Canam Energy, Inc. (CNGJ.PK) - Does Uranium Glow in the Dark?
No, and if the recent reports about “peak oil” are true, neither will your household lightbulbs. Peak oil has moved from being a theory, to being accepted as fact in the oil producing industry. In a nutshell, the theory states that we have already found all of the easy to find oil we’re going to find on this earth, and the major wells have already seen their best days of production. In simpler terms, we cannot count on hydrocarbons from oil to continue to supply our power.
Yet power is what this world craves. In China, 1.2 billion people are getting their first tastes of US style consumerism and they like it. As they move from an agrarian society base consisting of millions of individual farmers, to a more Urban style labor force, the demand for electricity is far outstripping supply. In many of China’s major manufacturing hubs, the plants go silent for hours per day. Not because of labor shortages, because the government shuts off their power. It’s similar to the brownout situations in California, where the power company has to spread out it’s power over many segments. Despite all those millions of hard working people, there simply isn’t enough power to go around.
But if it’s not oil because of dwindling supply, and it’s not solar because it’s simply not efficient enough, and it’s not coal because of all the nasty emissions it produces, what will the world use to generate the power it so desperately needs? Nuclear energy. Nuclear energy is all the things that oil, solar, and coal would like to be, but cannot. Nuclear is clean, produces no green house gasses, and is tremendously efficient. A pellet of fuel, half the size of a golfball, in the proper reactor will put out the same amount of electricity as a hundred barrels of oil. That’s the power of the atom.
So attractive is the nuclear solution that China now has plans to bring 20 nuclear plants on line by 2030, and in the US, the first application to build a nuclear reactor in the last 30 years was just presented to the department of energy. France has quietly been the leader in nuclear generated power, producing almost 70% of that nation’s electrical needs from the splitting of atoms, and all of it without one single measurable safety infraction. In other words, the “three mile island” type nuclear accident is virtually not possible with today’s technology. Pebble bed reactors that automatically shut themselves down via their own physics make this new crop of electricity producing nuclear plant a new reality.
As an investor, the proper question to be asked in general is; “where is the opportunity?” With nuclear power, the opportunity is unquestionably in the fuel that nuclear reactors must use to produce their energy. That fuel is uranium. Uranium is a very interesting naturally occurring element, having such properties as being approximately 70% more dense than lead, is semi radioactive, and can have a varying amount of neutrons. But none of that is as impressive as the price paid for this material. This is the area which most captures investors interest. Just seven years ago, a pound of the material called yellow cake sold on the market for approximately 7 US dollars per pound. As of October of 2007, the price had already surpassed 141 dollars per pound.
Why the run up? Demand. Along with global growth such as the China miracle, a lot of explorations and test mines were left abandoned when uranium prices bottomed out with the glut of cheap oil in the late 90’s. Today oil is almost 100 dollars a barrel and the push for “green” energy is so large now that global warming has hit the headlines. Uranium demand is huge and growing larger. Interestingly there is already a shortage of the material. There is no viable stockpile of it as demand has risen.
Canam Energy is a publicly traded company that has come to believe that the best way to capitalize on this demand is via acquisitions of undeveloped and underdeveloped uranium deposits around the world. The Company’s Quebec acquisition in Grand Calumet Township is a perfect example of good forecasting. The site contains 24 claims, which encompass some 3,000 acres, most of which are adjacent to properties with extremely high levels of uranium return. Past work on operations conducted during the 1950’s showed probable returns of ore measuring in the one million tons, with an average uranium purity of 0.8% U308.
But there is another interesting twist to the mining operation that must be mentioned. Along with uranium, there is also the harvesting of other metals that come into play. Gold, Palladium, Rhodium, Nickel, Platinum are just a sample of the precious metals that are generally found in tandem with Uranium mining. Canam is positioned to see benefits from those and other metals not only in their Quebec property, but in Mongolia, where they’ve secured the mineral exploration rights to five very promising properties.
Mining for metals such as uranium, gold, silver, platinum, and the other noble metals will continue to grow. Uranium demand for a power hungry world will continue to rise. Companies such as Canam Energy will see to it that we enjoy the benefits of their labor, through affordable nuclear energy that powers our lights. Investors will see the benefits of a company well positioned to bring “light” to their portfolio.
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