| China Demand for Uranium, World Growth in | | | | Through 2005, many uranium exploration companies |
| Electricity Demand to Drive Uranium Price Higher | | | | announced new projects throughout Canada and the |
| Industry expert says all new production already | | | | United States. Miller did not see how their efforts |
| factored in uranium price "We are consuming far | | | | would immediately alleviate the uranium supply crunch, |
| more uranium than we are producing worldwide," | | | | "If you are talking about any of those, such as in |
| explained David Miller, Wyoming legislator and recently | | | | Labrador or the Yukon or in the basins outside the |
| appointed president of Strathmore Resources | | | | Athabasca Basin, or even within the Basin, for those |
| (TSX-V: STM; OTC: STHJF.PK). "All the new | | | | that are just now doing their first exploration, you |
| production is already factored into the future market | | | | are talking the year 2020 before those could come |
| for uranium. We're underwater right now without | | | | online and supply uranium to the world market." |
| building one more nuclear power plant." Nuclear | | | | But, what about the world's richest concentrations of |
| reactor requirements have far outstripped current | | | | uranium in Canada's Athabasca Basin? Will they help |
| mining production (see chart below) for the past two | | | | stem the rising uranium price? In a nutshell, Miller says |
| decades. Current worldwide production is more than | | | | no. He explained, "The next one to come online is |
| 80 million pounds, but the demand for uranium, which | | | | Cigar Lake, but it was discovered over 20 years ago. |
| fuels nuclear reactors, is running an annual deficit of | | | | Cigar Lake may come online in 2007 or 2008. There is |
| approximately 60 million pounds. | | | | another one called Shea Creek, which was discovered |
| According to a World Nuclear Association report on | | | | by Cogema more than a dozen years ago. They are |
| uranium supply, published this past September: | | | | having some very good results on that." Could they |
| "...the world's present measured resources of uranium | | | | start the permitting process on that one in the near |
| in the lower cost category (3.5 Mt) and used only in | | | | future? "Absolutely," Miller responded. "But you are |
| conventional reactors, are enough to last for some | | | | talking about 8-10 years before that one could come |
| 50 years... Further exploration and higher prices will | | | | online. It might be close to 2015 before it could bring |
| certainly, on the basis of present geological | | | | any uranium to the world market." |
| knowledge, yield further resources as present ones | | | | The future largest producing uranium mine in the |
| are used up... so a significant increase in exploration | | | | world is likely to be Olympic Dam in Australia. It's |
| effort could readily double the known economic | | | | basically a copper mine with uranium grades. On |
| resources, and a doubling of price from present levels | | | | October 27th Hong Kong-based institutional advisor |
| could be expected to create about a tenfold increase | | | | Marc Faber, and author The Gloom, Boom and Doom |
| in measured resources, over time." | | | | Report, told Dow Jones newswire that he thought |
| Electricity: Uranium's Supply and Demand Problem | | | | copper prices would fall by as much as 40 percent. |
| "We're not going to run out of uranium, but where | | | | (Note: Marc Faber also said, "I'd be a physical buyer |
| will the price go to encourage new production?" | | | | of uranium.") "What happens when copper is $0.50 |
| asked David Miller. "We are around over $33/pound | | | | pound? What will be their cost of producing that |
| now. Could it double again? It wouldn't surprise me at | | | | uranium?" asked Dave Miller. "Olympic Dam is low |
| all." Kevin Bambrough, a research analyst for Sprott | | | | grade uranium, less than 0.05 percent U308. Their |
| Asset Management, heartily agreed with Mr. Miller, | | | | cost to operate the uranium portion of that will go |
| saying, "We have just started a long term uranium | | | | up, if copper prices go down. It would make their |
| bull market that will end in a 'uranium mania' as utilities | | | | cost higher, and they would be less inclined to sell it |
| and countries drive uranium prices to unbelievable | | | | at a low price." |
| highs as they compete to secure supplies." | | | | Where else do utilities turn for their growing uranium |
| That driving force is demand for more electricity. | | | | needs? There are big known deposits in Australia, |
| Over the past 25 years, total world energy use | | | | and one that has hundreds of millions of pounds of |
| expanded by almost 50 percent, with stronger | | | | uranium in it. But, it happens to be adjacent to, and |
| growth in electricity usage. Demand for electricity is | | | | possibly partly in, one of Australia's national parks. In |
| increasing far more rapidly than overall energy use. | | | | other words, utilities are likely to be paying more for |
| Electricity demand has been projected to grow 2.8 | | | | their uranium as this decade progresses. |
| percent annually through 2010, and substantially more | | | | David Miller argues that some of that uranium |
| between then and 2020. About 2 billion people | | | | production is likely to come from the smaller, but |
| currently have no electricity access, and with United | | | | well-capitalized, companies, such as Strathmore |
| Nations forecasts of world population growth by 1.5 | | | | Minerals. "Our strategy from day one, and we haven't |
