Category Archives: uranium and nuclear

BHP presents united front against activist Elliott at AGM

 

BHP presents united front against activist Elliott

Reuters Staff

OCTOBER 19, 2017 / 11:23 AM / UPDATED AN HOUR AGO

By Barbara Lewis and Zandi Shabalala

LONDON, Oct 19 (Reuters) – The new chairman of BHP , the world’s biggest miner, threw his weight behind his CEO on Thursday after attacks from activist investor Elliott Advisers prompted speculation that the end of Andrew Mackenzie’s tenure was imminent.

Pressure has mounted on BHP and its chief executive since Elliott went public in April with its criticisms of the miner’s strategy.

“Any suggestion there is a set timeline around Andrew’s tenure is simply false and without merit,” Chairman Ken MacKenzie told reporters after his first AGM since taking office at the start of September.

Asked by a shareholder whether it was Elliott or the BHP board that was running the company, the chairman replied that “MacKenzie and Mackenzie” were running BHP, though he did not specify the order of the pair who share the same names but with slightly different spelling.

At least five representatives from Elliott Advisors, which holds 5 percent of BHP, attended the London meeting but did not ask questions from the floor.

Elliott declined to comment on Thursday, though it has welcomed the new chairman’s appointment.

Chairman MacKenzie said he had met more than 100 shareholders across eight countries, which he said gave him confidence, though he added that there are areas where the company needs to sharpen its focus.

He reiterated that work is in progress to sell shale assets, which is one of Elliott’s main demands, and that further action would take place to refresh the board of directors.

SKILLS REVIEW

“We recognise that the board needs to continue to evolve to take into account the rapidly changing environment in which we operate. So we will undertake a review of the board’s skills and experience requirements during this financial year,” he said.

BHP’s London share price has risen nearly 7 percent since the start of the year, about half as much as that of its main rival Rio Tinto.

Both the chairman and the CEO said they were striving to maximise shareholder value and that meant that shale assets would be sold only at the right price.

“We will be both urgent and patient as we examine all the options,” CEO Mackenzie said. “We have to get the timing right to maximise shareholder value.”

BHP’s big rival Rio Tinto suffered a setback this week when the U.S. Securities and Exchange Commission (SEC) charged the company and two of its former executives with inflating the value of coal assets in Mozambique and concealing critical information. The company said it would defend itself vigorously against the allegations.

Chris LaFemina, a mining specialist at Jefferies bank, said he had preferred Rio over BHP for the past two years.

“While our preference has not changed, BHP’s competitive position has modestly improved,” he said in a note.

“New chairman Ken MacKenzie seems willing to push for significant strategic changes at BHP … after years of unacceptable underperformance of its share price versus Rio‘s.” (Editing by Elaine Hardcastle and David Goodman)

Rick Rule, President and CEO of Sprott on Uranium Markets

Interview with Rick Rule, President and CEO of Sprott U.S. Holdings Inc.

CEO.CA

Sept 24 2017

Rick Rule CEO of Sprott

Once again I had the pleasure of catching up with Rick Rule, and in this interview we talked about the Uranium market, Bitcoin, Gold, and the lessons he learned from his early mentor Peter Cundill. Enjoy!

Hi Rick, welcome back to The Next Bull Market Move. I’d like to start the interview with a question about one of your early mentors, Peter Cundill.

I understand he was an early mentor of yours at the beginning of your career, and I have recently been reading the book ‘There is always something to do’ which is about his investments and how he invested. What were the most valuable lessons your learned from him?

During the period of time that I was learning from Peter, he was focused on deep value opportunities of two primary types; net nets (companies where current assets exceeded all liabilities, and market cap) that were operationally cash flow positive, and companies with hidden, mispriced or redundant assets.

Peter loved closely held timber companies whose forest lands were selling for half of market value, or had real estate development potential. He called the cash flow positive net- nets, free bonds, meaning that you got the cash generating for free, after subtracting current assets from enterprise value.

Peter was of the habit of looking for extraordinary value, which was enabled by a tolerance for pain (a declining share price) and remarkable patience. He was not afraid to be right. Those bargains were seldom available in popular sectors, or favorable markets

‘Investors tend to follow trends and fashion rather that taking the trouble to look for value.’

This was a common theme of Peter’s, and a reason behind the long term success of most value investors. Most investors (maybe most people) believe themselves to be very cogent, rational beings, surveying the information landscape, accumulating facts, and weighing them objectively to reach reasoned conclusions.

Wrong! Most folks search for information that affirms their existing paradigms and prejudices, they look for justifications for comfortable narratives. Hence, trends in motion stay in motion, long after the circumstances that caused the trends cease to exist.

Value investors, including Peter, and certainly myself, are repeatedly guilty of the same sin, but we are taught to try to recognize it and guard against it. Peter’s guard was particularly successful, he was a pathological cheapskate, so he had a quantitative guard against fashion.

What are your thoughts behind Bitcoin and cryptocurrencies as a speculation? Will this space eventually turn into a dotcom mania like the late 1990’s?

Kerem, I’m the wrong one to ask, I don’t own a TV, and I can’t dress myself in stuff that matches! As a judge of popular culture, I’m your last choice.

That being said, I love the sector, in many regards. The technology, the “block chain” and the distributed ledger have the possibility to make many aspects of human culture, but particularly commerce and trade, much more efficient, while eliminating many of the supposed needs for government regulation and taxation.

As currencies, I’m a consumer of currencies, and mediums of exchange, and stores of value. A multiplicity of choice, competition between various currency systems to serve me better, is something I enjoy!

The ability to create and market an algorithm, and market it as a dream, converting the promoters ability to market the dream, in return for other peoples earned wealth will attract some very smart, and likely stupendously successful scam artists, who just like central bankers, will bill savers and investors out of billions of other currency units. Governments hate this, they want a monopoly on fraud and extortion, but in this circumstance, they are entering into a battle of wits, under armed.

Once again, the sentiment surrounding Uranium has fallen into pessimism and despair. Speculators have left the scene since the big run up we had at the beginning of the year. It seems to me that for the most part, investing early in bull markets involves patience and being able to handle a certain amount of boredom. When a market does nothing, no one is interested. When a market is rising, everyone is interested. Is Uranium following a similar path to the previous bull market you speculated in?

The early run up in uranium equities was a very interesting phenomenon in that it occurred on very low volume. I think two forces were at play. One, I believe a three year “bear market” wore out the sellers, they were out of inventory, and the shares had moved to stronger hands. At the same time, speculators with longer memories, of the last bull market, began to accumulate, in hopes of a repeat. The companies, stumbling on a funding window, which could and did save the sector from extinction, drowned the buyers in an avalanche of freshly issued equity.

I believe we need a period of sustained Japanese reactor restarts in order to have a uranium price response in the next two years. By 2020, the problem takes care of itself. Ironically, the longer it takes for the market to re-balance, the wilder the probable upside ride is on recovery. When you destroy productive capacity, which is what extended “bear markets” do, the industry is unable to respond to price increases by increasing supply, and we get those spectacular price spikes, like we did in the early part of the last decade.

What are your current thoughts on gold? Is the pullback we had over the last few years over?

My belief is that the most important factor in the gold price, is global faith in the purchasing power of the US dollar, and faith in US Treasury securities. The most important measure of this faith, that I’m aware of, is the US 10 year treasury yield, and more importantly, the delta between the 10 year, and the TIP.

