Market Outlook Journal
by James Finch - Please email your feedback to
jfinch@stockinterview.com
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April 10, 2006 |
James Lovelock’s Latest Book Rejects Renewables, Endorses Nuclear Energy as the Only Viable Energy Source
On the front page of the World Nuclear Association website prominently rests a quote from what some consider the world’s leading environmentalist and among the world’s top scientists, Dr. James Lovelock:
“There is no sensible alternative to nuclear power if we are to sustain civilization.”
- James Lovelock, preeminent world leader in the development of environmental consciousness
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James Lovelock, at 86 years old, continues to be the Giant of the world’s environmental movement. He is also the loudest and most articulate scientist advocating the use of nuclear energy as the only method in preventing our return to the Dark Ages. |
At age eighty-six, Dr. Lovelock has just published his fourth book, The Revenge of Gaia (Penguin Books, 2006). “Gaia” is Dr. Lovelock’s belief that earth is a living, evolving organism, not just a hunk of rock we all live upon. Throughout his book, Lovelock refers to Gaia, when he is discussing our third planet from the sun. His latest book is a MUST read for anyone who is following the renaissance in nuclear energy. Environmentalists are unlikely to read this book. It may become, once the book becomes available in the U.S., an unspoken rule that this book is not to be read among environmentalist cliques. Well-intentioned environmentalist group members or followers who truly wish to help the environment would do well to broaden their horizons and read this book. Fair warning however, those environmentalists who carefully read Lovelock’s latest book could become nuclear power lobbyists, perhaps trading in their zest for protesting nuclear power to a realist view, like that of James Lovelock. Chapter Five, “Sources of Energy,” will instantly disintegrate every tenuous argument propounded by the naïve and antediluvian anti-nuclear movements across the world.
Dr. Lovelock’s credentials and achievements are light years beyond those of any environmental mouthpiece espousing the “green” movement. More so than anyone alive, Lovelock is first and foremost a giant of the earth’s environmentalist movement. Since 1974, Lovelock has been a Fellow of the Royal Society. Since 1994, he has been an Honorary Visiting Fellow of Green College, University of Oxford. New Scientist described him as “one of the great thinkers of our time. The London Observer has called him, “one of the environmental movement’s most influential figures.” In 2003, he was made Companion of Honour by Her Majesty the Queen. Prospect magazine named Dr. Lovelock in September 2005, “one of the world’s top 100 global public intellectuals.”
How does Dr. Lovelock respond to the question of nuclear waste? He writes, “I have offered in public to accept all the high-level waste produced in a year from a nuclear power station for deposit on my small plot of land; it would occupy a space about a cubic metre in size and fit safely in a concrete pit, and I would use the heat from its decaying radioactive elements to heat my home. It would be a waste not to use it. More important, it would be no danger to me, my family or the wildlife.” That should enlighten those arguing against the Yucca Mountain nuclear waste depository.
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Dr. Lovelock warns if we do not move away from fossil fuels, earth may someday resemble the landscape of Mars (see above). |
Chapter Five, “Sources of Energy,” concisely and cogently answers every “theory” about renewable energy sources hyped by the “green” movement. Let’s take Biomass, which makes sense to any concerned citizen. Lovelock even agrees with the theory of Biomass, writing, “Used sensibly and on a modest scale, burning wood or agricultural waste for heat or energy is no threat to Gaia.” Please note that he modified his statement with “sensibly” and “modest.” In a nutshell, he explains why Biomass will not become a leading energy source, “Bio fuels are especially dangerous because it is too easy to grown them as a replacement for fossil fuel; they will then demand an area of land or ocean far larger than Gaia can afford… We have already taken more than half of the productive land to grow food for ourselves. How can we expect Gaia to manage the Earth if we try to take the rest of the land for fuel production?” He added poignantly, “Just imagine that we tried to power our present civilization on crops grown specifically for fuel, such as coppice woodland, fields of oilseed rape, and so on. These are the ‘bio fuels’, the much-applauded renewable energy source…We would need the land area of several Earths just to grow the bio fuel.”
