for opportunity. And opportunities are there to be had, Rule maintained. While a number of key commodities have gained in price, equities remain low, creating a more attractive ratio of price to value.

Looking at gold discoveries, Brent Cook sees a decline since 1980, with yearly mine production now about three times the annual ounces found in the ground. The pipeline of up-and-coming copper mines currently has the fewest projects of this century. Zinc discoveries peaked in 2016, then fell steeply. With majors showing heightened interest in explorers, he said, “this is a fantastic time to invest in juniors—but be careful.”

It’s very hard to know where the bottom of the market is until you come out of it.—Sean Roosen

Also emphasizing the declining success rate of exploration, Osisko Gold Royalties CEO Sean Roosen agreed that peak gold has arrived. That’s manifested not only in the relative lack of discoveries but the shortened average mine life of current operations. As for the state of equities, “it’s very hard to know where the bottom of the market is until you come out of it.”

Both sides of the gold bug/resource investor dichotomy found support in a slogan displayed by Byron King: “If you can’t save the world, go find some gold.” And from his perspective saving the world, the Western parts anyway, seems beyond hope. An editor with Agora Financial and Jim Rickards’ Gold Speculator, he focused largely on the U.S., which he said faces domestic conditions and foreign rivalry that put all aspects of American power at risk. The country barely resembles its post-WWII self when “we had the money, we had the gold and we had the friggin’ bomb.”

The U.S. and its allies have since squandered their prominence in banking, currencies, capital markets, manufacturing, technology, military prowess and space travel.

We have lost academia to a different form of thought.—Byron King

Where the West outperforms others, maybe, is in the flakiness of its institutions. Canadian and American universities lead the way: “We have lost academia to a different form of thought.”

In a momentous development that policymakers deny, he said, Russia has surpassed the U.S. in the aerospace and high-tech weapons industries. “Incredibly stupid people in Washington D.C.” believe against all evidence “that we can win a war with Russia.”

Mercifully, that kind of war might not happen. But another kind would show no mercy. Relaying Rickards’ ideas, King said real wars have become too expensive and dangerous to fight. So major powers instead sabotage their enemies’ currencies. As China and Russia continue to accumulate gold, the two could team up to defeat the West.

References to stupidity in high office recurred during the conference. Rule reminded the audience of Justin Trudeau’s statement that “the budget will balance itself” and Barack Obama’s notion that U.S. debt doesn’t matter because Americans owe the money to themselves.

Trey Reik of Sprott USA pegged that country’s federal debt at $20 trillion and U.S. total debt at $68 trillion. The country needs another $2.8 trillion in debt just to service the current amount, he added. With such unsustainable levels, he sees a tsunami of defaults coming.

One of the reasons I own gold is the future is much too interesting to be predictable.—James Grant

When the consequences of debt and the state of the economy become known, a gold bull market will return, argued James Grant. The editor of Grant’s Interest Rate Observer and Ron Paul’s choice to chair the Fed called interest rates “the most important aspect of capitalism…. Try to imagine a world without them. We do live in this world.” Today’s negative sovereign debt yields are unprecedented in history, he stated.

In a twist on the Chinese curse “may you live in interesting times,” Grant said: “One of the reasons I own gold is the future is much too interesting to be predictable.”

Throughout the conference speakers agreed, disagreed and overlapped in their perspectives. But no doubt everyone concurred with an insight elegantly expressed by Eric Fry of the Oxford Club: “It’s better to have more money than less money.”

The Sprott Natural Resource Symposium returns to Vancouver in July 2019.

Lithium in abundance, but…

April 25th, 2018

Bolivia’s huge resources face huge challenges, Simon Moores points out

by Greg Klein

Bolivia’s huge resources face huge challenges, Simon Moores points out

Estimates vary widely but attribute enormous lithium potential to Bolivia’s Salar de Uyuni.

