Brandt steps up with a plan to save shuttered Saskatoon manufacturing facility.
March 24, 2017
Saskatchewan company to acquire substantially all of the Mitsubishi Hitachi Power Systems Canada Ltd. operating assets from Prestige Equipment and Hilco Global.
The Brandt Group of Companies has entered into a binding agreement with US-based industrial liquidator Prestige Equipment and financial services company Hilco Global for the former Mitsubishi Hitachi Power Systems Canada Ltd. (MHPSC) facility in Saskatoon. The entire 22-acre parcel, located in the city’s Hudson Bay Industrial area, along with its 208,000sq/ft. manufacturing facility and all of its highly specialized equipment will make the transition to local ownership for an undisclosed sum. It is believed that Hitachi has invested hundreds of millions of dollars in the world-class gas turbine and wind generation equipment manufacturing facility since its construction in 1988. The plant features the largest machining and fabrication equipment in Canada and has produced power generation equipment for customers around the world, including SaskPower.
“We realized that it was critically important for us to move quickly,” says Brandt President, Shaun Semple. “When we learned that the Hitachi assets were going be broken up and sold off in spring, we had to act fast or the province would lose a world-class facility and the ability to produce large-scale green energy products.
With almost 400 workers already out of work as a result of the plant’s decline and final closure in October 2016, an auction and liquidation would have assured long-term unemployment for the highly skilled local workforce. With Brandt already constructing a world-class engineering facility in Regina and looking at further expansion possibilities in that city, the Saskatoon facility presents an excellent additional opportunity for growth and diversification.
“It is our plan to reintroduce green energy technologies such as wind turbines to assist SaskPower with its mandate to diversify beyond traditional fossil fuels,” adds Semple. “We will be sitting down with the provincial government, the City of Saskatoon and SaskPower to see what can be done to save this valuable asset. But, we’re just getting started; there is a lot of work still to be done to guarantee a successful outcome.”
The acquisition of this facility will bring Brandt’s manufacturing footprint in the province to over 500,000sq/ft., split evenly between Regina and Saskatoon.
“Except for Brandt’s new Engineering Centre, currently under construction, we have temporarily suspended our other expansion plans in Regina until our manufacturing future planning is complete and a number of development issues are worked out”, concludes Semple.
The expected closing date for the Saskatoon deal is April 10, 2017.
Jack Mintz: Compared to Ottawa’s budget, Saskatchewan’s is a fiscally prudent dream
Jack M. Mintz | March 23, 2017 6:11 PM ET
Two very different budgets on the same day. There has been lots of talk about the federal one. Saskatchewan’s budget was much less noticed. The Saskatchewan one deserves more credit.
The federal budget has no plan to balance the books in the foreseeable future. The Saskatchewan budget will balance the books within three years, even though it has faced plummeting resource prices since 2014.
The federal budget focuses on growth through a plethora of government spending programs. The Saskatchewan budget uses tax reform and spending restraint to improve competitiveness.
The federal approach is based on the philosophy that the government should direct the private sector. Saskatchewan looks to reduce barriers to growth by getting the government out of the way.
The federal budget’s major theme — innovation — is based on the notion that we have an inept private sector. The government is picking six “winning” sectors, ranging from agri-food, advanced manufacturing to clean tech, that it will get behind, since entrepreneurs could never make a go of a winning idea without government involvement. And since the government thinks private firms best compete in a “supercluster,” it will pay to make that happen, too.
The federal budget sprays out minute expenditure programs like a lawn sprinkler. For innovation. Skills training. Stronger communities. Millions here, millions there, spread over five years, and appealing to merely a select few.
And if you were looking for any tax relief, you won’t find much, unless you need a caregiver. The government will be squeezing a half-billion dollars in higher taxes next year. There will be more after it finishes its review to close down certain tax expenditures. The small businesses and entrepreneurs we rely on to innovate should brace themselves for a heavier tax load. For a federal budget purportedly focused on innovation, if offers shockingly little in terms of creative ideas to spur innovation, and plenty to squelch it.
The feds could learn something from Saskatchewan.
There, the big theme is shifting taxes from income to consumption — and improving competitiveness. Personal income tax rates will be reduced for all categories by one point – Saskatchewan will next year have the lowest provincial top income-tax rate in the country at 14 per cent (47 per cent combined with the federal rate). The corporate income tax rate will drop by one point to 11 per cent, matching the rate in British Columbia (manufacturing income will be taxed at nine per cent).
The feds could learn something from Saskatchewan
The provincial sales tax will be increased by one point to six per cent and its base expanded to include restaurant meals, kids clothing, insurance premiums and other assorted things that were once exempt. An investment tax credit for manufacturing machinery will be bumped up from five to six per cent to offset the impact of the higher PST.
Other measures include: a lower tax rate on income earned from commercialization of research and development (and a scaling back of R and D tax credits), a reduction in tax credits (including the elimination of tuition and education tax credits), and higher fuel taxes.
Overall, these changes go in the right direction to improve competitiveness. The Saskatchewan tax reform would even have a bigger impact on growth by pursuing a level playing field among businesses (such as removing over-the-top incentives for manufacturing) and harmonizing the PST with the federal GST to remove taxes on business capital and intermediate inputs. Maybe, with base broadening, Saskatchewan might be willing to pursue a harmonized sales tax, which would be more conducive to growth.
To balance the books in three years, Saskatchewan keeps the lid on spending, including public sector compensation. Infrastructure spending will sharply rise as well as increased support for low-income households as an offset to the sales tax increases. It will unload the money-losing Saskatchewan Transportation Co., a baby step towards more privatization, which would help the province become even more competitive.
Overall, the current deficit of $1.3 billion forecasted for 2016-17 is expected to fall to $685 million (including a $300 million in contingency funds). Saskatchewan plans to bring its roughly $15-billion budget into balance by 2019–20.
Saskatchewan’s budget is a dream for fiscally prudent voters: it keeps spending down, starts balancing the books, and shifts taxation to less distortionary revenue sources.
Next time this year, these budget makers could be facing a far different situation if the U.S. sharply reduces personal and corporate income taxes by 2018 as Republicans plan. Saskatchewan has at least prepared itself better than Ottawa has.
