| Will we see a dramatic spike in uranium | | | | Administration (NOAA) estimated up to a total |
| prices this summer? Some industry insiders | | | | of 16 storms, as many as ten hurricanes and |
| have forecast spikes that could send uranium | | | | up to six Category 3 or higher hurricanes. |
| soaring to between $55 and $100/pound. Most | | | | Dr. Gray's team estimates similar numbers, |
| were not expecting this to occur during 2006. | | | | but places the brunt of the storms' impact on |
| However, there are several reasons we believe | | | | the eastern United States.Storms mainly cause |
| something could crack wide open in the | | | | panic. It is the landfall which causes death |
| uranium market over the next 100 | | | | and destruction. Using Steering Current |
| days.RUSSIALet's take the Russian situation. | | | | Predictors, sea surface temperatures, a |
| U.S. utilities have been somewhat | | | | 52-year statistical hindcast, North Atlantic |
| lackadaisical about uranium pricing because | | | | and Arctic Oscillations and other parameters, |
| they've been getting Russian uranium on the | | | | Dr. Gray forecast in his recent report, "The |
| cheap. Russia's | | | | odds of a major hurricane making landfall |
| | | | along the East Coast are more than twice the |
| Rosatom head Sergei Kiriyenko has reportedly | | | | climatological average value this year." He |
| told U.S. utilities there will be no HEU-2 | | | | forecast a 38-percent probability of a major |
| deal. Whether this is a ploy to extract a | | | | hurricane hitting land along the Gulf Coast |
| better deal for Russia, or Russia's | | | | this year.The most chilling comparisons made |
| announcement it will feed other | | | | in the "Extended Range Forecast of Hurricane |
| nuclear-ambitious countries with its uranium | | | | Activity for 2006" were those which went |
| is not known.U.S. utilities are now lobbying | | | | unremarked by the media. Dr. Gray compared |
| the U.S. Commerce Department to end the | | | | Hurricane Season 2006 to hurricane seasons in |
| restrictions on importing enriched Russian | | | | 1961 and 2004. Hurricane Carla in 1961 was |
| uranium. They like the pricing, and are now | | | | ranked 3rd worst by barometric pressure at |
| arguing that higher uranium prices are | | | | landfall of all hurricanes entering the Gulf |
| jeopardizing the nuclear renaissance in the | | | | Coast. The 2004 hurricane season brought |
| United States.Because of rising uranium | | | | Charley, Frances, Ivan and Jeanne, which were |
| prices, 85 percent of the utilities, which | | | | some of the most devastating U.S. hurricanes |
| operate nuclear facilities, have formed AHUG | | | | recorded. Such scenarios would wreak havoc |
| (Ad Hoc Utility Group) to terminate the | | | | with already strained energy prices, but |
| import restriction. If AHUG accomplished its | | | | would be good for the uranium mining bulls. |
| goal, the loser would be USEC, which is now | | | | Gray concluded, "We believe that 2006 will be |
| arguing on America's "overdependence" of | | | | a very active season in the Atlantic basin." |
| nuclear fuel. USEC depends upon the Russian | | | | The more active, the more likely a dramatic |
| uranium to fund its future enrichment | | | | spike in uranium pricing.NUCLEAR EXPANSION: A |
| facility program. In a way, this amounts to | | | | WORLDWIDE PHENOMENONYuri Sokolov, Department |
| corporate welfare. USEC is arguing against | | | | Head of Nuclear Energy for the United |
| unlimited Russian uranium.U.S. utilities are | | | | Nation's International Atomic Energy Agency |
| now being fed about 50 percent of their | | | | (IAEA), told reporters this past week, "There |
| nuclear fuel from decommissioned Russian | | | | is plenty of uranium assuming the industry |
| warheads. Russia is more than a tad upset | | | | keeps moving ahead with exploration and new |
| because the deal they made does not reflect | | | | mines." Sokolov is confident the "identified |
| the current spot or long-term price of | | | | resources" of 4.7 million metric tons can be |
| uranium. Something will likely occur at the | | | | mined for less than $60/pound. That's about |
| G8 Summit in St. Petersburg, Russia on July | | | | 26 percent higher than the current spot |
| 14-17. Russia will chair this summit for the | | | | price. There was also a warning buried in his |
| first time.Expect fireworks. On the official | | | | speech. He cautioned the major risk to |
| G8 website, Russian President Putin | | | | uranium supplies would come from possible |
| announced, "Russia, as the presiding country, | | | | delays in moving from discovery to |