 

It’s a testament to lithium market expectations that companies will compete with each other to do business in Bolivia. When news broke that the country wanted help to develop its fabled Salar de Uyuni, several firms showed willingness to overlook a history of investment confiscation. So has one of the world’s worst mining jurisdictions become serious about opening what just might be the world’s largest lithium resources?

Yes, an April 21 government announcement would seem to indicate. Media reports say the German firm ACI Systems GmbH had been selected out of five applicants from China and one each from Canada and Russia to team up with the state-owned Yacimientos de Litio Bolivianos, which would hold the lion’s share of a 51%/49% joint venture. The actual agreement has yet to be signed.

Bolivia’s huge resources face huge challenges, Simon Moores points out

After winning power in 2006, Bolivian President Evo Morales gained a reputation for nationalizing resource and infrastructure assets, sometimes without compensation. State-run and co-operative mining operations, meanwhile, have suffered problems ranging from inefficiency to
exploitive and even deadly working conditions.

Clearly there’s an incentive for Bolivia to change its approach to mining. According to la Razón, the deal calls for $900 million from YLB (all figures in U.S. dollars) and $1.3 billion plus expertise from ACI to develop facilities that would process lithium and manufacture batteries and cathodes, primarily for the European electric vehicle market.

Expected to come online within 18 months, the industry might eventually provide Bolivia with a forecasted $1.2 billion in annual revenues, 1,200 direct jobs and thousands of indirect jobs.

It takes enormous mineral potential to rationalize such optimism. While estimates can vary wildly, they all rate Bolivia highly. Uyuni has “likely the largest accumulation of lithium in the world,” according to the U.S. Geological Survey, citing a 2013 estimate of nine million tonnes at an average concentration of about 320 ppm. Another USGS report estimates a 2017 global total of 53 million tonnes, with 9.8 million tonnes in Argentina, nine million in Bolivia, 8.4 million in Chile, seven million in China, five million in Australia and 1.9 million in Canada. Comparing Bolivia with its Lithium Triangle neighbours, Industrial Minerals credits Uyuni with three times the resources of Chile’s Salar de Atacama and nearly 20 times that of Argentina’s Salar del Hombre Muerto. Some media reports say Bolivia holds as much as a quarter of global supply.

Resources mean little and economic reserves mean everything.

“There is no doubt that Bolivia has a huge lithium resource with Uyuni, most probably the biggest in the world,” notes Simon Moores, managing director of Benchmark Mineral Intelligence. “But resources mean little and economic reserves mean everything.

“In these economic terms—extracting the lithium in a usable form for the battery industry at a reasonable cost—Chile and Argentina are light years ahead of Bolivia,” he tells ResourceClips.com.

The country has been conducting pilot scale work, but nothing comparable to its neighbours. In contrast to Chile’s Atacama, Moores says, Uyuni’s high magnesium content and lower evaporation rate present processing challenges. “Most likely new or adapted processing methods will have to be employed, which adds a further layer of complexity.”

As for political risk, “the jury is out on any partnership in Bolivia,” he stresses. “In 2009, when this story first broke, there were a number of high-profile partners involved. Every partnership to date has failed. This is not to say any present or future partnership will share the same fate, but you are not only dealing with a challenging resource—despite its size—you are dealing with Bolivia and all the political problems that come with that. The risk is huge.

“Then when you are in production, the risk is even bigger. You just have to see the problems SQM has had with the Chilean government at a time of high prices and high demand. And they have been operating since the mid-90s.”

If Albemarle, SQM, Ganfeng, Tianqi, FMC get involved then you will have to stand up and take notice. Until that point, Bolivia will always be a lithium outside shot.

As for other companies entering Bolivia, Moores sees the possibility of “a handful of explorers becoming active and maybe one or two ‘industrial’ partners. But the key thing we always look for at Benchmark Mineral Intelligence is partners with lithium processing experience. If Albemarle, SQM, Ganfeng, Tianqi, FMC get involved then you will have to stand up and take notice. Until that point, Bolivia will always be a lithium outside shot.”

