Category Archives: uranium and nuclear
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.
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.
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.
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
16th August 2017 BY: MARTIN CREAMER
CREAMER MEDIA EDITOR
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.
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.
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.
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 Want to Share the Risk
By Thomas Biesheuvel
August 10, 2017, 5:00 PM CST August 11, 2017, 2:07 AM CST
- 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 Plc, BHP 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.
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.”
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 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 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.
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: firstname.lastname@example.org
On Behalf of the Board of Directors of ALX Uranium Corp.
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.
Cantor analyst: ‘This is the best uranium PEA we have ever seen’
The Energy Report
Aug 6, 2017
NexGen Energy Ltd. (NXE:TSX; NXE:NYSE.MKT) announced its maiden preliminary economic assessment (PEA) of the “basement-hosted” Arrow Deposit on July 31. In its press release, the company outlined the following highlights:
- After-Tax Net Present Value (NPV8%) = CAD $3.49 Billion
- After-Tax Internal Rate of Return (IRR) = 56.7%
- Average Annual Production (Years 1-5) = 27.6 M lbs U3O8
- Average Annual Production (Life of Mine) = 18.5 M lbs U3O8
Based on a uranium price of $50/lb, the company anticipates Saskatchewan royalties over the life of the mine of CA$2.98 billion.
The PEA “is based on the mineral resource estimate announced by the Company in March 2017. . .that comprised an Indicated Mineral Resource of 179.5 M lb of U3O8 contained in 1.18 M tonnes grading 6.88% U3O8, and an Inferred Mineral Resource of 122.1 M lb of U3O8 contained in 4.25 M tonnes grading 1.30% U3O8,” the company stated. “The PEA does not include the results of the Company’s winter or summer 2017 drill programs, which will total over 66,000 m of additional drilling.”
“The maiden PEA confirms our view that Arrow is a once-in-a-generation type of deposit.”
Reacting to NexGen’s announcement in an Aug. 1 research report, Cantor Fitzgerald analyst Rob Chang declared, “This is the best uranium PEA we have ever seen. Moreover, the forecast annual production rate of 27.6M lbs U3O8 over the first five years would place Arrow as the largest uranium mine by production in the world and make NexGen the second largest producer behind only Kazatomprom. We are reiterating our Buy recommendation and increasing our target price to $5.65/share, or by 9%.”
NexGen stock currently trades at ~CA$3.06 per share.
Chang also commented on the fact that the 2017 drill results have not been included in the PEA. “Note that thus far in 2017, approximately 66,000m of drilling (producing numerous high grade assay results) has been conducted at Arrow and a new discovery (South Arrow) has been recently detected. None of this data has been included in the PEA,” he wrote.
“Despite the high per tonne cost of Arrow, the deposit characteristics (high grade, vertical orientation, and competent bedrock) have led to industry-leading costs. . .for the first five years of production, only ISR production from Kazakhstan is expected to have a lower cost profile than that of Arrow,” Chang continued. “The per pound cost is seen as the lowest of any conventional mine globally.”
Looking to the future, Chang wrote, “By 2018, NexGen expects to update the resource model and continue with the engineering and environmental baseline studies. A maiden pre-feasibility study is expected to be completed, followed by a project proposal submitted to the EIA Board. Following the recent financing with CEF Holdings, the company has nearly $200M in cash on the Balance Sheet.”
In conclusion, Chang stated, “The maiden PEA confirms our view that Arrow is a once-in-a-generation type of deposit.”
Eight Capital analyst David Talbot views the NexGen PEA as “a major de-risking event. While looking past obviously impressive economics backed by a deposit that is likely unlike any other, completion of the PEA might just kick-start the M&A process. We speculate that Arrow could end up in the hands of a uranium producer or company looking to enter the sector.”
Furthermore, because “start-up is likely to correspond with a dramatic uranium supply vacuum mid-next decade, timing is good,” Talbot stated. While acquisition may be in the wings, “meanwhile management will be moving forward as if it plans to do it alone. And why not? Each successive milestone such as PEA, PFS, FS and permitting helps de-risk Arrow while potentially providing all that much more value.”