Dr. Jack M. Mintz is the President’s Fellow at the University of Calgary’s School of Public Policy
Trump administration grants permit for Keystone XL pipeline
OTTAWA — The Globe and Mail
Published Friday, Mar. 24, 2017 7:09AM EDT
Last updated Friday, Mar. 24, 2017 9:49AM EDT
TransCanada Corp. has finally received its presidential permit to build the Keystone XL pipeline – nine years after the project was first conceived in a world of $100 (U.S.) crude prices and rising imports to the United States.
The company still has a significant hurdle to clear in Nebraska, where the state’s Public Service Commission must approve the route following a court decision invalidating a previous green light issued by the governor.
TransCanada chief executive Russ Girling was scheduled to meet U.S. President Donald Trump at the White house on Friday morning to announce the agreement.
Keystone XL will deliver some 800,000 barrels per day of oil sands crude from Alberta to Steele City, Neb., where it will connect with lines taking the oil to the massive refining hub on the U.S. Gulf Coast.
With new projects coming on stream in the oil sands in the next few years, production is expected to grow until 2020, straining the capacity of the existing pipeline network.
The KXL project became a political lightning rod during the Obama era.
Failure of Barack Obama to approve the project over the course of his administration created a rift in Canadian-U.S. relations as former prime minister Stephen Harper had invested considerable political capital in getting it done.
Environmentalists rallied against the project, making it a symbol of fossil-fuel infrastructure that would keep the world dependent on the carbon-intensive energy that is driving feared changes to the climate.
The Trump administration decision reverses the 2015 rejection of Keystone XL by Mr. Obama who said it would contribute to rising greenhouse gas emissions from the oil sands. Friday’s approval is part of a broader effort by President Trump to roll back Obama era climate-change policies and support development in the coal, oil and natural gas industries.
The Liberal government in Ottawa is cheering the pipeline decision. Prime Minister Justin Trudeau has long supported Keystone XL, even as his government approved two pipeline project, Kinder Morgan Inc.’s expansion of its Trans Mountain line to Vancouver and Enbridge Inc’s rebuilding of its main export line to the U.S.
“Keystone XL will create thousands of good, middle-class jobs for Canadians during construction,” said Alexandre Deslongchamps, a spokesman for Natural Resources Minister Jim Carr.
After years of company and government leaders insisting the Canadian industry needs to diversity its export markets, the TransCanada and Enbridge projects will dramatically expand capacity into the United States, where growing shale oil production is reducing the need for imports.
However, refiners in U.S. Gulf Coast and the MidWest spent billions of dollars prior to the shale-oil boom in configuring their operations to handle the diluted bitumen that comes from the oil sands. And declines in Mexican and Venezuelan heavy-oil production, they remain prime markets for Canadian oil-sands producers.
However, if today’s low oil price persist, growth in oil sands production would level out, raising questions as to how much additional pipeline capacity is actually needed. At the same time, environmentalists warn that rising production would jeopardize Canada’s commitment to cut greenhouse gas emissions by 30 per cent form 2005 levels by 2030.
TransCanada’s Mr. Girling – who has battled for years to win KXL approval – welcomed it Friday.
“We greatly appreciate President Trump’s administration for reviewing and approving this important initiative and we look forward to working with them as we continue to invest in and strengthen North American’s energy infrastructure,” he said in a statement.
Anthony Swift, of the Natural Resources Defense Council said his organization will be looking closely at the approval and considering a court challenge. Mr. Swift contended that Keystone’s environmental-impact statement, completed in January, 2014, is so out of date that it would open any decision up to legal action.
“It is vulnerable to reversal. There was an assumption that oil prices would stay above $100 a barrel,” he said Thursday. “We’re looking at a project, the route for which is unknown and the market for which has changed fundamentally.”
Mr. Swift said the pipeline must also be assessed under the U.S. Clean Water Act, providing another hurdle to the project at the federal level.
U.S. to approve Keystone XL permit by Monday: report
Published Thursday, Mar. 23, 2017 11:24AM EDT
Last updated Thursday, Mar. 23, 2017 11:53AM EDT
The U.S. State Department will approve by Monday the permit needed to proceed with construction of the Canada-to-United States Keystone XL oil pipeline, a project blocked by former President Barack Obama, according to Politico.
The State Department’s undersecretary for political affairs, Tom Shannon, will approve the cross-border permit on or before Monday, at the end of the 60-day timeline that President Donald Trump ordered in January when he called for construction of Keystone and the Dakota Access pipelines.
The 5 biggest private funds investing in mining
Denver is the global capital of private capital raising for investment in the sector
March 22, 2017
According to a new report by private capital tracker Preqin, overall fundraising for natural resources investment actually declined declined by a fifth in 2016 to the lowest since 2012 despite the turnaround in the industry experienced last year.
Coming off a record 2015, 74 funds raised a total of $60bn in 2016 for investment in natural resources, which includes metals and mining, water, timberland and energy. Private providers of capital include pension funds, sovereign wealth funds, endowments, family offices and others.
Money will also flow into mining from diversified funds with a combined war chest of $12.3 billion, but none of the energy-focused funds with $206 billion on call are looking to invest in coal assets
In 2015 funds with a primary strategy of investing in mining and metals made up a small portion of funds raised with three funds closing on $1.1 billion in 2015. Last year five funds managed to raise $2.1 billion. 2012 was the peak year for mining-specific fundraising with $4.6 billion of capital commitments from investors.
So called dry powder – money already raised and ready to be invested – destined for mining totals around $5.5 billion while funds still have to exit $10.7 billion worth investments.
Some money will also flow into mining from diversified funds which have $12.3 billion ready to be injected into natural resources, but according to a recent Preqin survey none of the energy-focused funds which have $206 billion on call are looking to invest in coal assets.
The biggest mining-focused fund currently in the market to raise funds is China’s Power Capital. The Asia-focused fund is seeking $3 billion which should it be successful will place it at number two position. Diversified US-based Energy and Minerals Group is looking for $4 billion.
While much smaller, Preqin spotlights the Electrum Strategic Opportunities Fund with a target of raising around $250 million as one of the funds to watch this year thanks to its eye-watering net investment multiple of 2.05.
Electrum, launched in 2015 by prominent metals investor Thomas Kaplan invested in two junior mining companies based in the Yukon, Wellgreen Platinum and Victoria Gold, last year. Electrum also acquired a stake in Kaminak Gold, another Yukon explorer, prior to its sale to Goldcorp for C$520 million.
