by Greg Klein | November 18, 2015
Angered by the upcoming leadership of the United Arab Emirates, an alliance of watchdog groups plans to boycott the Kimberley Process next year. The Civil Society Coalition made the announcement November 17 at a KP meeting in Luanda, Angola. The UAE, home to the world’s third-largest diamond trading centre but accused of lax policies towards conflict stones, takes over the rotating position of chairperson next year.
Through its diamond certification scheme, the KP works to eliminate the trade in conflict stones that finance rebel violence against legitimate governments. Enforcement is left to its 81 member nations.
Judging by UAE’s favoured status as the go-to place for illicit gold and diamonds, it would appear Dubai is not only a tax-free haven, but an ethics-free haven as well.—Jaff Napoleon Bamenjo,
Civil Society Coalition
“In the last year, repeated concerns have been raised by Partnership Africa Canada, Amnesty International, the United Nations Panel of Experts on the Central African Republic and others about negligent import controls that allow illicit diamonds from conflict areas such as the Central African Republic to enter the legitimate supply chain,” Civil Society stated.
“Judging by UAE’s favoured status as the go-to place for illicit gold and diamonds, it would appear Dubai is not only a tax-free haven, but an ethics-free haven as well,” coalition representative Jaff Napoleon Bamenjo told KP members. “From the Bangui to Kinshasa to Marange, the UAE’s policy of not checking values on imported parcels, or applying added vigilance on diamonds emanating from problematic areas, has had grave implications on the integrity of the entire diamond chain.”
Bamenjo also accused UAE companies of “the obscene theft of African diamond revenues” by undervaluing imports, then exporting stones at prices 40% higher. “With competing trading centres averaging a 10% mark-up on re-sorted and re-exported parcels, it does make one wonder what Dubai knows about ‘value addition’ that competitors in Antwerp and Tel Aviv don’t know.”
Bamenjo said his group had been working with the KP to prevent the UAE from assuming the leadership role. The KP’s contrary decision “will send a message to the world that the KP no longer has standards, that the lowest common denominator still gets to lead, whatever the reputational and long-term impacts to this initiative.”
The 11-member Civil Society’s founder and co-ordinator is Partnership Africa Canada, whose 1998 study was one of three seminal reports that launched the campaign against conflict diamonds, according to the coalition. The KP was established in 2002.
The boycott follows charges that the KP is being used to certify conflict diamonds from Brazil and allegations from Amnesty International that the process “camouflages” conflict stones from the Central African Republic.
by Greg Klein
One of the advantages Canadian diamonds bring to the market is their certifiably ethical character. Ensured by a tiny laser inscription on each stone and a verifiable record of its movements from kimberlite to consumer, the gems distinguish themselves for a quality apart from their beauty. The Kimberley Process was supposed to do the same for diamonds from all countries by banning the trade of conflict stones. Instead it simply “camouflages” the problem, according to Amnesty International.
“This is a wake-up call for the diamond sector,” the group stated on releasing a September 30 report focusing on the Central African Republic. “States and companies can no longer use the Kimberley Process as a fig leaf to reassure consumers that their diamonds are ethically sourced.”
Amnesty castigates the organization, which describes itself as an initiative of governments, industry and civil society “to stem the flow of conflict diamonds—rough diamonds used by rebel movements to finance wars against legitimate governments.” Its membership consists of 81 countries, with the EU counting as a single state. But failures by both countries and companies mean consumers might unwittingly buy diamonds “associated with conflict and abuses,” the report states. “Despite more than a decade of the Kimberley Process, diamond supply chains are characterized by opaqueness, abuse and unjust enrichment.”
Amnesty’s report comes as the KP reconsiders its ban on CAR diamonds.
Those stones have long provided a major source of revenue to the CAR, one of the world’s poorest countries. In 2010 roughly 80,000 to 100,000 workers relied on artisanal diamond mining for their employment. Rough exports under the KP brought in US$60.8 million in 2011 and $62.1 million the following year, producing about half the country’s exports. Global rankings placed the CAR 12th by value and 14th by volume up to 2013.
But in March of that year, Muslim rebels known as Selekas overthrew the government. Reprisals by Christian and animist Anti-Balaka militias followed, along with atrocities on both sides. Over 5,000 people died. Diamonds, mined by artisanal workers in small operations, helped fund both groups. In May 2013 the KP banned its members from importing CAR diamonds.