| billion people in 2020, electricity demand will continue | | | | veered from this at all, has been to acquire as many |
| to grow. | | | | known uranium deposits as we possibly could," |
| As an interim solution to the greenhouse gas problem | | | | explained Miller. "We started early in this uranium cycle |
| and climate changes (e.g. the worst Atlantic hurricane | | | | in 2003. We were out there before 95 percent of |
| season since record-keeping began), a growing | | | | these other uranium companies even thought of |
| number of countries are investigating nuclear energy | | | | starting uranium companies. We were able to pick up |
| to solve their burden of a soaring electrical demand. | | | | some very good deposits in New Mexico and |
| Presently, there is as much electricity generated by | | | | Wyoming. These are known, drilled-out uranium |
| nuclear power as was provided by all sources | | | | deposits in the country that's produced as much as |
| worldwide in 1960. | | | | uranium anywhere else on earth. We've taken all that |
| Nuclear power generates more than 16 percent of | | | | exploration information, where they discovered these |
| the world's electricity, nearly 24 percent of the OECD | | | | old deposits, and have acquired a number of those |
| and 34 percent of the European Union's electricity | | | | old deposits. Now, we have opened a permitting |
| needs. In an April 2005 speech to the National Small | | | | office in New Mexico and starting the permitting |
| Business Conference in Washington, President Bush | | | | process to put those into production, somewhere |
| announced, "Nuclear power is now providing about 20 | | | | down the road. We don't know if we can do it in |
| percent of America's electricity, with no air pollution | | | | four years or six years. It's a long process and all |
| or greenhouse gas emissions. Nuclear power is one of | | | | kinds of studies must be done to get these fully |
| the safest, cleanest sources of power in the world, | | | | permitted and into production." |
| and we need more of it here in America." | | | | But there is a second part to the Strathmore Minerals |
| Demand for electricity is projected to impact other | | | | strategy. Miller announced, "Don't ignore the richest |
| commodities as well, not just the price of uranium. In | | | | uranium province on earth, which is the Athabasca |
| the Energy Information Agency's Annual Energy | | | | Basin in Canada. Strathmore is the Number One |
| Outlook 2005, U.S. electricity demand will bring about | | | | landholder in the Athabasca Basin., even larger than |
| increases in natural gas consumption. By 2025, the | | | | Cameco. We control approximately 3 million acres in |
| electric power sector will account for 31 percent of | | | | Canada, and nearly all of that is in the Athabasca |
| total demand for natural gas, as consumption | | | | Basin. We have dozen different individual projects in |
| increases from 5.0 trillion cubic feet in 2003 to 9.4 | | | | the Basin. We are starting the exploration process on |
| trillion cubic feet in 2025. | | | | all of those. As I said earlier, exploration takes a long |
| China's Demand May Be Greater Than Anticipated | | | | time. We have not made any discoveries yet, and it |
| Today, 441 nuclear power reactors in 31 countries | | | | may be three to five years before we make a |
| provide more than 16 percent of the world's | | | | discovery." |
| electricity. In 2003, that was 2525 billion kilowatt | | | | The case with Cameco (NYSE: CCJ), the blue chip |
| hours. Eleven countries are constructing thirty more | | | | publicly traded uranium producer, may also help fuel |
| reactors, mainly in China, but also in Russia, Japan and | | | | uranium prices rally to higher levels. They have |
| Korea. The International Atomic Energy Agency has | | | | forward sold their production. Added Miller, "I would |
| projected at least 60 new power plants will be | | | | bet their average sales price, under contract right |
| constructed over the next 15 years. By 2020, nuclear | | | | now, of the 20+ million pounds they deliver every |
| power's electricity production share will increase to 17 | | | | year is somewhere in the low teens - maybe $13 |
| percent. | | | | pound plus/minus $1-2. As these contracts mature, |
| "China is the future wild card," said Miller. "Their | | | | and bring on new contracts, that price is going to |
| current uranium demand is miniscule. They have a | | | | keep going up, but lag the market. They should keep |
| small nuclear industry. They may have three or four | | | | going up for the next five years." |
| thousand megawatts of capacity. Their uranium | | | | And that should summarize why uranium prices are |
| demand is only about 4 or 5 million pounds per year. | | | | unlikely to suffer a down cycle over the next several |
| They meet that internally from their own uranium | | | | years. |
| deposits. But what they are planning for nuclear is | | | | The Case for Nuclear Energy |
| probably the most aggressive program in the world. I | | | | As electricity demand grows by leaps and bounds |
| visited China in 2003 to teach ISL (in situ leaching) | | | | during the 21st century, many of the world's |
| uranium geology and ISL mining techniques to a | | | | governments are seriously considering nuclear energy |
| couple of institutes. At that time, they were talking | | | | as a safer alternative to coal-fired plants. As many |
| about building two new nuclear power plants per year | | | | study the safety issues of nuclear-powered |