Well services companies Trican, Canyon to combine in $637M friendly deal
CP, THE CANADIAN PRESS
Published on: March 22, 2017 | Last Updated: March 22, 2017 9:27 AM MDT
Trican chief executive Dale Dusterhoft COLLEEN DE NEVE / CALGARY HERALD
Two Calgary-based companies that provide services to the oil and gas industry are planning to combine forces through an exchange of shares and debt valued at $637 million.
Trican Well Service Ltd. (TSX:TCW) would exchange 1.7 of its common shares for each share of Canyon Services Group Inc. under the friendly deal, which is supported by the boards of both companies.
Both companies say the offer is worth $6.63 per Canyon share, based on Trican’s stock price at the end of trading on Tuesday.
Trican would also assume $40 million of Canyon’s debt.
Canyon’s shareholders would end up with 44 per cent of the combined company’s equity, with the rest going to Trican shareholders.
The proposed transaction requires approval by at least two-thirds of votes cast by Canyon shareholders at a meeting and by a simple majority of votes cast by Trican shareholders.
Amec Foster Wheeler Signs MOU with Muskowekwan First Nations and Encanto Potash Corp
- First mining development in Saskatchewan on First Nations land
- Muskowekwan to receive revenue stream through participation in the project
- Amec Foster Wheeler engineers to provide expert support
March 23, 2017 08:01 AM Eastern Daylight Time
LONDON–(BUSINESS WIRE)–Amec Foster Wheeler announced today that it has signed a Memorandum of Understanding (MOU) with Muskowekwan Resources Ltd (MRL), a wholly-owned operating company of the Muskowekwan First Nations and Encanto Potash Corp.
MRL and Encanto have a joint venture agreement to develop the Muskowekwan Potash Project – the first mining project in Saskatchewan, Canada, on First Nations land.
The MOU sets forth the terms of engagement under which Amec Foster Wheeler aims to provide First Nations members and businesses with opportunities for employment, training, and mentoring during each phase of the project, and is part of the company’s approach to sustainability that includes integrating social, environmental and economic conditions into the company’s values and operations. This includes establishing and maintaining the social license to operate and integrating sustainability goals into the early stages of every project.
Muskowekwan, a Saulteaux (Ojibway) First Nation located approximately 140 km northeast of Regina, will receive a revenue stream through its participation in the project, and will be supported by engineering experts from Amec Foster Wheeler.
Duane Gingrich, Senior Vice President, North America for Amec Foster Wheeler’s Mining business said:
“The foundation of the Memorandum of Understanding is based on our strong relationship with the Muskowekwan First Nation community. We are truly honoured to have signed this historic agreement that will help foster a culture of economic independence, ownership, and entrepreneurship amongst First Nations and local communities.
Muskowekwan Chief and MRL President Reg Bellerose said:
“We look forward to working with Amec Foster Wheeler on this significant agreement to advance this opportunity. This agreement is a good step towards our goal of generating our own source revenues and providing access to training and employment for our people.”
Encanto Potash Corp., President and CEO Stavros Daskos said:
“Working with Amec Foster Wheeler since their introduction to Encanto by Chief Bellerose has been an enormous help for the project. The team is always available, detail oriented and very devoted to helping us succeed. This relationship is exemplary of how First Nations business people, engineers, and international corporations work together on building industry to secure the future.”
Notes to editors:
Amec Foster Wheeler (www.amecfw.com) designs, delivers and maintains strategic and complex assets for its customers across the global energy and related sectors. Employing around 36,000 people in more than 55 countries and with 2016 revenues of £5.4 billion, the company operates across the oil and gas industry – from production through to refining, processing and distribution of derivative products – and in the mining, process & power, pharma, environment and infrastructure markets. Amec Foster Wheeler offers full life-cycle services to offshore and onshore oil and gas projects (conventional and unconventional, upstream, midstream and downstream) for greenfield, brownfield and asset support projects, plus leading refining technology.
Resilient World is our sustainability strategy for solving tomorrow’s natural resource challenges together. In a changing world excellence demands new solutions – solutions that are cleaner, more efficient, and built to last. To find these solutions we need problem-solvers. People who are driven every day to find answers to the world’s toughest resource challenges. At Amec Foster Wheeler, our passion for solving these challenges connects us. Together with our customers we’ll find the answers through innovation, ingenuity and expertise. Together we’re building a more Resilient World.
Amec Foster Wheeler shares are publicly traded on the London Stock Exchange and its American Depositary Shares are traded on the New York Stock Exchange. Both trade under the ticker AMFW.
Encanto Potash Corp. is a TSX Venture Exchange listed and traded Canadian resource company engaged in the development of potash properties in the Province of Saskatchewan, Canada, the largest producing potash region in the world. Through a joint venture agreement with Muskowekwan Resources Ltd. on our flagship property, Encanto has a project land package which totals approximately 61,000 largely contiguous acres. A Pre-Feasibility Study dated February 28, 2013 titled “Encanto Potash Corp. Technical Report Summarizing the Preliminary Feasibility Study for the Muskowekwan First Nations Home Reserve Project in South Eastern Saskatchewan, Canada” confirms the Proven and Probable KCI Reserves totaling 162 MMt grading 28% (average) which supports primary and secondary mining for over 50 years at an assumed annual rate extraction rate of 2.8 million tonnes. For additional information about Encanto Potash Corp., please visit the Company’s website at www.encantopotash.com or review the Company’s documents filed on www.sedar.com.
This announcement contains statements which constitute “forward-looking statements”. Forward-looking statements include any statements related to the timing, results and success of contracts, and are generally identified by words such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “will,” “may,” “continue,” “should” and other similar expressions. Forward-looking statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Amec Foster Wheeler, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking statements. Amec Foster Wheeler does not undertake to update any of the forward-looking statements after this date to conform such statements to actual results, to reflect the occurrence of anticipated results or otherwise.
March 20, 2017
An important message to all Saskatchewan residents on the upcoming provincial budget that will be presented this Wednesday.
Washington Cos. makes unsolicited, $1.1-billion bid for Dominion Diamond
Published Sunday, Mar. 19, 2017 6:44PM EDT
Last updated Monday, Mar. 20, 2017 4:51AM EDT
The Washington Cos. made a $1.1-billion unsolicited offer for Canada’s Dominion Diamond Corp., leading to weeks of talks that have hit an impasse.