The multi-million-dollar production and trade of CAR conflict stones persisted, however. Already rife, smuggling increased. Export companies located in the CAR continued buying the gems, which they stockpiled while waiting for the KP to end the ban.
Thanks to foreign peacekeepers, a transitional government took office in January 2014 and now holds a degree of control over parts of the country. A presidential election is scheduled for October 18. Not surprisingly, the country wants to regain revenue from its largest export.
In July of this year, the KP said it would allow exports provided certain circumstances were met. Seeing no indication they can be met, Amnesty fears the KP will lift the ban nevertheless.
The KP would require that diamonds come from “compliant zones” free of effective rebel activity. The organization would also allow stockpiles to be exported, provided they stand up to a forensic audit. Amnesty maintains neither condition’s plausible.
Control over compliant zones is tenuous, the group states. One zone considered potentially compliant by the KP actually suffers from significant rebel activity. Peace, where it exists, is fragile. Just days before the report’s release, the worst outbreak of violence in a year hit the CAR’s capital of Bangui, home to most export companies. By September 30, media reports said the death toll reached at least 42.
Meanwhile diamonds from rebel-controlled zones have been mixed with compliant output. No one can realistically verify the stockpiles’ sources. And unless buyers can find a way to verify that, their stockpiles should be confiscated and sold, with the money being spent for the good of the people, Amnesty argues.
Nor does the KP effectively address smuggling. Amnesty’s report takes the major sorting and distribution centres of Antwerp and Dubai to task for taking advantage of what it calls the limitations and weaknesses of the KP. The Antwerp World Diamond Centre quickly shot back, criticizing Amnesty for “factual errors.” The centre insisted it “implements a 100% strict control mechanism for each import or export of diamonds, which led to the interception and seizure of two shipments, containing rough diamonds potentially originating from CAR.”
Amnesty also charges that the UAE government “may be complicit in the illicit flow of wealth out of Africa.”
Despite more than a decade of the Kimberley Process, diamond supply chains are characterized by opaqueness, abuse and unjust enrichment.—Amnesty International
The report sees human rights abuses in other aspects of the trade as well. Sharp practice, extortion and outright theft deprive miners of reasonable remuneration. Tax evasion deprives the government of money that could alleviate poverty. Mining itself involves heavy, unnecessarily dangerous work—and often child labour. The KP doesn’t consider such problems, labelling conflict diamonds simply as “diamonds used by rebel movements or their allies to finance conflict aimed at undermining legitimate governments.” That also exempts diamonds that finance abusive government forces, Amnesty states.
Meanwhile the KP holds countries, not the companies themselves, responsible for ensuring ethical sources.
Amnesty’s report complements the work of other NGOs scrutinizing conflict minerals. But its scathing indictment of the Kimberley Process casts a shadow on much of the world’s diamond trade. In an announcement accompanying the report, the group calls not only on governments but companies like De Beers and Signet to push for wide-ranging reform. In addition, “diamond companies should be investigating their supply chains for human rights abuses, conflict and other illegal or unethical practices, and disclosing the steps taken.”
Next March responsible sourcing will be the featured topic at the Jewelry Industry Summit, a three-day international event preceding the JA New York trade show.
Download the Amnesty International report Chains of abuse: The case of diamonds from the Central African Republic and the global diamond supply chain.
by Greg Klein | March 20, 2015
Last year’s global diamond jewelry demand reached an all-time high of $81 billion, according to De Beers data released March 20. Sales overtook 2013 numbers in each of the world’s top five diamond markets, which account for 75% of global demand. Although the pace of growth slowed in China, India and Japan, American consumers helped push spending to record levels.
Overall, demand rose 3% globally. The U.S., the world’s fastest-growing market, climbed 7% to $37 billion. Even with China’s slower rate of increase, the Asian giant’s demand rose 6%. India, Japan and the Gulf states each saw increases of about 2%.
“Retailers are also positive about the prospects for 2015,” said De Beers Group chief executive Philippe Mellier. Looking farther ahead, he added, “As the number of middle class households in the major consumer markets is set to grow by hundreds of millions in the years ahead, the medium to long-term prospects for the diamond industry are also exceptionally strong if the right investments continue to be made across the value chain.”