| regards it as its duty to give a fresh | | | | production. Industry insiders understand it |
| impetus to efforts to find solutions to key | | | | can take between 12 and 20 years after a |
| international problems in energy, education | | | | discovery to reach the production stage. U.S. |
| and healthcare." It should be noted that | | | | utilities may get more aggressive to secure |
| Russia is now the world's second largest oil | | | | supplies as this year and next pass by. Their |
| exporter behind Saudi Arabia. Russia is also | | | | supply deficit for 2008 through 2012 requires |
| hoping to reach a deal in joining the World | | | | a near miracle to match demand |
| Trade Organization before the summit opens.We | | | | requirements.Sokolov also set targets in the |
| believe Russia may exacerbate the current | | | | IAEA's annual Red Book. Depending upon how |
| tight supply situation in the uranium markets | | | | quickly the nuclear industry expands, more |
| and cause prices to rise after the summit. On | | | | uranium will be required. By 2025, if global |
| June 9th, Russia's news service Novosti | | | | nuclear capacity increases to 22 percent, |
| reported the country would start constructing | | | | utilities will need 80,000 metric tons per |
| two nuclear power units per year inside | | | | year. An increase to 43 percent would require |
| Russia beginning in 2007. Kiriyenko also | | | | 100,000 metric tons annually. The Red Book |
| announced Russia would ramp up to four or | | | | forecast new mines, over the next five years, |
| five nuclear reactors for 2009-2010. | | | | would add about 30,000 metric tons to the |
| President Putin plans to build an | | | | supply inventories. This new capacity would |
| international full-service nuclear fuel | | | | fill the current uranium supply shortage, |
| center in Russia to provide enriched uranium | | | | unless of course the industry is hit with |
| for the growing number of countries wanting | | | | delays. More new mines would also need to |
| nuclear energy programs. It would be hardly | | | | come online to keep pace with the heralded |
| likely Russia would provide additional | | | | nuclear renaissance. Only the most cynical |
| uranium to U.S. utilities in that | | | | industry insiders would disagree the uranium |
| context.TRADE TECH LLCWhat about going into | | | | mining sector desperately needs a dramatic |
| Russia's G8 Summit? It appears uranium | | | | surge in production between 2010 and 2020 to |
| trading through June could continue to show a | | | | match the explosive growth ahead for this |
| very tight supply situation, where sellers | | | | sector.SUMMARYNuclear energy "hot talk" |
| continue to set pricing. A recent posting on | | | | should also get a boost in August and |
| the Trade Tech LLC website announced the | | | | September, after the North American release |
| following:A number of buyers concluded | | | | of James Lovelock's "The Revenge of Gaia" |
| transactions during May, which significantly | | | | (Basic Books). The 86-year old scientist has |
| reduced outstanding demand. The impasse | | | | led the charge among the world's |
| between buyers and sellers ended this past | | | | environmentalists to get the greens to go |
| month, with buyers apparently reconciling | | | | nuclear. The international media has sought |
| their expectations with recent price | | | | out Dr. Lovelock's opinions. Figure we'll see |
| increases and current offers. Sellers moved | | | | the same boost in "pro nuclear" media |
| increasingly toward market-related pricing | | | | appearances going into the autumn. As the |
| terms for spot delivery, and buyers showed a | | | | author appears on numerous talk shows, the |
| renewed willingness to accept these offers. | | | | polls should swing more heavily into building |
| Exceptionally strong long-term demand | | | | more nuclear plants. That could add further |
| continues to exert upward pressure on the | | | | pressure on utilities to quickly secure |
| spot uranium price as each pound held by | | | | inventory.Russia's desire for a uranium |
| sellers is considered more valuable with | | | | nuclear monopoly, hurricanes, tight supplies |
| every new buyer that enters the market. At | | | | through the summer and the likelihood of yet |
| least one, and possibly two, uranium auctions | | | | another energy crisis before Labor Day could |
| are expected in June. Buyers are expected to | | | | spell a significant boost in spot uranium |
| compete aggressively for this material and | | | | pricing. It would not surprise us should spot |
| TradeTech expects uranium prices to continue | | | | uranium trade closer to $60/pound over the |
