Posts by RichardMills:

A Stop Spike Event

September 30th, 2014

 

By Richard (Rick) Mills. As a general rule, the most successful man in life is the man who has the best information Population growth reports say we can expect, barring WW lll or a virus like Ebola going airborne, upwards of 11.4 billion people on the planet by the 2060s. There’s just over 7 billion of us now. A possible 50 percent plus gain in our numbers over such a short time is going to put enormous strain on our abilities to source the needed inputs for survival let alone bring those in the developing world up to the same level of amenities that we in the developed world have or expect to obtain. Rising global scarcity of minerals – the metals our industrial and connected society uses every day to sustain its lifestyle – is a subject we will all become very familiar with. That’s because there’s no getting around the fact we live on a planet with a finite resource base and a growing population. Lets state the obvious: For over the last twelve years supply has struggled to keep pace with demand Metal supply is finite and subject to compounding demand from developing nations Metal production is highly cyclical, with intermittent peaks and troughs which are closely linked to economic cycles – declining production has historically been driven by falling demand and prices, not by scarcity Rates of production and amounts of reserves continually change in response to movements in markets and technological advances Most mineral resources will not be exhausted in the near future If energy was cheap and unlimited then recoverable resources would be unlimited But Discovery and development is increasingly becoming more challenging and expensive Average ore grades are in decline for most minerals, yet production has increased dramatically Our most important metals are suffering from declining ore quality and rising extraction (ore is a different and inferior chemical or structural composition) costs Our prosperity has always been based on the fact that producing resources yielded more resources than it cost. However the cost of *energy is climbing, the amount used is climbing but the returns from energy expended is declining. Eventually the quantity of resources used in the extraction process will be 100% of what is produced Most older existing mines, the foundation of our supply, have increasing costs with production rates stagnating or even declining The rate of discovery is not keeping pace with the rate of depletion, let alone being higher *Energy can be thought of as a proxy for labor, materials, energy and externalities – environmental, community impact etc.   The Global Middle Class   The newly emerging middle class are a major contributing factor to the fundamental demand shift in global commodity markets and per capita consumption of commodities in developing countries is still only a fraction of the level it is in developed countries. Infrastructure spending and increased discretionary spending by consumers are the key factors driving this rising demand – as more and more people in emerging markets move from rural areas to the cities, consumption will increase putting massive upward pressure on commodities.   The World Bank estimates that the global middle class is likely to grow from 430 million in 2000 to 1.15 billion in 2030. The bank defines the middle class as earners making between $10 and $20 a day – adjusted for local prices. Most of the world’s middle class has, until recently, been located in Europe, North America and Japan. In the 1970s and 1980s South Korea, Brazil, Mexico and Argentina built sizeable middle-class populations. Today its China, India, Asia and Africa adding to the world’s middle class. In 2000, developing countries were home to 56 percent of the global middle class, by 2030 that figure is expected to reach 93 percent.   The following graph is from PricewaterhouseCoopers (PwC) ‘Minerals and metals scarcity in manufacturing: the ticking timebomb.’A survey of senior executives of leading global companies on the impact of minerals & metals scarcity on business.   PwC   Let’s take an in-depth look at the challenges the mining industry is facing going forward. Copper is a very good representative metal to use.   Copper Consumption   Per capita consumption of copper in the United States was 10 kilograms per person 1965, the same in 1995. In Japan per capita consumption increased from 6 kilograms per person to 11 kilograms per person over the same time period. Copper consumption in Korea in 1965 was less than 1000 tons. By 1995, Korea’s consumption of copper had reached 637,000 tons, or more than 14 kilograms per person. In China, even after years of economic growth, per capita copper usage is about 5.4 kg. As China’s populace urbanizes, builds up its infrastructure and becomes more of a consuming society, there’s no reason to suspect Chinese copper consumption won’t approach or even surpass U.S., Japanese and South Korean levels. There’s 1.3 billion people in China, even a slight increase in Chinese consumption will translate into enormous demand growth. The preliminary purchasing managers’ index (PMI) for China rose to 50.5, up from Augusts 50.2. Any number above 50.0 indicates expansion in the manufacturing sector; any number below, contraction. This is the fourth consecutive month that China’s PMI has remained above the 50 mark – meaning manufacturing is stabilizing World Bureau of Metal Statistics data shows 12 month average copper consumption rising to a record in China (already the world’s largest user of copper), while over the same time period use in the U.S. climbed to its highest since 2009. The U.S. is the world’s second-largest consumer of the red metal. U.S. manufacturing activity hovered at a near 4-1/2-year high in September and factory employment surged. According to Morgan Stanley U.S. copper demand is expected to grow by 4.4 percent this year and is on track to expand for two consecutive years, the first time since 2000. New-home sales surged in August to the highest level in more than six years. India, with its 1.2 billion people, is presently using 0.4 kg of copper per person. The country is modernizing and needs to invest heavily in electrical power infrastructure. According to the International Energy Agency (IEA), India’s power production will need to rise by up to 20 percent annually to keep pace with its economic and population growth. Just meeting the required power target would double India’s annual copper consumption. India’s economy grew by 5.7% in the three months to June, its fastest pace in two-and-a-half years. The new government of Narendra Modi is focusing on Asian partners China and Japan for enhancing investments in infrastructure and manufacturing. The growth model pursued by China and Japan – export oriented manufacturing, heavy infrastructure building and urbanization – has become India’s blueprint for pushing growth up to and beyond the 7 percent mark.The annual world average per-capita consumption of copper is 2.7 kg.   Resource Nationalism & Political Risk   Resource nationalism is the tendency of people and governments to assert control, for strategic and economic reasons, over natural resources located on their territory. The major benefit for developing countries from natural resource development comes in the form of: Employment/wage’s Government revenues – taxes, royalties or dividends There can also be indirect benefits such as knowledge and technology transfers. Foreign investments, made for off-take agreements, can also involve infrastructure investments, sometimes on a massive scale, like electricity, water supplies, roads, railways, bridges and ports. Indonesia’s President Yudhoyono prohibited ore exports from Southeast Asia’s largest economy in January. He’s betting that investment and higher prices would more than offset job cuts and lost revenue from unprocessed ore shipments. The Energy and Mineral Resources Ministry said on August 14th the ban on ore exports will remain in place. The curbs could spur as much as $18 billion in investment in processing plants by 2017, US$4.5 billion has been invested so far this year.. Resource extraction companies, because the number of discoveries was falling and existing deposits were being quickly depleted, have had to diversify away from the traditional geo-politically safe producing countries. The move out of these “safe haven” countries has exposed investors to a lot of additional risk.   “National governments are no longer the only, or even in many cases the primary, source of political risk in mining projects. Political risk can stem from local governments, international and local NGOs, community groups, local competitors or any other group advancing political objectives. Similarly, the types of issues that mining companies have to deal with are quite varied. These range from having to deal with things like corruption, NGO scrutiny, maintaining a social license to operate, a lack of clarity over the implementation of mining legislation through to poor infrastructure and HIV/AIDS.” Ben Cattaneo, Managing political risk in mining   Human Resources   The Mining Industry Human Resources Council (MIHRC) estimates that over 60,000 people employed in the mining sector are expected to retire by 2020 but that the industry will need an additional 100,000 people just to maintain current levels of production. The Petroleum Human Resources Council of Canada warned a severe oil patch labor shortage is looming and that the “patch” will need to hire 24,000 new employees by 2014. In both industries the biggest demands will be for workers to replace staff who reach retirement age. The existing shortage of skilled personnel and the imminent retirement of so many baby boomers (many are mid level managers) means the mining sector is in direct competition with the energy sector for people to train and prospects are bleak for either industry to obtain the necessary bodies and minds. “One of the challenges facing Teck Cominco is the pending labor shortage. Almost 50% of our labor force is eligible for retirement over the next 10 years.” Donald Lindsay, President and CEO, Teck Cominco Limited   Copper Talk   Kitco has a few things to say regarding copper: “Further urbanization and industrialization of China, and to a lesser extent India, will continue to increase copper intensity; persistently threatening to overwhelm annual global copper production by 2019… For many developed nations within the Organization for Economic Co-operation and Development (OECD), developing significant new (Greenfield) copper mining projects has become a serious challenge as stricter regulations, environmental concerns, and an inability to accurately predict capital expenditures (Capex) prohibitively increase project costs without removing the risk of significant political opposition… Though mined production of copper is set to increase over the next few years, increasing demand and reduced capital investment for exploration and development of new deposits will likely lead to material supply shortfalls around 2020… The long run trend of falling head grades for copper is an additional concern. Since 2000, average head grades for copper, without adjusting for production weightings, declined from 1.3% to 1.1% in 2012.   Furthermore, the weighted average head grade for mined copper is likely less than 1% as several of the world’s largest copper mines have been in production for many decades and are now mining extremely low grade ore (less than or equal to 0.5% Cu). As head grades decline, costs rise for a given tonnage.” Kitco.com, Multi-Year Global Copper Market Outlook A Yale University study said new discoveries of copper have raised global reserves by just 0.63 percent per year since 1925 but usage has risen at 3.3 percent per year. Over the past seven years, forecasts for world mine copper production have consistently exceeded actual production figures. An important take away from the graph below would be the decline in production from existing mines and how “Probable Projects” barely keep pace with expected consumption.       The chart below provides a graphic view of the decline in world average copper grades since 1985, plus the declining grade forecasts based on new mines under construction.   Source Brook Hunt   The metal content of copper ore has been falling since the mid 1990s. A miner now has to dig up an extra 50 percent of ore to get the same amount of copper. As grade drops the amount of rock that must be moved and processed per tonne of produced copper rises dramatically – all the while using more energy that costs several times more than it use to. With the lower grades of ores now being mined energy becomes more and more of a factor when considering economics. Barclays said in February that the real expense of producing copper may be as much as 87 percent higher than back in 2007 due to higher labor and energy costs. Miner and metals trader Glencore PLC forecast strong demand for copper from both China and the West in the latter part of 2014. Glencore also said the expected glut of supply in the market would be tempered by shortages of scrap metal and the risk of disruptions from both new and old mines. Morgan Stanley said they were optimistic about copper prices because of acute shortages of copper scrap and strong copper demand. Rio Tinto says growth will continue to be a challenge for several reasons: An increasing proportion of potential new supply is located in riskier countries. More challenging environments subject to a lack of infrastructure imply an increase in the capital intensity of new projects. Recent supply has continued to underperform with decreasing grades and disruptions impacting production. Major causes of supply disruption will continue, these causes being; Technical complexity, Project delays, Labor strike action 1m metric tonnes of new copper supply is required to be produced each year to keep up with copper demand. The following chart graphically illustrates how current projections for future copper production may be optimistic.   Source A. Gonzales   Correlation   Commerzbank said, in a March note to clients, that the market is not factoring in basic supply and demand elements, copper may have been oversold and the market is fairly tight meaning no long term justification for low prices. Global copper inventories have fallen by almost half this year and are near their lowest since 2008. Data analysis by The International Copper Study Group (ICSG) shows there is a high correlation between supply/demand and the increase or decrease in warehoused copper inventories.If there’s an increasing oversupply of copper than warehouse inventories should show a rising trend. A supply deficit of copper should be accompanied by falling inventories. Below is a current chart of London Metal Exchange (LME) copper stocks.       Mining Facts: The low-hanging mineral fruit has been picked Metallurgy is becoming more complicated Energy is expensive and using more to achieve the same amount of production There is no substitute for many metals except other metals – plastic piping is one exception There hasn’t been a new technology shift in mining for decades – heap leach and open pit mining come to mind but they are both decades old innovations Increasingly we will see falling average grades being mined, mines becoming deeper, more remote and come with increased political risk Labor shortages loom, baby boomers are starting to retire en masse, and the resource-orientated talent pool is thinning out We’re rushing headlong into shortages of resources and the conflicts generated from a lack of security of supply Mine production of many metals shows us a number of similarities: Slowing production and dwindling reserves at many of the world’s largest mines The pace of new elephant-sized discoveries has decreased in the mining industry All the oz’s or pounds are never recovered from a mine – they simply becomes too expensive to recover Conclusion   On September 16th 2014, copper futures on the Comex jumped the most in 13 months, triggering a brief trading halt. The cause? A news report had said China, the world’s top metal user, had increased government stimulus measures by 500 billion yuan or US$81 billion. Copper’s price jumped as much as 4.1 percent on the news, the largest intraday increase since May 3, 2013. The increase triggered a “stop spike event” – a trading halt. Bloomberg said copper trading across all contracts was 70 percent more than the average of the past 100 days. Now that’s a jittery copper market and no wonder. This author believes that today’s worries have only temporarily unseated the commodities super-cycle with the recent sell-off being nothing more than a short downturn within a secular bull market for commodities. Are metals, and perhaps a couple of copper junior resource companies, on your radar screen? If not, they should be.

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Cloud Revenue Cycle Management

August 10th, 2014

 

 

By Richard Mills.

U.S. hospitals write off between 3% and 17% of their revenue due to denied claims from payers – insurance carriers, other third-party payers, or health plan sponsors (employers or unions) for the patient. Further, administrative and process-related inefficiencies are reducing health care cash flow, revenue is being lost that should have been collected – it’s a lot of revenue.

This “lost revenue” puts additional burden on hospitals that already are stretched due to rising healthcare costs and lower reimbursement rates.  In the low margin healthcare business it’s sometimes the difference between a profitable year and a losing one, or even possibly the existence of the hospital.

The following data typifies the estimated annual denial costs for community, teaching and health system hospitals in the U.S. and the potential amounts of claim recoveries that can be achieved if the issue is addressed.

 



2013, Hospital Denials Management: In-source, Outsource or Both?



Example of Denied Claims Categories and Recovery Estimates

Current trends in U.S. healthcare are going to make this situation worse…

Clinical documentation and billing submissions are so demanding, complex and time consuming hospitals are writing off an astounding 50 percent of denied claims without any effort to collect. And things are going to get worse, much worse, here’s a few reasons why:

1. With the implementation of the Affordable Care Act (ACA), another 45 million more people will be eligible for Medicaid or coverage from insurance.

2. U.S. adoption of The International Classification of Diseases Tenth Revision (ICD-10) means clinical documentation for billing submissions will become even more complex. ICD-10 implementation entails a seven-fold increase in procedure and diagnostic codes – the number of inpatient procedure codes alone will increase by more than 1,700%.

3. Payers are tightening the screws and paying less. They also suffer from an increasingly complex workload. And of course, as businesses concerned with their own bottom line the practice of preserving or ‘stretching’ cash becomes more common – the money they have they want to keep because it increases the internal rate of return on that cash. All the more reason to get proper documentation and billing submission right, and done, in a timely fashion.

Dell Solutions says the number of denied claims is forecast to grow 400 percent just over the next four years.

A longer-term consideration is demographics, specifically an increase in the number of senior citizens; “In the next two decades, the increase in the 65-and-older population will be about twice as great as it was in the decades just past.” Nicholas Eberstadt, The Demographic Future

Senior citizens need increasing amounts of medical attention as they age and seniors are covered by Medicare/Medicade. The reimbursement rates for Medicare/Medicade are lower than commercial insurers – hospitals can no longer rely on high income insured patients to cover losses.

In an effort to keep up with health care industry demands and improve their bottom lines health care providers and payers are increasingly relying on third-party experts such as specialized claims audit and recovery firms to resolve claim denials and capture charges that should be paid.

Certive Solutions TSX.V-CBP

Searching for a company that is launching into a fast-growth period in an attractive market? If getting ‘in’ at the start of building something special is what you are looking for then look no further then Certive Solutions CSE-CBP.

Every company needs competent ‘been there done that’ type managerial talent to recognize opportunities and steer the ship. Some companies are more successful at attracting top shelf talent than others. Having John Shackleton as Chairman is a significant indicator for Certive’s value proposition. Mr. Shackleton led the growth of OpenText from $50M to $1.3B in revenue – Open Text, a Waterloo-based company, is the world’s leading independent provider of enterprise content management software.  Having John serve as  Certive’s Chairman is certainly something investors are going to have to take very seriously. If a high quality management team, governed by a ‘been there done that’ kind of guy is your top priority then look no further than Certive Solutions CSE – CBP.

In a nutshell here’s Certive’s opportunity – revenue sharing with health care providers

Revenue Cycle Management (RCM) companies such as Certive are comprised of four different functions:

• Billing, charge capture and coding
• Claims management
• Reimbursement, insurance/payer management
• Payment resolution and collections

Currently U.S. hospitals are writing off between 3 and 17 percent of their revenue because claims are denied. Coding errors, lack of pre-approvals, lapsed coverage or timing out and wrong category allocation are all major causes of denied claims and lost revenue.

Certive has identified several opportunities that currently exist in Revenue Cycle Management (RCM), here’s two that exist in claims management:

Internal Growth – To reduce denial incidence as close to zero as possible, and help negotiate successful resolution of denied claims with its payers, hospitals will increasingly need to more intelligently outsource claims.

External Growth – Acquisitions and amalgamation of the space. As it currently stands the claims denial industry is extremely fragmented. There are many Tier Three players whose existing customers, contacts and cash flow will build very serious shareholder value for the acquirer.

Other opportunities will be rolled in as the company progresses.

Certive’s competitive advantage is its DNA in cloud business process software technology – technology  that makes businesses run more efficiently, enables scale, and analytics and intelligence to do it better.