With mines in Canada, South Africa, Botswana and Namibia, De Beers is the world’s largest diamond producer by value. The company, held 15% by the government of Botswana and 85% by Anglo American, has made diamonds the second-most profitable commodity for Anglo. De Beers controls about 35% of rough diamond sales globally, part of a vertically integrated operation spanning the industry from exploration to retail.
In Canada, De Beers runs the Northwest Territories’ Snap Lake mine and Ontario’s Victor Mine, and also holds a 51% stake in the NWT’s Gahcho Kué, a joint venture with Mountain Province Diamonds TSX:MPV. Considered the world’s largest diamond development project, Gahcho Kué has production scheduled for 2016.
But De Beers has warned that Snap Lake could face a shutdown. On March 11 the mine’s COO Glen Koropchuk told a Mackenzie Valley Land and Water Board panel that the mine “cannot continue to operate” without an amended water licence.
Canada’s only fully underground diamond mine, Snap Lake has experienced a greater inflow of groundwater high in “naturally occurring total dissolved solids,” some of which is currently being stored underground. Saying the situation isn’t sustainable, the company wants permission to release greater quantities of water from the mine. Otherwise the seven-year-old operation could cease, throwing nearly 800 people out of work, Koropchuk indicated.
The mine produced 1.2 million carats last year. Analyst Paul Zimnisky has estimated an equal level of production this year at an average price of $105 per carat.
A De Beers spokesperson didn’t respond to inquiries from ResourceClips.com.
by Greg Klein | November 5, 2014
Even after the Kimberley Process banned diamond imports from the Central African Republic last year, the country exported an estimated 140,000 carats worth $24 million, according to a November 5 Reuters story. As violence escalates again, a UN panel wants mining sites monitored by troops and drones.
Following an outbreak of sectarian fighting in late 2012, Muslim Seleka rebels established regional strongholds. Between December 2013 and last August, about 3,000 people were killed amid reports of looting, kidnapping and rape. Mining licences and commodity taxes help fund the carnage, the UN found.
About 8,000 peacekeepers out of a 12,000-strong commitment are currently deployed in the CAR, Reuters added.
Diamonds are a rebel’s best friend in CAR, as armed groups smuggle blood diamonds and trade them for arms.—Sasha Lezhnev,
senior policy analyst
with the Enough Project
In August at least 25 illegal miners died after an open pit collapsed at or near AXMIN Inc’s (TSXV:AXM) Passendro gold project in the south-central CAR. It was the second such accident in the area since June 2013, when at least 37 people died. AXMIN had already suspended its exploration and pre-development work at the location, declaring a force majeure in December 2012.
“The victims of the deadly collapse were artisanal miners, who use their hands and cheap tools to dig minerals out of the earth in illicit operations that help finance the violent conflicts in the war-ravaged country,” the Globe and Mail reported.
French uranium giant AREVA pulled out of the CAR in 2012, where its 90%-held Bakouma project began test mining in 2010 and was scheduled for full production in 2014 to 2015.
A May report from the Enough Project blamed illicit diamonds, oil and ivory for funding weapons, fuel and poaching equipment.
“Diamonds are a rebel’s best friend in CAR, as armed groups smuggle blood diamonds and trade them for arms,” said Sasha Lezhnev, the project’s senior policy analyst.
CAR diamonds “are sold to traders in the Darfur region of Sudan, as well as Chad, Cameroon and the Democratic Republic of Congo,” the report stated. “The traders circumvent the international Kimberley Process certification scheme and [the diamonds] are likely sold on the world market in the United Arab Emirates, Belgium, India, South Africa, Saudi Arabia and Qatar.”
by Greg Klein
For giant miners and junior explorers alike, diamonds upheld their market lustre in 2013 and show further encouragement this year. So it wasn’t quite an industry-wide shock when one record-shattering sale fell through. A group of investors fronted by New York diamond cutter Isaac Wolf defaulted on last November’s $83.2-million bid for the Pink Star, Sotheby’s revealed late last month. Now the auctioneer’s out the $60 million guaranteed to the anonymous seller. But the company retains the stone, to which it attributes an “inventory” value of $72 million. Meanwhile, undeterred by the caprice of the super-rich, efforts continue to find, mine and market opulence for the affluent.
