Canada’s Nuclear Summer

V.CCB, T.NXE, V.SYH, uranium, graphite, nuclear energy

There is a lull in the precious metals junior markets and it makes sense for investors to look at a few of the alternatives out there. One of which is nuclear energy.

The world’s demand for electricity is steadily growing. In particular, countries such as India and China are building electrical generation capacity to meet their economy’s demands. While much of that new capacity is being built with modern coal technology, increasingly electricity hungry countries are deploying nuclear power.

Nuclear power has two huge advantages: it is reliable and it does not create either air pollution or CO2 emissions.

The big disadvantages of nuclear power are cost and safety (both real and imagined.) The safety issues have largely been resolved to the satisfaction of governments in places like India, China and Korea. Cost, however, can still be a significant issue. Modern reactor design – both at the large scale and, increasingly, at smaller scales – is addressing the cost issues with techniques like standardization and factory construction. The regulatory schemes in many countries are being designed with efficiency and certainty in mind. All of which reduces the perceived risks of nuclear power and make it significantly less costly to finance.

Running a reactor is relatively inexpensive provided that there is an assured source of fuel – almost always uranium and a high purity moderator – often graphite – is available.

On the uranium side, world demand and supply have been in rough balance for several decades. However, for principally economic reasons, a number of the world’s uranium mines have been shut or put in care and maintenance in the last few years.

As new reactors come online more uranium needs to be mined and the best place in the world to find that uranium is the Athabasca Basin in Saskatchewan. As NexGen Energy (T.NXE) puts it on their website, “The Athabasca Basin is home to the richest endowment of uranium on Earth.”

NexGen has begun the Environmental Assessment process on its Rook 1 Project in the Athabasca. This is a critical step in the process of building a mine at the site.

That assessment will take into account NexGen’s innovative plan to store the tailings of Rook 1 underground thereby reducing the surface footprint of the mine and its environmental impact. A critical consideration given the sheer size of the proposed mine.

At an earlier stage in the discovery process, we have Skyharbour Resources (V.SYH) which has assembled a portfolio of highly prospective properties in the Athabasca Basin and an ensemble of joint venture partners.

Skyharbour has adopted the project generator model which allows it to join with other exploration companies to “work up” properties which it owns. This means that Skyharbour can advance several projects at once while retaining a healthy treasury.

Where NexGen is proceeding to build a uranium mine, Skyharbour is finding the next uranium mine in the Athabasca.

But what about graphite? While most of the excitement around graphite has focussed on batteries graphite is also vital to the nuclear world. However, the graphite required for nuclear reactor moderators has to be very, very pure. Even traces of other elements can ruin “nuclear graphite”.

For a variety of reasons, most nuclear graphite has come from synthetic rather than natural sources. The essential problem being that natural graphite often has impurities which are difficult and expensive to extract.

Synthetic graphite is a man-made substance manufactured by the high-temperature processing of amorphous carbon materials. The primary material used to manufacture synthetic graphite is petroleum coke. Petroleum coke, or pet coke, is the solid carbon residue that remains after the coking process is performed on petroleum residue. The bulk of synthetic graphite has been produced in China however, the Chinese are reducing production because of the really nasty environmental costs associated with that production.

This has left a gap in the market for really high grade, natural, graphite. There are some natural deposits of graphite which have very low levels of impurity and which can be cheaply and effectively upgraded to the .9999 purity required in reactors.

One of those deposits is Canada Carbon’s (V.CCB) Miller hydrothermal lump-vein deposit in Quebec and is being tested as I write. In the next while, the results of those tests will come back and, if the preliminary results are any indication, Canada will have a new, strategic, resource.

The testing is critical because if Canada Carbon’s graphite checks out as nuclear graphite it will have a worldwide market. A market in which high purity graphite sells for super premium rates. Think USD $40,000 per ton.

So, for investors suffering from precious metals fatigue and wary of the Wild West in cannabis, companies like NexGen, Skyharbour and Canada Carbon are worth a look.


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