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Heat signatures (red), and smoke (light blue haze) are visible from fires burning in Kalimantan, Indonesia in this NOAA-12 image. In 2002, these fires contributed up to 40 percent of the world’s carbon dioxide emissions. If the world were powered by bio fuel, we would simply have higher carbon dioxide emissions than now. |
Wind power gets shellacked as well. For those environmentalists, such as Amory Lovins, who believe “Wind Farms” are going to become a significant energy source, they are heedless of the economic and practical considerations. According to the Royal Society of Engineers 2004 report, onshore European wind energy is two and a half times, and offshore wind energy over three times, more expensive per kilowatt hour than gas or nuclear energy. Denmark, which pioneered wind farms, is regretting the decision. Niels Gram of the Danish Federation of Industries said, “In green terms windmills are a mistake and economically make no sense… Many of us thought wind was the 100-percent solution for the future, but we were wrong. In fact, taking all energy needs into account it is only a 3 percent solution.” Lovelock writes, “To supply the UK’s present electricity needs would require 276,000 wind generators, about three per square mile, if national parks, urban, suburban and industrial areas are excluded… at best, energy is available from wind turbines only 25 percent of the time.” German environmentalists, who have recently led the charge for Wind Power, should reconsider. Lovelock writes, “The most recent report from Germany put wind energy as available only 16 percent of the time.”
Surely, solar power must be the answer, right? Wrong! Lovelock writes, “Solar cells are not yet suitable for supplying electricity directly to homes or workplaces, mostly because, despite over thirty years of development, they are quite expensive to make. At the Centre for Alternative Technology in Wales there is an experimental house with a roof made almost entirely of silicon photocells. In summer it provides about three kilowatts of electricity, but the cost of installation was comparable with the house itself, and the expected life of the cells is about ten years. Sunlight, like wind, is intermittent and would, without efficient storage, be an inconvenient energy source at these latitudes.”
Solar and wind power were just two of the many energy sources Lovelock rejects. Wave and tidal energy, hydro-electricity, hydrogen, fusion energy, coal and oil and natural gas all suffer similar consequences under Dr. Lovelock’s scientific microscope. Geothermal gets a partial endorsement, but Lovelock writes, “Unfortunately there are few places where it is freely available. Iceland is one of them, and it draws a large part of its energy needs from this source.” How many of you know that, while natural gas could cut carbon dioxide emissions by half, if used ubiquitously, some of the natural gas leaks into the air before it burns? According to the Society of Chemical Industry’s report (2004), this amounts to about 2 to 4 percent of the gas used. Methane, the main constituent of natural gas is 24 times more potent a greenhouse gas than carbon dioxide.
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A world’s appetite for electricity is straining our natural resources. Only 20 percent of these lights in the northeastern United States are powered by nuclear; the rest by fossil fuels.
Images courtesy of the National Oceanic and Atmospheric Administration and the Defense Meteorological Satellite Program. |
Fusion sounded great in theory, but when I discussed it with Dr. Fred Begay, at the Los Alamos National Laboratories, this past November, he told me it may take fifty years to develop, if it ever could be developed as an energy source. Lovelock explains in his book why Fusion Energy would be wonderful, but he brought up the one point, which stymies nuclear physicists (and which environmentalists won’t even talk about), “… the nuclear fusion of hydrogen yields millions of times more energy than its mere combustion, but to start the powerful reaction requires some means of heating the hydrogen to 150 million degrees.” How exactly go you go about heating something on earth up to 150 million degrees, when the core of the sun has a temperature of a little more than 100 million degrees? Again, great theory and work is being done in this arena to bring about a solution sometime this century, but this technology remains in an incubation stage.
The most shocking and disturbing discussion through Lovelock’s book was the problem with carbon dioxide emissions. The burning question these days is what to do with nuclear waste. Lovelock believes we should start worrying about what to do about carbon dioxide emissions waste, “The world’s annual production of carbon dioxide is 27,000 million tons. If this much were frozen into solid carbon dioxide at -80 degrees Centigrade, it would make a mountain one mile high and twelve miles in circumference. To sequester this much each year could not be achieved quickly – probably not sooner than twenty years from now.” He added, “If only had developed and installed the equipment for removing carbon dioxide from power stations and industry fifty years ago, we would now face surmountable problems.” Another problem with carbon dioxide should give you nightmares or reach for a gas mask. Carbon dioxide, according to Dr. Lovelock, “has a complicated removal with an effective residence time of between fifty and a hundred years. About half of the carbon dioxide we have so far added to the air remains there.” That means the carbon dioxide we add to our existing air pollution will still be breathed by our children, grandchildren and their children. How is that for a legacy?
James Lovelock’s Conclusion on Nuclear Energy |
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James Lovelock’s latest book, The Revenge of Gaia (Penguin Books, 2006) is not yet available in the United States. It can be ordered through Amazon.co.uk |
How does James Lovelock feel about nuclear energy? “I believe nuclear power is the only source of energy that will satisfy our demands and yet not be a hazard to Gaia and interfere with its capacity to sustain a comfortable climate and atmospheric composition. This is mainly because nuclear reactions are millions of times more energetic than chemical reactions. The most energy available from a chemical reaction, such as burning carbon in oxygen, is about nine kilowatt hours per kilogram. The nuclear fusion of hydrogen atoms to form helium gives several million times as much, and the energy from splitting uranium is greater still.”