If you have observed what I have observed, that gold trades inversely with the US 10 year treasury, and you observe that the US 10 year treasury has been in a 35 year “bull market”, with the yield falling from 15% to 2%, you might believe that the bond “bull market” is closer to the end, than to the beginning. If that is the case, gold, which I believe trades inversely, may be in a “bull market” which is closer to it’’s beginning, than it’s end.

Applying Cundill’s logic to the US 10 year treasury, it is simply not cheap enough to be attractive. Jim Grant refers to it as “return free risk”. I think gold will prevail over that type of competition.

Better yet, the gold quote has done better over the last twelve months, that the gold equities, and I believe the gold equities are poised to catch up.

And finally, give us an update on what Sprott is up to, and how investors can get in touch?

Sprott continues to refashion itself as a global merchant bank, and investment manager focused on natural resources and precious metals. We sold our broader market Canadian mutual fund business to that unit’s employees, which freed up a lot of capital, and sharpened our focus. We have a superb balance sheet (over $300,000,000 in working capital, with no debt), a very resilient business (we generated free cash flow in a sector where the most relevant measurement metric, the TSXV index declined by almost 90%,) and we manage to pay a 5.5% dividend on our common stock. Imagine what we can do in a favorable market.

We manage or administer in excess $10,000,000,000 on behalf of individuals and institutions worldwide, focusing on the sectors where we have spent three decades building our knowledge, and our brand; natural resources, and precious metals.

We would love for investors to visit our website sprottglobal.com and to stay subscribed to our free blog, “Sprotts Thoughts”, a journal of the best ideas inside and outside our organization.

As an added inducement to visiting us, if your readers will email me (rrule@sprottglobal.com) a copy of their natural resource portfolio, in text, not as an attachment, with both security name, and symbol, I will rate and comment on those portfolio companies, for free, and send my response back, by email.

Many thanks Rick.

Thanks for the visit.

The Next Bull Market Move

As Rick mentioned, feel free to contact him at rrule@sprottglobal.com for a no obligation portfolio ranking.

Here is Rick’s full Bio : http://sprottglobal.com/our-team/rick-rule/

Rick’s twitter account: @RealRickRule

Here is the Sprott US media YouTube channel: https://www.youtube.com/user/sprottglobal

 

 

 

Offshore wind 6 times more expensive than nuclear power when wind’s required battery storage is factored-in

The key item is, “The headline “Offshore wind now cheaper than nuclear power” is very much in the UK news following the latest offshore wind auction in the UK where the lowest bids came in at £57.50 / MWh, well below the Hinkley C strike price of £92.50. But baseload nuclear, which delivers all the time, can’t be compared directly with intermittent wind, which delivers only when the wind blows. To make an apples-to-apples comparison we have to convert wind generation into baseload generation by storing the surpluses for re-use during deficit periods. Doing the math, offshore wind works out to be 6 times more expensive than nuclear power.”

The real strike price of offshore wind

September 20, 2017 by Roger Andrews

http://euanmearns.com/the-real-strike-price-of-offshore-wind/

 

Hinkley still scores on reliability and low carbon ….. but the extent to which its costs are obscene is now plainer than ever. In Monday’s capacity auction, two big offshore wind farms came in at £57.50 per megawatt hour and a third at £74.75. These “strike prices” …..  are expressed in 2012 figures, as is Hinkley’s £92.50 so the comparison is fair. As for the argument that we must pay up for reliable baseload supplies, there ought to be limits to how far it can be pushed. A nuclear premium of some level might be justified, but Hinkley lives in a financial world of its own, even before battery technology (possibly) shifts the economics further in favour of renewables …..

Thus spake the Guardian in a recent article entitled Hinkley nuclear power is being priced out by renewables.

What the Guardian says is, of course, nonsense. Comparing non-dispatchable wind directly with dispatchable baseload nuclear is not in the least “fair”. Barring Acts of God baseload nuclear is there all the time; wind is there only when the wind blows. We can level the playing field only by comparing baseload nuclear generation with baseload wind generation, and the only way of converting wind into baseload is to store the surpluses generated when the wind is blowing for re-use when it isn’t. To compare offshore wind strike prices directly with nuclear strike prices we therefore have to factor in the storage costs necessary to convert the wind into baseload, and this post shows what happens to wind strike prices when we do this using the “battery technology” favored by the Guardian. It finds that battery technology does not “(shift) the economics further in favor of renewables”. It prices wind totally out of the market instead.

The two offshore wind farms in question are Hornsea Project 2 (1,386MW) and Moray East (950MW). The project cost for Moray is given as £1.8 billion, or £1,895/kW installed. The project cost of Hornsea Project 1 is given as £3.36 billion, which relative to the 1,218 MW capacity gives £2,759/kW installed. N0 project cost is given for Hornsea Project 2. Moray is 77% owned by EDP Renewables (EDPR) and 23% by Engie. Hornsea is 100% owned by DONG. The locations of Moray and Hornsea are shown below:

wind map

To conduct an analysis we have to estimate how much storage will be needed to convert the wind generation from Hornsea and Moray into baseload generation, and to do this we need to know what wind output from these wind farms will be. There are no readily-accessible data for operating UK offshore wind farms, but on the other side of the North Sea are Denmark’s offshore wind farms, and the P-F Bach data base provides hourly generation data for them. So I used Bach’s Denmark data to simulate generation from Hornsea, the larger of the two wind farms, assuming that the results would be reasonably representative. I picked January 2015 as an example month and factored the generation from Danish wind farms in that month up to Hornsea levels relative to installed capacities, which in this case aren’t very different (1,271MW total in Denmark at the beginning of 2015 and 1,386MW at Hornsea). The results are shown in Figure 1:

wind generation graph 1

Figure 1: Hourly generation from Denmark’s wind farms in January 2015 factored up to match Hornsea 2

Strong winds during the first half of the month were largely responsible for the overall 60% capacity factor during the month – respectable for a wind farm. However, the wind blew less strongly in the second half and died away almost to nothing on the 21st and 22nd.

The next step was to convert the spiky wind output into baseload, which requires that surplus generation during windy periods be stored for re-use during deficit periods so that the generation curve comes out flat. Surpluses and deficits were quantified relative to an 825 MW threshold, which is the amount of continuous baseline power Hornsea generates when generation is flat-lined. Figure 2 shows wind generation surpluses and deficits relative to this threshold:

wind generation graph 2

Figure 2: Hourly wind generation surpluses and deficits relative to 825MW of constant baseload output, January 2015

How much storage, which according to the Guardian will be supplied by batteries, will be needed to flatten out these surpluses and deficits? I estimated this in two ways. First I simply accumulated the surpluses and deficits, starting with the batteries discharged, and came up with the battery charge status plot shown in Figure 3. Driven by the generation surpluses in the first half of the month the batteries charge up, reaching a maximum capacity of 95,800 MWh on January 18. Thereafter the deficits set in and the discharges begin, and by the end of the month the batteries are back to being 100% discharged:

wind generation graph 3

Figure 3: Hornsea hourly battery charge status based on accumulation of hourly surpluses and deficits, January 2015

