| Bad weather may be heading our way. Many very | | | | Envisioning the "potential" of a 600-percent |
| smart voices have raised their volume over | | | | increase in nuclear reactors online, about 25 |
| the number of alarming red flags pointing to | | | | years from now, Bambrough also calculated how |
| a worldwide environmental catastrophe coming | | | | much uranium would be required to fuel those |
| in a few years or decades hence. One voice, | | | | reactors. |
| coming from the sharp mind of James Lovelock | | | | |
| is resounding across the world's media nearly | | | | According to Bambrough, current global |
| every day. His solution: get more nuclear | | | | uranium mining production rests at about the |
| reactors online and sequester the carbon | | | | 100 million-pound level. By 2030, if nuclear |
| dioxide emissions as fast as possible. | | | | energy expands as Moore insists it should, |
| | | | then the world's utilities will require on |
| What's the alternative? Move to the Arctic | | | | the order of about 1.3 billion pounds every |
| Circle, where you may someday bask year | | | | year. With regards to a planetary build-up of |
| around with temperatures pleasantly at 74 | | | | nuclear energy, Bambrough wrote, "The supply |
| degrees Fahrenheit. According to findings | | | | of uranium may well be the most limiting |
| recently published in the journal Nature. | | | | factor." |
| About 55 million years ago, there was | | | | |
| something called the Paleocene Eocene Thermal | | | | This may become the new case for a sustained |
| Maximum (PETM). In this PETM phenomenon, the | | | | rally in the spot uranium price. Bambrough |
| entire Earth was heated up by a gigantic | | | | wrote, "Much higher uranium prices will be |
| release of greenhouse gases, like carbon | | | | required to attract enough investment capital |
| dioxide. Lovelock has insisted we may see | | | | to meet the growth in demand." This has |
| that kind of hot later this century. | | | | already begun, as uranium prices have |
| | | | skyrocketed for the past six years. Long-term |
| Now, another brainy man, with whom we have | | | | uranium recently traded as high as $46/pound, |
| many chats this year, has issued a special | | | | exponentially higher than the spot price of |
| 56-page report, entitled "Investment | | | | $6.40/pound in late 2000. Bambrough is |
| Implications of an Abrupt Climate Change." | | | | correct in his conclusion. Building an |
| Co-authored by Market Strategist Kevin | | | | underground uranium mine costs far more than |
| Bambrough and Eric Sprott, Chief Executive | | | | it did in the glory days of uranium in the |
| and Portfolio Manager of the world-famous | | | | 1950s. Environmental regulations force miners |
| money management firm which bears his name, | | | | to spend more and take longer in constructing |
| they present a compelling argument as to why | | | | any uranium-producing facility, including an |
| and how global warming and climate change is | | | | ISL operation. |
| going to dramatically impact our financial | | | | |
| world. You are well advised to read it. | | | | "Marginal mines will become price setters," |
| | | | wrote Bambrough. This helps explain why the |
| Take Your Pick: Nuclear Energy or Cheap | | | | Sprott Asset Management funds have invested |
| Arctic Land | | | | heavily in companies such as Strathmore |
| | | | Minerals (TSX: STM; Other OTC: STHJF), Energy |
| Aside from optioning to buy vast tracts of | | | | Metals (TSX: EMC) and others. When we first |
| land near the Arctic Circle, as Dr. | | | | interviewed Strathmore Minerals Chief |
| Lovelock's conclusions force us to briefly | | | | Executive, Dev Randhawa, in June 2004, he |
| consider, what can we do to protect our | | | | told us his strategy was to capitalize upon a |
| finances? Global warming, climate change and | | | | sustained rally in the uranium price by |
| an apocalypse soon to dawn on the horizon are | | | | acquiring properties which were uneconomic at |
| probably too much reality for the here and | | | | the sub-$20/level. His strategy has rewarded |
| now. But, what will you do ten to thirty | | | | shareholders and continued to do so with each |
| years from now? This past week, we | | | | uptick in the spot uranium price. If |
| interviewed Julian Steyn, author of A | | | | Bambrough's conclusion is accurate, the |
| Brighter Tomorrow, which he co-wrote with | | | | junior uranium developers could very well |
| U.S. Senator Pete Domenici. A conservative | | | | become the Internet high-fliers. That |