Closely held Washington Cos., run by Dennis Washington, made the proposal to acquire Toronto-based Dominion Diamond for $13.50 a share on Feb. 21. Dominion’s board has stalled on the offer, Washington Cos. said in a statement Sunday. The bid carried a 36 per cent premium to Dominion’s closing price on Friday.
Washington Cos., which has businesses in mining, marine and rail transportation, heavy equipment distribution, said it has a long track record of growing businesses throughout North America, with expertise in the mining industry and the Canadian market. The company said Dominion’s board has refused to let it perform due diligence, which might lead to an increased offer.
“We are disappointed that Dominion’s board has thus far prevented Washington from moving ahead with its proposal under which shareholders would receive a substantial premium and immediate liquidity, but we remain fully committed to completing this transaction,” said Lawrence Simkins, Washington Cos.’ president, in the statement.
A representative for Dominion Diamond wasn’t immediately available for comment.
Washington Cos. said it was particularly interested in developing Dominion Diamond’s Ekati Diamond Mine northeast of Yellowknife.
BDT & Co. is providing financial advice to Washington Cos. while Skadden, Arps, Slate Meagher & Flom LLP is the legal adviser in the U.S. Blake. Cassels & Graydon LLP is providing legal advice in Canada.
Dominion Diamond has been the topic of takeover talk after the company hired Rothschild & Co. to explore a sale in 2015. That process failed to find a buyer. The company had been targeted at the time by a group of shareholders, led by Toronto-based hedge fund K2 & Associates Investment Management, who criticized the company’s management and business strategy.
In January, Dominion Diamond chief executive officer Brendan Bell said he planned to step down at the end of June, citing personal reasons after the company decided to move its corporate offices to Calgary.
Rick Rule on Uranium: Early means wrong, unless…
March 16, 2017
Rick Rule on Uranium: Early Means Wrong, Unless…
You have a 5-stock portfolio where the worst company goes 22:1
In an exclusive Q&A session for Sprott Private Wealth clients, Rick Rule shared his thoughts on the uranium market and explained why speculators shouldn’t worry too much about being early.
Transcript (edited for readability)
Rick: Let’s begin with a general discussion of the resource market. Those of you—and I assume that most of the Canadian clients of Sprott have fairly broad backgrounds and resource equities. Those of you who do have that background will understand that these markets are extremely cyclical and extremely volatile. I don’t think I need to remind too many of you that the period 2011 through the end of 2015 featured a truly brutal bear markets in natural resource equities. The worst I recall since the beginning of the 1980s, the TSX-V index if my memory serves me correctly declined by 88% in nominal terms and more on real terms because the index gets gained.
Those of you who have been around for the long time know, however, that bear markets are the authors of bull markets, just as the spectacular bull market we enjoyed last decade was the author of the bear market that we just suffered. If past is prologue, this incredible decline sets the place for a very handsome recovery. And certainly 2016 saw the down payment on that recovery where the gold or precious metals sub-index of the TSX was up by at least 100%.
It’s important to know that you resolve commodities bear markets and commodities equities bear markets in one of two ways. One, the traditional way, is demand creation where simply the low prices associated with commodities in a decent economy leads to an increase in demand because the low price increases the utility of the commodity. This recovery appears to be different given a paucity of worldwide demand for anything.
The other resolution is, of course, supply destruction where an extended period of low prices causes the destruction of productive capacity which is very difficult to reestablish because of the long lead times and the incredible amount of capital that are required to address bringing production back online. And I suspect that the recovery that we’re going to see in this market will happen as a consequence of supply disruption, which means, ironically, that this market could, in theory, overshoot to the upside well above market clearing prices because the ability to address market imbalances—supply and balances will be reduced for a 5- or 6-year timeframe.
This has profound implications, of course, for the resource equities. As we know, the resource equities get oversold in bear markets and they get overbought in bull markets and one would expect, to the extent that prices overshoot to the upside with regards to the commodities that prices could but not necessarily will overshoot to the upside. That doesn’t mean that coming out of the bear market into a bull market that one should buy indiscriminately.
It’s important to note that the junior resource sector in aggregate is always overpriced because 80% of the listings in the junior market have absolutely no value whatsoever.
The credibility and occasionally the luster that one sees in junior resource markets really are caused by 20% or more of the listings. So, it’s extremely important in bear markets or bull markets not to buy the broad market but really to buy the best companies and the best performers. Mercifully over time, Sprott has an exemplary track record of doing just that and I hope that we’re able to continue that effort on your behalf.
One of the things that we’ve seen in the beginnings of this bull market that we’ve just enjoyed is occasional periods where the stocks, having been ridiculously depressed in 2015, have in the near term overshot to the upside. And I suspect that we’re going to see extremely choppy markets through the balance of 2017, which means that you’re going to have to be a stock picker, first of all, and it also means that in periods where the market is overbought, you’re going to have to remember to sell and in periods where the market declines precipitously, which it will, you have to remember not to be shaken out of the market. Remember that traders and investors both attempt to buy low and sell high.
It’s difficult to buy when the market is declined by 25% or 30%, but in truth, an attractive market that’s fallen by 25% or 30% is precisely 25% or 30% more attractive, and this will be a stock picker’s market and a market where you either have the intestinal fortitude to use volatility as a tool or it will certainly use you and you will become a victim.
Yes, we’re in the early stages of the bull market, but no it’s not going to be easy. It’s going to be volatile. There’s going to be a lot of money to be made but you’re going to have to follow your brain not your heart because the market will always attempt to trick you by rising rapidly and by selling off just as rapidly. The beginnings of bull markets as you’ll recall in the 2000-2002 period can be extraordinarily volatile.
Some of you will recall the beginning of that last great bull market upside, the early part of 2001, when the market fell by 40% to punish the faithful just one more time. Could that happen again? It almost certainly will. Don’t be shaken out. Use the sell-off as a chance to position yourself for the subsequent runs.
Now, let’s talk about the subject of the call—the uranium market. I suspect that anybody who is on this call after the long bear market that we have endured in uranium were participants in the bull market that we enjoyed in the 2001-2006 timeframe. That was easily—and this is a poor pun—the most explosive bull market I have ever seen in my career. I remember there were 5 uranium juniors, 5 companies worldwide where the management teams had a deep enough memory to be able to spell uranium. And over the course of that bull market, the poorest performer of those 5 juniors ran 22:1. The best performer in that market, Paladin Uranium, ran from a bottom of 1 penny to a high of $10. The single oddest experience of my financial career.