Next I ran the hourly wind generation data through Dave Rutledge’s more sophisticated storage balance algorithm, which starts with the batteries fully charged. The resulting battery charge status plot is shown in Figure 4. 95,800 MWh of battery charge – the same amount as before – is needed at the beginning of the month to keep the batteries charged up until the end of the month, although by the time the end of the month arrives they again have no charge left:

wind generation graph 4

Figure 4: Hornsea hourly battery charge status based on Rutledge storage balance algorithm, January 2015

Beginning with the batteries fully charged, however, creates a complication. During the first half of the month the batteries remain fully-charged for most of the time, and any surplus generation when they are fully-charged has to be curtailed because there’s nowhere to put it. Figure 5 shows the impacts. The curtailment that occurs during the first half of the month amounts to 16% of total monthly generation, and as a result Hornsea delivers an average of only 693MW to the grid instead of the 825MW it would have delivered if the batteries had been discharged rather than charged at the beginning of the month:

wind generation graph 5

Figure 5: Hourly wind generation sent to grid and curtailed based on Rutledge algorithm, Hornsea, January 2015

How to handle this complication? Strictly I should go back and tweak the algorithm until I get an optimum combination of baseload output and battery storage, but in this case it isn’t worth the effort. Why not? Because as we shall shortly see the impacts of the added cost of battery storage on the strike price are so large that even crude approximations are meaningful. So I will run with the 95,800 MWh storage estimate (although it’s almost certainly an underestimate. It assumes 100% charge-discharge efficiency and no battery degradation with time and there is also a high probability that it would increase if time-frames longer than a month were considered.)

Now to economics, and another approximation.

A wind farm gets its fuel for free and maintenance costs are comparatively low; the lion’s share of downstream costs comes from servicing the debt on the initial investment. Here I assume that effectively all of these costs come from debt service, meaning that there will be a direct relationship between the strike price and the initial investment. With this assumption all we have to do to estimate a “batteries included” strike price is add the cost of the batteries to the initial investment and factor the strike price up in proportion. When we do this for Hornsea this is what we get:

Initial wind farm investment = £3.9 billion:  I factored the Hornsea Project 1 cost (2,759/kW installed) up in proportion to the increase in installed capacity (1,396 MW for Hornsea 2 vs. 1,218 for Hornsea 1). This gave a total project cost for Hornsea 2 of £3.85 billion, which I rounded up to £3.9 billion.

Cost of battery storage = £35.4 billion: 95,800 MWh of lithium-ion batteries at current prices of around US$500/kWh – £370 at current exchange rates – gives a total cost of 95,800,000 kW * £370/kWh = £35.4 billion.

Cost of wind + battery storage = £3.9 + £35.4 = £39.3 billion

Strike price with batteries included = £579.42/MWh: The strike price increases in proportion to the increase in total investment, i.e. from £57.50/MWh to 39.3/3.9 * £57.50 = £579.42/MWh.

Since as noted earlier the 95,800 MWh storage requirement is almost certainly an underestimate – and quite possibly a large one – we can reasonably conclude that Hornsea’s strike price will be at least six times higher than Hinkley’s £92.50/MWh when the two are compared on an apples-to-apples basis using the Guardian’s battery storage option.

What does this factor-of-six difference tell us? Actually not much, because the comparison is academic. No one is ever going to outlay £35.4 billion to install battery storage at a £3.9 billion wind farm. Backup gas, not battery storage, is presently the only option for smoothing out erratic wind generation, and estimating how much this might add to the Hornsea strike price would be a complex undertaking, although I might give it a shot in a later post.

What it does tell us is that adding even a comparatively small amount of battery storage to a wind (or solar) project could kill it economically, which is probably what motivated the Guardian to make the comment about putting limits on how much “we” have to pay for “reliable baseload supplies”. And in the clean, green, environmentally-conscious, demand-managed, smart-meter-monitored, grid-interconnected, one-hundred-percent renewable world of the future the Guardian envisions we won’t need reliable baseload supplies anyway.

 

 

 

Hurricane Harvey Makes The Case For Nuclear Power

Hurricane Harvey Makes The Case For Nuclear Power

SEP 1, 2017 @ 06:00 AM

James Conca, CONTRIBUTOR

Forbes at https://www.forbes.com/sites/jamesconca/2017/09/01/hurricane-harvey-makes-the-case-for-nuclear-power/#7cd5b24e3625

Harvey over Houston

NASA satellite images show NASA-NOAA’s Suomi NPP satellite image of Tropical Storm Harvey sitting over Texas and the two nuclear reactors at the South Texas Project Nuclear Operating Company near Houston.

Hurricane Harvey made land fall in Texas this week and the flooding was historic. What is shaping up to be the most costly natural disaster in American history, the storm has left refineries shut down, interrupted wind and solar generation, caused a constant worry about gas explosions, and caused a chain of events that led to explosions and fires at the Arkema chemical plant that is only the beginning.

Over a fifth of the country’s oil production has been shuttered. Natural gas futures hit a 2-year high as did gasoline prices at the pump.

But the Texas nuclear power plants have been running smoothly.

The two nuclear reactors at the South Texas Project plant near Houston were operating at full capacity despite wind gusts that peaked at 130 mph as the Hurricane made landfall. The plant implemented its severe weather protocols as planned and completed hurricane preparations ahead of Category 4 Hurricane Harvey striking the Texas Gulf Coast on August 25th.

Anyone who knows anything about nuclear was not surprised. Nuclear is the only energy source immune to all extreme weather events – by design.

This nuclear plant has steel-reinforced concrete containment with 4-foot (1.2 meter) thick walls. The buildings housing the two reactors, vital equipment and used fuel have steel-reinforced concrete walls up to 7 feet (2.1 meters) thick, which are built to withstand any category hurricane or tornado. It can even withstand a plane flying directly into it.

Houston reactors

The two nuclear reactors at the South Texas Project Nuclear Operating Company near Houston, Texas has been operating at full capacity on Tuesday throughout the historic flooding and winds caused by Hurricane, then Tropical Storm, Harvey. Despite wind gusts that peaked at 130 mph as Harvey made landfall.

The plant is located 10 miles (16 kilometers) inland and at an elevation of 29 feet (8.8 meters) above sea-level. The facility is designed with watertight buildings and doors, with all buildings housing safety-related equipment being flood-proof to an elevation of at least 41 feet (12.5 meters).

‘We’ve got significant rain but flooding has not been an issue here,’ plant spokesman Buddy Eller said in a phone call about the reactors.

That the nuclear plant is just fine seemed to irk anti-nuclear groups who don’t want to see nuclear ever performing well, even if it helps the storm-wracked people of south Texas when other power sources are failing.

Three watchdog groups, the Sustainable Energy & Economic Development coalition (SEED), the South Texas Association for Responsible Energy and Beyond Nuclear recklessly urged politicians, the owners, and regulators to shut down the plant because of Harvey, even if it hurt residents, emergency workers and hospitals who desperately need that power.

But the regulators and the State would have none of that nonsense, understanding that these groups just peddle fear. The reactors provide 2,700 MW of power to 2,000,000 customers in the area.

U.S. Nuclear Regulatory Commission (NRC) staff are at the plant, constantly assessing the situation and safety aspects. ‘The South Texas Project reactors have been operating safely throughout Harvey and continue to do so,’ NRC spokesman Scott Burnell said. The reactors can be shut down quickly if something develops, but that’s not expected to be necessary.

