| China Demand for Uranium, World Growth in | | | | mined are roughly comparable. If you havent done |
| Electricity Demand to Drive Uranium Price Higher | | | | any work, after a discovery, it still will take about |
| Industry expert says all new production already | | | | four to six years to mine in any of those areas. |
| factored in uranium price We are consuming far more | | | | In early 2004, there were probably less than twenty |
| uranium than we are producing worldwide, explained | | | | uranium producers and exploration companies. Since |
| David Miller, Wyoming legislator and recently | | | | then, the number of uranium exploration companies |
| appointed president of Strathmore Resources | | | | has jumped to more than 200. Miller warns investors |
| (TSX-V: STM; OTC: STHJF.PK). All the new | | | | that it could take up to 12 years for a grass roots |
| production is already factored into the future market | | | | project to begin mining yellowcake. Miller explained, |
| for uranium. Were underwater right now without | | | | Starting, finding, permitting and mining a project is |
| building one more nuclear power plant. Nuclear reactor | | | | probably going to take a minimum of 12 to 20 years. |
| requirements have far outstripped current mining | | | | From the start of the exploration program to defining |
| production for the past two decades. Current | | | | the ore body, after you make a discovery, to |
| worldwide production is more than 80 million pounds, | | | | starting the background and permitting process, to |
| but the demand for uranium, which fuels nuclear | | | | development and then finally mining its going to take |
| reactors, is running an annual deficit of approximately | | | | a long time. |
| 60 million pounds. | | | | Through 2005, many uranium exploration companies |
| Electricity: Uraniums Supply and Demand Problem | | | | announced new projects throughout Canada and the |
| Were not going to run out of uranium, but where will | | | | United States. Miller did not see how their efforts |
| the price go to encourage new production? asked | | | | would immediately alleviate the uranium supply crunch, |
| David Miller. We are around over $33/pound now. | | | | If you are talking about any of those, such as in |
| Could it double again? It wouldnt surprise me at all. | | | | Labrador or the Yukon or in the basins outside the |
| Kevin Bambrough, a research analyst for Sprott | | | | Athabasca Basin, or even within the Basin, for those |
| Asset Management, heartily agreed with Mr. Miller, | | | | that are just now doing their first exploration, you |
| saying, We have just started a long term uranium bull | | | | are talking the year 2020 before those could come |
| market that will end in a uranium mania as utilities and | | | | online and supply uranium to the world market. |
| countries drive uranium prices to unbelievable highs as | | | | But, what about the worlds richest concentrations of |
| they compete to secure supplies." | | | | uranium in Canadas Athabasca Basin? Will they help |
| That driving force is demand for more electricity. | | | | stem the rising uranium price? In a nutshell, Miller says |
| Over the past 25 years, total world energy use | | | | no. He explained, The next one to come online is |
| expanded by almost 50 percent, with stronger | | | | Cigar Lake, but it was discovered over 20 years ago. |
| growth in electricity usage. Demand for electricity is | | | | There is another one called Shea Creek, which was |
| increasing far more rapidly than overall energy use. | | | | discovered by Cogema more than a dozen years |
| Electricity demand has been projected to grow 2.8 | | | | ago. Could they start the permitting process on that |
| percent annually through 2010, and substantially more | | | | one in the near future? Absolutely, Miller responded. |
| between then and 2020. About 2 billion people | | | | But it might be close to 2015 before it could bring |
| currently have no electricity access, and with United | | | | any uranium to the world market. |
| Nations forecasts of world population growth by 1.5 | | | | The future largest producing uranium mine in the |
| billion people in 2020, electricity demand will continue | | | | world is likely to be Olympic Dam in Australia. Its |
| to grow. | | | | basically a copper mine with uranium grades. On |
| As an interim solution to the greenhouse gas problem | | | | October 27th Hong Kong-based institutional advisor |
