U3O8 Uranium.

**stolwyk** · 29-03-2005, 09:04 AM

PAUL VAN EEDEN: THE FUTURE OF URANIUM
http://www.kitcocasey.com/displayArticle.php?id=54

This is the last of a three-part interview with Paul van Eeden (www.paulvaneeden.com) conducted on March 8, 2005 during the PDAC Conference. Paul, formerly Managing Editor for Doug Casey’s International Speculator and now the publisher of his own weekly stock alert service for high net worth investors, is one of the most original thinkers and analysts working in the resource business today.

Let’s change tacks a little bit, Paul. What are your thoughts on uranium?

PVE: I’m very bullish on uranium. During the 1970s, there was massive expansion of nuclear power production. Demand for uranium for these nuclear plants was increasing and supply wasn’t keeping up. The utilities started panicking because in a nuclear power facility, your biggest cost is the capital to build it. The actual fuel cost for uranium is a very, very small component of your production cost. So, to the utilities, it’s fairly irrelevant what the price of uranium is. What’s relevant is the fact that you cannot run out of fuel. In the ‘70s, the utilities panicked because they saw that current uranium mine supply was not keeping up with the growth in demand. They started buying uranium in the market and stockpiling it so that they wouldn’t run out. And the price of uranium obviously skyrocketed. Now, the interesting thing is that uranium price peaked in 1979 at an average price of $43 per pound. It peaked in 1979 because that was the first year that mine production met current demand. Right now, we’re consuming around 170 million pounds of uranium annually. We’re producing on the order of 80 or 90 million pounds. Let’s say we produce 85 and we consume 170. That’s 50 percent. We need to double uranium production before we meet today’s demand. And in the United States since 1979, uranium demand has increased 35 percent without one additional reactor being built.

Why is that?

PVE: Because the reactors, when they were built, were over-designed. And so they figured out that they could increase capacity. The utilization could increase. By the way, these uranium reactors were all slated to be shut down, but because they were so over-designed, they’re now finding that these things have a lifespan far in excess of original designs. Most of these things are giving extensions on their projected lives. About 16 percent of the world’s electricity is being generated from nuclear power. 20 percent of U.S. electricity comes from nuclear power. 25 percent of Japan’s electricity comes from nuclear. 40 percent for South Korea. 80 percent in France. I was flying through London and I picked up a newspaper and the front was an article that reported a study commissioned by the British government to figure out how they were going to meet the Kyoto protocol. The commission found unequivocally that there’s no way they can do it without going nuclear. Canada conducted a similar study with similar results. China has stated that it is their goal to get either 24 or 26 percent, I can’t remember exactly, of their electricity from nuclear in the next 20 years or so. They’ve also stated that they’re going to build between one and two nuclear power plants every year for the next 20 years.

That's an incredible increase in consumption.

We’re 50 percent short of demand already. The uranium price will not stop rising until current supply meets current demand. Just like in the ‘70s. Nothing has changed – utilities still cannot run out of nuclear fuel. Nuclear power generation is increasing, not decreasing. The drawdown of U.S. government inventories has basically come to an end. We’ve used up probably 50 percent of U.S. government inventories over the last 25 years and I don’t think we’re going to see any further drawdowns. The U.S. now wants to become self-sufficient in the nuclear industry. That means production, conversion and enrichment all within U.S. borders. Right now, there’s no conversion facility in the U.S., but they’re building one. That means uranium is becoming strategical

**Geoff7** · 30-03-2005, 11:15 PM

"PVE: If I find one good investment every two or three months, I’m actually quite happy. Four good investments a year is a good year."

Bloody amatuers, settle too easy I reckon.

**stolwyk** · 31-03-2005, 12:53 PM

Uranium : +50 cents to $22.50

**stolwyk** · 01-04-2005, 10:36 AM

Dough Casey: Uranium Update

http://www.kitcocasey.com/displayArticle.php?id=57

**stolwyk** · 02-04-2005, 02:41 PM

MELBOURNE - Prices for uranium, used to generate 16 percent of the world's electricity, may rise by a quarter this year as stockpiles of the nuclear fuel decrease and demand is set to rise from reactors being built in China and India.

"You have gone from a buyer's to a seller's market," said Bob Mitchell, who holds physical uranium worth more than $26 million for Adit Capital Management in Portland, Oregon. "Most reactors under construction haven't secured long-term supply and there is no inventory left among utilities."

Commercial stockpiles of the fuel dropped 50 percent between 1985 and 2003 because mine output could not keep up with demand, according to a September report by the Massachusetts Institute of Technology. Mine expansions may not meet demand, pushing up prices for uranium at miners such as Cameco, the world's biggest, and Energy Resources of Australia.

Cameco shares rose 68 percent last year and Energy Resources of Australia, which is 68 percent-owned by Rio Tinto Group, surged 94 percent. Paladin Resources, an Australian company that plans to mine uranium in Namibia, rose ninefold.

China is preparing to award an $8 billion contract to build four reactors in the world's biggest nuclear power construction program. The country plans to build 27 plants to meet a target of raising nuclear energy output fivefold by 2020. India aims to build 17 reactors to triple nuclear power capacity by 2012.

"Uranium prices will advance in 2005," said Mitchell at Adit Capital, who also owns Cameco shares as part of the $200 million he helps manage at another fund, Touchstone Investment Managers. "In China, they'll have to build a couple more reactors a year."

Concern about supply shortages helped increase spot prices of uranium to $20.50 a pound as of Dec. 31, according to Metal Bulletin. That is the highest since 1984, according to a report by Jeff Combs, president of Ux Consulting, based in Roswell, Georgia, which publishes spot uranium prices.

The spot market, which makes up about 12 percent of uranium sales, according to the World Nuclear Association, sets a price reference for long-term contracts between miners and utilities. Uranium prices rose to a record of more than $40 a pound in the late 1970s, according to Combs at Ux Consulting.

Contract prices paid by power companies may rise to $27 a pound this year from $20 a pound last year, a National Bank Financial analyst, Ian Howat, said in a Nov. 24 report. Long-term prices may rise to $26 a pound, a Goldman Sachs JBWere analyst, Ian Preston, said in a Dec. 14 report after attending a uranium conference in Sydney.

"It looks like current prices are here to stay and possibly rise significantly," Craig Kinnell, acting chief executive of Energy Resources of Australia, the world's third-biggest uranium miner, said in an interview Dec. 31.

"Inventories are falling and there has been little response to that in the way of more mine supply. Our contract prices have risen to reflect the spot price rises."

China aims to double total power generation capacity by 2020. It needs to add two reactors a year by then to meet a target of generating 4 percent of its power from nuclear plants.

Demand from China may help uranium prices double in the next two years and may triple demand for nuclear power by 2020, said Quinton George, managing director of Trinity Asset Management. The company owns 18 percent of Afrikander Lease, which holds South Africa's biggest uranium deposit.

"The supply deficit will affect this market for at least the next 10 years," Geroge said. "In the next two years we could well see uranium touching historical highs, at least doubling current prices."

China has begun talks with Australia, which holds the world's largest uranium reserves, to enable the fuel to be exported by Rio Tinto, the world's third-biggest miner, and WMC Resources, which owns the biggest deposit of the radioactive metal.

"We're working with the Australian government to get the ability to sell uranium to China," Bruce Brook, WMC's chief financial officer,

**robbo** · 02-04-2005, 10:16 PM

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Kind Regards,

Robbo