This month Rio Tinto NYE:RIO heads to Antwerp and Israel for the company’s first rough diamond tender of 2014. Rio says this offer of 124 lots “showcases a unique combination of white and fancy-coloured rough diamonds” from its mines in Australia, the Northwest Territories and Zimbabwe. Among notable stones from the NWT’s Diavik, Rio’s peddling a 70-carat white diamond, several purple diamonds and some “fancy and intense” yellow diamonds.
Once pulled out of the ground, about 80% of the world’s diamonds go to Antwerp, the undisputed capital of global trade since the 15th century. The city handles about $11.2 billion worth of rough stones annually, out of a global total of $14.2 billion, according to the Antwerp World Diamond Centre. Vying for a piece of the action are some 1,850 local companies crowded into their own fabled district with “Flemish, Orthodox Jewish and Indian diamantaires working alongside manufacturers, rough and polished dealers, buyers and services providers from almost every country in which diamonds are mined, processed, bought and sold.”
The centre characterized last January as an “excellent 2014 kick-off” in which the value of exports jumped 27.7% and imports 21% over the same month last year. Exports showed “an all-around increase, principally to the usual consumer markets India, the United Arab Emirates and Hong Kong.”
Polished diamonds picked up too. January exports improved 9.69% and imports 13.79% in value over the same month in 2013.
Although the stones’ esthetic vagaries complicate matters, diamond prices remained relatively stable last year, avoiding the declines seen in precious metals. Giants did well, with Rio reporting a 15% increase in diamond revenue over 2012. De Beers proclaimed 2013 “a strong year of growth” for its Forevermark diamond brand, “driven predominantly by continued consumer demand in core markets, China, U.S., India and Japan.” Many Canadian-listed juniors and mid-tiers rose well above the malaise suffered by their counterparts in other commodities.
Among activity within Canada, Kennady Diamonds TSXV:KDI continues working towards a maiden resource for its eponymous project in the NWT. Infill drilling began last week, according to a March 6 statement, part of a plan to better define the Kelvin kimberlite body prior to a mini-bulk sample of 25 to 30 tonnes. Last year a 4.3-tonne sample from Kelvin showed 5.38 carats per tonne with the three largest diamonds comprising “a 2.48-carat off-white transparent octahedral, 1.06-carat off-white broken aggregate and a 0.9-carat off-white transparent irregular,” Kennady stated.
The March 6 update also reported an amended exploration agreement with the Lutsel K’e Dene First Nation and receipt of a five-year land use permit and seven-year water licence.
The same day Shore Gold TSX:SGF announced a “target for further exploration” for its central Saskatchewan properties. A TFFE uses exploration data to disclose potential quantity and grade that might not be realized in an eventual resource estimate. On that basis, Shore’s TFFE for seven kimberlites “is estimated to include between 983 million and 1.17 billion tonnes of kimberlite containing between 52 and 90 million carats.”
The seven kimberlites spread over two properties, Shore’s wholly-owned Star-Orion South project and the adjacent Fort à la Corne, a joint venture shared 67%/33% between Shore and Newmont Mining Corp of Canada TSX:NMC.
A 2011 feasibility study showed a probable reserve for the Star and Orion South deposits:
The two deposits also have inferred resources totalling 9.1 million carats.
In other Canadian diamond activity, North Arrow Minerals TSXV:NAR closed a $5-million private placement late last month to fund three projects, two of them 80% options with Stornoway Diamond TSX:SWY. The Qilalugaq property in Nunavut is slated for a 1,500-tonne bulk sample and an Antwerp valuation next summer. Pikoo, a Saskatchewan project heralded for its diamond discovery in November, is expected to undergo till sampling this year to seek out additional kimberlites.
On the earlier-stage Redemption project in the NWT, North Arrow holds a 55% option with Arctic Star Exploration TSXV:ADD. This year’s plans include till sampling and geophysics at the 11,493-hectare project, 32 kilometres from the Ekati mine and 47 from the Diavik mine.
Dominion Diamond TSX:DDC looms large in the region, holding an 80% interest in Ekati, 58.8% of the mine’s Buffer zone and 40% of Diavik. Chuck Fipke and Stewart Blusson, two pioneers of Canadian diamond exploration, each hold 10% of Ekati, while Rio holds 60% of Diavik. Dominion ranks fourth worldwide for diamond production by value.