What’s interesting about that bull market is that at the beginning of that bull market, nobody wanted to believe. Uranium hadn’t performed for 20 years, so many observers were bored. And the ones who weren’t bored were actively hostile. When you mentioned uranium in 2000, people thought of Hiroshima, Nagasaki, Three Mile Island or Chernobyl. In truth, they were critical rather than merely bored. It was, in fact, a contrarian’s paradise.
By the end of that bull market, people who had equated uranium with Chernobyl and Nagasaki were trying to cadge new stock tips out of anybody who could spell uranium. This disgust gave way to total greed. The extremity of that bull market became amusing after a while because as a consequence of the bear market, there were probably only 10 or 15 exploration teams worldwide who were confident to own a uranium company. Yet at the top of the bull market boom, there were 500 companies that purported to be in the uranium business. That meant determining whether or not a company had an adequate management team was a simple function of dividing the number of teams available—15—by the number of applicants—500. Not a very promising outlook.
It is strange that when a commodity has to go up, nobody cares. And when a commodity has gone up and doesn’t have to go up anymore, nobody cares. It’s interesting how really so soon after we’ve learned that lesson how we forget the lesson with the exception, of course, of those of you who are on the call.
So, let’s look at the uranium market today and where we are. You’ll recall in the last market that the price of uranium ran from $8 a pound in 1999 to a high in excess of $135 a pound in 2006. And although it hasn’t round-tripped, it has come pretty close. Subsequent to the tragic events in Fukushima, the uranium price fell from $85 a pound all the way down to a low of $18 a pound. It has settled out now as we speak in the spot market of $24 a pound.
Let’s look at uranium industry economics and talk about where the price of uranium is likely to go in the intermediate, that is, 2- to 5-year timeframe. The International Energy Agency estimates that the global total cost of production—this includes issuer working capital and adding back or subtracting, if you will, the value of prior exploration and production write-downs—that the total cost to produce a pound of uranium today is about US$60 on a global basis. So, worldwide, we spend $60 a pound to make uranium and we sell it for $24 a pound. We lose $36 a pound and being minors we try and make it up on volume.
What this means is that the industry is in liquidation. Why would anybody invest in an industry in liquidation? How much should one pay for the privilege of losing $36 a pound on volume? The reason is, of course, that either the uranium price goes up or the lights go out. Well, uranium is a politically unpalatable source of energy. It’s a widespread source of energy, nonetheless. Responsible at the present time for between 15% and 16% of total US base load demand after 2 decades of very strong investment in a variety of alternatives including wind, solar and natural gas.
While it’s a politically unpopular form of energy, it’s a necessary form of energy. And I would submit to you that within the intermediate term timeframe, that is, the 3- to 5-year timeframe, we have two expectations. One alternative is that the price of uranium goes up to the cost of production or the other is that the lights go out. And my suspicion is that it will be the former rather than the latter. And this move from $24 a pound to $60 a pound should engender a pretty interesting move in the uranium stocks. You have seen in the last 8 weeks an amazing move in the junior uranium stocks probably in anticipation of the bigger move.
It’s worth noting that the yellowcake price in the last 8 weeks has gone from $18 a pound to $24 a pound. That is, it has gone from very—well, from ludicrously uneconomic to just plain very uneconomic. And the consequence of that is that the price of many uranium juniors has doubled and some are up by 400%. We’ll talk about this in a minute.
It is my own expectation that the uranium price will stay weak. I can’t tell you how weak and I can’t tell you for how long, but at the present, despite the fact that uranium prices are very low, the market is oversupplied. You’ll hear many reasons for this. People always seek a narrative to justify conditions, but the most obvious one to me is that the second biggest consumer of uranium in the world, the Japanese, shut off uranium production following Fukushima. So, a country that had supplied about 16% or 17% of global demand all of a sudden had a hundred million pounds of inventory that they weren’t going to use. In other words, what had become demand suddenly became supply.
The most important single thing for you to watch as uranium investors and speculators more important than anything else is the pace of Japanese restarts. If Japanese reactors begin to restart, two things happen: systemic demand returns to the market and about 75% of what currently constitutes supply disappears from the market. The market fell simply because there was a plurality of supply over demand. The market will rise when the demand begins again to exceed supply. This is a question that begins with when not if. But when is an important question.
Is there any reason to justify the increase in uranium stocks that we have seen in the last 8 weeks? And the answer to that is: unless you know when the uranium price is going to increase, probably no. How do we play this game? We know for sure that the uranium price must go up or the lights will go out. So, we have a wonderful question in the sense that the unanswered question is when but not if.
In terms of the speculative aspects of the uranium market, which I suspect most of you are more interested in, I want to bifurcate the strategies that we’re going to talk about between what I would call strategic speculation and a tactical speculation. What you will find in all commodity centers but particularly in uranium is that the management talent and the assets do not align conformably across the whole market but a rather concentrated in a fairly small number of companies.
My suggestion is that of the 30 or 35 companies that remain interested in uranium—by the way, that’s down from 500 over 5 or 6 years. Of those 30 or 35 companies that pretend to be in the uranium business, there are 6 or 7 that are probably market leaders in terms of their assets and their managements. I am not prepared to disclose on this phone call who they are because our own research differentiating the best from the worst is not done.
We expect to have a list that will have segregated that 35 down into 6 or 7 and we expect to have that available through your Sprott brokers in the early or mid-summer, that is, June and/or July.
Now, one thing that those of you who experience the last market will understand is that as Doug Casey would say, “When the tide rises, all boats float,” which is to say that the lousy companies will perform in the market sometimes better than the good companies. And there is a case to be made for tactical trading, that is, buying companies with tiny tight market caps to participate in the furor that is usually engendered by a real market.
But you need to differentiate within your own portfolio those companies that deserve to do well as a consequence of their managements and their assets, and those companies that will do well as a consequence of the stupidity of your peers. In my own experience, when I have tried to buy stocks in anticipation of people even more foolish than me following me, I have turned out most often to be the greater fool.
From my own point of view, most of my own uranium speculations will be tactical speculations, that is, I will attempt to confine myself to the best companies, not necessarily the companies that have the best market structure, momentum, and trading characteristics but rather the companies that have the best management teams and the best assets.