Two-hundred and fifty storm crew workers, along with regulators, were running the plant and were set up with sleeping arrangements, food and water to weather the storm no matter how long it took. None of them were afraid, knowing how safe the reactors are.

No other industry was as prepared.

According to the online news source North American Wind Power, one large wind installation in the path of the storm sent all 39 workers home as the hurricane closed in, but operated remotely until the wind hit 55 mph. It then shut down automatically like all farms when wind speeds exceed their design limits. Most wind farms have not sustained much damage, but getting them back to capacity will be difficult.

The Nuclear Regulatory Commission also said Harvey does not pose a threat to the Waterford Nuclear Power Plant in New Orleans and the River Bend Plant near Baton Rouge.

We’ve seen this before. Last summer, a heat wave cooked Americawith extreme temperatures, affecting most energy production as well as causing fires and water shortages, sucking electricity like crazy to power the cooling necessary to avoid discomfort and even death. According to the National Weather Service, 122 million Americans were under heat alerts.

Fortunately, nuclear power didn’t mind, scoring record capacity factors of 96% and up, with no increase in price. Other energy sources did not fare so well and some gas plants gouged consumers just because they could.

In 2014, a Polar Vortex shut down natural gas and coal plants, and stopped wind turbines and solar generation. But nuclear performed wonderfully and provided more power to the hard-hit northeast than any other source.

Whether it’s hurricanes, floods, earthquakes, heat waves or severe cold, nuclear performs more reliably than anything else. There’s no better reason to retain our nuclear fleet, and even expand it, to give us a diverse energy mix that can handle any natural disaster that can occur.

 

 

 

Canada’s biggest threat to meeting GHG targets? Reluctance of Canadians to change their lifestyles

Canada’s biggest threat to meeting GHG targets? Reluctance of Canadians to change their lifestyles

Aug. 25, 2017

http://www.jwnenergy.com/article/2017/8/whats-one-biggest-threats-canada-meeting-its-ghg-targets-reluctance-canadians-change-their-lifestyles/

wind farm and family.png

Image: iStock

Canadians pay among the lowest prices for electricity in the world, and the chair of a Senate committee that has been holding fact-finding get-togethers with citizens who benefit economically from those low rates isn’t sure they’re willing to pay what Europeans do to decarbonize the country’s power sector.

“Environmentalists say we should be like Denmark and Germany,” says Sen. Richard Neufeld, a former B.C. provincial politician who chairs the Standing Senate Committee on Energy, the Environment and Natural Resources. The committee has been holding meetings on university campuses and elsewhere across Canada to gather information for a series of interim reports. It will release a final report later this year or in early 2018.

“Citizens of Denmark and Germany pay 45 cents a kilowatt-hour for electricity, compared to an average in Canada of eight to 10 cents. If consumers in Canada had to pay that, there would be a revolution,” Neufeld says.

Neufeld points to Ontario, where electricity rates have doubled since the provincial government phased out all coal-fired power and provided heavy subsidies to bring on more solar, wind and other more costly options, as what could happen in the rest of Canada if power rates skyrocket. The Liberal government in that province, which phased-out coal and turned to costlier alternatives, has consistently trailed badly in the polls.

The committee released a 59-page report, Positioning Canada’s Electricity Sector for a Carbon Constrained Future, in late March.

Neufeld, who was the mayor of For Nelson before serving as the MLA for Peace River North from 1991 to 2008 then being appointed to the Senate in 2009 by former prime minister Stephen Harper, should know how voters in Canada can react to governments they believe are no longer responding to their needs. The former Liberal B.C. government, which he represented in several cabinet posts, including as minister of energy, mines and petroleum resources, recently lost an election to a coalition of the New Democrats and the Greens after more than 15 years in power.

Neufeld, who represented an area of B.C. that is very economically reliant on oil and gas development and owned an energy-related business in the region, is unabashedly pro–fossil fuels.

He’s also concerned about the radical economic shift that would be required to meet Canada’s Paris Agreement commitment to cut CO2 emissions by 30 per cent by 2030 and what that would “hit Fred and Martha [i.e., average Canadians] in their pocketbook.”

He has said policymakers “must be mindful of passing down…costs to consumers and making it unaffordable.”

The committee’s deputy chair, Quebec-based Sen. Paul Massicotte, a former business executive who was appointed to the Senate by former Liberal prime minister Jean Chrétien in 2003, is more of an optimist about reaching the goal. It would require Canada, on track to emit 742 megatonnes of CO2 by 2030, to remove 219 megatonnes from its annual emissions toll.

Commenting on another report released by the Senate committee, Decarbonizing Transportation in Canada, he says “some minor changes to how we travel and how we ship goods could have a significant impact on our greenhouse gas emissions.”

Neufeld is not so sure.

“The rest of the world calls us energy hogs,” he says, but, given Canada’s climate, its extensive land mass and other factors, it’s unavoidable that Canadians will use more energy than more populous nations with a smaller geographic footprint.

“You can drive across Germany and Switzerland in a day,” he says. “You can’t do that in Canada.”

He says many of the younger Canadians the committee met with on university campuses, as well as the professors, hold an unrealistic view of the country’s electricity sector. “The students and professors all wanted to shift radically to the use of renewables, such as solar,” he says. “But how realistic is that in the Arctic, where they don’t get any sun for several months during the winter?”

In fact, according to the Senate report on Canada’s electricity sector, the country already has one of the cleanest power sectors in the world, with 80 per cent of its electricity coming from sources that do not emit greenhouse gases (GHGs). Almost 60 per cent of the country’s power comes from hydro, with nuclear power providing 16 per cent, and wind, solar and other renewables about 3.5 per cent.

The GHG-emitting power sources—which include coal-fired power, now being phased out in most parts of the country, and natural gas–fired power—are responsible for most of the remaining electricity.

Because Canada has such clean power sources, power is only responsible for 11 per cent of the country’s GHGs. It’s also only responsible for 2.5 per cent of global electricity consumption. In 2014, Canada used 550 terawatt-hours of power, with the industrial sector responsible for 43 per cent of total consumption and households for 33 per cent.

The Senate report highlights some steps that could be taken to make the power system even cleaner and more efficient, including the development of “smart grids” and power-sharing between provinces and between the U.S. and Canada.

The move toward a national carbon tax, along with regulations to phase out coal-fired power, will also lead to a lower carbon footprint from the sector, the report concludes.

But Neufeld, a conservative who worries about the impact of any further moves to decarbonize one of the world’s lowest-carbon power systems, insisted the Senators add that any such steps should be taken without creating “undue hardship” for Canadians from an economic standpoint.

“You can always do more,” says Neufeld, but he adds that Alberta and Saskatchewan, where much of the thermal power use in Canada is generated, simply have no logical alternative.

“They have very little hydro potential,” so they need to use fossil fuels.

Alberta has committed to shutting down its coal-fired plants by 2030, and Saskatchewan is also moving in that direction. While renewables will play an increasing role in those provinces, Neufeld says the shift should be gradual “without disrupting their economies.”