An Antwerp report that came through in late February evaluated a 1,013.5-carat parcel of commercial-size stones for Peregrine Diamonds TSX:PGD. Taken from the CH-6 kimberlite pipe in Nunavut, the gems were priced at an average of $213 per carat for a total of $215,605. Peregrine has a resource scheduled for CH-6 by the end of Q2.
The valuation was conducted by WWW International Diamond Consultants, a company that’s familiar with Canadian projects and currently evaluating diamonds for Gahcho Kué in the NWT. JV partners De Beers (51%) and Mountain Province Diamonds TSX:MPV (49%) plan to use the data in a feasibility update scheduled for release by the end of March. Gahcho Kué’s expected to become Canada’s next diamond mine.
by Greg Klein
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Radiometric results divert NexGen’s focus to new area of Rook 1
Following up on last week’s market-moving news, NexGen Energy TSXV:NXE reported more radiometric readings from the first hole on the Arrow area of its Rook 1 project. Obviously inspired by the results, the company has moved its other rig to Arrow “until additional rigs can be sought to drill the other 11 western-located Rook 1 target areas,” according to the February 24 statement.
Once again NexGen has found dozens of “significant”—if tiny—intervals of uranium mineralization from hole RK-14-21. By “significant,” NexGen means at least 0.05 metres reading over 500 counts per second, a measure of gamma radiation from drill core by a hand-held scintillometer. The significant readings started at 207.8 metres in downhole depth and ended at 583.55 metres. Drilling stopped at 663 metres. Two intervals maxed out the scintillometer at 10,000 cps.
The readings are no substitute for assays, which are pending. But an additional spectrometer scan “confirmed that all radiometric activity is due to uranium, with minimal or no thorium input.” Further encouragement came from three intercepts showing visible pitchblende.
Now in progress are two more holes, one collared from the same location but at a more shallow angle and another 30 metres northeast along strike. Now under revision is the company’s original 6,000-metre plan for the Patterson Lake South-adjacent project. Arrow has become the target.
On February 26 NexGen reported it closed a previously announced two-year extension to its 70% earn-in on the northeastern Athabasca Basin Radio project. Assays have yet to be released from Radio’s nine-hole, 3,473-metre program, which wrapped up last July.
Denison reports Wheeler River drill results, updates other projects
A downhole radiometric probe found high-grade uranium oxide-equivalent results for a new batch of holes at Denison Mines’ (TSX:DML) flagship Wheeler River project. The company holds a 60% interest and acts as operator in the southeastern Basin joint venture, with Cameco Corp TSX:CCO holding 30% and JCU (Canada) Exploration 10%. Collars for eight holes released February 26 were spaced over roughly 240 metres of the closely drilled zone A of the Phoenix deposit. The best intercepts show:
With vertical drilling and “roughly” horizontal mineralization, the company considers intercept widths equal to true widths. Assays will presumably follow these radiometric readings, which are no substitute for lab work.
So far 13 of 28 winter holes have been finished at zone A and an exploration target called the K zone. The latter showed no significant mineralization but Denison declared itself encouraged by “sandstone and basement alteration in three of seven wide-spaced drill holes, which will likely warrant follow-up drilling.” This winter rigs will also target Wheeler’s 489 zone, Phoenix North, K North and two DC resistivity-low anomalies, the company added. The project lies about 35 kilometres from the Key Lake mill.
Ten holes at Moore Lake followed Hatchet’s example. Electromagnetic and DC resistivity surveys are slated for winter. Denison currently has drills turning at its Park Creek, Bell Lake and Waterbury Lake projects in campaigns scheduled for March completion.
Kivalliq announces ore-sorting and metallurgical progress at Angilak in Nunavut
Kivalliq Energy TSXV:KIV says metallurgical and ore-sorting tests from the Lac 50 deposit of its Angilak property provide encouraging news for the Nunavut project’s economics. Announced February 27, tests showed better than 95% uranium recovery in a 48-hour leach cycle, the ability to recycle all the primary alkaline leach reagents and production of 70% yellowcake meeting industry standards for uranium concentrate. The presence of boron and magnesium was “marginally higher than penalty levels but significantly below reject levels,” the company stated. Optimization tests continue.