One of the things that I think that you will see in the next 2 or 3 years before this market gets underway in earnest is you are going to begin to see concentration and amalgamation in the uranium business. This is a very good thing. When you see industries in liquidation like uranium, one of the critical tasks is to increase the assets under management by smaller groups so that the general and administrative expense relative to assets under management declines. The industry needs efficiency which it hasn’t seen. And you also need management teams that are able to make decisions over broad asset bases so that they optimize the asset rather than optimize their chances for salary.
You need ultimately to see low G&A charges relative to assets in the ground and production. So these amalgamations will be good and the amalgamations will benefit the companies that are consolidated in the near time. In the long term, they will benefit the consolidators.
One thing I really want to talk about, because I expected everybody on this call is already long in the uranium stocks and is excited about the moves that we’ve seen, is the need, in the choppy market, to remember that buying low and selling high involves both of those actions. When the overbought situation in uranium corrects itself, these uranium juniors that have run up 100%, 200%, 300%, 400% can easily decline by 50% which makes them paradoxically 50% more attractive even after they have disappointed you.
What I am trying to say is if you bought a viable uranium junior 8 weeks ago at 10 cents a share and it’s currently at 45 cents a share, you might be well advised selling half of your position drawing your capital out so that you have the rest of your position for free so that when and if the prices decline, you have both the cash and the courage to take advantage of the market decline because, make no mistake, nobody is going to be building any mines at $25 uranium. It’s going to take a higher price to incent the mines to be built, which means that between now and that blessed event that we’re going to have lots of advances and lots of declines in the market. Lots of chances to take advantage of volatility and lots of time to be taking advantage of volatility.
It will also be important for those of you who are qualified to take advantage of private placements to be part of the Sprott effort to capitalize the best uranium juniors. It’s our belief that we don’t want to be involved in any company that we won’t be willing to finance for 3 years of bad markets. In other words, while this market may perform this year, it may not perform in 2018. It may not perform until 2019.
The last uranium market that I was in, I was 3-1/2 years early which tempted me to say I was wrong except I made so much money after that in such a short period that it overcame almost any discount rent that I wanted to apply to it. And my suspicion is that that might be true this time.
Don’t make a commitment to the uranium business that you aren’t prepared to stick with for 3 years.
When you can, make that commitment in a private placement. Make that commitment so that you have the size to stay interested and more importantly where you have a warrant, the right but not the obligation to buy more stock at a fixed price when you are right and the price goes up.
Be picky. Pay attention to and take advantage of opportunity. Stay in touch—in close touch with your Sprott broker and find out when private placements in the sector are available. Buy those private placements where you have enough courage of your conviction that you’re happy to stay along for 2 years or 3 years even in the face of periodic 20% and 30% decline.
I think that’s a good enough general overview of the uranium market and now what I think I’d like to do is to begin answering questions.
[Begin Listener Q&A]
Question. “Does the uranium oversupply take 2 years to unwind? What price can it be expected until then?”
Interesting question. I’m too old and smart to answer it directly. I have no idea when the oversupply unwinds. The leading indicator will be Japanese restarts. If we see Japanese restarts 9 months from now, effectively the overhang in the market is gone. Until we see Japanese restarts, the overhang that we see in the market will not happen.
In terms of what price could it go to, well, the global cost of producing uranium right now is about $60 a pound. At the beginning of the last bull market in 2000 or 2001, the global cost of producing uranium was about $30 a pound. One would have expected an irrational market the last time through for the price escalation to peak out at $40 or $45 a pound. But you’ll remember when you have a supply destruction resolution of a bear market and the market supply and demand is equalized and the price starts to pick up, the suppliers can’t meet pricing signals in the market.
In the last bull market, the price could have resolved itself in the $50 or $60 range but overshot all the way to $130 or $135 a pound. While this market could resolve itself in the $70 a pound level, it’s not unreasonable to believe that we have any global economic recovery or any recovery in China combined by a restart of Japanese reactors that the uranium price could settle above $60 or $65 a pound.
Remember too that there is tremendous price elasticity or demand in elasticity with regards to uranium. The price of producing electricity from a nuclear reactor is completely independent on the price of uranium. The uranium as a percentage of the cost of generated electricity in a nuclear reactor is commonly between 3% and 5% of total costs. The truth is that in the nuclear industry today, the legal bills are much higher than the uranium bills.
The consequence of that, if you have 6 billion dollars invested in a reactor and you’re burning a million pounds of fuel a year, the difference to you between spending 30 million dollars on yellowcake and 60 million dollars on yellowcake is entirely irrelevant. It’s the 6 billion dollars that you have invested in the plant that matters.
What that means in the case of uranium given that it sells for $24 and it costs $60 is that the price of uranium must go up and because there is so little demand elasticity, the price of uranium can go up. The price is something that must go up and can go up almost certainly will go up. I just can’t tell you when.
Next question. “Is Toshiba’s problems with their reactors going to impact the outlook for uranium?”
The answer to that is no. There are plenty of competing suppliers of nuclear technology. And Toshiba’s problems are precisely because they are an inefficient problem-solver. Markets work. The most efficient solvers of problems kill the least efficient solvers of problems, and Toshiba has proven then to be, at least in the context of constructing reactors in the United States, very inefficient problem-solvers. The market is doing what it was intended to do, which is basically assassinating Toshiba’s nuclear business. But there are plenty of nuclear technology providers in the world. The thing that matters one more time in terms of the uranium price is Japanese restarts.
The next question. “The market is rigged. The only relevant chances is our chances of recovery through a lawsuit in the second district of Court of New York.”
I don’t happen to believe that assertion. Given the fact that I have hung around, if you will, Canadian small-cap markets for years means that I’ve seen a lot of rigs in my life. I’ve seen a lot of conspiracies. And in my suspicion, a thorough going rig is impossible because the people who organize and engineer the rig turn on each other.
Markets work over time. Rigs don’t work.
The idea that there is a political class which would like to eliminate the use of uranium is absolutely true. The problem with that is that even that political class when they come to congress or parliament and flip the switch wants the lights to go on, and those are their alternatives. Think about their other alternatives. Germany is an example. In a political context, very publicly shut down nuclear energy except that they didn’t. They bought nuclear energy from Poland, nuclear energy from France.
The difference was the domicile of the reactor, not the consumption and that part which they couldn’t buy from Poland or France in large measure, they filled in by burning dirty U.S. coal. It’s an interesting green solution to an odd political calculation. So, the market is rigged? I don’t think so. The relevant topic for me is Japanese restarts, not some kangaroo court in the United States.