Through his book, Lovelock reminds us that nuclear power is the single answer for this century, “We need emission-free energy sources immediately, and there is no serious contender to nuclear fission.”
Lovelock addresses Three Mile Island, Chernobyl, nuclear testing in the 1960s, and many other events over the past fifty years, as nuclear energy has developed. If you wondered about radiation and cancer, Lovelock answers that as well. You may leap up, after reading those pages, and start faxing them off to every environmentalist group you can contact. It may be the most definitive analysis of the disconnect the media and the greens have about nuclear energy and its impact on our health that you have ever read. Lovelock concludes, “The persistent distortion of the truth about the health risks of nuclear energy should make us wonder if the other statements about nuclear energy are equally flawed.”
One specific question that has puzzled me, for a number of years, was this: How many people die to produce each of our energy sources? The table below answered that question. The comparative safety of the different energy sources comes from the Paul Scherrer Institute in Switzerland in a 2001 report, which Lovelock reproduces on page 102 of his book. The Institute examined all of the world’s large-scale energy sources and compared them against their safety records. The numbers of deaths were expressed in terms of terrawatt year of energy made, between 1970 and 1992. A terrawatt year (TTY) is one million million watts of electricity made and continuously used throughout a year.
| Fuel |
Fatalies |
Who |
Deaths per TTY |
| Coal |
6400 |
Workers |
342 |
| Hydro |
4000 |
Public |
883 |
| Natural Gas |
1200 |
Workers and Public |
85 |
| Nuclear |
31 |
Workers |
8 |
Excerpted from James Lovelock's The Revenge of Gaia, page 102. |
Lovelock does not simply endorse nuclear, as an idle thought. He is passionate about nuclear energy as a life-saving measure, “My strong pleas for nuclear energy come from a growing sense that we have little time left in which to install a reliable and secure supply of electricity…. The important and overriding consideration is time; we have nuclear power now, and new nuclear building should be started immediately. All of the alternatives, including fusion energy, require decades of development before they can be employed on a scale that would significantly reduce emissions.”
He concludes his masterpiece of Chapter Five of The Revenge of Gaia by writing:
“Meanwhile at the world’s climate centres the barometer continues to fall and tell of the imminent danger of a climate storm whose severity the Earth has not endured for fifty-five million years. But in the cities the party goes on; how much longer before reality enters our minds?"
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April 7, 2006 |
Strathmore Minerals’ Quality Management Attracts BBC News
In a March 19th Market Outlook, I wrote about my observation that it is the quality of management that attracts the Big Publicity. Mainstream publicity is what attracts a wider audience of investors and enhances a company’s possibility of being taken over. Early investors celebrate when their favorite company goes “in play.” Case in point is Strathmore Minerals (TSX: STM; Other OTC: STHJF), whose story we have followed for nearly two years.
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David Miller was in Hong Kong addressing the International Atomic Energy Agency, when he was invited by BBC News for a worldwide interview.
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Strathmore president David Miller was in Hong Kong this past week, addressing the International Atomic Energy Agency (IAEA) on the subject of uranium mining. During the course of his visit, he was invited to be interviewed on BBC World News and did so on April 6th. To reach millions of listeners on one of the world’s premiere radio networks, BBC (British Broadcasting Corporation), is not only a privilege for the guest, in this case David Miller, but it helps bring the uranium story before a wider audience. One might say he was lucky and in the right place at the right time. But, over the past few months, David Miller has also been interviewed by Street.com and Dow Jones, and appeared on Canada's ROB TV and CNN-TV.
Miller was joined on the BBC News show with Luis Echávarri, Director/General of the Paris-based OECD (Organization for Economic Cooperation and Development) Nuclear Energy Agency to talk about the uranium supply crunch. Miller told BBC, “The current demand is nearly double what the current production is from mines in the world. You simply can not turn these mines on with a switch.”
As many of these smaller uranium companies continue to build their management teams with “quality names,” they will continue to attract the eye of the mainstream media. And as more of the media become interested in the “uranium story” and the company story for them, that will accelerate interest in the entire sector. The Itochu – Uranium Resources (OTC BB: URIX) is likely to be just the first volley of more joint ventures between a utility company and a small-cap uranium development company.
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April 4, 2006 |
Why Does a Company’s Uranium Resource Calculations Double?