He regards Bolivia’s infrastructure as another significant challenge, but not the country’s worst. “If big mining groups can make this happen in Africa, they can make it happen in Bolivia. The biggest focus should be economic extraction and the long-term viability of Uyuni. This is the biggest hurdle.”

Simon Moores speaks at the International Mining Investment Conference in Vancouver on May 15, the first day of the two-day event. For a 25% admission discount click here and enter the code RESOURCECLIPS.

On May 16 Moores presents the Vancouver stop of the Benchmark World Tour 2018. Click here for the complete tour schedule and free registration.

Flanders to Holland and back

March 13th, 2018

Resource Clips visits the diamond industry in Belgium and the Netherlands

by Greg Klein

Resource Clips visits the diamond industry in Belgium and the Netherlands

A stately building belies elaborate security guarding this Antwerp diamond bourse.

 

As if providing an outer defence, a solid line of retail jewellers blocks two broad avenues from Antwerp’s famed diamond district. Access comes mainly through a side street with a police-controlled traffic barrier. More cops and soldiers (the latter attesting to Belgium’s ongoing terror alert) patrol the narrow streets inside. The only vehicles seem to be armoured vans customized for the diamond trade or the occasional bicycle carrying an Orthodox Jew with long coat and side curls flowing in the wind but magnificent hat solidly perched.

Resource Clips visits the diamond industry in Belgium and the Netherlands

Practitioners in Belgium and the Netherlands
perfected the art of transforming rough stones into jewelry.

Except for the Portuguese synagogue, the buildings look un-Antwerpishly drab, catering to four bourses, several major companies and many more smaller operations that buy and sell stones and/or cut and polish them, as well as businesses selling tools of the trade or offering services like laser inscription removal.

Travel agents advertise flights to Mumbai and the Emirates, the Union Bank of India maintains a local branch and the neighbourhood postal outlet flogs a “one-of-a-kind diamond postage stamp.”

And there are no photos allowed, a courteous but firm police officer insists.

“But I’m a journalist from Canada.”

“I realize that, but it’s not allowed.”

“Being a journalist from Canada?”

“They don’t like it.”

“They” apparently represent the world’s diamond capital, a status Antwerp still holds for grading rough, although no longer for the art of transforming those stones into jewelry. One polishing factory, however, is DiamondLand, which welcomes visitors to its workshop before ushering them into the sales department. A guide explains that Antwerp’s seemingly ubiquitous diamond retailers cater to an international clientele attracted by prices that justify travel expenses.

Resource Clips visits the diamond industry in Belgium and the Netherlands

Traders in 15th-century Bruges met outside
the home of Jacob van der Beurze, from
whom the word “bourse” was derived.

Yet this global diamond centre’s far from any mine. Antwerp and other cities of the Low Countries gained that peculiar stature pretty much by inventing the modern diamond industry. Just how they did that can be explained by a visit to Bruges, aka Brugge.

Those able to tear themselves away from the insufferably pretty canal-side buildings of possibly Europe’s most beautiful fairy tale surroundings could spend a few interesting hours in the city’s Diamond Museum. There, visitors learn of Venetian traders who brought diamonds to Europe from India, once the world’s only known source, eventually establishing a permanent presence in this once-important trade centre by the 15th century. That was before 16th century Portuguese and 17th century Dutch took over the Asian trade routes.

Other European cities had diamond cutters too, but it was in Bruges in 1476 that Lodewijk van Bercken is said to have invented the technique of polishing stones using a wheel, diamond dust and olive oil. His existence might owe more to legend than fact, but the technique continued, enhanced by later refinements and more recent technology.

As local waterways silted up, Bruges lost its overseas trade and the diamond industry shifted to Antwerp, which in the late 15th century became the world’s greatest trade centre overall. The industry gained new blood with migrations of Jews fleeing the Spanish in Spain, the Spanish in Portugal and, later, the Spanish in Flanders as the industry moved once again, this time to Amsterdam. Diamonds played a part in the city’s Golden Age, which flourished especially well after Amsterdammers forced the closure of Antwerp’s port. Protestants from France and Flanders joined the religious diasporas that bolstered Europe’s diamond industry.