| and rational man, even he admitted in an | | | | conclusion was reached by newsletter writer |
| email, "I am afraid I do agree with his | | | | James Dines, this past November, and repeated |
| (Lovelock's) concerns." | | | | numerous times in multiple reports by others. |
| | | | |
| If one finds logic within the statistical | | | | "Large low-cost producers may be able to reap |
| analysis presented by the United Nations | | | | Middle East-like oil profits for decades," |
| Intergovernmental Panel on Climate Change | | | | wrote Bambrough. If the spread between |
| (IPCC), a rational mind would want to start | | | | production costs and spot uranium keeps |
| protecting his finances today in order to | | | | widening, the smaller uranium companies are |
| ensure future survival for his family and | | | | going to hit it big. Those companies, which |
| lineage. Esteemed scientists have picked | | | | postponed uranium mining, will be selling |
| their way through mountains of statistics, | | | | their uranium production at the kind of |
| charts and projections about what is | | | | profits-to-production spread ExxonMobil or |
| happening with melting glaciers, rising | | | | ChevronTexaco now enjoy. |
| temperatures, higher sea levels and so forth. | | | | |
| They do not like what they see, they are not | | | | Rising uranium prices are probably more of an |
| alone, and the better minds are not endorsing | | | | irritation for fuel traders than the |
| wind farms or solar panels as "the solution." | | | | utilities, who worry about construction |
| They see nuclear fission reactors as | | | | costs. The actual fuel cost to operate a |
| mandatory, and the faster these go online, | | | | nuclear power plant borders on the absurd. |
| the less we will later have to sweat | | | | Bambrough wrote in his report, "Fuel costs |
| (literally). | | | | (for nuclear) are merely 4.5 percent of total |
| | | | costs, even with uranium at $40 per lb. If |
| Eric Sprott and Kevin Bambrough have laid out | | | | uranium rises to $100 per lb (a further 150 |
| a possible solution, a cogent thesis as to | | | | percent increase), the cost of nuclear power |
| why we must stop fooling around now. They | | | | would only rise by approximately 6.75 |
| didn't write the report to alarm and cajole | | | | percent." Fuel costs for coal and gas are 35 |
| you to lynch the next environmentalist or | | | | and 73 percent, respectively. And they |
| anti-nuke whom you come across. Messrs. | | | | release massive doses of CO2 into the air. |
| Sprott and Bambrough provided a blueprint of | | | | |
| what must be done by governments and | | | | What else can be done aside from a worldwide, |
| decision-makers. More importantly, they have | | | | unanimous endorsement of nuclear energy? |
| given us extremely provocative advice on HOW | | | | There may still be difficulties ahead. |
| to protect our finances during the brewing | | | | Lovelock told us the CO2 emissions problem |
| crisis. | | | | should have been addressed 50 years ago. It |
| | | | takes between 50 and 100 years for the |
| Remember, it won't just be some meteor | | | | atmosphere to cycle through those emissions. |
| hitting the earth (although that might | | | | |
| happen, too). Global warming is tantamount to | | | | The Sprott report co-authors concluded there |
| boiling water on your stove. First, it gets | | | | will be supply problems for food, water and |
| warm, then warmer and warmer. Eventually, it | | | | energy. They envision problems with national |
| gets hot. Then, the water boils. In other | | | | security, soaring grain prices, and greater |
| words, the catastrophe will brew for a while, | | | | investments needed to provide water and |
| causing political and economic instability, | | | | energy to those who aren't buried ten feet |
| and a host of other ills, probably better | | | | deep in their indebtedness. They foresee a |
| described in biblical terms. Most of us, | | | | currency collapse as central banks flood the |
| unfortunately, will wait until the next | | | | money system to provide liquidity. And, of |
| Hurricane Katrina is a few miles down the | | | | course, gold will resume the role it has |
| road before waking up. | | | | always held during times of overpowering |
| | | | economic calamity. |
| Through the first half of the report, the | | | | |
| authors cover global warming and climate | | | | Is this too much reality for you? Should we |
| change, in just about every way imaginable. | | | | just wait a while and see what transpires? We |
| Messrs. Sprott and Bambrough found nooks and | | | | might not be so lucky. Some experts, such as |
