Dev Randhawa

According to Japan’s Ministry of Economy, Trade and Industry, the country’s carbon dioxide emissions during the last fiscal year were at the highest levels yet recorded. In total we’re talking 1.224 billion metric tons of CO2. That’s an increase of 1.4% from the previous year and 16% more than 990 which is the base year for emission cuts targeted under the UN Framework Convention on Climate Change,

That’s what happens when you shut down your green energy source (aka nuclear reactor fleet) and start burning more coal and gas to meet your energy requirements. Despite Japan’s reduced energy consumption last year (down 0.9%) imports of LNG were up 24% and coal 4.8% from prior to Fukushima.

An article by the Wall Street Journal quoted Tokyo-based analyst Tomomichi Akuta, saying that unless a number of reactors come back online soon, the trend of high emissions is unlikely to change much.

I don’t think Mr. Akuta’s comment is a revelation to anyone who’s been observing Japan’s progress. It is, however, a powerful endorsement for reactor restarts. With the two Sendai reactors receiving approval from both the NRA and the local prefecture, it’s widely expected the first restarts are not far off.

Dev Randhawa, CEO of Fission Uranium

As I write this blog post, the spot price has risen to nearly $42 in a very short space of time. In fact, it’s up almost 46% on the $28 dollar low this year and a look at the chart (which does not show the movements of today’s trading) shows which way uranium is currently headed. I’ve been fielding a lot of questions about the reasons for the climb in price, particularly with some of the spectacular daily price jumps, and wanted to share my thoughts.
Worldwide demand for uranium has been, and will remain, strong. Yes, an overhang was obviously created when Japan shut down its fleet but the industry has been steadily chewing through that overhang and we’ve now reached a point where utilities now have to come back into the market. They are doing so at a time when the market has been oversold based on sentiment rather than fundamentals and with each bit of demand-related news, more utilities are coming forward.

What are the specific catalysts? Positive news from Japan – the first two reactors have cleared the last vote for restarts; increased European issues with Russia – European utilities have already begun sourcing uranium enrichment services elsewhere. In addition, uranium producers have put a number of advanced projects on hold during the past few years and refused to come to the table for long-term contracts at low prices.

All commodity prices fluctuate but my belief is we’ll see yet more increases over time because producers are still not making money at current prices and, as I blogged earlier this year here and here, security of supply has become a major industry concern and the nuclear reactor construction boom continues.

Anthony Milewski, Director of Fission Uranium

For those of you who may have missed it, I was interviewed yesterday on BNN just prior to taking part in the TSX opening ceremony. We were invited to take part in the ceremony due to being the 600th company to list on the TSX. BNN’s show ‘The Street’ was interested in discussing the PLS project, as well as the impact of rising spot prices and other factors underlying the uranium sector. Here’s the video.

Dev Randhawa, CEO of Fission Uranium

In case you missed our latest press release, we’ve announced our first batch of PLS summer drill program assays – all of which are from the zone drilling. For those of you who may be new to Fission, the summer drill program was split into zone drilling and exploration drilling. Zone drilling focused on further expanding the mineralized zones discovered in prior drill programs, while exploration drilling tested a number of prospective targets elsewhere on the property.

As you know from the scintilometer results we released during the program, we hit on every zone hole. This is an important fact because at the end of this year we aim to have our 43-101 Maiden Resource Estimate in place and every hit will add directly to the number of pounds included in the 43-101.

The press release has the detailed information but the key takeaways are that all 29 holes hit mineralization at shallow depth, our largest zone (R780E) has expanded laterally along strike and the best hole in the batch – hole PLS14-248 (line 825E) – has been confirmed as the second strongest hole to date.

Holes like PLS14-248 are not just reminders of the great potential that PLS has. They also add substantial lbs to a resource. This particular hole returned composite assay intervals including 35.13% U3O8 over 16.5m within a larger interval of 13.23% U3O8 over 47.5m. This corresponds to an interval GT value (Grade %U3O8 x Thickness in meters) of 628.5, making this the strongest discrete mineralized interval drilled at PLS to date. The composite GT value for the entire hole is 698.4.

If you have any questions, don’t hesitate to get in touch and be sure to follow us on Twitter and LinkedIn for regular updates.