Going forward, Talbot anticipates that the company’s focus will “continue on Arrow with mid-2018 PFS planned. Another $35 MM of its $200 MM may be spent to upgrade resources by then. Developing a potential exploration shaft may run in parallel to permitting. It may help confirm resources and feed into final permits. Management suggests permits will be influenced by Arrow’s strong technical characteristics and sound environmental planning including clean metallurgy, 100% land-based, basement host rocks, and plans to return all tailings underground in a paste backfill.” If NexGen continues on its present course, Eight Capital predicts “start up in 2025.”
All this confirms Talbot’s belief that NexGen’s Arrow represents the “world’s largest uranium mine potential,” as he stated in a July 31 research report.
“Shares of NexGen were glowing on Monday after the company reported positive results of its independent Preliminary Economic Assessment (PEA) of the basement-hosted Arrow Deposit, located on the company’s 100%-owned Rook I project in Saskatchewan’s Athabasca Basin,” Canaccord Genuity stated in its Aug. 1 Morning Coffee update.
The PEA announcement was the latest in a string of reports updating NexGen’s progress. On July 25 the company announced that assays on step-out drilling during the winter drilling program at Arrow had confirmed “high grade uranium mineralization” in a new area on the property.
“Step-out hole AR-17-136c2 which intersected a new area of semi-massive to massive pitchblende mineralization in the A3 shear has returned high grade assays,” the company reported. “This high grade uranium mineralization was intersected 40 m outside the current resource, and 70 m outside the current A3 High Grade Domain.”
In addition, “first pass drill testing of the Southwest Gap intersected numerous lenses of high grade uranium mineralization that has connected the 180 m Southwest area with the Arrow Deposit. The Southwest Gap represents a material resource expansion opportunity as it was not included in the March 2017 updated mineral resource estimate,” the company stated.
In a July 27 research report, Haywood analyst Colin Healey commented on results the company had announced that same day with regard to its Rook 1 project.
“NexGen has announced that the first two exploration holes of the summer drill campaign at its 100%- owned Rook 1 project have resulted in a new discovery zone, which includes narrow high-grade intercepts of uranium mineralization 400 metres south of the Arrow Deposit on a parallel structure that was previously almost entirely untested,” Healey wrote. “The rocks reportedly exhibit many of the same characteristics of the main Arrow deposit including ‘dense massive pitchblende veins’, occurring ‘within at least three stacked high strain or sheared intervals, which is a common characteristic of the Arrow Deposit.'” Healey noted.
In its release, the company reported, “The first two exploration holes of the summer drill program have resulted in the discovery of a new zone of off-scale radioactivity approximately 400 m south of the Arrow Deposit. This new area of mineralization has been named the South Arrow Discovery and is located on an Arrow-parallel structure that remains almost completely undrilled.”
“This new discovery further highlights the potential for additional discovery at Rook 1,” Healey wrote. “We expect NexGen will continue to deliver positive news flow as its seven-rig, 25,000 m summer drill program progresses in preparation for the PFS due in early 2018 . . . We continue to believe NexGen is significantly undervalued given its comparative deposit scale (global resource >300 Mlb U3O8), grade (165 Mlb U3O8 grading 18.8%), and quality (entirely hosted within competent basement rock).”
Haywood also believes that “NexGen is peerless in the Athabasca Basin and globally as an exploration/developer play, as it controls a large, world-class, high-grade uranium deposit in a proven operating district, with the scale (301.6 Mlb U3O8) to be standalone economic right from the maiden resource.”
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1) Tracy Salcedo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She owns, or members of her immediate household or family own, securities of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
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Mining industry can now predict opposition to projects before it’s too late
August 7, 2017
It’s sounds too good to be true, but a new company is proving miners they can foresee opposition or any other form of social conflict related to their projects, before they even attempt going through a licencing process.
Chalkstone, a UK-based company founded by Donald Bray, a political anthropologist and academic at the University of Cambridge, bases its success in a very unique method, applying what’s known as “granular social intelligence.”
“We take a systemic approach and mix methodologies, combining big data and quantitative analysis with ethnography, qualitative interviews and focus groups, all of which help us dig deep into particular issues and accurately define the social stance of a target group,” Bray explains on the phone from his home in Paris.