Next question. Somebody quoting me, throwing my own verbiage back at me. “If you’re too early, you’re wrong. In questioning when uranium companies are profitable or uranium spot price is north of $30, are you measuring in months, years or decades?”
Now this is the crux of our discussion. You’ll recall earlier in this discussion my admitting to being at least 30, probably 40 months early last time, and I publicly castigated myself saying that 10% discount being 4 years early isn’t the same as early. It bridges on being wrong, except when you have a 5-stock portfolio where the worst company goes 22:1. In that particular case, the truth is that the money my clients and I made overcame almost any discount in a financial sense.
Now, in terms of a non-financial sense, that is, the trauma that you feel being 40% or 50% down on an investment when other types of investments are working and you’re lagging can take you to the psychiatrist couch at the very best. It’s important to measure whether you have the financial and the psychological strength to be early. But the truth is the contrarians—successful contrarians are always, always early.
Do I measure this in months? Likely not. Years? Likely. Decades? Certainly not. If the current condition that we’re in extends longer than 5 years, you will see almost every uranium mine in the world with perhaps 5 exceptions shut down. Could it take 2 to 3 years? Absolutely. But one more time, what you watch is the pace of Japanese restarts.
Next question. “Is the present moment too early, just right or a little late to start investing in uranium juniors?”
That’s a great question. And the answer to that is actually yes, yes, and yes. It depends on who you are. It depends on your orientation. It depends on your timeframe. It depends on your psychological tolerance and your needs. A little late? Well, a basket of uranium juniors is up probably by 100% in 6 weeks, which is to suggest that they’re substantially less attractive than they were.
My own supposition is that not all of that basket will exist when the uranium price goes up. Some of them will go to zero. The time to sell those is anytime you own them. But the truth is, that the survivors in the 3- to 5-year timeframe, my suggestion is, will be markedly higher than they are today, but perhaps lower first. So, are we too early? Maybe, for some of you. Are we too late? Maybe, for some of you, if 30% or 40% decline would shake you out, then you’re too late. Or is it just right? If you have a 3- to 5-year timeframe, that one is probably true too. I’m not meaning to be obtuse. I am suggesting that the answer to that question has more to do with you as an investor, as a speculator, as a human being than it does with the uranium market because the truth is that all three of them are true.
Next question. “Small modular reactors, do you feel this development technology ‘led by UK, Bill Gates and others will advance uranium markets in 2017?”
Absolutely not. It might influence the narrative, the thinking around uranium. It might excite people, but demand from small modular reactors will probably not be a factor in the market for 10 years. After the ultimate commercialization of this technology, if it occurs, I see one of the strangest permitting nightmares in the world—the idea that you’re going to be able to permit a backyard nuke. While it’s highly amusing to me, probably it’s causing conundrum already in federal, state and local governments. A conundrum that I think is wonderful, but I don’t see impacting the market in particular.
Next question. “Gold and, to a lesser extent, silver and uranium are presented as negatively correlated with the stock market in general. If there is a sudden drop in the market as a whole, will gold and uranium stocks also tank?”
The answer to that is absolutely. What you’ll learn about resource stocks is that resource stocks are stocks. And when stock markets tank, in particular, in response to liquidity crisis, all stocks tank and stocks on the periphery of markets—small stocks, stocks in unpopular sectors tank the most.
So, if we have 30% or 40% market decline, my estimation is that we’d have a 50% or 60% decline in the small resource stocks. I also believe that some of the small resource stocks are undervalued now, which means that they would come back quicker than the broad market. The question is, would you have the courage to hold them through that? Or better yet, buy into that sort of decline? Remember the different name for a bear market is a sale. It’s just that people will very seldom have the courage to buy financial assets on sale.
Next question. “How much spare production capacity do current uranium producers have?”
And the answer to that is not much. They have a lot of latent capacity, but bringing that capacity online with the exception of Kazatomprom requires a lot of capital expenditure and a long lead time to production. An example would be one of the largest uranium producers in the world is actually a by-product at Olympic Dam in Australia and Olympic Dam could easily supply another 15 million pounds a year.
The problem with that is that the expansion that they’re looking at Olympic Dam is a 15 billion dollar capital outlay that will take 60 years to effect and is, in fact, more reliant on higher copper prices than uranium prices. So, with the exception of Kazatomprom which has a substantial amount of fairly low cost production that they could bring online, there is not much spare productive capacity and there is no productive capacity at all that I’m aware of with the exception of Kazatomprom below US$45 a pound. There is, in the U.S. market, probably four million pounds a year of spare productive capacity, but the cash cost associated with that production are about $40 a pound. So, the incentive price for that production is $45 or $50 a pound.
Next question. “Over the next 2 years, do you see a strong enough recovery in enough countries to drive the prices of industrial metals significantly iron?”
And the answer to that is no. I do not suspect that we will see a demand-led recovery in industrial materials prices. I believe that the recovery that we’ll see in industrial materials prices will come about as a consequence of supply destruction, not demand creation.
The exception to that is the nickel business where you’re having a politically engendered choice ironically for the right reasons. The government of the Philippines has made the odd right decision, not something that they’ve done very often of late, but they’ve decided to eliminate the highly destructive open-pit unauthorized laterite mining that’s taking place in decimating large amounts of the Philippines islands. This reduction of laterite mining has caused supply destruction in the nickel industry that I think will drive the nickel price higher without increased demand.
Next question. “Why do uranium producers continue to produce so much if they are losing $36 a pound?”
The answer to that is a paradox. In capital-intensive businesses, when you have sunk billions of dollars into productive capacity, you produce down through marginal cost and often through marginal cost because it costs you so much money to shut in production and then it costs you so much money to reestablish production that what people often do is they produce down to the cash cost of production and then they produce below the cash cost of production in the vainglorious attempt to win what we call “the last man standing” contest. In other words, you want to have productive capacity available when the price increases.
And then, of course, there’s that great unsung reason why people continue to produce. And that’s so that the management team can continue to have something to do and draw their salary. Remember that in the mining business, management teams consider true yield not to be profit margin but rather salary and emolument to management teams, which can seldom be done when they shut in production.
Next question. “Trump’s indifference proves him to be republican captured by fossil foil oligarchs. Bad time for alternative sources including uranium.”