During all that time new diamond sources were found in Borneo, Brazil, Russia and Australia, with the greatest discoveries of all in late 19th-century South Africa. That country’s first consignment of stones sparked a boom in Amsterdam, bringing unprecedented demand for cutters and polishers.

Resource Clips visits the diamond industry in Belgium and the Netherlands

This exacting profession continues
to draw new adherents.

Amsterdam’s decline began in the 1920s, to the advantage of Antwerp. Bruges also regained some stature as early 20th-century strikes encouraged some Antwerp companies to move their operations to job-starved West Flanders. Bruges’ on-and-off revival lasted about 61 years, Amsterdam held out with a few prominent companies but Antwerp prevailed. More recently, however, polishing has been moving to places like Tel Aviv, New York, Moscow and especially Surat, where the sector could be joined by the world’s largest diamond bourse, reportedly now under construction.

But Amsterdam, second only to Bruges for canal-side prettiness, to Vancouver for drugs and hookers, and to nowhere for massive mobs of selfie-snapping sightseers, still hosts companies offering workshop tours. Among them is Gassan Diamonds, now ensconced in a building that originally housed Boas Bros, once Europe’s largest company. Among the newer company’s achievements is the patented Gassan Cut with 121 facets.

Further factory visits make facet envy evident. One such operation is Coster Diamonds, founded in 1840 and the world’s oldest remaining diamond company. It was Coster that cut history’s most fabled stone, the Koh-i-Noor, now part of Britain’s Crown Jewels.

Crediting lengthy experience and new technology, Coster created the Royal 201 eight years ago by adding 144 facets to the more traditional brilliant cut, aka the Amsterdam cut. Coster also claims a Guinness record for the smallest polished stone ever—a tiny, tiny brilliant cut of 0.0000743 carats.

But with its 257-facet Star of Amsterdam created two years ago, Amsterdam’s Zazare Diamonds surpasses Gassan and Coster in the many-sided contest. This isn’t just a numbers game, a Zazare rep insists. “More facets mean more sparkle, more life,” she says.

But much of the industry’s sparkle and life have moved elsewhere, especially India. Numbers provided by Rapaport News show the country’s net polished exports, representing exports minus imports, climbed 3.8% to $20.71 billion last year. Belgium’s share fell 34% to $269.2 million.

Although India already hosts the world’s largest gem exchange in Mumbai’s Bharat Diamond Bourse, the Surat Diamond Bourse would far overshadow its neighbour. Construction has begun on a nine-tower complex that could accommodate more than 4,400 merchants, sources told Rapaport. Expected to be fully operational by 2021, the long-delayed proposal would be located within the government-planned Diamond Research and Mercantile (DREAM) City, confirming much of the world’s trade in the country that first found and coveted the gems.

 

Resource Clips visits the diamond industry in Belgium and the Netherlands

Dozens of diamond shops form a solid wall curving
along two streets outside Antwerp’s diamond district.

 

Resource Clips visits the diamond industry in Belgium and the Netherlands

But not all of them thrive.

Exploration begins at Arctic Star’s Finnish diamond project

November 23rd, 2017

Update: On November 24 Arctic Star announced the closing of a final tranche of an oversubscribed private placement totalling $1.7 million.

by Greg Klein | November 23, 2017

Having closed the acquisition a week earlier, Arctic Star Exploration TSXV:ADD now has a crew busy at its Timantti diamond project in Finland. Located among favourable regional infrastructure in the Fennoscandian Shield, which hosts the major Russian diamond mines Lomonosov and Grib, the property has geophysics, sampling and drilling planned.

Exploration begins at Arctic Star’s Finnish diamond project

Arctic Star VP of exploration Buddy Doyle
gathers kimberlite float samples at Timantti.