| their upward climb in June.Aggressively | | | | next 100 days. Any "shock event" could spike |
| competing for tight uranium supplies lends | | | | the spot uranium price above that level, and |
| credence to a possible rise through the $50 | | | | possibly make a run for $100/pound |
| pound level before the G8 Summit ends.ANOTHER | | | | uranium.Such a level would be unsustainable, |
| BAD HURRICANE SEASONUnusually bad weather | | | | of course, but it would be an eye-opener and |
| drives up energy prices. This summer's | | | | attract renewed interest in the domestic |
| hurricane season may be the equivalent to | | | | uranium mining sector. The key domestic |
| this past winter's European gas shortages, | | | | contenders for adding new mining capacity in |
| which came courtesy of the Ukraine/Russian | | | | the United States appear to be Strathmore |
| squabbling and a bad European winter. Many | | | | Minerals (TSX: STM; Other OTC: STHJF), |
| countries began expressing interest in a | | | | Uranium Resources (OTC BB: URRE), Energy |
| nuclear energy program after that episode. | | | | Metals (TSX: EMC), UR-Energy (TSX: URE.TO), |
| Another climate event might compel more to | | | | and Uranerz Energy (OTC BB: URNZ). There are |
| head for more nuclear.Over the past two | | | | others, but we have not followed their |
| decades, hurricane watchers have learned to | | | | developments as closely.Should the Russians |
| pay attention to Dr. William Gray of Colorado | | | | absolutely confirm there will be no HEU-2 |
| State University's Department of Atmospheric | | | | deal, U.S. utilities will be driven to |
| Science. While based in hurricane-absent Fort | | | | closely investigate working relationships |
| Collins, Colorado, his atmospheric studies | | | | with domestic uranium development companies |
| have proven Nostradamus-like prescient over | | | | for reliable nuclear fuel supplies. Itochu |
| the past 22 years. Why are we talking about | | | | has established a relationship with Uranium |
| hurricanes? Hurricane announcements tend to | | | | Resources (UOTC BB: URRE), and we expect more |
| drive up energy futures. The number of | | | | of these joint ventures to materialize. As |
| hurricane days adds pressure to an already | | | | for market capitalizations versus |
| tight energy market. Hurricanes start to show | | | | pounds-in-the-ground, during the last uranium |
| up on an investor's radar during August and | | | | bull market (in the 1970s), utility companies |
| remain there through September.Because of | | | | were buying uranium companies for about $5-6 |
| anticipated tight uranium supplies for June | | | | pound of uranium. Some of our favorite |
| utility buying and the anticipation of | | | | companies, which host historically reliable |
| Russian fireworks in mid July, a fitting | | | | and NI 43-101 compliant uranium resources |
| climax for a strong surge in uranium pricing | | | | over 100 million pounds, would be severely |
| might come along with a major hurricane | | | | undervalued under a parallel |
| hitting the Gulf Coast. Last year's Katrina | | | | scenario.StockInterview's "Investing in the |
| can serve as a reminder that climate changes | | | | Great Uranium Bull Market: A Practical |
| can impact energy prices, uranium included. | | | | Investor's Guide to Uranium Stocks" debuts |
| Based upon the weather forecasts, we believe | | | | its e-Book edition this coming weekend. The |
| in the high probability of an encore to last | | | | number of investors now following |
| year's energy shortages.While this year's | | | | developments in the uranium sector has grown |
| hurricane season is not expected to match the | | | | exponentially over the past two years. The |
| devastation of 2005, it still highly rates at | | | | mad rush for data about uranium companies and |
| 195 percent for a Net Tropical Cyclone | | | | industry developments has catapulted this |
| Activity rating. Last year's first tropical | | | | website's traffic into the top ten percent of |
| storm, Arlene, formed on June 9th. This | | | | all Internet websites. When the print edition |
| year's Tropical Storm Alberto formed a year | | | | arrives in bookstores and libraries, and is |
| and a day later. Exclude the busiest | | | | offered through book clubs and other allied |
| hurricane season in 154 years of | | | | groups, the demand for uranium and interest |
| storm-tracking, and this year is expected to | | | | in the nuclear fuel cycle should make another |
| rate well above the average hurricane season. | | | | leap forward.James Finch contributes to and |
| The National Oceanic and Atmospheric | | | | other publications. |