“We are not interested if the community is, in any way, being taken advantage of” — Donald Bray.
Before going further, he’s quick to note that the goal of his company is not just to help mining companies get what they want, but to assist them in building mutual trust with the groups living in the areas in which they operate.
“We are not interested if the community is, in any way, being taken advantage of,” he says. “Our due diligence runs in a number of different directions.”
The expert, with more than 15 years of experience working across the globe, particularly in conflict zones, is not saying mining companies are the “bad guys” in the story.
“It’s not that firms don’t care about CSR [corporate social responsibility] or don’t want to invest in it. The problem is that most tools currently available don’t really help them grasp the human aspect of their projects,” he says.
Donald Bray, Chalkstone founder.
Half of all risks faced by extractives companies are non-technical ones, which in turn account for nearly 75% of all projects delays. “For a mid to large sized mining company, the costs of these delays (socio-political and community risks) can add up to some $20 million a week,” says Bray. “This is huge and it deserves far more attention than mere box-ticking or forms of corporate philanthropy.”
Chalkstone already has a known success story under its belt. After an intensive study on a ruby mine and a copper deposit in Afghanistan, applying counter-insurgency tactics used by deployed troops, Bray was hired in 2015 by Gemfields (LON:GEM), the world’s largest emerald and ruby miner. At the time, the precious gems firm had committed to building an emerald mine in Colombia.
Part of Chalkstone’s work to help Gemfields enter the market was the creation of a communications platform based in text messaging, which allowed the mining company and local communities to talk freely to one another.
Named by the community as “Suna Verde” (meaning “Green Pathway” in the Muisca aboriginal language), the system kept locals updated on everything from job-training initiatives to when the “health brigade” (a team of doctors and nurses that travel around the countryside) would be in each village. Soon, says Bray, Suna Verde was rivalling the radio as the region’s main source of news and other information.
“The experience showed us that communities want jobs, roads, hospitals and clinics, schools, and any other benefit offered by mining companies, but they want to be actively involved in their decisions. They don’t want to be just beneficiaries of someone else’s goodwill,” says Bray. “This is one of the most important lessons I’ve learned and which is transferrable to almost any community in the world.”
During the first months of work for Gemfields in Colombia, Chalkstone warned the company there was opposition brewing for another international mining firm in the region. Only four months later, that miner was hit by protests and even armed attacks.
“When you invite thousands of voices into a conversation, you need to be prepared for dissenting opinions (…) By listening to all of them, you’re able to get in front of the risks. That’s what happened in Colombia… we were able to see things that you wouldn’t normally see and we told Gemfields about it.”
While Gemfields decided in May to leave Colombia and Sri Lanka to focus on its African projects, the fact the company didn’t face hostility from community members is a testament to Chalkstone’s work, says Bray.
The company, currently involved in mining and oil and gas projects in East Africa, as well as a new venture in Colombia, believes its novel approach could also be useful to investors.
“Given that nearly 66% of shareholder value in a junior miner is linked directly to socio-political and community risks, according to some calculations, investing in understanding the social environment in which a miner will operate shouldn’t be an afterthought or something people turn their minds to only when times get tough,” Bray warns. “Trust is valuable,” he concludes.
These are a few examples of conflicts an approach such as Chalkstone’s could have prevented:
Cameco Corporation: The Bear Case From a Bull
The story behind uranium miners is a good one, even if the current market is bad. But what if things go wrong?
Reuben Gregg Brewer
Jul 27, 2017 at 5:11PM
Cameco Corporation (NYSE:CCJ) is the world’s largest pure-play uranium miner. That hasn’t been a great business to be in lately, but the outlook for uranium appears pretty enticing. For aggressive investors, Cameco’s nearly 80% price decline over the past decade could be a huge buying opportunity. But what if the bull case doesn’t pan out? While I’m optimistic, here’s what could go wrong from a bull’s perspective.