Over the next three months Certive will be deploying its cloud technologies into three fundamental areas of operation:

Phase I – Data capture, initiated July 1st 2014. Data capture tools are being developed that will streamline access to relevant information on claims allowing auditors to more efficiently utilize their expertise and time on the actual audit of a claim, and the processing of adjustments for payment.

Phase II – Audit work flow

Phase III – Collection

Certive expects rapid growth through standard selling processes, but also plans on significant growth through acquisition – acquiring the smaller industry players that are good companies with good principals and good customers, but lack the resources to invest in technology. Certive’s “technology-enabled” acquisition model will drive growth – leveraging the company’s entire management team’s significant experience in growth through acquisition.

 



Industry Structure:  A large fragmented industry ripe for aggregation.

The total available market for Certive, based on CMS National Healthcare Expenditures, is $US50 billion.

Are you looking for an opportunity that’s so clear and concise, so well thought out and so damn compelling you can almost feel how successful it will be? Look no further then Certive Solutions CSE-CBP.

Cloud Analytics

Certive Solutions describes itself as – a Cloud Solutions provider for the U.S. Health Care Market serving the revenue cycle management segment, focused on claims audit and recovery solutions for U.S. hospitals.

Cloud computing makes it possible to take full advantage of the vast amount of data collected. Analyzing the data and extracting relevant trends and groups increases the amount of, and speed of, revenue recovery for the hospitals, and Certive too.

Cloud Analytics is a term for a set of technological and analytical tools and techniques specifically designed to extract information from massive amounts of data. With an online connection cloud computing can be done anytime from anywhere. You and your team are no longer tied to individual computer hard drives, instead everything is done via the net.

Hospitals face three challenges they are increasingly not able to meet:

• Managing the ever changing nature of the data
• Applying the right analytical techniques to use the information most effectively
• Adapting workflow tools to the workplace by applying good business practices in this fragmented industry

Certive’s Cloud Automation

Think of an inefficient factory. As a business manager, as the factories CFO, you need to realize productivity/revenue gains. One way of doing so is automating whatever you can automate, whatever you can put on an assembly line you will – improved technology means greater efficiency and speed which equals greater productivity.

Now think of something similar happening in a hospital – using the internet as your assembly line.

The ever-increasing availability of cheap computing power and storage capacity makes automation of claim processing and follow up possible. Cloud computing makes the internet your assembly line. Certive’s Cloud Technology is an incredibly efficient organizer, storage facilitator and an enabler of speed.

Revenue increases exponentially through faster, more efficient and more successful resolution of denied claims by adoption of Certive’s Cloud Analytics automation technologies and workflow management tools. By engaging with Certive, hospitals are taking massive steps toward improving their speed and amount of denied claims recovery which improves their bottom line and relieves the pressure hospitals now face.

Certive’s revenue cycle business segments are:

Zero Balance – Zero Balance is the auditing of claims to identify underpayments by comparing actual payments to contracted terms for specific procedures. Zero Balance is the highest margin business line for the company. Zero Balance is a revenue sharing business line where Certive will realize the most immediate benefit from its workflow technology.

Billing Support – Billing Support is the company’s highest volume business wherein it analyzes claims to be submitted for payment prior to billing, this is done on a cost plus basis.

Early Out – Early Out is a revenue sharing business line where the company intercepts claims, audits and collects them before the expiration of the contractual period with the payer. Certive will gain immeasurable scale in this line of business, as it develops processes for the assignment of accounts to its collectors, and develops work cues to track files and anticipate delivery schedules.

Clinical Review – Certive reviews and audits any claim items that have been denied for clinical reasons. Generally these claims have been paid but a medical review determines that additional payments may be justified. The company is paid on a revenue-sharing basis.

Special Projects – Many underserved niche market opportunities –

audit and recoveries identified through an understanding of the regulatory environment – are regularly presented to the company. Most are revenue-sharing models.

 

Certive’s Cloud Revenue Growth Watch

 



June – Certive reported revenue of US$214,387 for the month of June 2014. Cash collections were US$247,336.

July – Certive reported revenue of US$238,207 or 11 percent higher than June. Cash collections were US$336,286 for July, an increase of US$88,950, or 36 per cent over the month of June.

Conclusion

Administrative and process-related inefficiencies, constant changes in payer rules and regulations, time-sensitive processes, the Affordable Care Act and implementation of The International Classification of Diseases Tenth Revision (the shift from IDC-9 to ICD-10) are all combining to dramatically increase the complexity of coding and reimbursement.

Ensuring that every patient claim is billed correctly, payers are invoiced on time and denied claims are dealt with properly and promptly are very real, and potentially revenue draining challenges, for health care givers in the U.S.

These are all excellent reasons why Certive Solutions CSE-CBP should be on every investors radar screen.

Is CBP on yours?

 

 

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Four Tickets to Ride With VMS Ventures

June 9th, 2014

 

By Richard Mills.

 

VMS Ventures TSX.V-VMS and Reed Lake Copper Mine partner Hudbay Minerals have reached what Hudbay defines as commercial production – 60 percent of planned production over a 90 day time period. Shouldn’t be but a quarter or two before analyst coverage starts for VMS.

There are, so far, four zones to be mined, the shallowest will be mined first, it’s also the lowest grade, the zones or lenses get richer the deeper you go. Underground drilling, to try and fine more ore – the deposits in this region have a habit of getting larger and life of mine (LOM) increasing – will start in roughly 18 months.

Currently the ramp is at the 160 meter level and too tight to the deposit for drilling down plunge.  As the ramp gets closer to the 350-400 meter level the first drill stations for pure exploration might be constructed – the 350-400 meter level will provide a good angle to test the down plunge continuation. Current diamond drilling is focusing on definition drilling for stope design and grade estimation.

Hudbay (HB) is currently compiling a very large data base of geophysical and geochemical data compiled by VMS, them and others and are working on a number of interesting concepts for further exploration on the property. The preferable drill season where Reed is located is typically when the ground is frozen so they have access to every target to be tested whether on high ground or low (wet) ground. Once HB is finished its current work with the data there will be a meeting to discuss how best to test new target areas on the property.

Hudbay budgeted $72m to bring the high grade Reed Lake copper mine into production. They did it under budget (at $66m) and under the days allotted with no lost time accidents – unheard of in this industry and especially so these days when it seems engineering screw ups and cost/time over runs are so common place.

So the big question for investors is when is HB paid back for carrying VMS to production and VMS’s 30 percent of cash flow from production goes directly into VMS’s coffers? VMS can’t, won’t estimate – that would be a forward looking statement they likely wouldn’t be willing to make.

But

We, as investors can make a very educated guess – after all we know HUD spent $66m and have a $4m operating budget, all monies from VMS’s share of production is slated to go directly to Hudbay to pay off their low, as in no interest loan.

So

All we need is a couple quarters of production. And everyone of us will be posting and talking guesstimates as to when. And one would have to expect a sharp upwards revision of VMS’s share price when we all can see that massive cash flow closer on the horizon.

The one thing that investors have been fixated on is the Dunlop case currently in front of the courts. The company, VMS, will not comment. Period. The following is what I have deduced from research and talks with friends highly knowledgeable on the situation.

First of all, and let’s make this abundantly clear, this is NOT about taking the deposit, VMS is in no danger of losing their 30 percent, that’s final, end of story. Do you honestly think HUD would have gone into production without knowing who their partner is going to be? They would never have turned a drill bit if it wasn’t clear to them. So what is this all about?

In my opinion it’s all about a net smelter royalty, yeah an NSR…that over the current LOM is worth about $4m to Dunlop.

So go to court, take a couple of years to settle (taking a chance the settlement is in your favor), if you do win you get appealed. Meanwhile VMS keeps mining. When they get their share of production cash VMS can bank Dunlop’s NSR. If he wins he gets it, if he loses VMS keeps it.

This information is all in the public domain, all you have to do is put it together. Imo this is settled out of court.

Conclusion

VMS is about the coming Reed Lake Copper Mine cash flow of course but it’s also so much more. There’s the potential for upcoming underground drilling to expand the LOM, there’s discovery possibilities elsewhere on VMS’s properties. There’s the possibility of an acquisition. VMS is actively seeking a close to production or production story in a safe stable jurisdiction, and then last but certainly not least there’s VMS’s rather large ownership piece of North American Nickel TSX.V-NAN and what might turn out to be one of world’s major nickel sulphide camps. You can access my latest update on North American Nickel here. Maybe, just maybe someone takes a run at us for our share of North American Nickel and upcoming Reed Lake mine cash flow?

All in all there’s at least four major tickets for investors to ride the VMS train. VMS Ventures has got to be on your radar screen, it’s on mine. Is VMS on yours?

If not, maybe it should be.

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North American Nickel Update

May 12th, 2014

 

 

By Richard Mills.

 

This year’s program at North American Nickels (TSX.V – NAN) Ni-Cu-Co-PGM Maniitsoq project on Greenland’s south east coast is going to be extremely large, possibly the largest green fields exploration/discovery phase program being done anywhere in the world this year. The company is suggesting over $9 million possibly approaching the $10,000,000.00 mark.

The first holes will pick up where last year’s program finished and expect at least 75% of all holes drilled to be in the Imiak Hill Conduit Complex (IHCC).

“The Imiak Hill Conduit Complex (IHCC) represents the three mineralized norite intrusions (Imiak Hill, Imiak North and Spotty Hill) discovered in the northern part of the Maniitsoq Property (Figures 6 & 7). The complex covers an area of 12 square km at the north end of the GNB. The three mineralized norites occur within a 1.6 km radius. At the present time, mineralization remains open at depth for all zones. The complex is only 25 km from tide water at Kangia Fjord.”

It’s been roughly two weeks since crews hit the ground at Maniitsoq. They are doing geophysics – TDPEM & Gravity.

“Our deepest hole to date at Imiak Hill in the IHCC intersected high-grade massive sulphide nickel-copper mineralization 185 metres below surface. The new geophysical ground surveys are designed to look below that depth and define the extent and shape of our high-grade mineralized zones providing plunge, strike and dip attitudes for the mineralization. The results from these 2014 ground geophysical surveys coupled with the airborne surveys and drill results from 2012 and 2013 will assist with drill targeting at the IHCC.” North American nickelPresident Dr. Mark Fedikow, PGeo

 

The PEM survey

The PEM system operates by placing a large loop of insulated wire on the ground through which a precisely controlled changing current induces magnetic responses from conductors hundreds of meters deep in the ground. It can be used to detect and discriminate between a wide range of conductivities from poor (zinc), to excellent (copper and nickel). Due to its unique transmitted current waveform and its receiver’s measuring system, a step-response transformation of the data has been developed which extends this range of detection and discrimination into the extremely high conductance that is seen in nickel exploration. This feature has made the Crone PEM system an important part of the exploration efforts in nickel exploration camps around the world, such as the Raglan camp, Voisey’s Bay, Sudbury, Alaska, Tanzania, Western Australia and now Greenland.

 

The gravity survey

In addition to the PEM survey, a gravity survey will be carried out by a two-person crew consisting of a gravity operator and a GPS operator. Gravity surveys measure extremely small variations in the Earth’s gravitational field, which can be used to locate high-density material such as nickel sulphide-bearing rock.

Expect the first drill to start up in the second week of June. A second drill will be added shortly thereafter. There is an excellent chance of a second phase 2014 drill program starting in early fall and ending in October.

There is north of $5 million in the treasury but with up to a $10m program already announced and with a possible second phase drill program this fall there will be a financing. North American Nickel is planning to raise almost $9.5m and both the Sentient Group (beneficially owns, or exercises control or direction over, 58,127,098 common shares of the company – approximately 41.3 per cent of the issued and outstanding common shares of the company, and no warrants) and VMS Ventures TSX.V-VMS (VMS, which is an insider and a related party of the company, beneficially owns, or exercises control or direction over, 33,589,704 common shares – approximately 23.9 per cent of the issued and outstanding common shares) of the company and warrants) will be participating.

 



There will not be any major mining Co. involvement at this point. Simply not in either group’s favor right now to let this happen.

The Sentient Group are not miners, their payoff comes further down the road when a project sale happens.

VMS Ventures owns almost 24 percent of North American Nickel.

This team are miners as evidenced by their 30/70 joint venture with Hudbay Minerals in the producing high grade Reed Lake copper mine.

One of the potential priorities after this year’s program will be to permit and build a road.

Look for a support logistics supply line to be started, in less than a year, from the nearby deep sea fjord into where the camp is now located

The southwest region of Greenland, where NAN’s Maniitsoq project is located, has a relatively mild climate with sea travel, and deep sea shipping possible year round.

 



 

The East Greenland Current flows south along Greenland’s east coast.

The current mixes with the warmer Irminger and Norwegian currents, at the southern extremity of Greenland (Cape Farewell).

A branch turns to form the West Greenland Current, which flows north along the west coast of Greenland into the Davis Strait, where it joins the Labrador Current.

The West Greenland Current (WGC), a combination of warm North Atlantic waters, keeps the southern west coast free of ice.

 

Conclusion

 Greenland is very mining friendly, hugely underexplored and very prospective for mineral discoveries. North American Nickel’s Maniitsoq property is larger than the entire Sudbury Basin, can be worked year round and has access to year round ports for shipping.

It’s my firm belief NAN has definitely got the grade for a mine. With Pentlandite as the main nickel-bearing mineral metallurgy wouldn’t seem to be a problem. The IHCC, where results have been nothing short of amazing, is but a very small part of an extremely large prospective for discovery land package.

This year’s $9m-10m program should go a long ways towards answering retail investors questions as to whether or not the Sentient Group and VMS Ventures have an out.

North American Nickel’s retail investors are going to have a very interesting 2014. So too will shareholders of VMS Venture TSX.V – VMS.

North American Nickel TSX.V – NAN should be on every ones radar screen. Is NAN on your screen?

 

If not, it should be.

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Holy Grail of Diabetes and Hemophilia

April 30th, 2014

 

By Richard Mills.

 

Paul Lacey was a researcher at Washington University when, in 1972, he cured some diabetic rats by transplanting the islet cells from healthy rats into diabetic ones.

Over the next two decades researchers made hundreds of attempts to apply the procedure to humans. Unfortunately no one was successful and by the early 1990’s most scientists had come to the conclusion that islet-cell transplantation was a lost cause.

 

Edmonton Protocol

 

Dr. James Shapiro, Dr. Jonathan Lakey and colleagues from the University of Alberta in Edmonton developed the Edmonton protocol in the late 1990s.

The Edmonton Protocol is a method of implantation of pancreatic islets into the portal vein of the recipient’s Liver. These pancreatic islets are sourced/extracted from pancreases removed from recently deceased adults.

Each recipient receives islets from one to three donors. The islets are infused into the patient’s portal vein, and are then kept from being destroyed by the recipient’s immune system through the use of two immunosuppressant drugs as well as an antibody drug specifically used in transplant patients.

Dr. Shapiro and Dr. Lakey reported Edmonton Protocol patient outcomes in the September 28, 2006, issue of the New England Journal of Medicine (NEJM): out of thirty-six patients transplanted, sixteen or 44 percent were insulin-independent after one year. Another 10 percent of patients were able to reduce the number of insulin injections they needed each day and the remaining 10 patients had totally rejected the transplant islet cells.

Since 2000 several hundred people have received islet transplants – but by five years after the procedure, fewer than 10% of all patients are free of daily insulin supplementation.

Islet cell transplantation is the only known therapy that can reduce or eliminate the side effects associated with diabetes. A search has been on for an alternative site for islet transplantation as well as for an optimal medical device in which to implant the islets. Several subcutaneous devices have previously been developed for islet transplantation but from a preclinical and clinical perspective the results from these products have been generally disappointing.

Currently there is no approved device to house and protect therapeutic cells in the body – cell therapy is limited to expensive procedures, poor cell survival and inappropriate delivery as well as a lack of available donors.

 

Sernova Corp. TSX.V – SVA

 

Sernova Corp. has developed the subcutaneous Cell Pouch™ specifically designed to overcome the issues with previous implanted devices for cell transplantation. Sernova’s extensive preclinical safety and efficacy studies have shown this device to be both safe and effective, while being sparing of islets, supporting its design and function.

Sernova’s Cell Pouch System™ is a versatile and scalable, first-in-class implantable medical device made entirely of FDA approved materials. The Cell Pouch System™ provides a natural “organ-like” environment rich in tissue matrix and micro-vessels. This is the ideal environment for therapeutic cells to thrive which then release proteins and/or hormones as required. The Cell Pouch System™, being thin and typically smaller than a business card, fits easily under the skin with virtually no visibility.

On August 16th 2012 Sernova, and the University of Alberta, announced the treatment of the first patient with insulin-producing islets transplanted into Sernova’s Cell Pouch System™ in a Phase I/II clinical study to treat Type-1 diabetes.

The clinical study is being led by Dr. James Shapiro, Professor of Surgery and Medicine, University of Alberta and Director, Clinical Islet Transplant Program.

Encouraging early results up to 30 days post-islet transplant were presented at the International Pancreas and Islet Transplantation Congress in September, 2013. These results showed after implantation under the skin, the Cell Pouch is safe and biocompatible. Following islet transplantation, the islets living within a natural tissue matrix were supported with a rich supply of blood vessels, similar to the pancreas. Of further importance, the islets were shown to make insulin, somatostatin and glucagon – key hormones in the control of blood sugar levels.