Dilution could be reduced through radiometric ore sorting prior to milling. Tests showed a cumulative uranium recovery of 96.7% out of 49.2% of the extracted rock. In other words, 50.8% of the rock was rejected with loss of only 3.3% of uranium. The tests also showed 94.1% recovery from just 15.9% of the rock, when 84.1% of rock was rejected with a loss of only 5.9% of uranium.
“The testing reflects the high-grade uranium characteristics at Lac 50 where the majority of uranium mineralization occurs as disseminations and veins of massive pitchblende within the carbonate and hematite alteration zone” comprising the inferred resource, the company stated.
The resource boasts Canada’s highest grade outside the Athabasca Basin. Released in January 2013, the inferred category uses a 0.2% cutoff to show 2.83 million tonnes averaging 0.69% for 43.3 million pounds uranium oxide (U3O8). The inferred resource also shows 1.88 million ounces silver, 10.4 million pounds molybdenum and 15.6 million pounds copper. Kivalliq operates the 137,699-hectare project, 225 kilometres south of the hamlet of Baker Lake, in partnership with Nunavut Tunngavik Inc.
Forum starts 3,000 metres at Clearwater
Adjacently southwest of PLS, drilling has begun at Forum Uranium’s (TSXV:FDC) 9,910-hectare Clearwater project. According to its February 26 statement, the company plans about 3,000 metres in 12 to 15 shallow holes between 100 and 200 metres in depth. Around 11 targets were chosen by previous surveys including ground gravity, airborne EM and radon work.
Initial drilling will focus on the project’s northern claim. Forum stated the central and southern claims require further ground gravity, ground EM and radon surveys to define targets.
Lakeland Resources offers $2 million private placement for Basin exploration
Lakeland Resources TSXV:LK announced a private placement up to $2 million on February 24. The offer consists of three million flow-through units at $0.25 and 5.92 million non-flow-through units at $0.21. Each flow-through unit consists of one flow-through share and one-half non-flow-through warrant. Each warrant is exercisable for 12 months at $0.30. Non-flow-through units consist of one share and one warrant, also exercisable at $0.30 for a year.
Proceeds go to Athabasca Basin exploration, corporate development and general and administrative purposes.
In January Lakeland announced its 12,771-hectare Gibbon’s Creek project showed high-grade boulders up to 4.28% U3O8 and some of the highest radon readings ever measured in the Basin. As part of a 70% four-year earn-in, Declan Resources TSXV:LAN has committed $1.25 million to exploration this year.
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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 ResourceClips.com, 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.
“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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by Greg Klein | November 26, 2013
Optimistic as they were, forecasts fell short of predicting Tiffany & Co’s NYE:TIF Q3 performance. The news comes as Mountain Province Diamonds TSX:MPV launches large-scale financing efforts for a new Northwest Territories diamond mine while observers foresee a continuing increase in diamond demand and prices.
Announced November 26, Tiffany’s net earnings for the quarter came to $94.61 million or $0.73 a share, up from $63.18 million or $0.49 a share last year. Bloomberg attributed the numbers to wealthy, confident consumers snapping up jewelry and other discretionary goods. The company operates 283 stores worldwide, 11 more than last year, including 120 in the Americas, 68 in the Asia-Pacific region, 54 in Japan, 36 in Europe and five in the United Arab Emirates.
[Bain & Co’s annual report] predicted global rough diamond demand will rise at a compound annual rate of 5.1% to $26 billion by 2023, while global rough diamond supply will increase at an annual rate of 2%.—Bloomberg
Tiffany’s news follows reports that Irish billionaire Dermot Desmond has backed a $125-million rights offering for Mountain Province. Already the company’s biggest shareholder with a 24% interest, Desmond will buy rights not taken up by other investors, according to a November 24 Bloomberg story. The news agency said the offering comes “amid renewed investor interest in diamond projects as a recovering global economy boosts demand for engagement rings and other jewelry in the U.S. and emerging market countries such as China and India.”
Bank of Montreal analyst Edward Sterck told Bloomberg that investor interest in diamond stocks “has increased markedly.” He sees rough diamond prices rising 5% to 7% annually beginning next year, “driven by good demand growth and highly constrained supply,” the article stated.
