| Summary: Sprott Asset Management uranium
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| | starting to see the weather impacts.
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| expert Kevin Bambrough talked with us
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| | There are problems with droughts across
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| about the "second leg" of the current
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| | the world as well as elevated hurricane
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| uranium bull market. He sees a massive
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| | activity. Going nuclear on a mass scale
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| nuclear build up heading our way with
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| | is starting to become recognized as one
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| "the environmentalists leading the
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| | of the only ways to have a real impact. I
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| charge." He said many price projections
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| | think what we're going to see is an
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| may be inaccurate because "people are
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| | unprecedented build out in nuclear
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| underestimating future demand."
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| | capacity throughout the world in the
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| StockInterview: Price forecasts on spot
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| | coming years and decades. I'd equate this
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| uranium are widening. Some insiders have
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| | to what happened when we went from using
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| predicted uranium prices may drop back
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| | oil for just lamps and home heating to
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| into the $30/pound range; others, such as
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| | using it as a transportation fuel. What's
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| yourself, continue to suggest $50/pound
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| | going to happen with the people who have
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| or higher. Any comments on the forecasts
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| | the higher quality uranium reserves and
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| others are making?
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| | lower cost production? They are going to
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| Kevin Bambrough:
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| | be able to reap massive profits over the
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| There are many people forecasting uranium
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| | coming decades.
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| prices now. It's important to consider
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| | StockInterview: Looking ahead, do you
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| their track record of forecasting prices.
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| | think we'll see more deals between a
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| Look at the contracts that have been
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| | small uranium producer, such as Uranium
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| written by many companies in the
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| | Resources (OTC BB: URRE) and the Japanese
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| industry, over the last number of years.
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| | multi-national conglomerate, Itochu
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| Anyone who had ceilings, or had signed
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| | Corporation?
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| fixed-priced contracts, has been
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| | Kevin Bambrough:
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| punished. Very few people in the industry
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| | I have no doubt that it's going to
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| predicted what has happened. Looking
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| | continue to happen. More importantly,
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| forward, I think that in our view, the
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| | I've heard that some of the major
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| cost of production of current producers
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| | builders of nuclear facilities around the
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| isn't going to be as relevant as it has
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| | world, companies such as Areva are quite
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| been in the past. It will be the more
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| | concerned about the availability of
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| marginal, much higher cost producers who
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| | supply going forward. When these
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| will be setting the price.
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| | companies are talking to countries and
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| StockInterview: Isn't there a sense of
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| | utilities that potentially could contract
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| false optimism that "projects in the
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| | to build nuclear facilities, they're
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| pipeline" will ensure an ongoing stream
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| | basically being told that buyers want
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| of uranium oxide for the nuclear fuel
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| | uranium supply assurances, or they aren't
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| cycle?
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| | going to give an order to buy a nuclear
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| Kevin Bambrough:
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| | facility. I've heard they are looking to
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| There are a lot of people looking at the
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| | do joint ventures or at least contract
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| supply situation going forward while
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| | with emerging producers to try to get
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| underestimating future demand. They are
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| | future supply. Then, they will be able
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| very optimistic that mining projects are
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| | sell their nuclear technology to
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| going to go as planned. We had recent
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| | countries and ensure supply.
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| news that Cigar Lake had a problem. There
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| | StockInterview: Will the Chinese be
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| was a flood the. There's a couple million
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| | satisfied with the uranium they plan to
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| pounds shortfall to most people's models
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| | buy from Australia, or will they have to
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| for at least two years. All because of
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| | tap into uranium production from another
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| one mine's six month delay.
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| | or other countries?
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| StockInterview: Would that have the kind
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| | Kevin Bambrough:
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| of impact the McArthur flooding
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| | I think that the Chinese will probably
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| (Athabasca Basin, Cameco) had on the spot
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| | look elsewhere as well. Countries have
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| uranium price a few years ago?
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| | strategic oil reserves. Why shouldn't
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| Kevin Bambrough:
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| | they have strategic uranium reserves to
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| I think it could. It was forecast to go
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| | supply their nuclear reactors? It makes
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| up to 18 million pounds of production.
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| | sense to have a good stockpile of uranium
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| That would have been ten percent of the
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| | considering the relative cost of nuclear
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| world's current consumption. Cigar Lake
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| | power versus anything else. I don't think
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| would need to ramp up over a three year
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| | that the nuclear power industry should
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| period, once it gets started. Now, there
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| | operate on a just in time basis,
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| is a six month delay. What if it's
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| | considering the costs and the risks of
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| delayed a year? That really changes the
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| | making sure you can secure supply. Don't
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| production profile for the next decade.
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| | get me wrong. There is plenty of uranium
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| There are many projects that could see
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| | in the world, but we're just going to
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| delays. The mining business is always
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| | have to pay up for it. I believe we're
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| full of delays. Remember that when we
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| | going to consume lot more than what we're
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| bring on new nuclear plants, they take on
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| | consuming nowadays - a decade or two out.
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| average about 1.6 million lbs when
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| | The world is waking up to the reality of
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| commissioning. What will happen, if in a
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| | peak oil production, and how it is going
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| decade, we bring on just 10 or 20
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| | to affect all aspects of energy
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| reactors each year? That's another 16 to
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| | production.
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| 30 million pounds per year of demand just
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| | StockInterview: How much of a factor will
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| because of the start up.
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| | Russia play in the nuclear build up?