On April 22nd 2014, Sernova announced interim results from the ongoing type 1 diabetes human clinical trial with the Company’s Cell Pouch System™.

Interim study results in the first group of patients support that the implanted Cell Pouch, transplanted with insulin-producing islets is showing longer-term safety and biocompatibility with one of the patients already beyond the 180 day time point.

Sernova’s second proprietary platform technology is Sertolin™ – a cell-based technology providing an immune-privileged environment for donor cells which reduces or eliminates the need for toxic and expensive anti-rejection drugs (US $10-15,000/yr).

Sertolin, when combined with therapeutic cells, protects them from attack by the immune system. The combination of these protector and therapeutic cells leads to long-term functional survival of the therapeutic cells without drug therapy. The Sertolin™ technology has the potential to reduce or eliminate the need for expensive lifelong daily anti-rejection drug cocktails that make subjects susceptible to serious infections.

 

Applications

 

The Cell Pouch™ could be used for any chronic disease where a deficient or missing protein or hormone can be replaced by therapeutic cell transplantation.

 

Diabetes

 

Sernova’s first application of its proprietary Cell Pouch System™ is islet transplantation for treatment of insulin-dependent diabetes – think of the Cell Pouch System™ as a potential natural insulin pump with the added benefit of fine-tuned glucose control. The Cell Pouch System™ is expected to prevent IBMIR (which is believed to rapidly destroy up to an estimated 90% of the transplanted islets) and in addition eliminate serious complications such as islet-induced blood clotting and liver thrombosis. The reduction in islet loss could lead to improved safety and efficacy of islet transplantation and the potential of treating multiple patients from a single pancreas donation.

Globally there are more than one billion overweight adults and at least 400 million of these are considered obese. More than 40 million children under the age of five were overweight in 2010.

Obesity and being overweight pose a major risk for chronic diseases including Type 2 diabetes, cardiovascular disease, hypertension and stroke and certain forms of cancer.

The World Health Organization (WHO) says 347 million people worldwide have diabetes.

The International Diabetes Federation expects that number to rise to 520 million by 2030.

Globally diabetes cost $US465b in 2011. More than 80 percent of the estimated global expenditures on diabetes are made in the world’s economically richest countries, not in the low and middle income countries where over 70 percent of people with diabetes live.

WHO projects that diabetes will be the 7th leading cause of death in 2030.

 

Haemophilia

 

Patients with hemophilia A have a defective factor VIII gene. Currently, the number of people with hemophilia in the United States is estimated to be about 20,000, an estimated 400,000 people worldwide are living with hemophilia and only 25% receive adequate treatment.

Patients receive prophy-laxis factor replacement therapy two to three times a week. Prophylactic therapy (prevention therapy) involves three infusions of Factor VIII each week at the hospital at a cost of about $260,000 each year.

The broader hemophilia market was $8.5 billion in 2011 and is expected to grow to $11.4 billion in 2016.

Sernova has recently announced a collaboration with Medicyte GmbH to develop a product for Haemophilia.

 

Other Applications

 

Sernova is exploring the additional utility of the Cell Pouch System™ as an enabling platform for a range of therapeutic cell types (including natural cells, stem cells and genetically engineered cells) with the potential to treat a number of chronic debilitating diseases (Parkinson’s disease and Parathyroid are two other candidates) representing broad unmet medical needs.

Cell therapies can cost $10,000 each and the Cell Pouch™ is thought to have a cost of $10,000, more study is needed as trials progress but SVA’s total product combination could bring in as much as $30,000 to $50,000 a patient.

 

Management

 

A recent addition to Sernova’s already impressive management team is

Frank Holler, Director. Mr. Holler is the chairman and CEO of BC Advantage Funds (VCC) Ltd. Frank was President & CEO of ID Biomedical Corporation when it was sold to GlaxoSmithKline in 2005, and was a founding director of Angiotech Pharmaceuticals, a TSX/NASDAQ-listed biotechnology company. Frank is a former director of the British Columbia Biotechnology Association (now LifeSciences BC), and in 2003 received the BC Biotech Award for Vision and Leadership.

 

Conclusion

Sernova is currently conducting a Phase I/II clinical study in subjects with diabetes; measures of safety and efficacy are the primary and secondary endpoints.

Patient volunteers with insulin-dependent diabetes and hypoglycemia unawareness are being implanted with the Cell Pouch™ which is subsequently transplanted with human donor islets.

“We are really encouraged by the initial results of this ground-breaking study. The preliminary findings that human islets survive under the skin within the Cell Pouch pave the way for our ongoing studies in patients that will now test how effective this new approach will be. Importantly, the islets were shown to be residing within a natural tissue matrix in the device, and were nicely integrated with microvessels, and stained for insulin, glucagon, somatostatin and polypeptide at the 30 day time point.” Dr. James Shapiro

“The findings in these initial patients parallel the results in Sernova’s multiple small and large animal safety and efficacy studies of the Cell Pouch. These showed an exemplary safety profile, and that islets were well- vascularised with microvessels and produced insulin. In addition, the islet-rich Cell Pouches then went on to show long-term glucose control in the diabetic animals.” Dr. David White, Professor Emeritus and Chair of Sernova’s Scientific Advisory Board

 

If you break the ongoing clinical trial down into its objectives you find there really are four results we’re looking for:

1. Bio-compatability: basically safety, is it safe to have in you. CHECK

2. Are the islets being kept alive? CHECK

3. Are the islets producing glucagon, somatostatin and polypeptide? Glucagon raises blood glucose levels. Its effect is opposite that of insulin, which lowers blood glucose levels. Somatostatin regulates insulin and glucagon. Polypeptides are chains of amino acids. CHECK

4. Measuring and monitering blood levels of C-Peptide and insulin to see if blood sugar levels are being properly controlled – obviously a part of the trial which is going to take some time.

“We will now begin to assess both the longer-term safety and efficacy of islets placed in the Cell Pouch in patients with diabetes, and will follow them for up to three years. We look forward to presentation of additional results as the study progresses.” Dr. James Shapiro.

So far we have three of the four results I’m looking for out of this trial, the fourth result, or at least some indication of efficacy, is expected later this year – the first patient received the Cell Pouch System™ (with islets), in August 2012. And let’s all remember one point – Sernova’s Cell Pouch™ is NOT a drug, it is a device. If it works in one patient there is absolutely no reason to suspect it won’t work in everybody.

Here’s how I think things are going to play out for Sernova over 2014 and beyond:

• Additional board appointments
• Cell Pouch System™ Phase I/II clinical study efficacy results
• In-house licensing deals with major universities
• Regional licensing deal

There is no market cycle for drug, bio-technology and bio-med device stocks. The need is always there and demand is growing at an alarming rate while at the same time big pharma’s number of patents and pipeline of new devices and drugs has fallen off a cliff. This “patent cliff” has shifted the playing field so much so that any new and exciting drug or device will be snapped up at a much earlier stage than previously thought possible.

Sernova’s management team has a very realistic end game plan – their objective is to add substantial value to existing assets and subsequently monetize them for the benefit of shareholders. This could take the form of an acquisition or such other mechanism whereby the value can be transferred to shareholders. It is not the objective of the company to build a large permanent, integrated pharmaceutical company.

The holy grail of diabetes and hemophilia A treatment is for patients not to have to take injections or infusions. Sernova Corp. (TSX.V-SVA) and it’s Cell Pouch System™ human trial PhaseI/II clinical study efficacy results should be on everyone’s radar screen. It’s definitely on mine. Is Sernova on yours?

 

If not, it should be.

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Imperialism Déjà Vu

April 14th, 2014

 

By Richard (Rick) Mills.

 



 

Fact; The world’s resources are finite.

Fact; Supply is constrained and demand keeps growing along with the world’s population.

Fact; A sustainable and secure supply of raw materials and energy is becoming the number one priority for all countries.

Major powers are scrambling for as much of the world’s resources as they can control. Exploration and drilling intensify daily. Previously inaccessible or unprofitable areas are targeted – the days of easy access to the globe’s resources no longer exist.

Unseen wars in previously unheard of places – soon to become front page news – are beginning for resource control. Peace today, harmonious relations tomorrow are nothing but fleeting illusions.

Hydrocarbons, mineral resources, fresh water and arable land are finite.

Understand someday peak oil and gas proponents will be proven right.

Understand arable, productive farmland is disappearing from overuse, desertification and urbanization.

Understand the world’s current population of 7 billion people use 60 percent of our annual renewable freshwater supply.

The world’s population is projected to hit 10 billion by 2050 – global demand for food and water is expected to increase by 50% and 30% respectively by 2030.

“It should be pointed out that when we speak of wars in the last third of the twentieth century we are talking about civil wars. Between 1965 and 1999 if we look at those wars in which more than a thousand people were killed a year, there were seventy-three civil wars, almost all driven by greed to control resources—oil, diamonds, copper, cacao, coca, and even bananas.” William K. Tabb, Resource Wars

Try and imagine the coming pressure on governments in regards to sourcing resources on a national scale. The world’s most powerful nations are staking claims, through aggressive diplomacy, wherever vital reserves of resources can be found. It isn’t enough.

Nations are going to go to war over natural resources. Conflicts are inevitable.

 

South & East China Sea

 

China has been involved in territorial disputes with Japan and Taiwan over the Senkaku islands, and Vietnam over the Spratly islands.

China has also ramped up its naval presence in the South China Sea. Why? China’s energy starved and the areas off the coast of the Philippine province of Palawan are oil rich. In mid-2012, the Philippines and China came dangerously close to an armed conflict over the Scarborough Shoal in the South China Sea.

China’s increasingly contentious showdown with Japan in the East China Sea could prove to be even more dangerous. At issue are disputed Islands (Senkakus to the Japanese, Diaoyu to China) and the fishing rights and natural resources those islands would deliver to their owner.

The standoff has already resulted in several direct confrontations between China and Japan.

The U.S. has treaty obligations to Japan. Secretary of Defense Chuck Hagel recently warned China that any attack on the disputed islands would “fall under our security obligations.”

 

India-China Border

Chinese dam-building on the upper reaches of the Brahmaputra River has raised fears in India that Beijing might one day turn off critical water supplies.

India’s state oil company, Oil and Natural Gas Corp., accepted an invitation from Vietnam to explore for oil and gas in the disputed South China Sea escalating an already intense drama.

Both India and China are pushing to gain a foothold in the Arctic. Melting ice is opening passages for shipping and creating the conditions for a boom in the extraction of fossil fuels and minerals.

Both countries are building up their navies to project influence, and China’s presence in the Indian Ocean is expected to grow.

“India will be concerned by a growing Chinese naval presence in the western Indian Ocean, which it has always considered its preserve. It has tolerated a significant U.S. presence there, but it has never considered the U.S. an enemy.” David Shinn, a former U.S. ambassador in Africa

 

Arctic

The Arctic Council is made up of the eight Arctic nations: Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden and the United States. These countries work through the Arctic Council to lay ground rules for governing the Arctic – the Council acts as a key vehicle for hashing out the not inconsiderable strategic stakes.

“With the Arctic ice melting, the region’s abundant supplies of oil, gas and minerals have become newly accessible, as have shortened shipping routes and open water for commercial fishing, setting off a global competition for influence and economic opportunities far beyond the nations that border the Arctic.” Yale.edu

China has recently won observer status on the council as has India, Italy, Japan, Singapore and South Korea.

 

Water War

Data scientists recently downloaded from a pair of NASA gravity-sensing Grace satellites show ground water is increasingly in short supply.

The biggest losses show up as red hotspots. Almost all of those red hotspots center on the major aquifers of the world. Grace shows us that groundwater depletion is happening at a very rapid rate in the arid and semi-arid parts of the world.

And the losses are staggering.

Parts of Turkey, Syria, Iraq and Iran along the Tigris and Euphrates rivers have lost 144 cubic kilometers of stored water. The majority of the water loss, about 60 percent, is due to reductions in groundwater.

There’s 600 million people living in the extremely dry 2,000 km stretch of land that extends from eastern Pakistan across northern India and into Bangladesh.

NASA’s Grace satellite measurements show a loss of 54km3 of groundwater a year.

At 54km3 of water loss per year, Lake Ontario (water volume of 1,639km³) would be dry in 30 years. A cubic kilometer of water equals about 264 billion gallons.

A 2005 Organization for Economic Co-Operation and Development Issues Brief suggested that conflicts and violence over access to water would likely increase because, “competition for water exists at all levels and is forecast to increase with demands for water in almost all countries. In 2030, 47% of world population will be living in areas of high water stress.”

 

In a 2012 report, the US director of national intelligence warned that overuse of water – as in India and other countries – was a source of conflict that could potentially compromise US national security. “Our Bottom Line: During the next 10 years, many countries important to the United States will experience water problems—shortages, poor water quality, or floods—that will risk instability and state failure, increase regional tensions, and distract them from working with the United States on important US policy objectives. Between now and 2040, fresh water availability will not keep up with demand absent more effective management of water resources. Water problems will hinder the ability of key countries to produce food and generate energy, posing a risk to global food markets and hobbling economic growth. As a result of demographic and economic development pressures, North Africa, the Middle East, and South Asia will face major challenges coping with water problems.”

 

The Pacific Institute, which studies issues of water and global security, found a fourfold increase in violent confrontations over water over the last decade. “There is a long history of conflicts over water resources, extending back thousands of years into myths, legends, and ancient history. But even now, in the modern world, disputes over access to water, the use of water as a weapon, and the targeting of water systems during conflicts remain all too common. It has been argued that water resources have rarely, if ever, been the sole source of violent conflict or war. But this fact has led some international security “experts” to ignore the complex and real relationships between water and security, which remain a major challenge. Indeed, our work suggests that the risks of water-related violence and conflict is growing, not diminishing, as population, resources, and economic and environmental pressures on scarce water resources increase. Many of these risks are materializing at the sub-national level rather than as disputes among nations, but even at the national level, there are growing concerns about tensions in Africa and parts of Asia that share international rivers but lack international agreements over how to manage those waters.”

Nations are going to increasingly compete for the world’s diminishing resources.

China is a surging military power, Russia is a resource powerhouse but politically corrupt and economically crippled. Japan is rebuilding its military. The U.S. is treaty bound to protect Japan and South Korea and will protect the Philippines in the face of Chinese aggression. Proxy conflicts in Africa, and elsewhere, between and among, U.S., Chinese, Indian and European backed forces will intensify in the future.

The Arctic will be an area of growing resource interest and rising conflicts.

A year ago, leading German industrial companies (to name four – BASF and Bayer who emerged from now infamous IG Farben, ThyssenKrupp, formerly two separate companies. Thyssen and Krupp both supported Hitler, the Volkswagen Group was founded on Hitler’s initiative) launched the Resource Alliance (Rohstoffallianz) for the purpose of securing the supply of selected raw materials for its shareholders and corporate members.

Germany’s Resource Alliance is advocating the use of military force to secure raw materials to keep Germany’s industrial machine chugging along.

Imperialism is the process whereby the dominant politico-economic interests of the time expropriate, for their own enrichment, the land, labor, natural resources and markets of others.

World War II gives us an excellent example of imperialism. The Nazi state gave German business cartels the opportunity to plunder the resources of occupied Europe.

 

Conclusion

 

Will future historians write that Iraq (oil), Libya (more than oil, Libya has one of the largest fresh water systems in the world contained in four major underground basins), Afghanistan and Syria, both literal gold mines of mineral wealth were the first battlegrounds in a continual war over resources?

Increasingly it’s going to be a resource centric world. Major powers will confront resource rich areas, in the left hand will be aggressive diplomacy – WE will build you bridges, schools, hospitals, transportation and power infrastructure in return for long term off take agreements for your resources. The right hand is understood to be a military club. Proxy conflicts, rebels, insurgents and civil war if you don’t agree or deal with someone else.

It isn’t if, it’s when do confrontations already underway, and the coming future conflicts spin out of control?

China’s after oil in the South China Sea and again it’s China but versus Japan in the East China Sea, both of whom are starved for energy.

India’s short of water, China controls the flow.

Russia annexes the Crimea, Putin’s eventual goal – the vast natural resources of the Ukraine. In 2008 Putin stopped NATO from signing up Georgia and Ukraine into its membership action plan. He then moved against Georgia. In 2013 he interrupted Ukraine’s signing of an association agreement with the EU. Now he’s annexed the Crimea and is on record stating that Ukraine is not a country but a territory and insists it should be divided. If Putin is successful in his bid for Ukraine what’s next? The Baltic states come to mind.

The German industrial complex, the Rohstoffallianz, is openly advocating imperialism.

An escalation in tension, and an increase in resource driven conflicts is certainly on my radar screen. Is the truth behind what’s increasingly going to drive future armed conflicts on your radar screen?

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It’s in his (Political) Genes

April 6th, 2014

 

By Richard Mills.

 

Japanese Prime Minister Shinzo Abe’s “Abenomics” goal was to end a long miserable decade and a half of deflation by kick starting the economy. This was going to happen because of massive yen creation. The fiat balloon would induce consumers to spend and corporations to reinvest profits, convinced by a rising stock market and surging exports that all is well.

The Bank of Japan pumped liquidity into the economy at a pace even faster than the U.S. Federal Reserve – $60 billion a month versus $85 billion (the U.S. economy is three times larger than Japan’s).

The flood of fiat did depreciate the yen, over the first six months of 2013 the yen weakened the most against the U.S. dollar since 1982.

The yen also dropped 12 percent against the euro and seven percent against the sterling, threatening European trade.