 

 

 

BHP’s New Chairman Heralds Era of Tougher Focus on Spending

BHP’s New Chairman Heralds Era of Tougher Focus on Spending

By  David Stringer

August 22, 2017, 6:02 PM CST August 23, 2017, 2:43 AM CST

Bloomberg

BHP Billiton Ltd.’s moves to ditch its U.S. shale assets and halt a rush into the potash market signal an era of more disciplined spending under the top miner’s incoming chairman.

Montreal-born Kenneth MacKenzie, 53, who takes up the post next month, is viewed by investors and analysts as more likely to focus on investment returns, after influencing BHP’s decisions to exit shale and delay proceeding on the $4.7 billion first phase of the Jansen project in Canada.

“They are talking more now about prioritizing projects based on return on capital,” according to Craig Evans, a Sydney-based portfolio manager at Tribeca Investments Partners Pty., a BHP shareholder and one of the miner’s more vocal critics in recent months. “I’d like to think this is the emergence of a bit more rigor on capex — and that’s coming from the new chairman.”

MacKenzie, appointed to BHP’s board last September and credited for doubling the market value of Australia’s largest packaging company, Amcor Ltd., in a decade-long spell as chief executive officer that ended in 2015, has met in recent weeks with more than 100 investors on a global tour that’s taken in Australia, the U.S. and the U.K.

A willingness to listen to shareholders was again apparent in board changes announced Wednesday. Grant King, the ex-Origin Energy Ltd. CEO appointed as a director in March, decided not to stand for election later this year “owing to concerns expressed by some investors,” according to a BHP statement. Fellow director Malcolm Brinded also opted to step down from October.

The producer’s strategy shift shows “an emergence of the rhetoric we’re going to see from Ken, in terms of where things are going to need to sit on the priority scale to have capital allocated to them,” Tribeca’s Evans said in an interview Tuesday. Melbourne-based BHP declined to comment.

BHP’s shares added 0.2 percent to A$26.04 in Sydney on Wednesday. Its bonds also climbed, with the 750 million euros of hybrid notes rising almost 1 cent on the euro to 119 cents, the highest since they were sold in 2015, according to data compiled by Bloomberg. The company’s 3 percent bonds due in May 2024 climbed almost 1 cent to 116 cents, the biggest gain in more than a year.

BHP’s CEO Andrew Mackenzie set out plans to improve returns and capital allocation in a speech in May 2016 and insisted Tuesday in an interview with Bloomberg Television that the decisions on shale and potash had been under consideration for several years, and weren’t a response to investor activism.

Paul Singer’s Elliott Management Corp., which began a public campaign in April urging BHP to overhaul its portfolio and boost payouts, last week backed MacKenzie as a chairman likely to heed shareholders’ calls for improvements. Elliott didn’t respond to a request for comment.

While BHP forecasts capital expenditure will rise about a third to $6.9 billion in the 12 months through June 2018, it has pledged to hold project spending to less than $8 billion annually through 2020, a fraction of the $23 billion total it deployed at its peak in 2013.

Show Caution

The producer should toughen its spending criteria and only develop projects that will deliver returns above 15 percent, Sydney-based Deutsche Bank AG analyst Paul Young said in a report last week. Aside from mothballing Jansen, BHP should also show caution on a potential $5 billion expansion of the Olympic Dam copper mine in Australia, according to Young.

BHP wants to improve the company’s average return on capital employed to about 20 percent by fiscal 2022 from 10 percent in the year ended in June, Chief Financial Officer Peter Beaven said Tuesday in a presentation. “There is still much more to be done, and this is where we’re focusing our efforts,” he told analysts on a conference call.

 BHP capital returns Aug 2017

MacKenzie’s appointment to replace Jacques Nasser, who has led the miner’s board since 2010, shows “a radical shift in strategy,” Sanford C. Bernstein Ltd.’s London-based analyst Paul Gait wrote in a note last month.

“It’s difficult not to see that in some of these changes,” Gait said by phone on Tuesday. “A focus on returns, on better capital allocation and tighter investment criteria are going to play a huge role on his watch.”

“That’s what he is known for — his reputation is predicated on maximizing returns on capital, and holding management teams to account,” said Gait.

Wesfarmers Ltd.’s outgoing finance director Terry Bowen and ex-BP Plc executive John Mogford will be appointed to BHP’s board from October, the producer said in its statement Wednesday. Bowen’s tenure at Wesfarmers has been noted for “a focus on improved cashflow and cost efficiency,” BHP said.

Ex-Royal Dutch Shell Plc exploration chief Brinded, a BHP director since 2014, chose to stand down as a result of “ongoing legal proceedings in Italy relating to his prior employment,” BHP said. Shell and Eni SpA are the subject of scrutiny over the acquisition of an offshore oil field in the Gulf of Guinea.

 

 

 

Activist shareholders push against Jansen potash project

Funds to Go for BHP’s Jugular If Miner Doesn’t Deliver Goods

By  David Stringer

August 20, 2017, 1:00 PM CST August 20, 2017, 9:46 PM CST

  • Market to weigh returns, strategy as company reports Tuesday
  • Challenges remain on board renewal, potash spending: Tribeca

 

BHP Billiton Ltd.’s truce with activist investors led by billionaire Paul Singer won’t last long if the world’s biggest mining company doesn’t pump up returns and deliver on strategic reform in the wake of its expected bumper profit report this week.

 

The naming in June of BHP’s youngest director Ken MacKenzie, 53, as chairman from next month has helped soothe disgruntled shareholders including Singer’s Elliott Management Corp., while continued demand growth in China for iron ore to coal is boosting prices, swelling earnings’ forecasts and raising expectations for higher payouts.

“They’ve got the most breathing space they’ve had in a long time,” Peter O’Connor, a Sydney-based analyst with Shaw and Partners Ltd., said by phone. “But if they mess up, the activists are going to be back on their jugular.”

After raising its stake in BHP’s London-traded shares to 5 percent, Elliott on Wednesday expressed confidence MacKenzie will heed investors’ calls to exit U.S. shale and tighten the producer’s approach on capital allocation. The increased holding, which under U.K. law allows the fund to call a company meeting, means it can “monitor BHP’s progress and hold it accountable for delivering results,” the fund said.

BHP is forecast to almost triple dividend payments as it reports an expected profit rebound Tuesday, following Rio Tinto Group and Fortescue Metals Group Ltd. in boosting returns. Perth-based Fortescue on Monday boosted dividend payments and said it may raise returns further this year amid higher prices.

Elliott, which manages more than $33 billion of assets, is regarded as one of the world’s most prolific activist investors, and is currently tussling with Warren Buffett’s Berkshire Hathaway Inc. over the firm’s offer for Texas’s largest power distributor. The fund has also shown it can be an enduring critic — battling Argentina for 15 years over its debt default.

BHP rebound forecast Aug 2017

MacKenzie met investors globally in recent weeks to listen to concerns over the company’s performance that gathered pace after Elliott launched its campaign in April. Elliott and BHP declined to confirm whether he held talks with Singer’s New York-based fund.

Elliott argues BHP’s leadership has destroyed about $40 billion in value and wants it to enhance returns, refresh the board, simplify its corporate structure and overhaul its oil and gas unit. The company on Thursday approved a $2.5 billion copper mine expansion in Chile and the new chairman will lead deliberations on pending investments in growth projects from potash to oil.