| crannies which may alarm you. Did you know | | | | the Chief Claims Strategist for Swiss Re, |
| the world's largest aquifer, the Ogallala | | | | wrote in a March 2006 CERES report, "Global |
| aquifer in the United States, is drying up | | | | warming has accelerated from a problem that |
| because the glaciers, which created this | | | | might affect our grandchildren, to one that |
| aquifer, are receding? Fresh water is already | | | | could significantly disturb the social and |
| in short supply for one-third of the world's | | | | economic conditions of our lifetime." |
| population. We may be surrounded by water, | | | | |
| but could lack a glass of fresh water to | | | | In other words, Messrs. Sprott and Bambrough |
| drink. Ask the Saudis why they are building | | | | are correct in their assumptions and |
| desalination plants as fast they can. Imagine | | | | conclusions. The time to get moving is today, |
| if those arid conditions prevailed across | | | | not thirty years from now. |
| more than 90 percent of the landmass of | | | | |
| earth. | | | | For a second opinion, before completing this |
| | | | column, we forwarded the Sprott report to |
| What happens as the earth's temperature goes | | | | David Miller. He wears many hats, including a |
| up? Increased urbanization, growing GDPs and | | | | consultancy to the International Atomic |
| demand for all the niceties that come with | | | | Energy Agency, third-term Wyoming legislator, |
| "civilization" have a price: more CO2 | | | | president of Strathmore Minerals (TSX: STM) |
| emissions. Deadly CO2 emissions, which raise | | | | and a walking encyclopedia on uranium, |
| the earth's temperature, poison our air and | | | | geology, nuclear power and politics. He |
| kill our plants (and us), are very likely | | | | responded quite bluntly, "The fuel of the |
| going to turn this earth into a potboiler | | | | 19th century was coal. The fuel of the 20th |
| before the century ends. | | | | century was oil. Both have run their economic |
| | | | course. Uranium is on its way to becoming the |
| Nuclear Expansion Needs More Uranium | | | | energy fuel of the 21st century. The |
| | | | crescendo of countries clamoring for nuclear |
| "This IS the perfect storm," Kevin Bambrough | | | | energy has been growing louder in each year |
| warned, not as the abused cliché the term | | | | of this new millennium." Perhaps, we may yet |
| has become, but as an angry voice demanding | | | | see Moore's energy mix come to pass, or at |
| decision-makers take to heart the gravity of | | | | least dramatic growth in the nuclear sector |
| CO2 emissions. "We need more nuclear reactors | | | | to more closely approach his targeted |
| now," he told us. He directed us to | | | | percentage level. |
| environmentalist Patrick Moore's contention | | | | |
| that the U.S. should reverse its energy | | | | One key question remains unanswered, during |
| source mix from an 80-percent dependence upon | | | | our two-year investigation into uranium and |
| fossil fuels, relying instead upon nuclear | | | | nuclear energy. Sure, we've gotten a lot of |
| energy for 60-percent of our electrical power | | | | answers, but we remain unconvinced. No one |
| supply. | | | | has satisfactorily answered this question: |
| | | | "Will there be sufficient supplies of |
| Under the former Greenpeace co-founder's | | | | 'already mined uranium' and current mining |
| scenario, Bambrough extrapolated the World | | | | production available to the world's nuclear |
| Nuclear Association (WNA) projections for | | | | reactors to meet the anticipated global |
| 2030. Nuclear power demand is then expected | | | | demand for electricity?" The make-break word |
| to soar from the current 368 Gw, produced by | | | | in the above question is "available." Uranium |
| the world's 441 nuclear reactors. He | | | | is nearly everywhere. There are about 1.7 |
| computed, using Moore's premise of a | | | | billion pounds of 'already mined uranium' in |
| 60-percent nuclear-reliance, that nuclear | | | | the world's inventories. But will there be |
| reactors would produce 18,900 Twh of the | | | | enough uranium made available to the |
| total power demand in 2030, which the WNA | | | | utilities when the time comes? |
| estimates might reach 31,500 Twh. To produce | | | | |
| that much electricity, Bambrough calculated | | | | If there is not, today's spot uranium price |
| that by 2030, nearly 2700 nuclear reactors | | | | could look comparable to gasoline prices, |
| will be required across the planet. | | | | circa 1965, at some future point. |