As Japanese efforts started paying off factory output rose, retail sales slowly started climbing and some inflation came creeping into consumer prices.



The weaker yen also drew investment away from emerging markets and toward Japanese equities – the Nikkei 225 soared.

“His plan, one of the world’s most audacious experiments in economic policy in recent memory, combines a flood of cheap cash (doubling the money supply in two years), traditional fiscal stimulus and deregulation of Japan’s notoriously ingrown corporate culture. The hope is that this will yank Japan from a debilitating deflationary spiral of lower prices and diminished expectations, stirring what Keynes called the “animal spirits” of investors and consumers.

And so it has. The stock market has soared more than 60 percent over the past year, and the yen has lost more than a quarter of its value, lifting corporate earnings in a country that is dependent on exports.” Martin Fackler, ‘Japan’s New Optimism Has Name: Abenomics’ The New York Times

 

The Real Deal

Many became convinced that Abenomics was the real deal meal because Japan had five quarters of high growth.

Unfortunately the wheels seem to be falling off. Japan’s GDP expanded at just an annualized one percent during the last three months of 2013. On a quarter-on-quarter basis that’s just 0.3% growth, the same as during Q3.

The Nikkei 225-stock index has fallen 8.98 percent in the quarter ending March 31, ending a five-quarter winning streak that still has the market up 68.8 percent since November 2012.

Bloomberg says foreign investors sold 975 billion yen ($9.5 billion) of Japanese shares in one week in March, the most since the crash of 1987.

According to Japan’s Ministry of Finance foreign asset managers have pulled more than $21 billion out of the nation’s equities so far in 2014.

Most alarming is that Japanese salaries have dropped 15 percent over the past 15 years and the trend is expected to continue…

“Japanese employers will fail in the next fiscal year to heed Prime Minister Shinzo Abe’s goal of wage increases that outpace inflation, highlighting risks that the nation’s recovery will stall, surveys of economists show.

Labor cash earnings, the benchmark for wages, will increase 0.6 percent in the year starting April 1, according to the median forecast in a poll of 16 economists by Bloomberg News. Consumer prices will climb five times faster, increasing 3 percent, as Japan raises a sales tax for the first time since 1997, a separate Bloomberg survey shows.

The squeeze on consumers from higher prices risks undermining public support for Abenomics and dragging on retail spending.” James Mayger and Cynthia Li, Bloomberg ‘Japan Consumer Prices Seen Rising Five Times as Fast as Wages’

What’s a prime minister to do? Well it’s this authors opinion Abe will continue to print and debase the currency along with adding more fiscal stimulus.

These are the first two arrows in his much talked about three arrow Abenomics quiver. The third arrow, structural reform, has received little attention from the government.

That’s an unfortunate circumstance because for nearly twenty long years demand has remained far below potential supply capacity – what’s known as a deflationary gap. The only sustainable way out for the Japanese economy is for the government to increase growth potential through higher efficiency.

That will be almost impossible because of demographics.

Japan’s most serious problem is demographics, the ageing and shrinking of Japan’s population is a significant demographic drag  on growth. Japan’s productive age population (15 – 64 years old) is projected to shrink by roughly 25 percent, some have the figure as high as 40 percent, by 2035.

Today the ratio between working-age people and retirees is roughly 4 to 1, but it will be 2 to 1 in 20 years.

This creates two very obvious problems:

• Many industries will have to be scaled down – an aging society is not one predisposed to increasing consumption nor will the existing workforce be able to keep up the pace in an export dependent economy.
• Controlling social security expenditures in the face of a rapidly aging population is going to be extremely difficult without raising taxes on those still working. And raising taxes will have a hugely negative impact on growth.

Whether you consider Abenomics a success, or not, many experts are questioning its sustainability.

Real term wages are set to drop by two percentage points in 2014. The domestic consumption tax is set to rise from five percent to eight percent this month.  These two factors will cause a drop in consumption and a slowdown in economic growth activity.

“The real risk it that the consumption tax will exacerbate the central problem with Abenomics—a blow to household wealth and spending power as price rises accelerate ahead of income.”Tom Orlik, Bloomberg economist in Beijing.

A tax increase in 1997 has been credited with kick starting 16 years of economic shrinkage. The government has designed a 5.5 trillion yen stimulus package to counter the expected decline in consumer spending.

Add one part continued currency debasement, drop in two parts of fiscal stimulus, stir a cup or two of worsening demographics into this economic witch’s brew and you’ve got the perfect recipe for Japanese stagflation.

 

Conclusion

The to do list of structural reforms needed in Japan is a huge mountain to climb:

• Greater international competition
• Higher female labor participation
• Employment deregulation
• Lower energy prices
• Corporate taxation

Whatever fiscal/monetary moves the government makes today will be continually undermined by Japan’s demographics. Structural reforms are necessary now.

Unfortunately while talking a lot about the need for reform the reality on the ground, and in the boardrooms is there’s been precious little actual reform. And this author doesn’t expect much from Abe’s revised ‘third arrow’ plan due in June 2014. The fact is Abe has been weak on reform and that’s not going to change, you see it’s built into his political genes.

Arch-conservatives have long dominated Japan’s politics. They’ve made the Liberal Democratic Party (LDP) their home and have stamped out almost every effort at social reform. The founder of the LDP, and its most important leader was Nobusuke Kishi – Shinzo Abe’s maternal grandfather.

The road to Japanese stagflation is being played out in real time on all our radar screens. It’s playing on mine, is it on yours?

If not, maybe it should be.

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A Revolution In Industrialization Is Underway

March 24th, 2014

By Richard Mills.



As a general rule, the most successful man in life is the man who has the best information

Imagine with me for a moment that the car market is at the start of a major transition. Why would I think that? Well…

• Electric cars deliver full torque from a standstill so they have impressive acceleration. They are fun to drive!
• Electric cars are quiet, there is no combustion, no muffler.
• Electric cars do not use explosive fuel, there is no gas tank.
• Electric cars are cheaper to operate, electricity being cheaper than gasoline.
• Electric cars are also cheaper to maintain than combustion systems. Having far fewer parts makes the car less complex, easier and cheaper to maintain – there’s no ignition, exhaust, timing or cooling systems.
• Electric cars can be plugged in at home and you wake up with a fully charged battery every day.
• No more getting ‘hosed’ at the gas station, not even the day before a long weekend when combustion engine car owners are lining up.
• Road trips have currently been extended to over 400 km on a single charge.
• A network of charging stations is being built.
• Tesla’s car battery can be guaranteed for a full eight years. Other manufacturers will follow this achievement.
• Old batteries can and will be recycled. Current technology saves a minimum of 70 percent on CO2 emissions involved in creating lithium-ion batteries from scratch.
• Zero tail pipe emissions.

I think that by 2020 battery-powered cars will become a no-brainer purchase for many of us.

The most recognized name in electric cars at the moment is Tesla Motors whose goal is to ship 500,000 cars in 2020. To reach that goal would require the entire battery industry to more than double production. That’s just Tesla – never mind other existing players and new entrants into the electric car market.

If ten percent of all cars on the road were to become battery-powered global battery production would require an astounding 20-fold increase.

JB Straubel, Tesla’s chief technical officer,  called this a “massive revolution in industrialization, on a scale that is kind of hard to imagine.”

 



Tesla Motors has plans to build, by 2017, the world’s largest lithium-ion battery factory – a ten million square foot manufacturing and recycling center it calls ‘Gigafactory.’ Tesla says its Gigafactory alone will eventually produce 35 gigawatt-hours of battery capacity every year which is more battery power than was produced globally in 2013.

Gigafactory will lower costs by shifting material, cell, module and pack production to one spot eventually allowing Tesla to roll off their assembly lines as many as half a million electric vehicles per year.

There are three essential components to a lithium-ion, or Li-ion, battery:

• An anode which is the negative electrode, it’s made from graphite.
• A cathode is the positive electrode, it’s lithium with cobalt based chemistry.
• An electrolyte, lithium salt is used as the conductor.

Lithium is not in short supply, as a matter of fact the market is currently in oversupply.

The graphite market is a different situation. There is currently a projected deficit if even just Tesla’s goals are to be met. However there is no actual shortage of graphite at this time and dozens of junior resource companies have graphite projects with many of them quite advanced.

That’s not the case for the other critical and strategic component of the lithium-ion battery – cobalt.

Much more cobalt is used in a lithium-ion battery than graphite. As a matter of fact LiNiCoAlO3 (Li-NCA) batteries typically have nine percent cobalt by weight. That equates to roughly six kilograms of cobalt per vehicle.

According to Robert Baylis, an analyst for Roskill, the Gigafactory alone will require an additional 6,750 tonnes of cobalt (current global annual demand 75,000 tonnes) when operating at full capacity. That’s hugely significant when you consider most cobalt is produced as a by-product of nickel mining (57%) and copper mining (37%) – only 6% of our cobalt use is supplied from primary cobalt operations.

The USGS calculates cobalt reserves are dispersed as:

• Africa 52%
• Americas 17%
• Australasia 24%
• Asia 7%

Some minerals are considered more important than others. A critical or strategic material is a commodity whose lack of availability during a national emergency would seriously affect the economic, industrial, and defensive capability of any country.

“Cobalt is considered a ‘technology enabling’ substance as its at the forefront of technological developments and innovation, whether for energy storage systems and catalytic processes, which are so important for the global green agenda, or enabling greater efficiencies in the operation of gas turbines. So subtle and essential is cobalt that it also forms the basis of many established and new biotech applications crucial for human health and diagnostics. In fact cobalt is so important for industrial development that the EU has recognised that it is a ‘critical’ metal for the EU in its Raw Materials Initiative, which was undertaken to help support EU industry from the effects of possible disruption to the supply of critical mineral availability.” Cobalt Facts, 2013, CDI

The U.S. Department of Homeland Security, in its most recent report, classified cobalt as a critical mineral.

The French Bureau de Recherches Géologiques et Minières rates high tech metals, including cobalt as critical based on three criteria:

• Possibility (or not) of substitution
• Irreplaceable functionality
• Potential supply risks
• Demand is increasing for critical metals due to:
  • Economic growth of developing countries
  • Emergence of new technologies and products

  Many countries classify cobalt as both a critical and a strategic metal because cobalt is used in so many diverse industrial and military applications.

  • Super alloys
  • Renewable Energy Re-usable energy storage systems
  • Wear resistant alloys
  • Magnets
  • Binder Material
  • Thermal spray coatings
  • Orthopedics
  • Life Science
  • Catalyst in de-sulfurizing crude oil and as a catalyst in hydrogenation, oxidation, reduction, and synthesis of hydrocarbons.
  • Gas to liquid technology (GLT)
  • Other Uses – Drying agents in paints, de-colorizers, dyes, pigments, and oxidizers. Promotes adherence of enamel to steel, and steel to rubber in steel belted radial tires

  Super-alloys use to be the largest use of cobalt and their manufacture still commands a large share of the market. But today the largest market share and the fastest growing use of cobalt is in energy storage – batteries.

   

  Global Cobalt Corp. TSX.V-GCO

  One of the company’s best maneuvering itself to take advantage of the ‘Revolution In Industrialization’ caused by the greening, the electrification of our land based transport systems is Global Cobalt Corp.

  Global Cobalt Corporation is a critical/strategic metals company focused on the development of a new mining region in the Republic of Altai, a mineral rich pro-mining region of southern Siberia, Russia. Global Cobalt’s goal is to bring on stream a number of highly prospective projects and establish a new mining jurisdiction focused on cobalt and other strategic metals.

  Global Cobalt’s flagship asset is the world-class Karakul Cobalt Deposit which has the potential to be the largest known primary cobalt asset outside of Africa. The Karakul option agreement was a milestone accomplishment and positioned Global Cobalt as a first-mover into the Republic of Altai.

  The most recent results from the Winter 2013 diamond drill program at the Karakul Cobalt Project continue to duplicate and support a metal zonation geological model that demonstrates the Karakul Cobalt Deposit includes higher grade cobalt, higher grade copper and higher grading tungsten and bismuth zones than previous work had indicated. To date results correlate very well with, and verify historic Soviet-era drill hole results. Most importantly GCO’s results have confirmed the validity of the Karakul Cobalt Project. Also, new mineralized zones were discovered and promising silver and tungsten values were returned. Plans have been outlined to accelerate completion of a NI 43-101 compliant resource and fast-track development of the project to supply the growing demand for cobalt.

  “Each release of assay results continues to confirm the validity of the historical drill and technical data but more importantly, we are gaining an understanding of the unique high grade sections for each metal group within the Karakul Cobalt Project which is key as we initiate on mine planning activities.” Erin Chutter, CEO of Global Cobalt

  One of Global Cobalt’s strategic advantages rests in the Altai Sister Properties, a collection of assets that covers prospective ground in a westerly arc north of Karakul. Although the primary development focus remains the Karakul deposit, the Altai Sister Properties offer tremendous upside potential and, in some cases, extensions of known mineralization. Initial analysis of the historic drilling results, along with a geophysical review indicates that the Altai Sisters have the potential to add dramatically to the Company’s future resources.

  Global Cobalt has an agreement with China’s top battery material supplier, Beijing Easpring Material Technology Co., Ltd. The Agreement provides GCO the right to sell to Easpring up to 100 percent of the total crude cobalt hydroxide, cobalt concentrate or cobalt carbonate production from the Karakul Cobalt Project for an initial term of 10 years from the commencement of commercial production at competitive market prices. In addition, the Agreement also allows for Easpring to participate in future mine project financing. Global Cobalt has also awarded a Feasibility Study to Beijing General Research Institute of Mining & Metallurgy, a leading global mining consultancy.

  Speaking to Global Cobalt’s activities in the Russian Federation, Mr. Georgiy Mamedov, Russia’s Ambassador to Canada commented in a written statement on March 14, 2014:

• “I would like to reiterate that Russia is committed to inviting Canadian companies to invest and work in Russia. We welcome foreign investment and will work closely with mining and exploration companies as part of that strategy. Global Cobalt Corporation is the type of company that we encourage to be active in Russia and we are very supportive of the Company’s efforts to be successful in its activity.” 

  Conclusion

   

  Tesla is highlighting the revolution in industrialization currently underway – the electrification of our land based transport systems and energy storage affordable for everyone.

  Global Cobalt Corp., with its highly qualified management team has the exploration, development and production expertise to enable timely, skilled development of their impressive asset portfolio.

  Global Cobalt is the first-mover into a new mining region, the mineral rich, pro-mining Altai Republic of Russia’s southern Siberia. GCO is the pioneer, the first foreign, investable, publicly traded mining company to advance the mineral resources in the entire region.

  Global Cobalt Corp. TSX.V: GCO, cobalt and the revolution in industrialization should be on all our radar screens. They are all definitely on mine, are they on yours?

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Dawn of the Dead Watershed

March 4th, 2014

 

 By Richard Mills.

As a general rule, the most successful man in life is the man who has the best information

There’s a lot of water on the planet we inhabit – an estimated 326 million trillion gallons or 1,260,000,000,000,000,000,000 liters.

That makes it hard to believe that there are somewhere between 780 million to one billion people without basic and reliable water supplies and that more than two billion people lack the requirements for basic sanitation.

Harder still to believe are reports water is going to get much dearer in our near termfuture yet global demand for fresh water may outstrip supply by as much as 40 per cent in 20 years if current fresh-water consumption trends continue.

Our planet is 70 percent covered in ocean, ninety-eight percent of the world’s water is in the oceans – which makes it unfit for drinking or irrigation because of salt.

Just two percent of the world’s water is fresh, but the vast majority of our fresh water, 1.6 percent, is in its frozen state and locked up in the polar ice caps and glaciers.

Our available freshwater (.396 percent of total supply) is found underground in aquifers and wells (0.36 percent) and the rest of our readily available fresh water, 0.036 percent, is found in lakes and rivers.

Aquifers

Freshwater aquifers are one of the most important natural resources in the world today. These underground reservoirs are essential to life on this planet. They sustain streams, wetlands, and ecosystems and they resist land subsidence and salt water intrusion into our fresh water supplies.

Many people think of aquifers as underground lakes but that’s not the case – the water is held between rock particles. Water infiltrates into the soil through pores and cracks until it reaches what is called the zone of saturation – all of the spaces between the rocks are filled with water, not air.

This zone of saturation occurs because water infiltrating the soil reaches an impermeable layer of rocks it can’t soak through.

 

 Water held in aquifers is known as groundwater. The water table is located at the top of the zone of saturation.

Groundwater represents about 30 percent of the available fresh water on the planet – surface water accounts for less than one percent. The rest is locked up in glaciers or the polar ice caps.

Almost all of the planet’s liquid fresh water is stored in aquifers. Some of the largest cities in the developing world- Jakarta, Dhaka, Lima, and Mexico City – depend on aquifers for almost all their water.

Most rural areas pump groundwater from wells drilled into an aquifer.

 

 

There are two types of aquifers: replenishable (a permeable layer of rock above the water table and an impermeable one beneath it) and non-replenishable (also known as fossil aquifers, no recharge) aquifers. Most of the aquifers in India and the shallow aquifer under the North China Plain are replenishable. When these are depleted, the maximum rate of pumping is automatically reduced to the rate of recharge or refill.

For fossil aquifers – such as the vast U.S. Ogallala aquifer, the deep aquifer under the North China Plain, or the Saudi aquifer – depletion brings pumping to an end.