Have you ever wondered how a uranium company’s “resource calculation” can increase, sometimes even double? I did and I began making inquiries about this. In February, during a meeting, it was a topic of discussion with William Boberg, Chief Executive of UR-Energy (TSX: URE). I have also had talks with David Miller, President of Strathmore Minerals (TSX: STM; Other OTC: STHJF), and his senior geologist, Terrence Osier. The differences in resources reported by a company, in at least one of the examples found below – Strathmore Minerals’ Church Rock property, is because of the mining methods to be used. The grade-thickness applied to the resource may differ between conventional mining (underground, open pit) versus in-situ solution mining. That can increase the size of the estimated resource.
A Canadian listed mining company can not announce its uranium resource estimate unless it files a document called a National Instrument 43-101 (NI-43-101). You may read in some news releases: These are historical estimates. The NI 43-101 came about after the 1997 Bre-X Minerals debacle. Possibly the worst mining scam in Canadian history, it was preceded and followed by other, lesser mining scams. Canadian regulators instituted measures to prevent a repeat performance. A National Instrument 43-101 means that an independent, qualified person has visited the property, reviewed the historical data, and reaches a conclusion on whether or not the property has merit.
Some of the oft-repeated grumblings by uranium insiders include, “This isn’t a gold property in an Indonesian jungle.” In fact, they are correct. Many of the properties held by some of the front runners for uranium mining development in the United States have had thousands of exploration drill holes, and hundreds (if not thousands) of delineation drill holes. Using UR-Energy as an example, this company’s Lost Soldier project has had more than 3,700 drill holes within a two square mile area. Historically, New Mexico and Wyoming have been two of the world’s top uranium producing areas. It is probably impossible to correctly estimate the total number of holes that have actually been drilled in these two states. In one geological textbook, Boberg suggested that millions of feet have been drilled in Wyoming.
Insistence by the Toronto Stock Exchange that companies file a National Instrument 43-101 on their properties has worked out in favor of investors. One case in point is Strathmore Minerals. On January 4th, the company issued a news release announcing an increase in its uranium resource estimate at its Church Rock, New Mexico property. The second sentence read, “The 43-101 report provides a new resource estimate which has increased to 11.8 million pounds of U3O8 from the historically reported 6 million pounds U3O8.”
This begs the question, asked at the beginning of this article: “Have you ever wondered how a uranium company’s “resource calculation” can increase, sometimes even double?” Much of what follows is advanced geological mathematics and may be confusing. Behind all the geometrical calculations, there are a few simple explanations. When a major mining company, such as Kerr-McGee, was establishing a uranium resource estimate, it was because its exploration team needed to prove the value of the project and get approval from its board of directors before investing in capital costs.
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Kerr-McGee used the "Circle Tangent" method in calculating uranium resources for underground uranium mining. They used a higher cutoff grade, which meant a lower uranium resource was announced before mining began.
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Pathfinder Mines, Ranchers Exploration, the U.S. Atomic Energy Commission, and Strathmore Minerals have used the "polygonal" method of estimating uranium resources. Because Strathmore plans an ISL operation on its property, it can use a lower cutoff grade, which is a standard among ISL operators.
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Kerr-McGee used the “Circle Tangent” resource method (don’t fall asleep now; we’ll explain that in a moment). Uranium mining in the 1970s and 1980s was mainly underground mining. Capital costs were well above $100 million for a mine and mill complex. They wanted to ensure they had plenty of uranium to feed that mill.
It should be noted that Kerr-McGee, and other underground operators, used a 6-foot true thickness cutoff combined with a 0.1 percent grade cutoff. This is 0.6GT. Six feet was the height of the mining equipment and operator. Phillips Uranium used 8ft at 0.075 percent, but still 0.6GT, because their equipment was larger.
When the price of uranium rose in the late 1970s, reports, maps, and resource calculation sheets started to show 6ft at 0.05 percent (0.3GT) on them. The price went up, the recoverable grade went down. However, the 6-foot height did not change, just the grade they could economically mine.
With in-situ recovery, the thickness of the intercept doesn’t matter so much. A lower grade cutoff can be used. When Strathmore reported an initial cutoff grade of 0.03 percent (standard for ISL operations), their geologists used a 0.3GT cutoff to directly compare with the 6ft of 0.05 percent resource of 10.9 million pounds which Kerr-McGee used in 1979.
Most uranium mining in the United States is likely to be in-situ solution mining (ISL). Another method used to calculate resources in tabular deposits is called the “polygonal” method. Tabular deposits are amenable to ISL mining. Some believe these are far more accurate in estimating uranium resources. Others disagree.