| for the next 20 years." | | | | electricity, they tend to conclude that nuclear energy |
| But as Miller observed, they may have more | | | | may very well provide a healthier, as well as a less |
| ambitious plans. He added, "Since then, I have heard | | | | expensive, alternative to present power generation |
| of more aggressive programs. One article I read | | | | methods. |
| recently was entitled, Let 1000 Reactors Bloom. That | | | | Miller pointed out, "In the 1970s, when the |
| is more than 200 percent of the nuclear reactors we | | | | anti-nuclear movement was very strong, the U.S. was |
| now have on earth. I believe that is what the | | | | then mining and burning 600 million tons of coal each |
| Chinese will be doing in the next 40 - 50 years, | | | | year. And now, thirty years later, because the |
| converting nearly 100 percent of their electrical | | | | anti-nuclear industry was successful, we are burning 1 |
| generation from nuclear power." Currently, China is | | | | billion tons of coal per year, a 50 percent increase in |
| generating less than three percent of their electricity | | | | the amount of coal we burn in this country. |
| from nuclear energy. | | | | According to the Environmental Protection Agency, |
| Miller speculates of how this might impact the price | | | | U.S. air pollution in 1999, as a result of energy from |
| of uranium, "If they are building nearly three times | | | | coal, emitted more than 13 million tons of sulfur |
| the world fleet in just China, then that would be | | | | oxides and nearly 5.5 million tons of nitrous oxides. In |
| about 500 million pounds of uranium demand from | | | | a Harvard School of Public Health study, as many as |
| China in fifty years. Other companies are announcing | | | | 70,000 Americans are dying each year as a result of |
| new nuclear power plants." What does that mean for | | | | air pollution. From sulfur dioxide alone, Harvard |
| the price of uranium? Miller concluded, "So, the | | | | estimated that 2400 Americans die for every million |
| demand for uranium is going up. I think the growth in | | | | tons of sulfur dioxide emitted, or more than 30,000 |
| demand will be more rapid than we realize." | | | | American deaths annually. |
| Uranium Mining: A Slow Process | | | | But, air pollution is far worse elsewhere. "The pollution |
| David Miller, who was previously interviewed by in | | | | levels in China - from Shanghai to Beijing - are |
| June 2004 (view article), reflected on last year's | | | | shocking," said Miller. "Emphysema kills 5,000 people |
| forecast, "I thought $30/pound was sufficiently high | | | | per year in the coal mines. They need nuclear power, |
| to encourage enough new production around the | | | | probably more than any area on earth, to clean up |
| world." But there are major issues with supplying the | | | | their air." |
| increasing appetite of the burgeoning nuclear power | | | | About David Miller: |
| industry. Miller warned, "The problem with encouraging | | | | David Miller, P. Geol. |
| new production is you don't turn these things on and | | | | President & COO, Strathmore Minerals Corp. |
| off. The only uranium, coming onto the market in | | | | David worked for over 20 years with Pathfinder |
| addition to what's already planned right now, will | | | | Mines Corporation/Cogema, the second largest |
| come from the already-discovered deposits." | | | | producer of uranium in the world, the last 4 years as |
| Two years from now, Miller thinks the spot price of | | | | its chief geologist for in-situ operations in the US. Mr. |
| uranium could double again. "There are going to be a | | | | Miller has over 25 years of experience in the |
| lot of people trying to put uranium mines into | | | | exploration and acquisition of uranium properties. He |
| production, but it is not an easy process." Permitting | | | | has also consulted in uranium exploration, mining, and |
| requirements in countries where most uranium is | | | | "in-situ" recovery for the International Atomic Energy |
| mined are roughly comparable. "If you haven't done | | | | Agency (IAEA) in Vienna. In association with the |
| any work, after a discovery, it still will take about | | | | IAEA, David also taught uranium geology, exploration |
| four to six years to mine in any of those areas." | | | | and ISL mining practices at the Beijing Research |
| In early 2004, there were probably less than twenty | | | | Institute of Uranium Geology and Mining. Mr. Miller is |
| uranium producers and exploration companies. Since | | | | also an elected member of the Wyoming Legislature. |
| then, the number of uranium exploration companies | | | | His committee assignments include the Minerals and |
| has jumped to more than 200. Miller warns investors | | | | the Energy Council. Mr. Miller has been the key |
| that it could take up to 12 years for a grass roots | | | | architect behind the Strathmore Mineral Corp's |
| project to begin mining yellowcake. Miller explained, | | | | property acquisition strategy in the U.S. in identifying |
| "Starting, finding, permitting and mining a project is | | | | drilled out in-situ leach recoverable uranium properties |
| probably going to take a minimum of 12 to 20 years. | | | | in Wyoming and New Mexico. |
| From the start of the exploration program to defining | | | | November 16, 2005 |
| the ore body, after you make a discovery, to | | | | By James Finch |
| starting the background and permitting process, to | | | | COPYRIGHT © 2007 by StockInterview, Inc. |
| development and then finally mining - it's going to | | | | ALL RIGHTS RESERVED. |
| take a long time." | | | | |