 

In North America the major concern is over water levels in the Ogallala aquifer under the U.S.Great Plains – the world’s bread basket. The Ogallala is the world’s largest known aquifer having an approximate area of 450,600 square kilometers and stretches from southern South Dakota through parts of Nebraska, Wyoming, Colorado, Kansas, Oklahoma, New Mexico, and northern Texas.

 

The Ogallala Aquifer was formed roughly 10 million years ago when water flowed onto the plains from retreating glaciers and streams of the Rocky Mountains. The Ogallala is no longer being recharged by the Rockies and precipitation in the region is only 30-60 cm per year.

When groundwater is depleted the effects (besides lessening of supply or no more water) can be drastic. Land subsidence happens when porous formations that once held water collapse resulting in the surface layer settling. Water won’t compress, but when the water is sucked out of an aquifer air fills the void between the rocks where the water use to be. Air compresses and the ground sinks or compacts – the aquifer will never hold the same amount of water again.

One study shows that from 1986 to 1992 some parts of the Mexico City Aquifer’s water levels dropped 6 to 10 meters. Areas of Mexico City, as a consequence, have fallen as much as 8.5 meters. The subsidence (ground compaction) is also damaging the sewer system, potentially leading to untreated sewage mixing with fresh water in the aquifer.

In March of 2009, Enoch City in Iron County, Cedar Valley Utah, contacted the Utah Geological Survey (UGS) about what they believed to be a fault running through one of their new subdivisions. It was determined by the UGS that it was a fissure caused by the groundwater level dropping as much as 114 feet since 1939 – the cause was determined to be due to pumping more groundwater than is recharged (refilled).

Another effect of over pumping is saltwater intrusion. If too much groundwater is pumped out from coastal aquifers saltwater may flow into them causing contamination of the aquifer. Many coastal aquifers – the Biscayne Aquifer near Miami and the New Jersey Coastal Plain aquifer for example – have problems with saltwater intrusion.

Streams, rivers and lakes are almost always closely connected with an aquifer. The depletion of aquifers doesn’t allow these surface waters to be recharged – lowering water levels in aquifers is being reflected in reduced amounts of water flowing at the surface.

This is happening along the Atlantic Coastal Plain, groundwater depletion is also responsible for the Yellow River in China not reaching the ocean for months at a time, the failure of the Colorado River in the U.S. and the Indus River in Pakistan failing to reach the ocean every day.

The world’s population is growing by roughly 80 million people each year and freshwater withdrawals have tripled over the last 50 years. Demand for freshwater is increasing by 64 billion cubic meters a year (1 cubic meter = 1,000 liters). The world’s seven billion people are using almost 60 percent of all accessible freshwater contained in rivers, lakes and underground aquifers. By 2050 the United Nations estimates we will have upwards of 10 billion people on this planet.

“When the well is dry, we learn the worth of water.” 
– Ben Franklin, Poor Richard’s Almanac 1733

About 20 percent of all cropland, or 277 million hectares, is under irrigation and irrigation multiplies yields of most crops by 2 to 5 times – irrigated agriculture currently contributes to 40 percent of the world’s food production.

The alarm bells are ringing.

Yet we continue to let happen widespread surface and groundwater contamination that makes valuable water supplies unfit for other uses.

One of the most injurious uses of our fresh water supply is Fracking.

Hydraulic fracturing, or fracking as it’s more commonly referred to, is used to stimulate the production of oil and gas from unconventional oil and gas deposits – shales, coalbeds, and tight sands. These types of deposits need to be stimulated because they have a lower permeability than conventional reservoirs and require the additional stimulation for production.

As of 2012, 2.5 million hydraulic fracturing jobs have been performed on oil and gas wellsworldwide, more than one million of them in the United States – Wikipedia.

Hydraulic fracturing involves drilling a well then injecting it with a slurry of water, chemical additives and proppants. Wells are drilled and lined with a steel pipe that’s cemented into place. A perforating gun is used to shoot small holes through the steel and cement into the shale. The highly pressurized fluid and proppant mixture injected into the well escapes and create cracks and fractures in the surrounding shale layers and that stimulates the flow of natural gas or oil. The proppants (grains of sand, ceramic beads, or sintered bauxite) prevent the fractures from closing when the injection is stopped and the pressure of the fluid is removed.

Proponents of hydraulic fracturing argue that fracking:

• Creates cheap domestic energy
• Replaces dirty coal-fired power plants
• Makes it easier to meet federal air and water quality standards
• Reduces our dependence on foreign supplied oil

Opponents of hydraulic fracturing have some serious concerns regarding:

• Contamination of the environment
• Threats to human health
• False promises of long-term economic benefits

Over the last several years there’s been a dramatic rise in the use of hydraulic fracturing. As use of this technology has increased worries are growing about fracking’s effect on our fresh water supply, it’s easy to see why:

• Fracking just one well can use two to eight million gallons of water with the major components being water (90%), sand or proppants (8-9.5%), and chemicals (0.5-2%). One four million gallon fracturing operation would use from 80 to 330 tons of chemicals and each well will be fracked numerous times. Many of these chemicals have been linked to cancer, developmental defects, hormone disruption, and other conditions
• Cracked wells and rock movement frequently leak fracking fluid and gases into nearby groundwater supplies. Fracturing fluid leakoff (loss of fracturing fluid from the fracture channel into the surrounding permeable rock) can exceed 70% of injected volume
• Methane concentrations are 17x higher in drinking-water wells near fracturing sites than in normal wells. Hydraulic fracturing increases the permeability of shale beds, creating new flow paths and enhancing natural flow paths for gas leakage into aquifers

The fracturing fluids job is to create the fractures, hold them open, place the proppants, and then lose viscosity to flow back up the wellbore. It has to do all that without damaging the reservoir.

The fracturing fluid will vary in composition depending on the type of fracturing used, the conditions of the specific well being fractured, and the water characteristics. Fracturing fluid additives include: proppants, acids, gelling agents to thicken the fracturing fluid, gel breakers which allow fracturing fluid and gas to flow easily back to surface, bactericides, biocides, clay stabilizers, corrosion inhibitors, crosslinkers which help maintain viscosity of fracturing fluid, friction reducers, iron controls, scale inhibitors, and surfactants.

A typical fracture treatment uses up to 12 additive chemicals to the fracturing fluid. The most often used chemical additives would include one or more of the following:

• Hydrochloric acid helps dissolve minerals and initiate cracks in the rock and is the single largest liquid component used in a fracturing fluid aside from water.
• Acetic acid is used in the pre-fracturing stage for cleaning the perforations and initiating fissures in the near-wellbore rock.
• Sodium chloride (salt) delays breakdown of the gel polymer chains.
• Polyacrylamide and other friction reducers minimize the friction between fluid and pipe.
• Ethylene glycol prevents formation of scale deposits in the pipe.
• Borate salts are used for maintaining fluid viscosity.
• Tetramethyl ammonium chloride prevents clays from swelling and shifting
• Sodium and potassium carbonates are used for maintaining effectiveness of the crosslinkers.
• Glutaraldehyde is used as a disinfectant of the water (bacteria elimination).
• Guar gum and other water-soluble gelling agents increases the viscosity of the fracturing fluid to more efficiently deliver the proppant into the formation.
• Formic acid and acetaldehyde are used for corrosion prevention.
• Isopropanol increases the viscosity of the fracture fluid.
• Methanol is a winterizing agent and product stabilizer
  

  FracFocus.com

  Each well uses between two and eight million gallons of locally-sourced freshwater which will be permanently contaminated by toxic chemicals contained in the fracking fluid, in ground contaminants and the mixing of the two to create new toxic substances.

  Hydraulic fracturing flowback not only contains chemicals added during well stimulation, but the fluid that flows out of the well as the gas is produced will contain a variety of toxic and carcinogenic substances, many of which were not present in the fracturing additives. This is because chemicals and minerals are present in the shale zone formation water and they may be released during the hydraulic fracturing process. This release results in additional contaminates formed in the wastewater, ie bronopol is a biocide with low human toxicity that can release nitrite, which in alkaline medium reacts with secondary amines to produce the potent nitrosamine carcinogens.

  The recovered waste fluid – water contaminated with chemicals and anything that water has come in contact with, meaning heavy metals and minerals – is often left in open air pits to evaporate, releasing harmful volatile organic compounds (VOC) into the atmosphere, creating contaminated air, acid rain, and ground level ozone.

  Some of the recovered waste water is injected deep underground in oil and gas waste wells or even in saline aquifers, there are serious concerns about the ability of these caverns and aquifers to handle the increased pressure and in the U.S., evidence is showing that deep-well injecting is linked to the occurrence of earthquakes.

  According to the industry’s own numbers just 60-70% of the fracturing fluid is recovered, the remaining 30 to 40% of the toxic fluid stays in the ground and is not biodegradable.

  No one is entirely sure what happens to the water that is not recovered from the fracking process but since the water returned to the surface contains radium and bromides we can be sure the lost water does as well.

  “When bromide in the wastewater mixes with chlorine (often used at drinking water treatment plants), it produces trihalomethanes, chemicals that cause cancer and increase the risk of reproductive or developmental health problems.”

  The use of the large number of oxidants, particularly hydrogen peroxide, in the presence of bromide can produce compounds that are potentially carcinogenic.

  Radium is a radioactive metal that can cause diseases like leukemia.

  Benzene, toluene, xylenes, ethyl benzene, and a variety of other aromatic compounds are routinely used. Of these, benzene carries the greatest toxicity, due to its well-known carcinogenicity. These five compounds will tend to remain in water, and only be weakly absorbed.

  From the Review of the DRAFT ‘Supplemental Generic Environmental Impact Statement on the Oil, Gas and Solution Mining Regulatory Program Toxicity and Exposure to Substances in Fracturing Fluids and in the Wastewater Associated with the Hydrocarbon-Bearing Shale’ by Glenn Miller, Ph.D., Consulting Environmental Toxicologist to the Natural Resources Defense Council we get the following…

  “if drinking water were contaminated with as little as 0.1% of certain shale gas wastewater, it would constitute a violation of a drinking water standard. The small percentage of wastewater that can cause serious contamination supports an argument that effectively any contamination caused by shale gas wastewater would be considered unacceptable…

  The flowback water (containing both the shale fracturing water and the produced water) that will carry contaminants from the shale and the fracturing additives is likely to be highly contaminated with metals, salts, and radioactivity that, in some cases, are greater than 1,000 times the drinking water standards. This level of contamination is sufficiently high that any level of contamination of surface and groundwater is unacceptable.”

  As companies pump out the fracking fluids bubbles and ‘burps’ of dissolved gas are released. These early gases are usually vented into the atmosphere for up to a month or more until the well hits full production, then it’s hooked up to a pipeline.

  Natural gas emits about half as much carbon dioxide as coal per unit of energy when burned but a report by Cornell University concluded that methane leakage was 3.6% to 7.9% of gas produced.

  Natural gas is mostly methane (CH4), and methane is over 25 times (86 times more damaging than CO2 over a 20-year period) more efficient than carbon dioxide at trapping heat in the atmosphere over a 100 year period.

  One of the U.S.’s largest gas fields, the Uintah Basin, produces about 1 percent of U.S. natural gas. Releases of those magnitudes could offset the environmental edge that natural gas is said to enjoy over other fossil fuels.

  “Unless leakage rates for new methane can be kept below 2%, substituting gas for coal is not an effective means for reducing the magnitude of future climate change.” Major 2011 study by the Center for Atmospheric Research (NCAR)

  The ‘Proceedings of the National Academy of Sciences’ study introduces the idea of technology warming potentials (TWPs) to reveal time-dependent tradeoffs inherent in a choice between alternative technologies.

  In this approach the potent warming effect of methane emissions undercuts the value of fuel switching. The switch from coal to gas, assuming a total methane leakage of 2.4%, would only reduce TWPs by about 25% over the first three decades – just half the oft touted 50% drop in CO2 emissions from the switch. The study found that if the total leakage exceeds 3.2%, gas becomes worse for the climate than coal.

  “Some of the most intensive oil and gas development in the nation is occurring in regions where water is already at a premium. A paper published last month by Ceres, a nonprofit that works on sustainability issues, looked at 25,000 shale oil and shale gas wells in operation and monitored by an industry-tied reporting website called FracFocus.

  Ceres found that 47 percent of these wells were in areas “with high or extremely high waterstress” because of large withdrawals for use by industry, agriculture, and municipalities. In Colorado, for example, 92 percent of the wells were in extremely high water-stress areas, and in Texas more than half were in high or extremely high water-stress areas.

  The Ceres report goes on to say that:

  Prolonged drought conditions in many parts of Texas and Colorado last summer created increased competition and conflict between farmers, communities and energy developers, which is only likely to continue. … Even in wetter regions of the northeast United States, dozens of water permits granted to operators had to be withdrawn last summer due to low levels in environmentally vulnerable headwater streams…

  Moreover, an April report by the Western Organization of Resource Councils found that fracking is using 7 billion gallons of water a year in four western states: Wyoming, Colorado, Montana, and North Dakota.” Tom Kenworthy, Fracking Is Already Straining U.S. Water Supplies

  “Independent producers will spend $1.50 drilling this year for every dollar they get back.Achieving energy self-sufficiency depends on easy credit and oil prices high enough to cover well costs. Even with crude above $100 a barrel, shale oil and gas producers are spending money faster than they make it.” Bloomberg,Dream of U.S. Oil Independence Slams Against Shale Costs

  Conclusion

  Water is a commodity whose scarcity will have a profound effect on the world within the next few decades – this makes the reevaluation of our values regarding fresh water use not voluntary but mandatory. We will have to drastically change the way in which we view our freshwater as a resource.

  If seven billion of us are using 60 percent of our renewable freshwater supply what percentage will 10 billion people use?

  Can we achieve, and sustain, the enormous harvest we need from our planet to feed ourselves? The answer is for now but we’re quickly moving towards ecological overshoot regarding our freshwater resources.

  The gap between human demand and supply is known as ecological overshoot. To better understand the concept think of your bank account – in it you have $5000.00 paying monthly interest. Month after month you take the interest plus $100. That $100 is your financial, or for our purposes, your ecological overshoot and its withdrawal is obviously unsustainable.

  Fracking is poisoning our precious freshwater supply and drawing the inevitable freshwater overshoot date ever closer, certainly dating it much closer than it needs to be. Are our fresh water resources on your radar screen?

   

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Saskatchewan Juniors In A Most Excellent Adventure

February 24th, 2014

By Richard Mills.

As a general rule, the most successful man in life is the man who has the best information

In the history of mineral exploration, the quest for uranium is really in its infancy. Gold, silver, copper, iron and tin exploration, mining and refining can be traced back almost 10,000 years in some form.

Uranium wasn’t identified until 1789 and not isolated until 1841. Work done by Madame Currie lead to the first practical use of radioactivity, the common X-Ray machine. In WWI over a million patients had X-Rays taken and at the same time radiation treatment of cancer was born using radium.

Uranium ore was found in 1900 by the Geological Survey of Canada near the present Port Radium in Saskatchewan. The first Canadian commercial mine was called Eldorado and began production in 1930 – the principal uses of uranium being pigments, ceramic glazes, and a yellow-green fluorescent glass and as a source of radium for medical purposes.

Otto Hahn and Fritz Strassmann discovered nuclear fission in 1939. The Eldorado mine was taken over by the Canadian government in 1943 and produced the uranium for the atomic bombs dropped on Japan. Eldorado Mining and Refining remained owned by the Canadian government until 1988 when it merged with SMDC the predecessor company of Cameco.

 

“Exploration for uranium ore began in earnest in 1942 under direction of the government for military purposes. A wartime ban on private prospecting was lifted in 1947, which led in the early 1950s to the discovery of major deposits near Elliot Lake, Ontario, and northern Saskatchewan. By 1959, 23 mines and 19 treatment plants were in operation, and Canada’s C$330 million in uranium exports exceeded the value for every other mineral.

 A second burst of exploration in the 1970s resulted in major discoveries in the Athabasca Basin in northern Saskatchewan. Mines at Rabbit Lake, Cluff Lake and Key Lake started up in 1975, 1980 and 1983, which up until 2000 accounted for most of Canada’s uranium production (14,223 tonnes of U3O8 in 1998).” World Nuclear Association

 Athabasca Basin

Uranium prices were weak after the early post war demand subsided. It wasn’t until the mid 1960’s prices improved and exploration increased.

The Athabasca Basin is an ancient sedimentary basin located along the Northern Alberta-Saskatchewan border south of Lake Athabasca. The Basin covers approximately 100,000 square kilometers in Saskatchewan and a small portion of Alberta. With the Port Radium area thoroughly explored a consortium flew an airborne radiometric survey over the sandstones of the Basin in 1967.

 

Follow up on the survey resulted in the discovery of the Rabbit Lake mine in 1968.

The “Athabasca Basin” legend was born resulting in a huge staking rush by juniors and in particular large multinational oil companies.  This was the beginning of a prolific period of ongoing uranium discoveries incomparable to any other domain in the world.

When the Cluff Lake D Zone was found in 1969, the Athabasca Basin become host of the highest grade uranium deposit ever found up that time.

In 1975, the richest open-pit deposit in the world was discovered at Key Lake.

More than 15 uranium deposits totaling over 1.4 billion pounds of uranium have been discovered in the region since the Rabbit Lake mine discovery back in 1968

Today the Athabasca Basin of northern Saskatchewan hosts the world’s largest and richest high-grade uranium deposits accounting for approximately 15 percent of global primary uranium supply.