Timantti’s White Wolf kimberlite has already revealed 169 microdiamonds, 111 from 52.7 metres of historically extracted core and another 58 from an 18.9-kilogram sample. The current program will include ground magnetic, gravity and electromagnetic surveys over the Black and White kimberlites to define their sizes and identify other drill-worthy anomalies.

Additionally, 20 backhoe till samples will be taken to search for diamond indicator minerals. Drilling will consist of about eight holes totalling 1,500 metres, with a 500-kilogram core sample from each of the two kimberlites. Results of the program will determine whether to proceed with bulk sampling.

Work will focus on a 243-hectare area covered by an exploration permit. The project also includes a 95,700-hectare exploration reservation.

Among other projects, Arctic Star holds the Cap property in east-central British Columbia, host to an extremely rare carbonatite-syenite complex that’s potentially associated with several commodities. In September the company reported “highly anomalous” assays for niobium, rare earths and phosphate from sampling and a drill hole.

In the Northwest Territories’ diamondiferous Lac de Gras region, Arctic Star also holds a 40% stake in the Diagras JV, where majority partner Margaret Lake Diamonds TSXV:DIA carried out geophysics last summer.

This week Arctic Star appointed Scott Eldridge as president/CEO. From 2008 to 2016 Eldridge led Euroscandic International Group, providing investment banking and advisory services to resource companies. He has been responsible for raising over $500 million in equity and debt financing for mining projects internationally.

Earlier this month the company closed a private placement first tranche of $965,000.

Read Isabel Belger’s interview with Arctic Star’s Patrick Power.

Double discovery

November 18th, 2017

The USGS reports new American uranium potential and a new uranium “species”

by Greg Klein

The USGS reports new American uranium potential and a new uranium “species”

The Southern High Plains of Texas, New Mexico and Oklahoma
might someday boost U.S. domestic uranium supply.
(Photo: Public domain)

 

The dream of discovery must motivate many a geologist. Through skill, effort and luck they hope to eventually find something precious, useful or otherwise valuable—something well known yet found in a previously unknown location. But a group of geo-boffins from the U.S. Geological Survey not only identified a type of uranium deposit previously unknown to their country, they discovered a new mineral.

It’s finchite, “a new uranium mineral species,” as a press release described it last week. The discovery actually dates to 2015, says Brad Van Gosen, the USGS scientist who did the discovering.

While surveying a Texas cotton ranch Van Gosen collected samples of what he and his colleagues thought was carnotite, “a pretty common yellow, near-surface uranium mineral.” Back in the lab, he put it under a scanning electron microscope, which kept showing strontium with the uranium and vanadium, he recalls. To a geologist, it was unusual—very unusual. A eureka moment was looming.

The USGS reports new American uranium potential and a new uranium “species”

First to recognize the new mineral finchite, USGS scientist
Brad Van Gosen examines rock layers in Texas.
(Photo: Susan Hall/USGS, public domain)

“We looked it up and there’d been no strontium-uranium mineral ever reported before. So [team leader Susan Hall] worked with a crystallography/mineralogy lab that specializes in micro-analysis up at Notre Dame and they concluded, ‘By gosh you’re right.’” Further study continued before sending the evidence to the International Mineralogical Association. “They’re the high council and they blessed it as a new mineral.” Finchite’s moniker honours the late Warren Finch, a USGS uranium expert.

Another major finding was that the uranium was hosted in calcrete rock formations, a style of deposit known elsewhere but reported for the first time in the U.S.

Some previously secret info led to the twin epiphanies. Hall, as leader of a project that’s reassessing national uranium resources, gained privy to some unpublished 1970s and ’80s data from the former Kerr-McGee company. Included were estimates for two deposits, Sulphur Springs Draw and Buffalo Draw, with marginal grades of 0.04% and 0.05% U3O8 respectively. Together they held an estimated 2.6 million pounds U3O8.