“He’s taken views on board on his listening tour and he’s been well received,” said Andy Forster, senior investment officer at Argo Investments Ltd., which manages more than A$5 billion ($4 billion) and holds BHP’s Sydney-listed shares. “It’s amazing how quickly things can turn around. With a higher iron ore price, the mining company balance sheets are in a much better position.” Argo was represented in a meeting with MacKenzie, he said.

BHP’s underlying earnings in fiscal 2017 are forecast to jump sixfold to $7.3 billion, according to the average of 18 analysts’ forecasts surveyed by Bloomberg, after plunging last year to a 15-year low. The full-year dividend will rise to 88 cents a share, from 30 cents, according to the forecasts. BHP’s consensus estimated payout of about 60 percent of earnings, above its 50 percent minimum threshold, compares with Rio Tinto’s first-half, total returns of 75 percent, according to Macquarie Group Ltd.

To read a preview of BHP’s full-year earnings, click here

The producer could use the profit bonanza to announce a modest buy-back alongside a higher dividend and additional debt repayments, according to UBS Group AG. While BHP may be tempted to follow Rio in boosting returns, it’s unlikely to do so before MacKenzie’s arrival in his post next month, Credit Suisse Group AG said in a note Wednesday.

BHP advanced 1 percent to A$25.63 at 1:43 p.m. in Sydney trading Monday.

BHP activist threats Aug 2017

Shareholders are looking to MacKenzie to begin to outline plans for improvements when he makes a first scheduled public address at an annual meeting in London in October, according to Tribeca Investments Partners Pty. BHP continues to need to carry out a wider overhaul of its board and should defer plans to enter the potash market, according to the fund, which also met with the incoming chairman.

“We’re pretty bullish on the company, but bullish because of the prospect of change,” said Craig Evans, a Sydney-based portfolio manager at Tribeca, which in May called on BHP to sell the shale assets and overhaul its leadership. “One of the things that worries us is what their intentions are with potash — we are not of the belief that they should be throwing money at it right now.”

The most important market news of the day.

The $12.8 billion Jansen potash project in Canada should be mothballed, according to a Deutsche Bank AG note Thursday. The company also should think twice about approving a $5 billion expansion of its Olympic Dam mine in Australia, Deutsche analysts including Sydney-based Paul Young wrote. The bank endorses BHP’s strategy on conventional oil — though not shale — and the longer-dated Resolution and Antamina copper projects in the U.S. and Peru.

“We want to see where the company is headed under the new leadership,” Tribeca’s Evans said. “They have an opportunity now to do a bit of self-help.”

 

 

 

Technology set to unleash mining innovation – Anglo’s O’Neill

Technology set to unleash mining innovation – Anglo’s O’Neill

16th August 2017 BY: MARTIN CREAMER
CREAMER MEDIA EDITOR

Tony O'Neill Anglo mining

JOHANNESBURG (miningweekly.com) – In the next ten years, technology is set to unleash a wave of mining innovation, with the sweet spot centred on changing the thinking around orebodies and processing plants rather than much-spoken-about automation.

“Our focus has changed from hunting technologies to hunting value,” Anglo American technical director Tony O’Neill told Creamer Media’s Mining Weekly Online in an exclusive interview.

Three-dimensional metal printing, nonexplosive breakage of rock and microwave preconditioning of rock, as well as medical imaging equipment, are finding rapid application in mineral mining and processing.

The word in the industry is that mining companies that embrace the new era will be successful and the ones that do not will ultimately not survive. Anticipated are mines with footprints that can more readily coexist alongside a community in much the same way as farming.

The good news is that pathways are already starting to develop that change the current mining and processing paradigm.

Technologies are being reconfigured to make mining and processing far more precise, which offers massive potential reward.

Currently, much larger volumes of waste are brought to surface, compared with the scenario more than a century ago. This is because, outside of safety improvements, old methods are still being used today. For instance, in 1900, to obtain 40 kg of copper, 2 t of material had to be mined using 3 m3 of water and 10 kWh of energy, compared with currently having to mine 16 times more material, using 16 times more energy and drawing on double the volume of water.

“It’s risen at such a rate that it’s becoming unsustainable,” O’Neill commented to Mining Weekly Online.

While mining was, in the past, content to be a research and development laggard, other industries were not – and they shot ahead on the technological front, proving up technology that is now available off the shelf for mining to implement.

A successful pilot plant is already pointing the way for the more widespread introduction of coarse-particle recovery, which brings considerably larger-sized particles to surface and slashes water use.

Moreover, with the maturing of robotics technology, research is also being conducted into the introduction of swarm robotic mining, involving the use of small robots that will bring ultra-precision to a hugely wasteful industry.

As more precise mining methods gather momentum, those 40 kg of copper used to illustrate mining’s deteriorating position may one day be mined without any waste at all.

Coarse-particle recovery and advanced fragmentation (using smart blasting technologies) are good examples of putting existing technologies into new configurations to deliver value right now.

None of the technologies used is unproven, but what Anglo has managed to do is configure them in a way that adds immense value, with minimal additional capital investment.

While technology will have to be honed specifically for mining at some stage, a surfeit of technologies is ready for instant application.

“It’s more about a mindset change than having to make massive investments,” Anglo American technology development head Donovan Waller added to Mining Weekly Online.

Much of the improvement is being driven by data science and the modern world’s ability to analyse increasing volumes of data to a very high degree.

Virtually all the technologies needed have come of age; one of the biggest being the stabilisation of information technology, in which other industries have tended to advance much faster than the mining industry. These other industries include consumer electronics, manufacturing, automotive engineering and the pharmaceutical sector.

COARSE-PARTICLE RECOVERY

The coarse-particle recovery process captures coarse particles that are not recoverable using conventional flotation.

By needing to grind to only 500 micron instead of 170 micron, capacity is increased. Less energy is required in the crushing and grinding and water is more easily extracted from the larger particles and then recycled, significantly reducing the need for fresh water. The extraction of interstitial water results in a dry product, which can be dry-stacked, ultimately eliminating the need for tailings dams.

In copper, coarse-particle flotation has the potential to change the cost curve of the industry by allowing for 30% to 40% more throughput at a recovery loss of 2% to 3%, a 20% energy saving and 30% to 40% less water.

This is already a significant achievement for Anglo American in copper, and the company is hopeful of migrating it to other commodities, including platinum in South Africa, where testwork is still at an early stage.

If, for example, platinum ore can be pre-sorted in advance and be presented at a grade of 10 g/t instead of 4 g/t, output can be increased by two-and-a-half times from the exact same capital invested.

SWARM ROBOTIC MINING

Swarm robotic mining descales mining to make it much more precise, mimicking the actions of a swarm of locusts devouring a field or an army of ants working independently to execute tasks.

The technology envisages highly selective mining of ore types linked to real-time algorithms across a broad spectrum that includes constraints in energy, prices and associated issues.

As many people as possible are taken out of harm’s way in a remotely controlled environment.

Small operational teams will communicate with each other, without the need for a big-brother view from the surface that controls each of those small operational elements independently in self-learning operations.

WATERLESS MINES

Currently, the industry spends a lot of time adding water to its processes and even more time trying to get the water out afterwards.

A pathway has been developed to end up with a waterless mine through the adoption of a closed loop, using only a fixed amount of water that is then recycled time and again. Anglo already recycles or re-uses more than 60% of its water requirements.