| and climate changes, a growing number of countries | | | | Marc Faber, and author The Gloom, Boom and Doom |
| are investigating nuclear energy to solve their burden | | | | Report, told Dow Jones newswire that he thought |
| of a soaring electrical demand. Presently, there is as | | | | copper prices would fall by as much as 40 percent. |
| much electricity generated by nuclear power as was | | | | (Note: Marc Faber also said, Id be a physical buyer of |
| provided by all sources worldwide in 1960. | | | | uranium.) What happens when copper is $0.50/pound? |
| Nuclear power generates more than 16 percent of | | | | What will be their cost of producing that uranium? |
| the worlds electricity, nearly 24 percent of the OECD | | | | asked Dave Miller. Olympic Dam is low grade uranium, |
| and 34 percent of the European Unions electricity | | | | less than 0.05 percent U308. Their cost to operate |
| needs. In an April 2005 speech to the National Small | | | | the uranium portion of that will go up, if copper prices |
| Business Conference in Washington, President Bush | | | | go down. |
| announced, Nuclear power is now providing about 20 | | | | Where else do utilities turn for their growing uranium |
| percent of America's electricity, with no air pollution | | | | needs? |
| or greenhouse gas emissions. Nuclear power is one of | | | | David Miller argues that some of that uranium |
| the safest, cleanest sources of power in the world, | | | | production is likely to come from the smaller, but |
| and we need more of it here in America. | | | | well-capitalized, companies, such as Strathmore |
| Demand for electricity is projected to impact other | | | | Minerals. Our strategy from day one, and we havent |
| commodities as well, not just the price of uranium. In | | | | veered from this at all, has been to acquire as many |
| the Energy Information Agencys Annual Energy | | | | known uranium deposits as we possibly could, |
| Outlook 2005, U.S. electricity demand will bring about | | | | explained Miller. We started early in this uranium cycle |
| increases in natural gas consumption. By 2025, the | | | | in 2003. We were out there before 95 percent of |
| electric power sector will account for 31 percent of | | | | these other uranium companies even thought of |
| total demand for natural gas, as consumption | | | | starting uranium companies. We were able to pick up |
| increases from 5.0 trillion cubic feet in 2003 to 9.4 | | | | some very good deposits in New Mexico and |
| trillion cubic feet in 2025. | | | | Wyoming. These are known, drilled-out uranium |
| Chinas Demand May Be Greater Than Anticipated | | | | deposits in the country thats produced as much as |
| Today, 441 nuclear power reactors in 31 countries | | | | uranium anywhere else on earth. Weve taken all that |
| provide more than 16 percent of the worlds | | | | exploration information, where they discovered these |
| electricity. In 2003, that was 2525 billion kilowatt | | | | old deposits, and have acquired a number of those |
| hours. Eleven countries are constructing thirty more | | | | old deposits. Now, we have opened a permitting |
| reactors, mainly in China, but also in Russia, Japan and | | | | office in New Mexico and starting the permitting |
| Korea. The International Atomic Energy Agency has | | | | process to put those into production, somewhere |
| projected at least 60 new power plants will be | | | | down the road. Its a long process and all kinds of |
| constructed over the next 15 years. By 2020, nuclear | | | | studies must be done to get these fully permitted |
| powers electricity production share will increase to 17 | | | | and into production. |
| percent. | | | | But there is a second part to the Strathmore Minerals |
| China is the future wild card, said Miller. Their current | | | | strategy. Miller announced, Dont ignore the richest |
| uranium demand is miniscule. They have a small | | | | uranium province on earth, which is the Athabasca |
| nuclear industry. They may have three or four | | | | Basin in Canada. Strathmore is the Number One |
| thousand megawatts of capacity. Their uranium | | | | landholder in the Athabasca Basin, controlling |
| demand is only about 4 or 5 million pounds per year. | | | | approximately 3 million acres in Canada. We have |
| They meet that internally from their own uranium | | | | dozen different individual projects there. We are |
| deposits. But what they are planning for nuclear is | | | | starting the exploration process on all of those." |