It’s not that there is more uranium on the property, or over the past 20-25 years, more uranium “grew” or floated onto the property. It is that the size of the uranium mineralization has been more accurately described. As bonus to investors, the stock prices often run higher after such announcements are made. In the case of Strathmore Minerals, the stock price rallied by about 10 percent after the company announced the increase in its resource estimate.
The guidelines for defining the amount of uranium mineralization have to do with geometric patterns. Kerr-McGee used blocks in 1985, according to the company’s guidelines. Kerr-McGee would define an ore body, decide if feasible to mine, and then build the mine. When underground and mining, they would proceed with longhole drilling and find more ore. Below is an excerpt from a Kerr-McGee document, which describes how to construct blocks for a “measured resource.”
“For each surface drill hole intercept of material equal to or above thickness and grade cutoffs, a circle shall be drawn using a radius equal to one-half the horizontal distance to the nearest below cutoff hole which tested the entire thickness of the same sedimentary unit, or a radius of 50 feet, whichever is less.
Although the 50-foot radius is the standard area of influence in New Mexico, this can vary depending on the area. Development in Wyoming, for example, currently uses a 25-foot radius circle for open pit “shallow” intercepts (<250’ depth) and a 35-foot radius circle for underground “deep” intercepts (>250’ depth).
Two or more above cutoff holes may be connected to construct a Measured block by lines tangent to the circles provided that:
The above cutoff intercepts TIE, that is, they are in the same lithologic portion of the same sedimentary unit and at least one foot of the intercepts can be connected with each other by a horizontal line.
There are no below cutoff holes which tested the same sedimentary unit falling within the Measured block. |
By comparison, Pathfinder Mines, Ranchers Exploration, the U.S. Atomic Energy Commission, and others used the polygonal method. It was first described in 1966 and is used as an acceptable method for calculating a uranium resource (reference appear at the end of this article). Strathmore Minerals uses the Equi-Distance Perpendicular Bi-Sector Polygonal Resource Method because both David Miller (President) and John DeJoia (vice president of technical services) previously worked for Pathfinder Mines. DeJoia is overseeing the geological and permitting work in Santa Fe for Strathmore’s properties.
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Mr. John DeJoia
Strathmore Minerals
Vice President
of Technical Services |
This polygonal method is described below in constructing the AOI (area of influence) polygons from surface drill holes:
(1) drill holes are plotted on the map,
(2) drift direction and distance are plotted, and
(3) lines are drawn connecting neighboring drill holes (we used the bottom-hole location of the drill holes {i.e. end of drift}).
(4) perpendicular lines were drawn equi-distant between the connected drill holes,
(5) these perpendicular lines were connected with other perpendicular lines, thus
(6) creating an equi-distance AOI polygon about individual drill holes.
(7) the areas for each AOI polygon were determined.
The areas are then applied to an Excel file containing the drill hole data (intercept depths and thickness, grade, etc.) to arrive at the various mineral resources calculated at the desired GT (grade x thickness of 0.1 to 1.0) cutoffs. According to Strathmore Minerals senior geologist Terrence Osier, “For the various resources we reported we used a limited, maximum size to the polygon’s area of influence.” With the Church Rock resource estimates, Osier explained the parameters for limiting the resources were as follows:
Measured: 100 ft x 100ft (10,000ft2)
Indicated: 200ft x 200ft minus the measured resource
Measured and Indicated: maximum sized polygon of 200ft x 200ft (40,000ft2)
Inferred: 400ft x 400ft minus the measured and indicated resource. |
Using the polygonal method, companies are increasing their resource estimates above the historically provided data. Additionally, as the spot price of uranium continues to rise (or at least remains above $40/pound), the quantity of economic uranium mineralization increases. At some point, if spot uranium stabilizes at a much higher level, all of the uranium development companies may have to upwardly revise their resource estimates.
Editor's Note: Special thanks to Terrence Osier, Strathmore Minerals senior geologist, for providing StockInterview.com with this invaluable data.
Parker, H.M., 1990, Reserve estimation of uranium deposits, in Kennedy, B.A., ed., Surface Mining, 2nd Edition: Society for Mining and
Metallurgy, and Exploration, Inc., Littleton, CO, Chapter 3.4.2, p.355-375.
Popoff, C.C., 1966, Computing reserves of mineral deposits: principles and conventional methods: U.S. Bureau of Mines Informational Circular IC 8283, 113p.
Sandefur, R.L., and Grant, D.C., 1976, Preliminary evaluation of uranium deposits. A geostatistical study of drilling density in Wyoming solution fronts, in Exploration for uranium ore deposits, Proceedings of a Symposium, 29 March to 2 April, 1976, by the International Atomic Energy Agency, Vienna, p.695-714. |
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