(Of course data from historic sources and the U.S. government agency falls outside the framework of NI 43-101 regulations.)

The newly transpired, near-surface deposits led Hall and her group to the Southern High Plains spanning parts of Texas, New Mexico and Oklahoma. It was there that they recognized calcrete, its first known manifestation in the U.S.

The USGS reports new American uranium potential and a new uranium “species”

Surface showings of yellow finchite might have previously
been mistaken for sulphur, says Van Gosen.
(Photo: Susan Hall/USGS, public domain)

The stuff’s associated with uranium in other countries. Among major calcrete-style deposits listed by the World Nuclear Association are Yeelirrie in Western Australia, along with Trekkopje and Langer Heinrich in Namibia. Yeelirrie is a potential open pit held by a Cameco Corp TSX:CCO subsidiary and averaging 0.16% U3O8. Trekkopje, a potential open pit majority-held by AREVA Resources, averages 0.01%. Langer Heinrich, an open pit mine operated on behalf of Paladin Energy, the majority owner now under administrative control, averages 0.052%.

According to the USGS, grades for potential Southern High Plains deposits range from 0.012% to 0.067%, with a median 0.034% U3O8. Gross tonnage estimates range from 200,000 to 52 million tonnes, with a median 8.4 million tonnes. Together, the region’s calcrete-style potential comes to 39.9 million pounds U3O8.

But that’s a regional assessment, not a resource estimate, reflecting how USGS methodology contrasts with that of exploration companies. The agency uses a three-part approach, explains Mark Mihalasky, who co-ordinated the assessment. The procedure first delineates areas that would allow the occurrence of a particular kind of deposit. Using additional geoscientific evidence, the agency estimates how many deposits might be awaiting discovery. How much those potential deposits hold can be estimated through comparisons with similar known deposits around the world.

Mineral assessment and mineral exploration are two different things…. It’s not a ‘drill here’ assessment.—Mark Mihalasky

“Mineral assessment and mineral exploration are two different things,” Mihalasky emphasizes. “The purpose of our assessment is to help land planners, decision-makers and people in the region get an idea of what could be there, based upon probability. It’s not a ‘drill here’ assessment.

“This whole region is a relatively newly recognized area of potential and while we’re not saying this is a new uranium province we are saying there’s something here that hasn’t been found before in the United States and this might be worth looking into in greater detail if you’re an exploration company.”

Already one company from Australia has been asking “lots of questions,” says Van Gosen. Although most uranium mining in the American west uses in-situ recovery, the shallow depth and soft host rock of the Southern High Plains could present open pit opportunities “assuming uranium prices and other factors are favourable.”

Any positive price assumption will have to wait, however. One week earlier Cameco announced the impending suspension of its high-grade McArthur River mine and Key Lake mill in Saskatchewan’s Athabasca Basin. The company said that long-term contracts had shielded it from uranium’s post-Fukushima plunge of over 70%, but those contracts are now expiring. Cameco had previously suspended its Rabbit Lake mine and reduced production at its American operations.

But while production faces cutbacks, controversy over American dependence on foreign uranium flared up again last month with renewed questions about the sale of Uranium One to Russia’s state-owned Rosatom. The formerly TSX-listed Uranium One holds American resources that could potentially produce up to 1,400 tonnes of uranium annually, according to the WNA. But last year the company’s sole U.S. operation, the Willow Creek ISR mine, produced just 23 tonnes of the country’s total output of 1,126 tonnes.

As the world’s largest consumer of uranium for energy, the U.S. relies on nukes for about 19% of the country’s electricity, according to USGS numbers. Only 11% of last year’s uranium purchases came from domestic sources.

Update: The full USGS report is now available here.

USGS reports new domestic uranium potential and new uranium “species”

November 14th, 2017

This story has been expanded and moved here.