Dev Randhawa, CEO of Fission Uranium

As Fission’s technical team continues with the hugely successful summer program (currently a 100% mineralization hit rate), we thought you might be interested in the new selection of summer photos from the site.

Click HERE to view the photos.
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The uranium spot price has climbed more than $2.00 during the last few weeks. For those unfamiliar with the spot price of this particular commodity, let me assure you that this is not due to standard market fluctuations.

Threat of sanctions against Russia alters market perception: Utilities are starting to come into the market due to worry amongst fuel managers that the Russians can’t make fuel deliveries. This is a big deal because Russia is a major player in the uranium market. So the utilities are purchasing options on material and some are actually buying material itself. The big worry is sanctions. Not fuel sanctions (although Australia has threatened uranium sanctions) but rather banking sanctions. In fact, Deutchebank just shelved a uranium deal for that very reason. Essentially, the Russians have been excluded from the market because people don’t want the risk management.

US Department of Energy (DoE) sued for selling too much uranium: Converdyn – the JV between Honeywell and General Atomics – is suing the US DoE because of its (the DoE) decision to selling an increased amount of excess uranium into the market. Previously a so-called gentlemen’s agreement has been in existence ensuring that the DoE would sell no more than five million lbs per year into the market. Based on the actions of the presiding judge so far, it’s felt that Converdyn may win the case.

Cameco facing strike action at major mines: On August 12, Cameco workers at two Saskatchewan uranium facilities – Key Lake and McArthur River – voted for strike action (92% in favour). Negotiations will continue until August 28th but if there’s no agreement then labour action will ensure with a resultant drop in production from one of world’s largest uranium producers. In addition, on August 1st, Honeywell’s management ordered a lockout of union workers at the Metropolis Works conversion plant.

Decline in primary supply due to spot price: This year, Rio Tinto will produce less than 1/3 of the uranium it produced two years ago and numerous other uranium projects have been stalled or put on indefinite hold – all because of the low spot price.

It comes down to security of supply: I’ve been saying for some time that security of supply is one of the most important, yet most underrated, issues facing the uranium sector. Like it or not, a large percentage of production and secondary supply comes from countries that for one reason or another are subject to political instability. That means at any given time a percentage of world supply could go offline.

My belief is that utilities are starting to realize the inherent vulnerability in global uranium supply and are beginning to cover themselves to ensure long term supply. Over time, the spot price will come to reflect uranium’s supply fundamentals.

Anthony Milewski (Black Vulcan Resources), Fission Advisory Board

There was an excellent article this week by Andrew Walker, the BBC World Service Economics correspondent, regarding Russia and its nuclear ties with the EU. You may have read some guest blog posts here by Anthony Milewski, who sits on Fission’s Advisory Board, regarding security of supply. The BBC article feeds right into Anthony’s point, which is that a very large percentage of the world’s uranium production comes from countries that, for one reason or another, have political issues. In other words, at any given time a large percentage of world supply could go offline.

If you’re not convinced, read the article. What I find the most compelling is that those countries with the most to lose (should Russia hold off on uranium supplies) are treading very softly regarding the political turmoil between Russia and the Ukraine. Those countries include Finland, Bulgaria, the Czech Republic, Slovakia and Hungary. To quote the article: there is a significant role in Europe’s energy sector for Russian nuclear supplies and the potential for significant disruption in the EU.

Of all the factors that can and do affect the uranium sector, I consider security of supply to be one of the most important and it’s not just Russia that has the potential to cause problems. Kazakhstan and Niger both have their own political issues as we’ve seen during the past twelve months. I believe this is one of the of the factors driving Chinese interest in Canadian uranium assets and has led to the agreements signed by the Canadian and Chinese governments in the last few years. Considering Fission’s world-class discovery happens to be sitting in the Athabasca Basin, Canada, this is a good thing for us and our investors.

As always, get in touch with any questions and, if you´ve not already done so, connect with us on Twitter and LinkedIn to stay up to date.

Dev Randhawa

Fission’s Chief Geologist, Ross McElroy Discusses the Summer 2014 Program.

To view click the link: Summer 2014 Program

We started drilling this week – the first holes of the $12M, 63 hole summer drill program. As you can see from the photo I´ve included, we have five drill barges hard at work. This is going to be a particularly exciting period for Fission. It´s our plan to have an NI43-101 compliant resource estimate complete by the end of this year so the results from the summer program are going to be key in building up the pounds in the ground.