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| StockInterview: Does this mean the
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| | Kevin Bambrough:
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| current uranium bull market still has
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| | Looking at some of the recent statements
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| strong legs?
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| | made by Russian officials, it's
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| Kevin Bambrough:
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| | completely clear to me that we've been
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| I think we're entering the second leg of
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| | correct in what we've been thinking for a
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| the bull market here. It is going to move
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| | long time: the HEU agreement (to deliver
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| away from a supply shortage story, where
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| | highly enriched uranium and have it
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| we focus on the fact that we only get
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| | blended down) is probably not going to be
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| about 60 percent of the current
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| | renewed. The Russians are planning to
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| consumption from mines, while the
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| | make nuclear technology a key export for
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| inventories are being worked off. Now,
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| | them, really as a value added product to
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| we're moving into a situation where we're
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| | go with uranium production. They desire
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| seeing an explosion in demand growth.
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| | to be able to offer a complete solution,
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| Just a couple of years ago when we first
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| | not just uranium, but the actual building
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| started investing in uranium, we could
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| | and technology around the nuclear
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| see probably about a dozen nuclear
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| | facilities themselves. They will also
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| facilities being planned for construction
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| | have growing uranium demands domestically
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| throughout the world. Now we've got well
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| | and have voiced concern about being able
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| over 100 being planned. It seems there
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| | to meet their own needs beyond 2015.
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| are new additions and talk of more
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| | StockInterview: But nuclear energy
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| additions every day.
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| | critics claim all of these power plants
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| StockInterview: How you envision this
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| | won't secure financing and most plans are
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| nuclear buildup rolling out?
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| | just pipe dreams never to be built.
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| Kevin Bambrough:
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| | Kevin Bambrough:
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| I don't think it's unreasonable to think,
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| | Two years ago, the critics said there
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| looking ten to twenty years out, there
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| | would never be any more nuclear plants
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| are going to be a lot of countries that
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| | built in the U.S. People used to say
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| will be trying to get in the position
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| | nuclear was over for Germany, and that
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| that France is in, with a much higher
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| | many countries would exit nuclear power.
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| percentage of their power coming from
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| | Now we're seeing the exact opposite.
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| nuclear generation. We could see a move
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| | We're seeing proposals being done,
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| to where maybe 50 percent of global
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| | incentives put in place, and a multitude
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| energy production or more could
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| | of projects moving ahead. If what the
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| eventually be supplied by nuclear. There
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| | leading scientists from NASA, the NOAA
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| is nothing else that can really step up
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| | and from many organizations around the
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| and fill the void and take care of this
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| | world are saying about global warming,
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| problem that we're having. France
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| | and the acceleration we've recently seen
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| produces 78 percent of their electricity
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| | continues, people are going to be begging
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| from nuclear. Why isn't that reasonable
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| | to have more nuclear facilities and cut
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| for others? Look out a decade or two, and
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| | CO2 emissions. The environmentalists will
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| it doesn't appear like we're going to
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| | be leading the charge.
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| have the oil and the gas in order to
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| | StockInterview: How long will it take
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| handle our needs. Obviously we can do
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| | before the proposed nuclear build up
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| more with coal, but if we're going to
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| | impacts the uranium mining companies?
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| keep using coal we've got to put in place
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| | Kevin Bambrough:
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| technology to take care of the carbon
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| | The actual build of all this takes time.
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| dioxide sequestration. If you want to
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| | I think the increase in the positive
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| have a stable, secure supply of
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| | perception, of the nuclear industry is
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| electricity, it seems that you're going
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| | going to continue to accelerate. All
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| to have to go with more nuclear or
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| | demand for uranium can come from just the
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| eventually with these new coal
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| | planning stage for nuclear power plants,
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| technologies. I think there is going to
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| | as companies look forward and try to
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| have to be a balance of both, because the
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| | contract future supply. Ultimately,
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| oil and gas just isn't going to be there.
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| | that's what will keep driving the uranium
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| StockInterview: What do you think is the
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| | price higher.
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| catalyst for this anticipated growth in
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| | StockInterview: How seriously is the
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| nuclear energy demand?
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| | nuclear industry taking the global build
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| Kevin Bambrough:
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| | up?
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| The most interesting thing is the fact
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| | Kevin Bambrough:
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| that some environmentalists are leading
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| | I think the industry is starting to take
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| the charge to go more nuclear. It's
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| | it very seriously. That's why the uranium
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| because they realize nuclear energy is
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| | price keeps pushing higher. People are
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| the only practical alternative and
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| | going around trying to contract for
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| because of the situation with the carbon
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| | uranium, and they are finding it more
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| dioxide (CO2) levels. There have been
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| | difficult. People are also starting to
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| some recent reports about CO2 levels
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| | realize that as you have problems, such
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| reaching 381 parts per billion, just
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| | as the McArthur River flooding, which got
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| spiking out of the range that has kept
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| | the uranium bull market jump started, and
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| the world in a relatively stabile
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| | now a problem at Cigar Lake, you really
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| environment for the last 400,000 years.
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| | should have a good build up of inventory
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| If you look at the work of people like
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| | in order to protect yourself in this
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| James Hanson, the correlation between CO2
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| | environment. Especially when the relative
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| levels and temperature is undeniable.
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| | cost of having to switch off a nuclear
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| Basically, mankind has increased the CO2
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| | facility to go to something else in a
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| levels beyond a level that hasn't been
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| | pinch is multiples higher.
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| seen in over a million years. We are just
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