| probably the most aggressive program in the world. I | | | | The case with Cameco (NYSE: CCJ), the blue chip |
| visited China in 2003 to teach ISL (in situ leaching) | | | | publicly traded uranium producer, may also help fuel |
| uranium geology and ISL mining techniques to a | | | | uranium prices rally to higher levels. They have |
| couple of institutes. At that time, they were talking | | | | forward sold their production. Added Miller, I would |
| about building two new nuclear power plants per year | | | | bet their average sales price, under contract right |
| for the next 20 years. | | | | now, of the 20+ million pounds they deliver every |
| But as Miller observed, they may have more | | | | year is somewhere in the low teens maybe $13 |
| ambitious plans. He added, Since then, I have heard | | | | pound plus/minus $1-2. As these contracts mature, |
| of more aggressive programs. One article I read | | | | and bring on new contracts, that price is going to |
| recently was entitled, Let 1000 Reactors Bloom. That | | | | keep going up. They should keep going up for the |
| is more than 200 percent of the nuclear reactors we | | | | next five years. |
| now have on earth. I believe that is what the | | | | The Case for Nuclear Energy |
| Chinese will be doing in the next 40 50 years, | | | | As electricity demand grows by leaps and bounds |
| converting nearly 100 percent of their electrical | | | | during the 21st century, many of the worlds |
| generation from nuclear power. Currently, China is | | | | governments are seriously considering nuclear energy |
| generating less than three percent of their electricity | | | | as a safer alternative to coal-fired plants. As many |
| from nuclear energy. | | | | study the safety issues of nuclear-powered |
| Miller speculates of how this might impact the price | | | | electricity, they tend to conclude that nuclear energy |
| of uranium, If they are building nearly three times the | | | | may very well provide a healthier, as well as a less |
| world fleet in just China, then that would be about | | | | expensive, alternative to present power generation |
| 500 million pounds of uranium demand from China in | | | | methods. |
| fifty years. Other companies are announcing new | | | | Miller pointed out, In the 1970s, when the anti-nuclear |
| nuclear power plants. What does that mean for the | | | | movement was very strong, the U.S. was then |
| price of uranium? Miller concluded, So, the demand for | | | | mining and burning 600 million tons of coal each year. |
| uranium is going up. I think the growth in demand will | | | | And now, thirty years later, because the anti-nuclear |
| be more rapid than we realize. | | | | industry was successful, we are burning 1 billion tons |
| Uranium Mining: A Slow Process | | | | of coal per year. |
| David Miller, who was previously interviewed by in | | | | According to the Environmental Protection Agency, |
| June 2004, reflected on last years forecast, I | | | | U.S. air pollution in 1999, as a result of energy from |
| thought $30/pound was sufficiently high to | | | | coal, emitted more than 13 million tons of sulfur |
| encourage enough new production around the world. | | | | oxides and nearly 5.5 million tons of nitrous oxides. In |
| But there are major issues with supplying the | | | | a Harvard School of Public Health study, as many as |
| increasing appetite of the burgeoning nuclear power | | | | 70,000 Americans are dying each year as a result of |
| industry. Miller warned, The problem with encouraging | | | | air pollution. From sulfur dioxide alone, Harvard |
| new production is you dont turn these things on and | | | | estimated that 2400 Americans die for every million |
| off. The only uranium, coming onto the market in | | | | tons of sulfur dioxide emitted, or more than 30,000 |
| addition to whats already planned right now, will | | | | American deaths annually. |
| come from the already-discovered deposits. | | | | But, air pollution is far worse elsewhere. The pollution |
| Two years from now, Miller thinks the spot price of | | | | levels in China from Shanghai to Beijing are shocking, |
| uranium could double again. There are going to be a | | | | said Miller. Emphysema kills 5,000 people per year in |
| lot of people trying to put uranium mines into | | | | the coal mines. They need nuclear power, probably |
| production, but it is not an easy process. Permitting | | | | more than any area on earth, to clean up their air. |
| requirements in countries where most uranium is | | | | |