The energy at the camp is something to see. We have a film crew visiting the site next week and I´ll be sure to share the footage as soon it comes through.

Dev Randhawa, CEO of Fission Uranium

Anyone wondering what the governments of EU member states think of nuclear should look no further than the letter sent to the EU’s Energy Commissioner, Gunter Oettinger, last week. The letter was sent on behalf of the UK, France, Bulgaria, Czech Republic, Hungary, Lithuania, Poland, Romania, Slovakia and Slovenia by Jan Mládek, the Czech Republic’s minister of industry and trade. There are some big economies in that list.

It’s very clear that these ten member states – not far off half of the EU roster – see nuclear as vital for energy security and low-emissions in Europe and they want support from the EU to foster additional growth.

For me, this is another signal of just how much pressure is being brought to bear on increase the use of nuclear energy. Energy security and carbon reduction. There’s just no way to address these issues in a timely manner without growing the role of nuclear. That, of course, is going to create more upwards pressure on uranium supply.

Here’s the full text of the letter. It’s well worth you reading it to understand just how serious these countries view the subject:

Dear Commisioner,

On behalf of the Ministers of Bulgaria, France, Hungary, Lithuania, Poland, Romania, Slovakia, Slovenia and the United Kingdom responsible for energy policy, I take the liberty to address you on our common view of nuclear power within the EU energy market and its role in ensuring energy security and decarbonisation.

Over recent months the issue of energy security within the EU has evolved, and we all agree that nuclear power will have an important role in the future of the EU’s energy mix. We believe that Member States must maintain their right to determine their own energy mix and nuclear power will therefore have a greater role in helping individual Member States secure their own indigenous energy supply.

Many Member States have immediate challenges in bringing forward the generating capacity needed to create a secure, low carbon and affordable energy system. There are a number of failures in energy markets across Europe bringing serious concerns about the ability of markets alone to offer the sufficient security required to stimulate investment on a purely commercial basis. National support mechanisms, consistent witht the Internal Energy Market and the competition rules provided by the Treaty on the Functioning of the European Union (TFEU), may therefore be needed. The Comission itself has recognised, in its Communication from 5 November 2013, that such intervention might be necessary “to secure a level playing field, overcome market failures, foster technology and innovation deployment and, more generally, support the market in delivering appropriate investment signals.” An agreed 2030 climate and energy package and the full implementation of the third energy package should contribute to a well-functioning electricity market that fulfills our future needs.

Well diversified energy systems are essential if we want to ensure energy security. We need an energy mix that will affordably meet our decarbonization objectives and meet energy demand. In the last decade the European Union has faced a continuous decline in its domestic energy production. This could be decelerated in the medium term by increasing the use of renewables according to EU policy and maintaining or developing nuclear energy according to policies of individual Member States. Nuclear energy’s significant role in the European energy mix should be clearly recognized.

We are convinced that nuclear energy should keep its proper place in European energy policy in accordance with the Treaties. Nuclear energy perfectly fits the three pillars of energy policy as reflected in the TFEU: security of supply, sustainability and competitiveness. Moreover the Euratom Treaty provides for obligations of the European institutions to support the development of nuclear power. In our view, nuclear energy, for its physical and economic characteristics, is entitled to be treated as an indigenous source of energy with respect to energy security, having an important social and economic dimension.

Nuclear power stations insofar as they are compliant with the highest safety standards, bring significant benefits to EU decarbonization, energy security and economic growth. In this respect, the European leadership in nuclear industry should be preserved. Unfortunately, it should be recognized that numerous market failures are currently preventing investment coming forward and this shuld not be overlooked by the Commission. Nuclear energy which requires capital intensive and long-term investment, should be supported by market mechanisms to create a predictable investment framework.

We call on the Commission to reflect on these circumstances in its crucial decisions and political commitments. In particular, it is important that the market failures and the need to hedge against investment risks are accounted for in order to create the necessary market conditions for investment in new nuclear build projects in Europe. A technology neutral approach creating a level playing field for all low-emission sources is crucial. We have to make wise strategic decisions that will secure stable energy supplies at competitive prices for future generations.

Yours sincerely

Jan Mládek

Minister of Industry and Trade of the Czech Republic