Ultimately, the aim is to arrive at potentially chemical means that allow for the liberation of particles without having to add water to them, to arrive at a waterless process.

SUN, WIND, GRAVITY AND SMALL, GREEN NUCLEAR

In terms of energy, the focus is on using renewables for energy self-sufficiency.

The solutions will be a combination of sun and wind. As the sun does not shine at night and the wind does not always blow, other energy forms, including gravity, will take advantage of the mining sector having depth as one of those solutions.

Ultimately, nuclear may be incorporated should it become “greener”, smaller and more modular, as is expected.

MODULAR CONCEPT

Instead of spending billions to build one big plant, small modular plants will be built and scaled up quickly, with the lifespan of the modules being influenced by the next step up in technology.

Mines will move away from using the same technology for long periods of time and outlaying large capital expenditure on plants that last for 50 years and more.

Smaller, modular, cheaper units will allow for technology upgrades every five years, providing scalability as well as the opportunity to ramp up on new technology that has arisen.

Although mining is not an industry that has been used to technological change, there is no reason why it should not, from now on, accelerate advancing technology quickly, as other industries do.

“Our FutureSmart Mining programme is about far more than technologies alone. It is end-to-end innovation, in its broadest sense, addressing all aspects of sustainability for the business – safety, health, the environment, the needs of our communities and host governments, and the reliable delivery of our products to customers. Those that innovate and are agile will thrive in this industry. That is mining’s new future.” O’Neill concluded.

 

 

 

Miners Built on Wildcat Culture Now Looking For Partners

Miners Built on Wildcat Culture Now Want to Share the Risk

By  Thomas Biesheuvel

August 10, 2017, 5:00 PM CST August 11, 2017, 2:07 AM CST

https://www.bloomberg.com/news/articles/2017-08-10/mining-companies-built-on-wildcat-culture-now-want-to-share-risk

  • Chastened by metals slump, new projects idle awaiting partners
  • Industry made by swashbuckling gamblers ‘has lost its nerve’

Swashbuckling gamblers abound in the mining business, where billions are spent searching for mother lodes in some of the most inhospitable places on the planet. But a prolonged slump in metals and big losses on earlier solo projects are turning top producers into risk-avoiding wallflowers.

“The mining industry has lost its nerve,” said Mark Bristow, chief executive officer of Randgold Resource Ltd., a London-listed producer of gold in Africa. “The new fad in town is joint ventures. It’s very strange if you’re a major miner. They should be comfortable in their ability.”

At a time when prices are recovering — helping to make new projects viable again — metals producers including Anglo American PlcBHP Billiton Ltd. and Rio Tinto Groupare seeking partners to share the investment risk rather than going it alone as they have in the past. While the more-cautious approach is a consequence of the near-death experience of the 2015 commodity crash, it could limit the payoff for shareholders during a metals rally.

Mining spending Aug 2017

The shift to more conservative financing comes as the industry confronts a core dilemma: the richest mines in the safest or most-accessible places have mostly been found and built. That means companies are increasingly looking to develop ore bodies that are of lesser quality and may be in higher-risk countries.

“They have to spend more to mine less,” said Rob Crayford, a fund manager at CQS Asset Management Ltd.’s New City Investment Managers in London. “A lot of the projects out there aren’t that great.”

Expansion Partners

Still, while prices remain well below their post-recession peaks, they’re up enough in the past year or so for companies to consider dusting off expansion plans they shelved during the glut. The London Metal Exchange index of six base metals, including copper and aluminum, has rallied almost 50 percent from a low in January 2016. Gold is heading for the biggest annual gain since 2010, and iron ore has almost doubled from the all-time lows reached in 2015.

S&P Global Market Intelligence estimates that exploration drilling for metals has risen for five straight quarters, off to its fastest start to a year since 2009, and there are signs the pace is accelerating.

Anglo American, a London-based producer that has been mining metal for more than a century, says its No. 1 new project is the giant Quellaveco copper deposit in Peru. But the company wants a partner before development starts, and says it will seek joint ventures for all future new mines, known as greenfield developments.

Melbourne-based BHP, the world’s largest mining company, is set to commit to the $13 billion Jansen potash mine in Canada after years of study, but says it wants to bring in a partner to help share the risk. London-based Rio Tinto also is seeking partners for future developments, while Glencore Plc says it won’t build any new mines at all.

“I’m not excited about greenfield,” said Chief Executive Officer Ivan Glasenberg, noting that over-development in years past created the oversupply and low prices that led to huge losses for the industry. “Unless something changes in the world, I don’t see Glencore doing greenfield for awhile.”

Acquisitions are more likely, Glasenberg said, because it doesn’t make sense to “bring new tons into the market which cannibalizes your existing production.”

The industry is still smarting from the self-inflicted wounds. Anglo’s giant Minas Rio iron-ore mine in Brazil cost $14 billion to buy and build, but it became an expensive mistake as prices plunged by more than half. Barrick Gold Corp., the largest bullion producer, spent $8.5 billion on the Pascua Lama project high in the Andes that has been stalled since 2013. The company recently signed a deal with China’s Handong Gold Group that may lead to a joint venture on the project.

It’s not just new mines that are making the industry more cautious. Some companies made investment mistakes that compounded the losses when prices fell. BHP has said its $20 billion spending on shale deposits was a mistake, while Glencore took a $7.7 billion writedown on its Xstrata Plc takeover. Rio Tinto bought coal assets in Mozambique for $3.1 billion that it later sold for $50 million.

To be sure, joint ventures aren’t a new idea. The giant Escondida copper mine in Chile is operated by BHP but also owned by Rio Tinto and Japanese companies including Mitsubishi Corp. But the push to share more of the risk is a marked contrast to the expansion during the previous bull market.

Still, the more swashbuckling method of going solo on projects may be the most beneficial for shareholders, according to Randgold’s Bristow, whose company built all of its three mines from scratch, including a joint venture with Johannesburg-based AngloGold Ashanti Ltd.

“Greenfield is absolutely where you should put all your money,” Bristow said. “But a lot of these companies are still dealing with their over-exuberant growth during the super cycle.”

 

ALX Uranium Corp. Identifies High-Priority Drill Targets at Newnham Lake, Athabasca Basin, Saskatchewan

ALX logo

ALX Uranium Corp. Identifies High-Priority Drill Targets at Newnham Lake, Athabasca Basin, Saskatchewan

August 10, 2017
Vancouver, BC, Canada, August 10, 2017 – ALX Uranium Corp. (“ALX” or the “Company) (TSXV: AL; FSE: 6LLN; OTC: ALXEF) is pleased to announce it has identified high-priority drill targets interpreted from the results of a ground geophysical survey carried out during the spring of 2017 at its Newnham Lake uranium property (“Newnham Lake”, or the “Property”) located in the northeastern Athabasca Basin, Saskatchewan, approximately 75 kilometres east of Stony Rapids. ALX employed a deep-penetrating, 3D induced polarization/resistivity (“IP/resistivity”) survey method to better detail conductive zones outlined from historical ground and airborne surveys.

“A 3D geophysical survey like this has become the tool of choice to develop drill targets in the Athabasca Basin,” said Sierd Eriks, President and CEO of the Company. “The discovery and rapid delineation of new uranium deposits found in deep terrain during the last several years can be directly attributed to this style of survey and the detail it provides.”