‘The next world order’

November 7th, 2017

Gold’s our best preparation for a new global monetary system, says James Rickards

by Greg Klein

Gold’s our best preparation for the new global monetary system, says James Rickards

James Rickards

An economic crisis looms, ready to strike within a few years and maybe imminently. Exponentially worse than 2008, it will be a disaster “so large the system does not bounce back. The system ceases to exist.” That’s the bleak vision of James Rickards, lawyer, economist, portfolio manager, newsletter writer, author of four books and a keynote speaker at the Silver and Gold Summit to be hosted in San Francisco on November 20 and 21. He offers some advice on how to prepare for the impending peril.

The collapse will hardly leave a void, he maintains. World powers redesigned the international monetary system three times last century and will do it again. Among the first casualties will be bank deposits, investments and the rest of a digitized belief system that many people think guards their future security. As citizens react, “the money riots will begin.”

Sovereigns don’t go down without a fight. The response to money riots will be confiscation and brute force. Governing elites will be safe in their hollowed-out mountain command centers. Private elites will fend for themselves in their yachts, helicopters, and gated communities, which will be converted to armed fortresses.

Gold’s our best preparation for the new global monetary system, says James Rickards

There will be blood in the streets, not metaphorically, but literally. Neofascism will emerge, order responding to disorder, with liberty lost.

This is the “next world order” that Rickards describes in his two most recent books, The New Case for Gold and The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis. Published last year, the books share overlapping content, with the latter volume focusing on why and how Rickards believes such events will take place. The New Case for Gold emphasizes owning the stuff as a survival strategy.

Rickards says the too-big-to-fail banks that failed in 2008 are even bigger now and more bloated with leverage. As are derivatives, the Warren Buffett-labelled “weapons of mass destruction.” Moreover the complexity of markets goes beyond “interconnected.” They’re unfixable.

A watchmaker, he points out, can open the back of a timepiece, fix or replace a gear and put everything back together. “Now imagine you take the back off the same watch and instead of gears you find a metallic liquid soup. How do you change a gear now?” Old models of economic intervention won’t work.

Gold’s our best preparation for the new global monetary system, says James Rickards

And this time the crisis will accompany a worldwide lack of confidence in the U.S. debt-diminished dollar as a reserve currency. China, along with Russia and other countries, could hasten events by conducting international trade in other currencies, throwing the dollar into freefall. Countries that have been buying and hoarding gold (contrary to Canada’s selloff) will demand a say in the scrip’s replacement. Yellow metal will prevail, either as a gold-backed international special drawing right “or the oldest form of money, which is gold.”

“It’s not a ten-year forecast,” he insists. “Could it be five years? Maybe. Could it be one year? Yes.” Watch for the endgame when China’s gold-to-GDP ratio meets or exceeds that of the U.S.

Rickards expects $10,000 an ounce, maybe $50,000. Manipulation will end when powerful states have the price where they want it, nullifying the hustling ability of far less powerful players.

He recommends making gold 10% of an individual’s investible assets, excluding a principal residence and equity in one’s own business. Or 15% to 20% “if you’re somewhat more aggressive.” If he’s wrong and gold drops 20%, for example, the 10% allocation causes a 2% loss on the entire portfolio.

He believes the time to buy is now. “I know that when the crunch comes, the large players are going to get all the gold available. The institutions, the central banks, the hedge funds, and the customers with relationships with the refiners are the ones who are going to get all the gold. Small investors will find they can’t get any.”

Store it in a non-bank depository, he cautions. Americans might consider the Texas state bullion vault. “In an extreme situation, you should be able to drive down to Texas, pick up your gold, and drive home before the highways are closed. If the highways are clogged, use a motorcycle.”

Sweetness and light, he ain’t. But whether you’re seeking survival strategies or evaluating dystopian possibilities, he presents a compelling case.

Rickards delivers a keynote address and takes part in a panel discussion on the first day of the Silver and Gold Summit, to be held in San Francisco from November 20 to 21. To save 25% on admission click here and enter promo code RESOURCE25.

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