Athabasca uranium deposits have grades substantially higher than the world average grade of about 0.1% U3O8. The two dozen or so known uranium deposits within the Athabasca Basin have average grades of more than 3.0% U3O8.

Unconformity-related deposits

One thing almost all economic uranium deposits have in common is that the uranium is remobilized from one area and re-precipitated in a host rock where chemical conditions are conducive to concentrating the uranium in higher concentrations.

An unconformity is a time gap in the rock record between two rock units. The lower unit may be deformed, brecciated or altered while the overlying units are less deformed. Uranium deposits occur in both the underlying and overlying units.

In the underlying units, there may be a weathering zone, fault zone or some other feature that increases the rocks porosity and permeability. In the overlying units, it may be the sandstones or some other features that allows the concentration of uranium.

 



 

The deposits in the Athabasca Basin can occur below, across and immediately above the unconformity, with the highest grade deposits situated at or just above the unconformity (eg Cigar Lake and McArthur River).

The initial discoveries were found through surface indicators – radioactive boulders, geochemical anomalies in the surrounding lakes and swamps and geophysical signatures. Hydrothermal fluids associated with high grade uranium deposits will cause extensive alteration of the host rock, resulting in displacement and removal of minerals/elements, creating porosity and subsequent density contrast. This density contrast will be expressed as a gravity low anomaly and is a prime drill target when qualified by other coincident indicators of uranium mineralization such as geochemistry and radon.

Today, all of Canada’s uranium production is from unconformity-related deposits – Key Lake, Cluff Lake, Rabbit Lake (Cluff Lake, Key Lake and the original open pit at Rabbit Lake have now been mined out, underground mining continues at Rabbit Lake), and McClean Lake and McArthur River deposits. Other large, exceptionally high grade unconformity-related deposits currently being developed include Cigar Lake (averaging almost 20% U3O8, some zones over 50% U3O8).

 

Patterson Lake South

In 2013 seemingly not asingle day went by without a news releaseabout another company staking claims in the area surrounding Patterson Lake South (PLS) and citing recent drill assay results from Fission Uranium Corp. TSX.V:FCU as the reason why.

Fission’s exploration success, that sweet smell of discovery (seven zones on trend along a strike length of 1.78km with all seven zones remaining open in all directions), has created renewed exploration interest in Canada’s province of Saskatchewan, uranium and in the junior resource market.

The importance of Fission’s discovery cannot be overstated in the context of Saskatchewan exploration and the markets in general. This kind of good news can excite the market for the entire junior exploration sector. Also area plays, where one company makes a discovery, then dozens of other companies rush in to stake all around them, are one of the very foundations of our junior markets.

Fission’s assays are spectacular, here’s two:

• Hole PLS14-129: intersected 36.72m of total composite off-scale (>9999 cps) mineralization at shallow depth.
• Hole PLS13-075: intersected 21.65m total composite off-scale and assayed at 21.76% U3O8 over 21.5m.

Area Play

Located at the southwestern edge of the Athabasca Basin of northern Saskatchewan, Canada the Patterson Lake South uranium play has the potential to go for several years as field crews are mobilized to the area and news flow will be constant from almost all the companies involved.

Fission’s discovery has sparked a land rush, there are an increasing number of savvy explorers and market players staking whatever land they can get surrounding the discovery area. A select few companies will be buy and hold for drill results and many others will present trading opportunities.

Given very legitimate, and increasing daily, concerns about growing country risk, and a very real looming uranium supply crunch, this is an extremely timely article about what is a truly exciting uranium area play. And it certainly doesn’t hurt investor’s prospects that Canada’s Province of Saskatchewan is one of the most geologically prospective and pro-mining jurisdictions in the world today.

All the elements of a new area play are here:

1) A spectacular new discovery, with new geology or a twist on old geology.
2) A jurisdiction with safe and reasonable tenure.
3) An area amenable to mineral exploration and development.

The Patterson Lake South area play juniors (and a couple of majors – Cameco & Areva) are gathering for what could be one of Canada’s most important uranium discoveries. There is huge upside potential in any of these juniors if they make another discovery. One drill hole could send their (and their neighbors) share price soaring.



 

In alphabetical order here are a few companies that I found very interesting, (most are running drill/exploration programs right now), and have singled out.

 

Azincourt Uranium TSX.V:AAZ – On January 20th Azincourt and JV partner Fission 3.0 TSX.V:FUU announced a $1mm 8-10 hole drill program including radon surveying and ground geo-physicals had commenced on their Patterson Lake North (PLN) property.

 

Aldrin Resource Corp. TSX.V:ALN – Plans a 3,000 m winter drilling program to test priority basement conductors on its 12,000 hectare Triple M Uranium Property. These basement conductor targets are located within the 1984 hectare southeast block of the Triple M Property. Aldrin’s SE block is located adjacent to the south boundary of Fission Uranium’s PLS discovery property at Patterson Lake.

Canadian International Minerals TSX.V:CIN – CIN has exposure to 59,987.177 hectares of mining claims proximate to PLS. On Monday, February 10, 2014, the Company’s common shares began trading on a consolidated basis – ten (10) old shares for one (1) new share. As a result of the consolidation, there will be approximately 8,313,350 common shares issued and outstanding.

Forum TSX.V:FDC – Forums Clearwater Project is located adjacent to Fissions Patterson Lake South discovery. Forum’s northernmost claim, staked immediately southwest of Fissions ground is interpreted to be on strike with the conductive trend that hosts the high-grade uranium mineralization on the Patterson Lake South project. Forum is conducting a $900,000 winter drill and ground EM survey program with 3,000 meters (12 holes) of drilling planned. Drilling should start by mid-February.

NexGen Energy Ltd. TSX-V:NXE – Announced that it has commenced a two drill, 6,000 meter program on the Rook I project. On February 19th NexGen announced it has discovered a new zone of uranium mineralization on the Rook 1 project. The Arrow prospect represents a totally new zone of uranium mineralization in the SW Athabasca basin and is completely unrelated to any other known occurrence in the region. The Rook I project is immediately adjacent to, and on trend, northeast from Fission Uranium’s high-grade uranium discovery, Patterson Lake South (“PLS”) project.

Purepoint Uranium Group TSX.V:PTU – Announced the commencement of its winter drill program at its Hook Lake Project. This project is a joint venture with AREVA Resources Canada Inc. and Cameco Corporation and is located immediately north of Patterson Lake. The 2014 diamond drill program will focus on the highly prospective “Patterson Lake Corridor”, the same electromagnetic conductive trend that hosts the Patterson Lake South uranium discovery.

 

Conclusion

As the story at Fission’s Patterson Lake South project unfolds (Fission is undertaking a $20mm 2014 work program) I believe we can expect exciting times for those investors who get involved with the various companies participating in, what still are, very early days of this developing area play.

Canada’s Province of Saskatchewan has a stable geopolitical environment and a tremendous wealth of mineralization. History has proven time and time again that junior exploration stocks can write a very exciting discovery story and reward investors with multiple returns on their capital. It is still very early days in the Patterson Lake South areaplay and the greatest rewards lie ahead of us.

Is the Patterson Lake South uranium area play on your radar screen?

If not, it should be.

 Original Link

 

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U.S. Economy: A house built on sand

February 17th, 2014

 

By Richard Mills.

 



As a general rule, the most successful man in life is the man who has the best information

Warning, I’m not a licensed financial planner, a broker, an analyst, a geologist nor an economist. And I’m also not, as you so often tell me in your e-mails regarding my articles, an English professor. I’m also not a doom and gloomer nor am I a gold bug.

I’m just an investor who believes precious metals are the only financial safety net worth owning and need to be the cornerstone of any generational wealth building program.

Everyone should own gold and silver bullion in the form of coins and bars.

The Incas believed gold was the “Sweat of the Sun” and silver was “Tears of the Moon.”

 

Sweat of the Sun

Early Greeks thought gold was a combination of water and sunlight.

In ancient Egypt, gold was considered the skin or flesh of gods, in particular the Egyptian sun god Ra. Gold was unavailable to anyone but the pharaohs. The Egyptian word for gold was “nub,” taken from gold-rich Nubia – shown on the Turin Papyrus as a major gold producer in antiquity.

The first true coins in Western civilization were issued, about 640 B.C., by King Ardys of Sardis. They were small round lumps comprised of electrum (a naturally occurring amalgam of silver & gold) – they were not of any standard weight & purity of metal or size.

The Greeks would not accept the electrum coins in trade so the coins were outlawed by King Croesus (560-546 B.C.) and gold or silver coins were issued. When the Lydians were captured by the Persians in 546 B.C., the use of gold coins began to spread.

“Gold, measured out, became money. Gold’s beauty, scarcity, unique density and the ease by which it could be melted, formed, and measured made it a natural trading medium. Gold gave rise to the concept of money itself: portable, private, and permanent. Gold (and silver) in standardized coins came to replace barter arrangements, and made trade in the Classic period much easier…

A monetary standard made the world economy possible. The concept of money, (i.e., gold and silver in standard weight and fineness coins) allowed the World’s economies to expand and prosper.

Money had been invented. Its name was gold.” ~ A brief History of Gold, onlygold.com

There are more than 400 references to gold in the Bible, including specific instructions from God to cover furniture in the tabernacle with “pure gold.”

“By the late 13th century it was the city state of Venice that controlled trade throughout the Mediterranean. And the Venetians knew that if they wanted to consolidate and further increase their power and influence that they needed a coin that would be accepted by all nations. For such a coin would allow trade to flow freely and easily and greatly facilitate payment for goods.

Many references list Giovanni Dandolo as the originator of the Venetian ducat in 1284. But it was actually in 1274 when the Doge of Venice, Lorenzo Tiepolo, began minting a gold coin with the image of the Doge kneeling before St. Mark on the obverse and the figure of Christ on the reverse – and thus the gold ducat was born. It was a coin weighing 3.5 grams and struck in .986 gold. These specifications for the ducat would remain the same for the next 700 plus years. It continues to be struck even today. Not since the Roman Empire, had a coin of gold been struck that would capture the trust of all nations and be as enduring as the ducat.

The popularity of this coin quickly spread throughout Europe and even beyond to most areas of the Middle East and including India, Egypt and Africa. For here, at last, was a coin that allowed any nation of the world to trade with another and have a uniform method of payment. In all cases, the specifications of the coin were the same – 3.5 grams of .986 gold. In later years, the ducat was also struck in fractions and multiples – from as small as 1/32 ducat to as large as the extremely rare 100 ducats…

Today, the US dollar is the currency that is accepted worldwide; and before the dollar it was the British pound. But the gold ducat stands out above all other coins as having achieved acceptability over the known world based on its reputation and specifications. For centuries the ducat held the position of being the world’s currency. No other coin can make that claim.” ~ The Ducat, Doug Prather winsociety.org

The world’s first hallmarking system, scrutinizing and guaranteeing the quality of precious metal, was established in 1300 at Goldsmith’s Hall in London – where London’s Assay Office is still located today.

In 1422 the Venice Mint struck a record 1.2 million gold ducats using 4.26 tonnes of gold from Africa and Central Asia.

Gold was one of the gifts of the Magi and almost all of the gold that has ever been mined still exists.

Sixty-five percent of all gold in circulation has been extracted since 1950. Seventy-five percent of all gold in circulation has been extracted since 1910. Over 90 percent of the world’s gold has been mined since the California Gold Rush.

The annual worldwide production of gold is approximately 2,810 metric tons or 90 million troy ounces per year – the world pours more steel in an hour than it has poured gold since the beginning of recorded history.

 

U.S. Dollar Better Then Gold

In July 1944, delegates from 44 nations met at Bretton Woods, New Hampshire – the United Nations Monetary and Financial Conference – and agreed to “peg” their currencies to the U.S. dollar, the only currency strong enough to meet the rising demands for international currency transactions.

Member nations were required to establish a parity of their national currencies in terms of the US dollar, the “peg”, and to maintain exchange rates within plus or minus one percent of parity, the “band.”

What made the dollar so attractive to use as an international currency was each US dollar was based on 1/35th of an ounce of gold, and the gold was to held in the US Treasury. The value of gold being fixed by law at 35 US dollars an ounce made the value of each dollar very stable.

The US dollar, at the time, was considered better then gold for many reasons:

• The strength of the U.S. economy
• The fixed relationship of the dollar to gold at $35 an ounce
• The commitment of the U.S. government to convert dollars into gold at that price
• The dollar earned interest
• The dollar was more flexible than gold

There’s a lesson not learned that reverberates throughout monetary history; when government, any government, comes under financial pressure they cannot resist printing money and debasing their currency to pay for debts.

Lets fast forward a few decades…

The Vietnam War was going to cost the US $500 Billion. The stark reality was the US simply could not print enough money to cover its war costs, it’s gold reserve had only $30 billion, most of its reserve was already backing existing US dollars, and the government refused to raise taxes.

In the 1960s President Lyndon B. Johnson’s administration declared war on poverty and put in place its Great Society programs:

• Head Start
• Job Corps
• Food stamps
• Medicaid
• Funded education
• Job training
• Direct food assistance
• Direct medical assistance

More than four million new recipients signed up for welfare.

During the Nixon administration welfare programs underwent major expansions. States were required to provide food stamps. Supplemental Security Income (SSI) consolidated aid for aged, blind, and disabled persons. The Earned Income Credit provided the working poor with direct cash assistance in the form of tax credits and welfare rolls kept growing

“The problem with Socialism is that eventually you run out of other people’s money.”Margaret Thatcher

Bretton Woods collapsed in 1971 when Nixon severed (known as the Nixon Shock because the decision was made without consulting the other signatories of Bretton Woods, even his own State Department wasn’t consulted or forewarned) the link between the dollar and gold – the US dollar was now a fully floating fiat currency and the government had no problem printing more money.

 

Tears of the Moon

In the time of the ancient Babylonians – long before the periodic table – there were seven sacred metals: gold, silver, copper, iron, tin, lead and mercury.

In Roman and Greek Mythology, the First Age was called Golden, the Second Age Silver. Apollo, the god of truth and light, and teacher of medicine, carried a silver bow.

The hieroglyph of Isis (Egyptian moon goddess) is a crescent and images of her are usually reproduced with her standing on the Crescent. This has also become the symbol for silver – on old maps a crescent shows the location of a silver mine.

Islamic alchemy gave silver an important place, alchemical procedures were defined in terms of silver – the silvering of other metals, the act of giving other metals silver like qualities.

We’ve long practiced the science (metallurgy) of separating silver from lead – the earliest known workings of any significant size were those of the pre-Hittites of Cappadocia in eastern Anatolia, the first sophisticated processing of lead-silver ore was attributed to the Chaldeans around 2500 B.C.

Silver metal was recognized as more precious than gold when bartering in ancient Egypt – this recorded as early as 930 BC. Silver’s use as money in coin form began around 2600 years ago. The Lydian (present day Turkey) Trite is considered by many experts to be one of the first coins used as money. It was made of “Electrum”, a silver and gold mixture. Egyptian silver in coin form began appearing around 300BC.

 

Crime of ’73

In 1873, the Fourth Coinage Act was enacted by the US Congress. Western silver miners labeled this measure the “Crime of ’73” because it stopped the printing of US silver dollars. The US had, unofficially, abandoned its bimetallic standard in favor of a monometallic one – gold.

The supply of silver not being used for coinage increased – European Nations had just gone from a silver to a gold standard, the US was no longer coining silver dollars and these two factors, when coupled with massive new silver discoveries in the American west, caused the price of silver to collapse.

Western miners, seeking the right to turn silver directly into money, mid-western grain and southern cotton farmers (who both had immense debts because of price deflation caused by overproduction) rallied to silver’s cause and the movement became known as Free Silver. The Populist Party had a strong Free Silver element and its merger with the Democratic Party moved Democrats from being in support of a monometallic gold standard to the Free Silver position.

Free Silver supporters were called “Silverites.”

Silverite’s argued that silver should continue to be part of the monetary standard with gold, their slogan was “16 to 1” – sixteen ounces of silver would be equal in value to one ounce of gold, using the ratio established in the Coinage Act of 1834.

Silverites also wanted “free coinage of silver” as authorized under the Coinage Act of 1792. Free coinage meant anyone who possessed uncoined gold could bring it to one of the United States Mints and trade it for its equivalent in gold coins, less a small deduction – Free Silver advocates wanted the mints to accept silver on the same principle. These inflationary measures would have increased the amount of money in circulation and helped debtors pay off their debts, while harming creditors and savers.

Opponents to the Free Silver movement were mostly the financial establishments of the Northeast – the moneylenders, creditors, banks, leaseholders, and landlords – they backed a monometallic gold standard – the expanding economy had constrained the money supply available on a gold only standard, this had made the dollar stronger and decreased prices, opponents of Free Silver wanted to keep it that way.

The Republican Party was against Free Silver, the party’s position being that the best way to national prosperity was “sound money.” Republicans favored a continued strong dollar, which rewarded savers and creditors.

Battle lines were drawn, on one side were the Free Silver proponents – miners, farmers, debtors and Democrats – who wanted a bimetallic standard, the free coinage of silver and inflation. On the other side of the line were the creditors and Republicans who wanted to keep a strong currency using a gold only standard.