My own suspicion is that although politics are important in both the near term and the long term, markets trump politics—poor play on word. And by the way, Trump is pro-nuclear. I think that Trump’s tweets and pontifications notwithstanding, his influence in the uranium market over 5 years will be nonexistent.
Next question. “Republicans captured by fossil fuel oligarchs.”
All of those oligarchs are also uranium oligarchs. So, my own suspicion is that although the narrative might be driven by the political headlines, the only politics that matter in the uranium business are Japanese politics. The popular consensus in Japan about whether energy security—Trump’s danger that the Japanese people have been exposed to by the Japanese nuclear industry. The only politics that matter in the uranium business in the near term are the restart of Japanese reactors, all the other political morons notwithstanding.
And with regards to alternative sources, remember that all of the alternative sources are challenged by uranium in the sense of uranium’s incredible energy density and the fact that the money to burn the stuff, if that’s the right phrase, has already been spent. I realized that the political establishment before Trump preferred other sources of energy, things like solar, but they had obvious problems, things like night.
Distributed energy, inconsistent energy, requires an amazing grid. You have to get wind power from where the wind is blowing to where the energy is wanted. You have to get solar power from where the sun is shining to where the power is going to be consumed. In order for this distributed energy to be effective in the United States, in the first instance, you needed up 400% redundancy which means that you need the ability to produce at peak about 4 times the average power consumption and you need an incredible expenditure in wire to get the power to where it ain’t from where it is.
What’s going to happen is we’re going to talk alternatives and we’re going to burn natural gas and we’re going to burn uranium and we’re going to burn coal. That’s what’s going to happen.
Next question, “The USA is the number one producer of nuclear power, 9th largest uranium producer. Concerning the amount of supply, which is produced by CIS nations, in your opinion will security of supply be a priority for the USA in the near future?”
The narrative to that question is yes. I think what you’ll see coming out of the Trump administration is the importance of US source material. I’ve heard that my whole career, about 40 years. The truth is, in need, demand is tangible. My entire career, there have been incredible postulations from the morons in Washington about the efficacy of using Arab oil as we burned millions of barrels a day.
Similarly, the Venezuelans have unveiled against the imperialist Americans on a global basis while the principal consumer of Venezuelan oil was, of course, the U.S. Will we make loud noises about the need to produce uranium in Wyoming and Texas? And will we allow that to make us pay more than a dollar or two a pound more for U.S. supply? Absolutely not. The truth is, you want electrical power at the lowest price that you can get it.
Now, is there a good future for nuclear in the U.S.? That’s a very different question. We have the rule of law in the United States. We have the best infrastructure with regards to electrical transmission and other source of things in the United States. Will there be money made at $60 a pound in Wyoming and Texas? Absolutely. Will we shut down nuclear generation in the United States? No. Will we shut down uranium mining in the United States?
The truth is that there are 4 good jurisdictions in the United States for extractive industries—Alaska, Nevada, Wyoming and Texas. And domestic uranium production is concentrated in Wyoming and Texas, both jurisdictions that have long regulatory experience with the uranium business. And make no mistake, in an industry as charged with narrative as uranium is, you want knowledgeable rather than unknowledgeable regulators. The regulators in Wyoming and Texas understand the risks of uranium. They have long experience in attempting to help industry mitigate those risks. Those are great places on a global basis to be producing uranium.
Will protectionism matter? No. Not at all.
Next question, “What are your thoughts about Deep Yellow Uranium as an investment or speculation?”
In the first instance, I can’t talk to you about what’s appropriate for you as an investor or speculator. In other words, I can’t give investment advice because I don’t know about the questioner enough to answer the question. I, or rather, an investment partnership where I am the general partner and the largest limited partner, has become the largest shareholder in Deep Yellow Uranium. I did that because of the incredible experience I enjoyed some years ago with Paladin, the stock that as I told you moved from a penny to $10.
Deep Yellow is the re-acquaintance of the original Paladin backer, that is myself and Sprott, with the team that made Paladin work, led by John Borshoff. Will past be prologue? I hope so, but I have no idea.
Is Deep Yellow an attractive investment or speculation? Well, it’s not an investment at all. Is it an attractive speculation? For you? I don’t know. My mind is obviously made up. A partnership that I control is now a 15% shareholder.
There will likely be a financing in Deep Yellow—and I’d say likely. They haven’t agreed to any proposals made by anybody, but there will likely be a financing in Deep Yellow in the next 3 months. And assuming in that an agreement can be made between Sprott and Deep Yellow, that financing will likely be done by Sprott. Now, the truth is that there are several groups that are competing to offer Deep Yellow money. My suspicion is that given our long relationship with Deep Yellow, that that management team believes that we bring more than money to the equation, but I may be flattering us in that discussion.
Final question, “I have been in the uranium markets for many years and have heard that the turn in the uranium market is closed. I recall watching a webcast on the same with Marin Katusa and I think yourself a few years ago. Could this be another false dawn?”
Absolutely, this could be another false dawn. Right now, demand is constrained because of Japanese restarts. There is between 80 and 100 million pounds of excess supply because of Japanese restarts. The timing of the recovery of this market is a function in the near term of Japanese restarts; in the long term, about the bankruptcy of the uranium power industry at this price point.
If you have questions about the topics raised in this article, please reply to this email or contact the editor here. You can also call your Sprott Global financial advisor at 800-477-7853. Rick Rule
CEO, Sprott U.S. Holdings
Mr. Rule has dedicated his entire adult life to many aspects of natural resource securities investing. In addition to the knowledge and experience gained in a long and focused career, he has a worldwide network of contacts in the natural resource and finance worlds. As Director, President, and Chief Executive Officer of Sprott U.S. Holdings, Inc., Mr. Rule leads a highly skilled team of earth science and finance professionals who enjoy a worldwide reputation for resource investment management.
Mr. Rule is a frequent speaker at industry conferences, and is interviewed for numerous radio, television, print and online media outlets concerning natural resource investment and industry topics. He is frequently quoted and referred by prominent natural resource oriented newsletters and advisories. Mr. Rule and his team have long experience in many resource sectors including agriculture, alternative energy, forestry, oil and gas, mining and water. Mr. Rule is particularly active in private placement markets, having originated and participated in hundreds of debt and equity transactions with private, pre-public and public companies.
If you have questions about the topics raised in this article, please reply to this email or contact the editor here. You can also call your Sprott Global financial advisor at 800-477-7853.
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