It’s been tough
The first thing to note about Cameco and uranium is that the miner has actually managed to weather a deep industry downturn pretty well. To give you a feel for the pain, uranium prices hit a 12-year low in 2016. But last year was the only year of the last 10 that the company dipped into the red. And that $0.16 per share loss was largely driven by one-time charges to adjust the business to the difficult market environment.
So even Cameco will tell you times have been tough. The outlook, however, remains bright. That’s because of increasing demand for power and the increasing preference for carbon-free energy sources. In fact, there are over 50 nuclear reactors being built right now. That should help to soak up the oversupply in the uranium market today. Add in Japan’s slow march toward restarting nuclear power plants shut after the Fukushima disaster and there’s even more reason to be positive.
In fact, if you are a uranium bull, Cameco could be a great buy today. But before you jump in, you might want to think like a bear.
A dour view of things
For example, look at Cameco’s impressive streak of profits in the face of a deep fall in the price of uranium. A big reason for that is the company’s use of long-term contracts. It’s a very big deal. The company’s realized price for uranium in 2016 was 60% higher than the average spot price for the year. Those contracts simply won’t last forever. If demand doesn’t pick up before its current contracts expire, it will be forced to sell on the spot market at much lower prices.
Demand growth is going to be important. Those 50 new plants being built and Japan’s push to restart its nuclear fleet are big positives. But there are plants being shuttered, too. For example, after Fukushima ocurred, Germany swore off nuclear power.It’s in the process of phasing nuclear out completely with little to stop the process because there’s virtually no support for nuclear in the country. Japan is feeling the heat of negative public opinion, too, which is one reason why the restarting process is taking so long. And never forget that just because someone says they are going to build a nuclear power plant doesn’t mean that they will. In the end, nuclear has a bad image and that could easily leave demand weaker than expected today.
Uranium prices, however, are a mix of supply and demand. And supply could be a bigger problem than you think. Cameco pulled back production in 2016 by 5% and is likely to rein production in even more this year. But money-losing Denison Mines and NexGen Energy Ltd.(NYSEMKT:NXE) are both working to develop new uranium mines from the ground up. In fact, NexGen could end up developing Canada’s largest uranium deposit. That means that even as Cameco is reducing production, new sources of uranium are looming on the horizon that could leave the nuclear power industry with more than enough supply to keep uranium prices low.
Food for thought
I tend to be an optimist, so I believe that carbon-free nuclear power will continue to be an important and growing part of the world’s power grid. That, in turn, will lead to higher prices for uranium as supply and demand balance out. I’m also of the opinion that Cameco’s management team will deftly handle whatever the industry dishes out.
But that doesn’t mean you should go in blind to what could go wrong. A few of the big ones are Cameco’s contracts rolling off before it has a chance to replace them, the potential for continued weak uranium demand, and new uranium supplies creating a headwind to higher commodity prices. Even if you’re an optimist like me, these are issues you should be keeping an eye on, just in case.
Supreme Court of Canada confirms First Nations have no veto power over resource projects
By Nelson Bennett, Business in Vancouver
July 28, 2017, 2:45 p.m.
Image: Kinder Morgan Canada
Just days after the new NDP government said it would work to implement a declaration that ostensibly gives First Nations in B.C. a veto over projects like the Trans Mountain pipeline expansion, the Supreme Court of Canada ruled no such veto exists.
“Overall, the decisions are positive for project development in Canada,” said Robin Junger, an expert in aboriginal law for McMillan LLP and former head of the B.C. Environmental Assessment Office.
On one hand, David Eby, the NDP’s new attorney general, confirmed last week what Junger has previously said to be the case – that his government doesn’t have the legal authority to deny permits for the pipeline expansion.
Those are statutory decisions made by civil servants, not political decisions to be made by cabinet ministers.
On the other hand, last week Premier John Horgan issued a mandate to Scott Fraser, minister of Indigenous Relations and Reconciliation, to work with First Nations “to establish a clear, cross-government vision of reconciliation to guide the adoption of the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP).”
That declaration has a clause that states that indigenous people have the right to “free prior and informed consent” on development projects within their asserted territory.
On the surface, that sounds like the NDP would be handing the Tsleil-Waututh of Burrard Inlet a veto, since they deny the federal government’s and Kinder Morgan Canada’s right to expand the pipeline in their territory – the Burrard Inlet in Burnaby.