Bloomberg added that an annual report on the global diamond industry issued by Bain & Co in August “predicted global rough diamond demand will rise at a compound annual rate of 5.1% to $26 billion by 2023, while global rough diamond supply will increase at an annual rate of 2%.”
Mountain Province has a number of strategies to raise its approximately $400-million initial portion of building the Gahcho Kué mine, a 49%/51% joint venture with De Beers 300 kilometres northeast of Yellowknife. Apart from the $125-million rights offering, and a $29.1-million private placement announced November 18, the company plans a $250-million debt facility in early 2014, according to Bloomberg.
The press agency added that financing and offtake might also come from Tiffany or Hong Kong’s Chow Tai Fook Jewellery Group.
by Greg Klein
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Algorithmic short-sellers could drive juniors to ASX
“The world’s number one stock exchange for mining companies”—that’s the consensus about Toronto, even from companies with operations and headquarters in other countries. But John Kaiser fears TSXV traders will drive juniors to the Australian Securities Exchange. In a Business News Network interview posted by Equedia on Sunday, the editor of Kaiser Research Online explained why.
Monitoring systems now in use can immediately spot significant buying, allowing traders to “intercept the capital that’s flowing in from real investors who are betting on fundamental outcomes, and they sell into this. Then, when that inflow is exhausted, they can simply lean into the order book and continue selling stock that they don’t have, selling short on a down-tick, creating a cascade of buyer’s regret and discouraging the longs, and actually facilitating being able to cover by the end of the day. So their intent to deliver the borrowed stock never has to be materialized. This sort of culture now lurks on top of a system where trading value has been in steep decline since April and May of last year.”
That’s especially troubling, he emphasized, because he believes the sector is moving back to a “discovery/exploration cycle” as prevailed during the 1980s and ’90s, “after a decade of resource feasibility demonstration.” Early-stage exploration companies are especially vulnerable, he said.
But Down Under has its downside too. “I don’t like the Australian stock exchange system because they don’t have a proper reporting system on a scale of technical detail that we in Canada have,” Kaiser added. “I think the Canadian system is fabulous for the entire resource exploration and development cycle. And I think it’s a shame that they allow this type of algorithmic hook-up that basically victimizes real speculators, as opposed to those simply trying to harvest the volatility that they’re literally manufacturing in this sector.”
Credit-card-sized gold bars as a crisis currency
A new product might make physical gold a more practical response to economic fears, according to a Friday Reuters story. The size of a credit card, the CombiBar is made up of 50 one-gram gold squares that can be broken off to use as currency. It’s selling well in Switzerland, Austria and especially Germany, where memories linger of post-WWI hyperinflation. The CombiBar is produced by the Swiss refinery Valcambi, which wants to introduce it to the American and Indian markets next year, while producing platinum and palladium CombiBars for Japan. Valcambi, by the way, is owned 60.6% by Newmont Mining TSX:NMC.
European demand “is rising every week,” Reuters quoted Andreas Habluetzel, head of the Swiss gold trading company Degussa. “Particularly in Germany, people buying gold fear that the euro will break apart or that banks will run into problems.”
Another company, Ex Oriente Lux, has sold 21 million euros of gold through its 17 vending machines in the United States, Europe and United Arab Emirates, Reuters added. “Sales rise according to the temperature of the crisis,” CEO Thomas Geissler told the news agency.
Former Solid Gold CEO accuses natives of slander
Darryl Stretch, the former CEO of Solid Gold Resources TSXV:SLD, has accused two native chiefs of “slanderous and defamatory remarks,” the Sudbury Star and Timmins Daily Press reported this week. He’s demanding public apologies from Wahgoshig chief Dave Babin and Nishnawbe Aski chief Harvey Yesno, who called him a “racist” at a Sudbury press conference in November, the Daily Press stated on Wednesday.
Stretch’s letter to the chiefs warned, “In the event that you do not respond to this notice I will take whatever action is available to me.”
Monday’s Star said Babin has no plans to respond and Yesno couldn’t be reached for comment.
Rhodes redux in Zimbabwe
Zimbabwe’s policy of “indigenisation and empowerment” requires foreign miners to divest 51% of their operations to Zimbabwean companies and community groups, as these examples show. Monday’s Harare Herald quoted Defence Minister Emmerson Mnangagwa explaining that the country was willing to work with foreign companies as long as Zimbabweans were the major beneficiaries.
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