Intense pressure caused the U.S. government to agree to the Bland-Allison Act of 1878, this act directed the Treasury to purchase silver at a high price. The Sherman Silver Purchase Act was enacted on July 14, 1890. It didn’t authorize the free and unlimited coinage of silver that the Free Silver supporters wanted, but it did increase, by a large amount, the amount of silver the government was required to purchase every month.

Using a special issue of Treasury Notes that could be redeemed for either silver, or gold, the US government became the second largest silver buyer in the world – after the government of India.

By 1893 the US was in one of the worst depressions in American history and people were turning in the new Treasury Notes for gold and depleting the government’s gold reserves. President Grover Cleveland (R) forced the repeal of both the Bland-Allison and Sherman Silver Purchase Acts.

 

Conclusion

“Jesus ends the Sermon on the Mount (Matthew 5-7) with a parable everyone should heed. He says a man built his house and considering the good and bad times, the calms and the storms, he built it upon a rock. And when the wind blew, the waters rose and the floods came, it was able to survive the storms for he built on a firm foundation. Jesus then tells of another man who built his house on sand. The winds blew, the rains fell, the floods came and washed away that man’s home.

Aesop passed on a fable from ancient Greece that implied the same thing. He tells of three little piggies who went out to face the world. One built his house with straw, another with sticks and the other with bricks. When the wolves came, they easily destroyed the straw house and the house built with sticks. Children’s faces light up at the end of the fable. The last, wise pig built his house out of brick. The big bad wolf came and “huffed and puffed” trying to blow the house down. The wolf then climbed the roof and came down the chimney, only to find the wiser pig had built a fire under a boiling cauldron and the wolf fell in and the pig ate the wolf instead of the wolf eating the pig.” Bob Cuttino, ‘Weathering the storms of life’

 

The history of fiat money has always been one of failure. Every fiat currency since the Romans started diluting the silver content of their denarius has ended in devaluation and eventual collapse of both the currency and of that particular economy.

 

Silver and gold have stood the test of time, as a medium of exchange, a storehouse of value and a safe haven in times of turmoil.

For the very first time in our history, all money, all currencies, are now fiat – the US dollar use to be gold backed and it was the rock all the worlds currencies were anchored to – when the US dollar became fiat, all the worlds currencies became fiat.

Thankfully, using history as our guide we know all about the benefits of owning gold. Gold and silver act as the go to safe haven. Gold and silver will preserve our purchasing power throughout whatever wickedness comes our way – they are the rocks upon which our families future generational wealth has to be built on.

Politicians always dilute for war and favor, as a consequence every fiat currency throughout history has failed the test of time. The big bad wolf is never long off the hunt. Are gold and silver on your radar screen?

If not, they should be.

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How Gold is Currently Being Priced

February 9th, 2014

 

By Richard (Rick) Mills.

As a general rule, the most successful man in life is the man who has the best information

Gold’s Price

 



Ahead of the Herd readers know I believe gold’s price is being driven by rising, or falling, real interest rates.

Real interest rates are the level of annual yield paid to savers and investors over and above the pace of inflation.

PIMCO makes a convincing case that the number one factor influencing the price of gold is the changes in real yield on 10 year US Treasuries.

 

 

 

“Based on our study, the regression shows that, all else equal, a 100-basis-point increase in 10-year real yields has historically led to a decline of 26.8% in the inflation-adjusted price of gold.”



 

Chasing Yield

When real interest rates are low, at, or below zero, cash and bonds fall out of favor because your real return is lower than inflation – if your earning 1.6 percent on your money but inflation is running 2.7 percent the real rate you are earning is negative 1.1 percent – an investor is actually losing purchasing power.

So gold’s price is tied to low/negative real interest rates which are essentially the by-product of inflation – when real rates are low, the price of gold can/will rise, of course when real rates are rising, gold can fall very quickly.

Interest rates matter, they matter a lot. They affect the cost of borrowing for homes and business investment. They effect the rates paid on deposits and savings and also set the risk-free rate of return which is important for assessing returns from other asset classes like shares, bonds, precious metals, commodities and property.

 

According to PIMCO:

 

“Today the marginal price of gold is largely set by financial demand, as over $70 billion of gold is held by ETFs, and investors choose to buy or sell gold ETFs by comparing the expected real return on gold to that of other liquid financial assets.” PIMCO

The world’s dominant gold Exchange Traded Fund (ETF) is the American SPDR Gold Shares. The SPDR had the largest outflow of any single ETP in 2013 at $25 billion.

 



 

 

Commodity exchange traded products (ETPs) suffered their worst year on record as assets under management (AUM) declined by $78 billion to $122 billion in 2013.

Total ETP gold holdings declined to 56.67 million ounces at year-end from 84.62 million at the end of 2012. ETF Securities estimated that of the roughly $71 billion gold AUM decline, 46% was caused by a 28% fall in the gold price and 54% by investor outflows. The decline in overall commodity AUM was the most on record.

 

PIMCO’s advice for gold investors is the following:

“As gold increasingly becomes a financial asset, when real yields rise, gold prices should fall if they are to maintain a given level of financial demand relative to investors’ other opportunities. Similarly, when real yields fall, we expect the price of gold to rise. Investors should be aware of the relationship between gold and real yields because it has important implications for how they think about the role of gold in their portfolio in an asset-allocation and risk-factor framework.” PIMCO

 

What does PIMCO expect for short term gold prices?

“Looking ahead, we expect the Federal Reserve to move very gradually in reducing accommodative policy and for 10-year U.S. real yields over the next several months to be relatively steady around current levels, which would be neutral for nominal gold prices.” PIMCO

According to a recent economist survey by Bloomberg the three-month Treasury bill rate will be 0.42 percent and the yield on the 10-year Treasury note will be 3.33 percent by the end of 2014.

The Bank of Nova Scotia, in its January 30th 2014 ‘Global Forecast Update’ predicts U.S. 10 year Treasury rising to 3.40 percent Q4, 2014 and to 4 percent Q4 2015.

 

U.S. Economy

“Low or negative real rates are usually the result of two things. Interest rates are the price of money, balancing the demand of citizens to save with business’s desire to invest. So a low real rate may simply be a sign that both consumers and businesses are feeling cautious.

 



But interest rates are also affected by the actions of the central bank—particularly so at present when the monetary authorities are intervening at both the short and long end of the yield curve. Central banks want rates to be low to encourage business investment, and to discourage consumer parsimony.

In both cases, low rates are associated with a weak economy. If the economy is strong, businesses will be eager to expand and will compete for savers’ capital, bidding up rates. A strong economy would also create inflationary pressures as companies battle for workers and raw materials, pushing up wages and prices. In these circumstances central banks would be raising rates as a precaution.” The Real Deal, Buttonwood, The Economist

The U.S. economy grew at a 3.2 percent annual rate in the October-December quarter on the strength of the strongest consumer spending in three years. The fourth quarter increase followed a 4.1 percent growth rate in the July-September quarter.

“To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. The Committee also reaffirmed its expectation that the current exceptionally low target range for the federal funds rate of 0 to 1/4 percent will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.” U.S. Federal Reserve

 

Conclusion

 The fundamental driving force behind the price of gold is real interest rates, specifically U.S. real interest rates because the U.S. dollar is the world’s reserve fiat currency.

The U.S. inflation rate was 1.5% for 2013. The U.S. Federal Reserve spiked 10 year Treasury yields to 3.3% with its tapering talk. As I write this the current 10 year U.S. Treasury yield is 2.6%.

Low, and even into negative territory real interest rates produced a bull market in precious metals. Has that tailwind been neutralized as PIMCO suggests? Are we entering a prolonged rising real interest rate environment? Perhaps we’re heading back to negative real interest rates?

“Gold is the wild card. The gold price and investor positioning today reflects near unanimous negative sentiment on gold’s prospects, based on expected higher global interest rates and a strong U.S. dollar as the U.S. economy recovers. Any disappointment to this scenario will likely drive the gold price higher, making it one of the better hedges against the risk the U.S. economic recovery falters.” Nicholas Brooks, head of research and investment strategy for ETF Securities, in an interview with Kitco.com

Real interest rates should be on every precious metals and commodities investors radar screen. Is today’s reality of gold and commodity pricing on yours?

Please visit  www.aheadoftheherd.com

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Climate Change, Polar Vortex’s and Nuclear Energy

January 27th, 2014

 

By Richard Mills.

 

As a general rule, the most successful man in life is the man who has the best information

What does nuclear energy have to do with a polar vortex, record cold/snow and climate change? Read on to find out…

From the World Nuclear Association (WNA) we take the following numbers as updated January 3^rd, 2014. An important point to remember is I’m only going to use demand numbers from ‘future reactors envisaged in specific plans and proposals and expected to be operating by 2030.’

Facts:

• Currently there are 435 reactors operating worldwide producing 375,264MWe. Operable already means connected to the grid.
• Currently there are 71 reactors under construction. Under construction means first concrete for the reactor has been poured, or a major refurbishment under way.
• There are 172 reactors on order or planned. Planned means approvals, funding or major commitment in place, mostly expected in operation within 8-10 years.
• There are 312 reactors proposed. Proposed means specific program or site proposals, expected operation mostly within 16 years.
• Tonnes uranium required for reactors in 2013 = 64,978t

71 reactors under construction + 172 reactors on order or planned + 312 reactors proposed = 555 NEW reactors expected to be connected and supplying power to the grid WITHIN 16 YEARS!

Tonnes uranium required in 2013 was 64,978t, 64,978/435 = 150t uranium per reactor.

555 new reactors times 150t = 83,250t new uranium per year in 16 years.

Adding to that number an industry standard 900 MW LWR typically needs around 350 tons of low enriched uranium fuel on start-up, and about 150t per year after that.

These numbers are driven even higher by the increased demand from the industry for future bigger reactor sizes of up to 1200 MW per power plant.

In 16 years, in 2030, we could be using as much as 148,228t (326,101,600 lb) uranium per year – if all the new reactors are built and no reactors are taken-offline.

Demand forecasts for uranium depend largely on installed and operable capacity. Once nuclear reactors are commissioned its very cost effective to keep them running at a high capacity. When demand load changes, utilities can burn more, or less fossil fuel to meet the changing requirements.

 

Nuclear Saves New England…

“In New England, natural gas electricity generation faltered so much

that regional grid administrator ISO New England had to bring up dirtier coal and oil plants to try to make up the difference. Nuclear energy didn’t have many problems at all and actually became the primary provider of electricity in New England, just edging out gas 29% to 27% (Hartford Business). Oil generation made up 15% while coal accounted for 14%… coal stacks were frozen or diesel generators simply couldn’t function in such low temperatures. Gas choked up – its pipelines couldn’t keep up with demand – and prices skyrocketed. Nuclear did quite well throughout the vortex period. The entire fleet operated at 95% capacity, a ridiculously high value (NEI).” James Conca, Polar Vortex – Nuclear Saves the Day, Forbes

The latest forecast from the World Nuclear Association (WNA) has a base case demand of 205 million pounds of U3O8 for reactors in 2020 and 255 million lb for 2030.

UxC pegs its base case at 275 million lb with a high of 355 million pounds for 2030.

Current annual global uranium consumption is 190 million pounds, annual global mine production is 140 million pounds, resulting in a current 50-million pound deficit.

That’s today’s deficit. In 16 years time we’re suppose to ramp up uranium production (according to the WNA & UxC base cases), anywhere from 65,000 million lb all the way up to 135 million lbs new mined uranium? Two base case scenarios are telling us we need to at least double, maybe even triple, mined uranium production in just 16 years.

In 2010, 22% of uranium came from secondary sources (uranium stocks held by miners, power plant builders and plant operators, as well as government stockpiles) this number had shrunk to 14% by 2012.

The HEU agreement governing the sale of decommissioned Russian warheads expired the end of 2013 – 20 million lb’s of annual supply removed from the market.

The last time excess uranium supply was this low (8% as a percentage of demand) was just before Fukushima when the spot price was US$70/lb U3O8.



Considering it takes over 11 years to find, develop, permit and build a mine we better get busy.

Uranium mine production, also known as primary supply, met 86% of nuclear power generation needs in 2012. While this is up from 65% in 2005, the absolute gap has been rising – from 7,480t uranium in 2005 to 10,470t in 2012.

In 2012, eight companies marketed 88% of the world’s uranium mine production and a net combined total of nearly 99% of world uranium consumption was being imported into user countries.

Governments play a huge role in regards to uranium supply:

• The Kazakhstan government controls 60% of domestic production through Kazatomprom.
• JSC Atomredmetzoloto (ARMZ) and Uranium One are controlled by Russia.
• Navoi Mining and Metallurgical Combinat (Navoi) is controlled by Uzbekistan.
• The French government holds a 10% stake in AREVA.



Some of the new mines counted on to reach substantial production are:

• Four Mile, Australia
• Cigar lake, Canada
• Talvivaara, Finland
• Imouraren, Niger
• Husab, Namibia

Some key deferrals and shutdowns include:

• BHP Billiton Ltd.’s (BHP) Olympic Dam expansion in Australia has been postponed indefinitely.
• Uranium One’s halted its Willow Creek mine expansion. Uranium One also mothballed its Honeymoon project in South Australia due to low uranium prices and high operating costs. The company’s Mkuju River project’s commissioning date of 2017 might be pushed back as the company needs to optimize the feasibility of the mine.
• Postponement of development at Rosatom Mine #6 (Priargunsky) and shutdown of Mine #2
• Capacity reduction at JSC Atomredmetzoloto’s Khiagda mine.
• Delayed Imouranen startup to mid-2016.
• Cameco’s Kintyre project in Australia is not economically viable at current uranium prices.
• Production from Energy Resources of Australia Ltd. Ranger 3

Deeps underground mine was anticipated to begin in 2017. Two recent leach tank spills at the company’s existing Rössing (Namibia) and Ranger (Australia) open-pit mines has resulted in the Australian government suspending all mining activity. The Australian government is currently conducting an audit to assess the impact.

• Talvivaara Mining announced in the fall of 2013 that a weakened liquidity position was forcing the company to explore various funding options. Production at the companies Sotkamo nickel/uranium mine may be halted indefinitely.

“Cigar Lake is among the most technically challenging mining projects in the world…” Tim Gitzel, Cameco’s president and CEO

KazAtomProm’s CEO announced Kazakhstan’s uranium output in 2014 was going to be similar to 2013 at 21,000 tU. This might signal Kazakhstan, the world’s number one uranium producer, is reaching peak uranium production levels of 50 Mlb/y.

Expect 2014 to be a rebound year for uranium spot prices for many reasons:

Japan – The Fukushima disaster in March 2011 destroyed four of Japan’s 54 nuclear power reactors – 16 of the remaining 50 have already applied to restart operations. With six of the 16 applications being prioritized for government review there could be as many as 6 Japanese reactors online by the end of 2014.

Japan has enough uranium (an estimated 100 million pounds) to last up to 10 years – that’s the overhang that’s driven down spot prices and the reason utilities have been holding off buying long term. But if Japan’s utilities are restarting their reactors it means that the threat of them dumping their inventory stockpile has been removed from the market. This could jump start buying as global utilities recognize the growing risk to future supply availability

And of course it means Japan itself would be returning to a nuclear reactor demand of >10 Mlbs/year in less than half a decade as they would need to secure long term uranium deals well before their stockpiles ran out.

UUR – Cumulative uncovered uranium requirements (UUR). UUR represents what utilities have to buy to meet their needs in future years, while maintaining strategic inventory levels. Utilities contracted for 160 Mlbs (average) of uranium per year over the last decade yet utilities only contracted for 20 Mlbs in 2013.

According to UxC, in 2003, the 12-year forward uncovered requirements were 130 million lb U3O8. Today, the 12-year forward uncovered requirements are just short of 200 million lb.

UPC – Uranium Participation Corp. TSX – U, the world’s only physical uranium fund is raising $50 million, most of the $50m will be used to buy uranium.

The effect of a massive uranium purchase by UPC would be threefold

1. Reduction in current excess supply
2. Upward pressure on the uranium price
3. Another spark to ignite utility buying

A one million pound UPC uranium purchase would represent 2.3% of total 2013 spot market volume.

Shale gas – The key to the U.S. natural gas boom is the use of new technology. Hydraulic fracturing, fracking, and horizontal drilling have tapped huge resources previously thought unrecoverable.

However the decline rate of shale gas wells is very steep. A year after coming on-stream production can drop to 20-40 percent of the original level.

Here’s James Howard Kunstler, author of “The Long Emergency” and his take on the situation;

“In order to keep production up, the number of wells will have to continue increasing at a faster rate than previously. This is referred to as “the Red Queen syndrome” which alludes to the character in Alice in Wonderland who famously declared that she had to run faster and faster just to stay where she is.”

Here’s something else, it’s a link to an Energy Report interview with energy expert Bill Powers.

The shale gas energy boom is not sustainable, will be shorter lived than most anticipate and its global potential is vastly overstated.

Consider also

Germany – the loss of 17 reactors will occur at approximately the same time as India’s rapid growth in nuclear energy – by 2030 India should have seven more reactors online than Germany will have taken offline.

AREVA has signed a €1.25 billion deal to build a new Angra 3 reactor in Brazil by 2016.

Canada and the European Union (EU) have reached a nuclear technology free-trade agreement.

China is going to help Pakistan build a US$9.6 billion nuclear power complex in Karachi.

The Russian federal government has approved plans (construction has already begun on several), to build 21 new reactors in nine different power stations by 2030.