But as the federal Liberals discovered when they too promised to implement UNDRIP, actually giving it legal force would require a constitutional amendment, which is why the federal Liberals abandoned it.
Two Supreme Court of Canada decisions issued on July 26 made it abundantly clear that, while the federal government has a duty to consult, that does not mean that First Nations can veto a project.
In one ruling, the Supreme Court of Canada ruled that regulators like the National Energy Board (NEB) can represent the federal Crown in executing the duty to consult First Nations, but that those consultations must be real, not lip-service.
In the Clyde River Inuit case, the Supreme Court ruled that the NEB has the authority to represent the Crown in executing its duty to consult, but that, in that particular case, it had failed to do so properly. The court ruled the NEB’s consultation failed to properly address the Clyde River Inuit’s concerns.
The other case, involving the Chippewas of the Thames First Nation decision, is particularly relevant to the Trans Mountain pipeline expansion. In that case, the court ruled that the consultation with the Chippewas had been adequate.
The Chippewas were objecting to a reversal and expansion of a pipeline owned by Enbridge. The Supreme Court ruled against the Chippewas in that case and in doing so affirmed that, provided consultations are adequate, First Nations don’t have the legal authority to stop developments in their territory.
“The duty to consult does not provide a ‘veto’ for indigenous peoples over Crown decision,” Blake, Cassels & Graydon LLP explains in a legal brief on the two cases.
So what does that mean for the NDP’s promise to implement UNDRIP? Junger said it is clear that it has no legal force.
“This is the law,” Junger said. “No elected person can change the law by statements.”
“Courts have interpreted Section 35 of our Constitution as saying there’s no veto. So I think don’t any government would have the power, even by legislation, to make that change. It would have to be a constitutional amendment. You can’t make it law by saying you endorse it.”
Uranium to stay weak for now but a ‘violent price increase’ is coming: Cantor
Michael Allan McCrae
Cantor Fitzgerald forecasts $22.14 spot uranium price for 2017 due to Kazakh producers being slow to implement planned production cuts.
“While a 10% reduction was guided by the state-owned organization [Kazatomprom] that by law has an ownership stake in every uranium mine in the country, we suspect that some operators may have dragged their feet in implementing these curtailments,” writes Cantor in a research note.
Cantor says that these prices are unsustainable and notes that some producers are buying from the spot market since to fulfill their deliveries since it is cheaper to buy in the market than to produce.
Another factor depressing prices is secondary supply.
“We currently estimate secondary supplies of about 48M lbs of U3O8 with 22M lbs coming from Russian sources such as enrichment providers via underfeeding. Our conversations with several industry participants leads us to expect continued high levels coming from Russia for at least through 2018.”
However, the research firm is optimistic over the long term.
“Our long-term price remains at US$80/lb, which begins in 2022, as we continue to believe that the supply and demand fundamentals of uranium will lead to a violent price increase, albeit further into the future than initially expected. We view US$80/lb as the long-term equilibrium price level that will incentivize production from the large, low grade African uranium mines, whose production we believe is necessary for future supply and demand to balance.”
Cameco settles U.S. tax dispute; narrows loss
SASKATOON — The Canadian Press
Published Thursday, Jul. 27, 2017 8:09AM EDT
Last updated Thursday, Jul. 27, 2017 8:11AM EDT
Cameco Corp. says it has settled a tax dispute with the U.S. Internal Revenue Service that will see it pay far less than was originally proposed.
The uranium miner says it is required to pay $122,000 (U.S.) instead of an originally proposed charge of $122-million.
Cameco disclosed the settlement as it reported a loss of $2-million (Canadian) for its latest quarter compared with a loss of $137-million a year ago as it continued to face difficult market conditions.
On a per-share basis for the quarter ended June 30, the company said it broke even compared with a loss of 35 cents per share in the same quarter a year ago.
On an adjusted basis, Cameco says it lost $44-million or 11 cents per share for the quarter compared with a loss of $57-million or 14 cents per share in the same quarter last year.
Revenue in the quarter totalled $470-million, up from $466-million.