In the Athabasca Basin with competent sandstone cover, uranium mineralization is typically associated with conductive metasedimentary rocks and an alteration halo which is manifested as a resistivity low in the lower sandstone. At Newnham Lake, unconformity depths are relatively shallow (less than 200 metres), and the anomalies located by ALX’s 2017 IP/Resistivity survey are located beneath the sandstone in the basement rocks.

Two major conductive trends are observed in the resistivity results. At depth, the Northern conductive trend appears as a very wide conductive unit, ranging from 500 to 800 metres in width. The Southern conductive trend is narrower, ranging from 200 to 400 metres in width. The Northern conductive trend was tested by numerous historical drill holes, but very few, if any, of the drill holes were deep enough to pierce the more intense portions of the resistivity-defined conductive trend. The Southern conductive trend was relatively untested with historical drill holes.

The resistivity low anomalies were picked on two different parameters. The shallow resistivity low (“S” or “Sierra”) anomalies are based on near-unconformity features at approximately 150 metres in depth from surface. The deep resistivity low anomalies (“D” or “Delta”) are picked from a deeper level at approximately 550 metres in depth from surface. Numerous structures were identified crosscutting the Northern and Southern conductive trends that are interpreted from offsets and higher resistivity trends, which has provided several high-priority drill targets as outlined below (see Newnham Lake drill targets map and 3D renderings) please click here:
·         Delta 2: this is a wider expression of the Sierra 5, Sierra 6 and Sierra 7 anomalies, which widens at approximately 250 to 300 metres depth;

·         Delta 5: a deeper expression of the Sierra 8 and Sierra 9 anomalies, which widens at approximately 350 metres depth;

·         Delta 9: a deeper expression of the Sierra 10 anomaly, which widens at approximately 250 metres depth below Brink Lake in the northwestern area of the Property;

·         Sierra 1: widens at approximately 200 metres depth;

·         Northern Trend: Sierra 1, Sierra 2, Sierra 3, and Sierra 4, where the trend appears wider at approximately 250 metres depth.
ALX believes that potential for uranium mineralization may exist “down-dip” along the conductive structures in the basement rocks which remain untested. Previous explorers focused on the “up-dip” expression of uranium mineralization at the unconformity between the overlying sandstone and the basement rocks.

2018 Winter Drilling Plan

ALX plans an initial drilling program of up to 3,000 metres in approximately 5 to 6 drill holes during the winter of 2018. An earlier proposal to conduct drilling in the summer of 2017 was re-evaluated and postponed until the 2018 winter season, due to the substantially higher costs of a helicopter-supported summer drilling program. The less-expensive, camp-based winter 2018 program will allow for more economic drilling meterage on a greater number of targets at depths up to 600 metres or more – over 300 metres beyond the deepest hole ever drilled at Newnham Lake.

About the 2017 IP/Resistivity Survey

The 2017 IP/resistivity survey consisted of 85.5 line-kilometres along 23 cross lines and 14.5 line-kilometres along two longitudinal lines for a total of 100.0 line-kilometres across the most prospective areas outlined by historical geophysics and drilling. The survey method used is capable of imaging conductive/resistive horizons to approximately 700 metres depth. Two longitudinal lines were run along the Northern and Southern conductive trends to obtain 3D IP/resistivity data. This line and station configuration produced 3D coverage in roughly a 500 metre wide corridor along the two conductive trends and has enabled better resolution of crosscutting structural features in the vicinity of the conductive trends.

NI 43-101 Disclosure

The technical information in this news release has been reviewed and approved by Sierd Eriks, P.Geo., President and CEO, who is a Qualified Person, in accordance with the Canadian regulatory requirements set out in National Instrument 43-101.

About the Newnham Lake Property

ALX has an option to earn a 100% interest in Newnham Lake through a series of three separate land acquisition agreements signed in 2014. The Property consists of eight contiguous claims totaling 11,737 ha (29,004 acres) and possesses a significant legacy of historical exploration data.

Historical drilling in the 1970s and 1980s identified encouraging amounts of uranium mineralization in shallow terrain at the unconformity, yet due to the convention of the era and the focus on unconformity-hosted targets, most drill holes were less than 100 metres in length and continued a maximum of about 30 metres past the unconformity. By example, 1979 hole BL-66 intersected 1,656 parts per million (ppm) uranium over 0.20 metres in a section containing visible grains of pitchblende, a uranium mineral commonly found associated with Athabasca Basin uranium deposits. This intersection began just below the unconformity at a depth of 86.7 metres, but the hole only tested the basement rocks to a depth 26.7 metres below the unconformity and was terminated in graphitic basement rocks at a vertical depth of 113.4 metres. Similar encouraging uranium intersections by previous operators resulted in the completion of over 150 holes in the most promising areas of the Property, focused almost entirely on unconformity-hosted targets. Given the historical results, ALX believes the best targets at Newnham Lake may be deeper, within the basement rocks, as evidenced by more recent basement-hosted uranium discoveries around the Athabasca Basin.

About ALX Uranium Corp.

ALX’s mandate is to provide shareholders with multiple opportunities for discovery and value creation by building and optimizing a portfolio of prospective uranium exploration properties? through staking, joint ventures, acquisitions and divestitures. The Company executes well-designed exploration programs using the latest technologies, and owns interests in over 130,000 hectares in Saskatchewan’s prolific Athabasca Basin. ALX is based in Vancouver, BC, Canada and its common shares are listed on the TSX Venture Exchange under the symbol “AL”, on the Frankfurt Stock Exchange under the symbol “6LLN” and in the United States OTC market under the symbol “ALXEF”. Technical reports are available on SEDAR (www.sedar.com) for several of the Company’s active properties.

For more information about the Company, please visit the ALX corporate website at www.alxuranium.com or contact Roger Leschuk, Vice President, Corporate Development at Ph: 604.629.0293 or Toll-Free: 1.866.629.8368, or by email: rleschuk@alxuranium.com

On Behalf of the Board of Directors of ALX Uranium Corp.

Warren Stanyer

Warren Stanyer, Director and Chairman

FORWARD LOOKING STATEMENTS

Statements in this document which are not purely historical are forward-looking statements, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Forward looking statements in this news release for example include and are not limited to references to the reporting of location of interpreted conductors at Newnham Lake; indications that drilling programs may be conducted on interpreted targets; all references to future exploration in the area, and the completion of drill holes to test the targets at Newnham Lake. It is important to note that actual outcomes and the Company’s actual results could differ materially from those in such forward-looking statements. Risks and uncertainties include economic, competitive, governmental, environmental and technological factors that may affect the Company’s operations, markets, products and prices. Factors that could cause actual results to differ materially may include misinterpretation of data; that the Company may not be able to obtain equipment or labour as required; that the Company may not be able to raise sufficient funds to complete intended exploration and development; that exploration permit applications may not be obtained in a timely manner; that weather, logistical problems or hazards may inhibit exploration; that equipment may not work as well as expected; that the collection and analysis of data may not be possible due to factors beyond the Company’s control; that positive results of exploration in any particular location are not necessarily indicative of property-wide potential; that the Company may not complete exploration programs in a timely manner, or at all; that market prices for uranium may not justify further exploration; and that despite encouraging results there may be no commercially exploitable mineralization on our properties.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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