China is currently building 29 reactors, India 6, Russia 10 and South Korea 5. The number of proposed nuclear reactors has been declining since 2010 but the number of facilities under construction, and planned, has increased every year. Projects are getting built and becoming operational.

BP projects that global energy consumption will rise by 41% by 2035, with 95% of that growth coming from rapidly growing emerging economies.

The United Kingdom has offered EDF Energy a power price guarantee for 35 years for a plant that the French utility plans to build in southwest England.

In the U.S. the Watts Bar Unit 2 nuclear plant in Tennessee remains on budget and schedule, commissioning is expected in late 2015.

Also in the U.S. construction of the Southern Company Unit 3 and Unit 4 reactors in Georgia is underway. These units are expected to be completed by late 2017 and 2018, respectively.

Opportunities

On May 31^st, 2013 I published ‘Civil Nuclear Energy Renaissance Restart’ in which I highlighted several uranium companies I liked.

Cameco: closed @ CDN $22.54, May 31^st 2013.

Uranium One: May 31^st 2013 closed @ $2.77, last trade $2.85 defunct (taken private)

Uranerz: May 31^st 2013 closed @ CDN $1.33.

Uranium One has been taken private, Cameco and Uranerz are still on my list and TSX-U is a new addition.

Cameco Corp. TSX: CCO, is the largest publicly traded uranium company and the world’s third-largest uranium producer.

Cameco Highlights:

• Vertically integrated
• Engaged in fuel conversion services and nuclear power generation
• Top-producer status
• High-grade deposits
• Low cash costs
• Organic growth in stable jurisdictions
• Healthy balance sheet

Cameco Corp. is the bellwether uranium mining company. The company is planning to increase its U.S. production in the Powder River Basin, Wyoming.

Uranium Participation Corp. TSX – U, UPC is a Canadian investment fund that purchases and holds both uranium oxide concentrate (U3O8) and uranium hexafluoride (UF6). The fund’s primary objective is to achieve capital appreciation through the value of its uranium holdings.

UPC would seem to offer investors all the upside of a potential uranium market rebound yet isn’t saddled with the exploration and operational risks other equities in the sector have.

Uranerz Energy Corp. NYSE – MKY, TSX.V – URZ, Uranerz Energy Corp. (NYSE: MKT, TSX: URZ) is a U.S. mining company operating in Wyoming’s Powder River Basin where it controls a large strategic land position. URZ is expected to be in production (annual recovery targeted for 600,000 to 800,000 pounds after ramp-up) in early 2014.

Uranerz has a processing deal with Cameco and long term sales contracts for a portion of their production with Exelon (operator of the largest nuclear fleet in the U.S.) and an undisclosed U.S. utility. The Company’s Nichols Ranch ISR uranium project, in Wyoming’s Powder River Basin, is licensed for a capacity of two million pounds per year of uranium yellowcake.

Conclusion

There’s a significant uncovered long term uranium requirement. With so many projects being deferred or cancelled outright, with existing mines being shutdown, with Japan restarting and with continued demand growth from other regions of the world it’s going to become increasingly difficult for utilities to meet uncovered uranium needs.

Facts are:

• Globally mined uranium is far from abundant.
• It can take 11 or more years to develop, permit and build a mine.
• Uranium demand could more than double over the next 16 years.
• The here today (but unrecognized by most) uranium supply pinch is not going to go away for a very long time.

Are, 1. the truth that nuclear energy is our only option for base load power, 2. the here today uranium supply pinch, and 3. the aheadoftheherd.com investment opportunities presented in this report, all on your radar screen?

If not, they should be.

Richard (Rick) Mills

Richard lives with his family on a 160 acre ranch in northern British Columbia. He invests in the resource and biotechnology/pharmaceutical sectors and is the owner of Aheadoftheherd.com. His articles have been published on over 400 websites, including:

WallStreetJournal, USAToday, NationalPost, Lewrockwell, MontrealGazette, VancouverSun, CBSnews, HuffingtonPost, Beforeitsnews, Londonthenews, Wealthwire, CalgaryHerald, Forbes, Dallasnews, SGTreport, Vantagewire, Indiatimes, Ninemsn, Ibtimes, Businessweek, HongKongHerald, Moneytalks, SeekingAlpha, BusinessInsider, Investing.com and the Association of Mining Analysts.

Please visit  www.aheadoftheherd.com

If you are interested in advertising on Richard’s site please contact him for more information, rick@aheadoftheherd.com

Comments Off on Climate Change, Polar Vortex’s and Nuclear Energy

Global Warming Chickenlittleism

January 12th, 2014

 

By Richard Mills.

As a general rule, the most successful man in life is the man who has the best information

The nature of the recently released report by the Intergovernmental Panel on Climate Change (IPCC) is extremely alarmist. The report warns, with a 95% certainty, that global warming is man-made and that the resulting  climate change will lead to:

• Rising temperatures, drought and increasing desertification
• Warming of the oceans and rising sea levels
• Shortages of food
• Loss of ice sheets & shrinking of glaciers
• Increasing intensity and size of storms

There’s no doubt our climate is changing, but are the charges the IPCC is making correct? Are the global climate changes we’re experiencing man-made or part of earth’s natural climate cycle?

Let’s take a look under the ‘hood’ of ‘man-made’ global warming.

Fact – The Earth’s climate has been continuously changing throughout its history. From ice covering large amounts of the globe to interglacial periods where there was ice only at the poles – our climate and biosphere has been in flux for millennia.

”it somehow wasn’t front-page news that committed believers in man-made global warming recently admitted there’s been no surface global warming for well over a decade and maybe none for decades more. Nor did we see warmists conceding that their explanation is essentially a confession that the previous warming may not have been man-made at all.

That admission came in a new paper by prominent warmists in the peer-reviewed journal Climate Dynamics. They not only conceded that average global surface temperatures stopped warming a full 15 years ago, but that this “pause” could extend into the 2030s.

Mind you, the term “pause” is misleading in the extreme: Unless and until it resumes again, it’s just a “stop.” You don’t say a bullet-ridden body “paused” breathing.

remarkably, that stoppage has practically been a state secret. Just five years ago, the head of the International Panel on Climate Change, the group most associated with “proving” that global warming is man-made and has horrific potential consequences, told Congress that Earth is running a “fever” that’s “apt to get much worse.” Yet he and IPCC knew the warming had stopped a decade earlier…

 

The single most damning aspect of the “pause” is that, because it has occurred when “greenhouse gases” have been pouring into the atmosphere at record levels, it shows at the very least that something natural is at play here. The warmists suggest that natural factors have “suppressed” the warming temporarily, but that’s just a guess: The fact is, they have nothing like the understanding of the climate that they claimed (and their many models that all showed future warming mean nothing, since they all used essentially the same false information).

 

If Ma Nature caused the “pause,” can’t this same lady be responsible for the warming observed earlier?” Michael Fumento, Global Warming Proof is Evaporating, New York Post

 

Global warming stopped almost two decades ago despite warmists arguments about man putting too much CO2 into the atmosphere. There has to be other factors at work, they are:

• Variations in solar activity accounts for ¾’s of the variability in earth’s temperature. Changes occurring within the sun affects the intensity of sunlight that reaches the Earth’s surface. These changes in intensity can cause either warming – stronger solar intensity – or cooling when solar intensity is weaker. Solar activity has dropped to a 100 year low.
• Variations in the Earth’s orbital eccentricity – the shape of the orbit around the sun, a 100,000 year cycle.
• Changes in obliquity or tilt of the earth’s axis – changes in the angle that Earth’s axis makes with the plane of Earth’s orbit, a 41,000 year cycle
• Precession – the change in the direction of the Earth’s axis of rotation, a 19,000 to 23,000 year cycle
• Albedo or the total reflectivity of the earth’s changing cloud cover
• Volcanoes often affect our climate by emitting aerosols and carbon dioxide into the atmosphere. Aerosols block sunlight and contribute to short term cooling, but do not stay in the atmosphere long enough to produce long term change. Carbon dioxide (CO2) has a warming effect. For about two-thirds of the last 400 million years, geologic evidence suggests CO2 levels and temperatures were considerably higher than present. Throughout human history, volcanic eruptions have produced some of the coldest winters ever recorded – in 2013 there were a record number of volcanic eruptions.

These climate change “drivers” often trigger additional changes or “feedbacks” within the climate system that can amplify or dampen the climate’s initial response to them: 

• The heating or cooling of the Earth’s surface can cause changes in greenhouse gas concentrations.

• The heating or cooling of the Earth’s surface can cause changes in ocean currents. Ocean currents play a significant role in distributing heat around the Earth so changes in these currents can bring about significant changes in climate from region to region

Approximately every 100,000 years or so our climate warms up temporarily, this temporary reprieve from the ice we are now experiencing is called an interglacial period – the respite from the cold locker began 18,000 years ago as the earth started heating up and warming its way out of the Pleistocene Ice Age.

The close of the Pleistocene Ice Age started when a shift in sunlight caused a slight rise in temperature – this raised gas levels over the next few hundred years and the resultant greenhouse effect drove the planet’s temperature higher, which drives a further rise in the gas levels and so on. The exact opposite happens when sunlight weakens, we get a shift from emission to absorption of gases which causes a further fall in temperature… and so forth.

Small rises or falls in temperature  – more, or less sunlight – causes a rise, or fall, in gas levels. Changing atmospheric CO2 and methane levels physically linked the Northern and Southern hemispheres, warming or cooling the planet as a whole.

 

Historical Atmospheric CO2 Levels

Atmospheric CO2 concentrations are @ 400 ppm. Over the Earth’s history, atmospheric CO2 concentrations have ranged from 180 ppm to 7000 ppm.

 



Everyone should watch, and carefully listen to, the following: In Defense of CO2

 

Useful Idiots, Chickenlittleism and Climate Change

Just as the weather has changed over time, so too has the reporting – media outlets blow hotter or colder following the short-term changes in temperature.

It’s easy to follow mainstream media’s climate change coverage dating back to the late 1800s with several major publications, including The New York Times, Time magazine and Newsweek reporting on four different climate shifts since 1895.

In 1895 the page six headline of The New York Times warned about the looming dangers of a new ice age. Reporting on ice age threats lasted from the late 1800s well into the late 1920s.

When the earth’s surface warmed less than half a degree, newspapers and magazines responded with sensational stories about the new threat with the Times out in front, cautioning “the earth is steadily growing warmer.”

British amateur meteorologist G. S. Callendar was arguing that mankind was responsible for heating up the planet with carbon dioxide emissions as early as 1938.

In 1954, Fortune magazine was writing about another cooling trend and ran an article titled “Climate – the Heat May Be Off.”

Stories about global cooling started in the ‘50s but didn’t gain much traction until about 1975. Some of the stories were remarkably similar in subject to today’s – severe weather and deadly storms would occur much more frequently, climate changes pose a major threat to the food supply.

 

In 1975, The New York Times reported: “A Major Cooling Widely Considered to Be Inevitable.”

“The Cooling Worlds” was the title of a Newsweek article in 1975. The paper wrote;

“the Earth’s weather patterns have begun to change…..a drop of half a degree in average ground temperatures in the Northern Hemisphere between 1945 and 1968. The evidence in support of these predictions has now begun to accumulate so massively that meteorologists are hard-pressed to keep up with it….what causes the onset of major and minor ice ages remains a mystery not only are the basic scientific questions largely unanswered, but in many cases we do not yet know enough to pose the key questions”

Just 6 years after publishing “A Major Cooling Widely Considered to Be Inevitable,” the New York Times, on Aug. 22, 1981,  quoted seven government atmospheric scientists who predicted global warming of an “almost unprecedented magnitude.”

Global cooling, warming, cooling again, and finally today (well maybe not so finally) warming.

Interesting that the term ‘Global Warming’ has recently morphed into the much more flexible ‘Climate Change’ – which of course means any major shift or major climate event can now be easily blamed on man’s activities.

IPCC Skeptics

Critics of the latest IPCC report are many but don’t expect to read any of them in mainstream media publications. Here’s a link to, and a short snippet and graph from, an excellent article by Great Britain’s The Mail.

“Global warming just HALF what we said: World’s top climate scientists admit computers got the effects of greenhouse gases wrong.”

“The Mail on Sunday has obtained the final draft of a report to be published later this month by the UN Intergovernmental Panel on Climate Change (IPCC), the ultimate watchdog whose massive, six-yearly ‘assessments’ are accepted by environmentalists, politicians and experts as the gospel of climate science. 

 

They are cited worldwide to justify swinging fossil fuel taxes and subsidies for ‘renewable’ energy…

 



One of the report’s own authors, Professor Myles Allen, the director of Oxford University’s Climate Research Network, last night said this should be the last IPCC assessment – accusing its cumbersome production process of ‘misrepresenting how science works’.”

A key new study in the journal Nature Climate Change revealed that nearly all climate models are dramatically inaccurate. On average, the predictions forecasted two times more global warming than actually occurred.

The Nongovernmental International Panel on Climate Change (NIPCC) has produced a report titled ‘Climate Change Reconsidered II’ by the Heartland Institute, the Center for the Study of Carbon Dioxide and Global Change, and the Science & Environmental Policy Project.

 

“This work provides the scientific balance that is missing from the overly alarmist reports of the United Nations’ Intergovernmental Panel on Climate Change (IPCC), which are highly selective in their review of climate science and controversial with regard to their projections of future climate change. Although the IPCC claims to be unbiased and to have based its assessment on the best available science, we have found this to not be the case. In many instances conclusions have been seriously exaggerated, relevant facts have been distorted, and key scientific studies have been ignored…Most notably, its authors say the IPCC has exaggerated the amount of warming they predict to occur in response to future increases in atmospheric CO2. Any warming that may occur is likely to be modest and cause no net harm to the global environment or to human well-being.”

Also from the Executive Summary:

“No close correlation exists between temperature variation over the past 150 years and human related CO2 emissions…

Evidence is accruing that changes in Earth’s surface temperature are largely driven by variations in solar activity…

The recently quiet Sun and extrapolation of solar cycle patterns into the future suggest a planetary cooling may occur over the next few decades.“
I found the following on wattsupwiththat.com. It’s an article by Joseph D’Aleo with 25 key rebuttals to the man-made global warming side of the debate.

(1) Warming not ‘global’. It is shown in satellite data to be northern hemisphere only

(2) It is now not warming. Warming (global mean and northern hemisphere) stopped in the 1990s

(3) Models suggest atmosphere should warm 20% faster than surface but surface warming was 33% faster during the time satellites and surface observations used. This suggests GHG theory wrong, and surface temperature contaminated.

(4) Temperatures longer term have been modified to enhance warming trend and minimize cyclical appearance. Station dropout, missing data, change of local siting, urbanization, instrumentation contaminate the record, producing exaggerating warming. The GAO scolded NOAA for poor compliance with siting standards.

(5) Those who create the temperature records have been shown in analysis and emails to take steps to eliminate inconvenient temperature trends like the Medieval Warm Period, the 1940s warm blip and cooling since 1998. Steps have included removal of the urban heat island adjustment and as Wigley suggested in a climategate email, introduce 0.15C of artificial cooling of global ocean temperatures near 1940.

I gave you the first 5 of 25 rebuttals, follow this link to read the other 20 points.

97% Consensus – polls say 97 percent of working climate scientists now see global warming as a serious risk.

“Historically, the claim of consensus has been the first refuge of scoundrels; it is a way to avoid debate by claiming that the matter is already settled. Whenever you hear the consensus of scientists agrees on something or other, reach for your wallet, because you’re being had. Let’s be clear: the work of science has nothing whatever to do with consensus. Consensus is the business of politics.” Michael Crichton, 17th January 2003, speaking at the California Institute of Technology

 

Conclusion

“I think that the latest IPCC report has truly sunk to level of hilarious incoherence.  They are proclaiming increased confidence in their models as the discrepancies between their models and observations increase.” MIT Climate Scientist Dr. Richard Lindzen speaking to Climate Depot

I agree with Dr. Lindzen, with so much garbage going into, and considering the non-use of so much key data, one would have to expect nothing but garbage to come out of the IPCC report, after all garbage in =’s garbage out.

Remember

It’s not gas that initially causes the rise in temperatures, its more, or less sunlight.

+- Sunlight = +- temperature = +- gas

What the IPCC is doing is chasing a symptom, you cannot cure, fix or regulate how much sunlight reach’s the earth surface.

As far as this skeptic is concerned the IPCC’s ‘scientific’ opinion on climate change is influenced by nothing more than funding and political factors.

So what might be their agenda?

“the theory of man-caused, catastrophic, global warming is embraced not because of any “science,” (that sham is for the “useful idiots,”), but because it is a justification for a government takeover of the energy industry, with massive increases in regulation, taxes and government spending.  The United Nations loves it because it inspires fantasies of the UN growing up to be a world government, with real government powers of global taxation, spending and regulation, all “to save the planet.”  Scientists who go along with the cause are rewarded not only with praise for their worthy social conscience, but also with altogether billions in hard, cold cash (government and environmental grants), for their cooperation in helping to play the “useful idiots.”  Moreover, many academic scientists are “progressives” themselves, and so favor sharp increases in government spending, taxes and regulation, because they are certain they know how to run your life better than you do.” Peter Ferrara,The Coming Revelation Of The ‘Global Warming’ Fraud Resembles The Obamacare Lie, Forbes

Is the real science of climate change, and the political machinations in regards to the UN and the IPCC’s global warming agenda on your radar screen?

 

If not, they should be.

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