SATURDAY EDITION

September 20th, 2014

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editorials

 
Achtung: Genius at Work!
Ferdinand E. Banks  Aug 21  

Ukraine's Next Crisis? Economic Disaster
OilPrice  Aug 20  

What The Oil Headlines Miss: Interview with Michael Levi
OilPrice  Aug 07  

21st Century Energy Centers Could Take the Bakken by Storm
Emerging Growth LLC  Jul 25  

Iraq Breaks Down, Oil Surges
Chris Martenson  Jun 18  

»» more editorials in the archives

market data


Ux U3O8 Price (Uranium)Sept 15th, 2014
$34.00 +$1.25 www.uxc.com

»View Commitment of Traders.

expert analysis & newsletter briefs

Focus Ventures Ltd.

"In Peru, I have been examining Focus Ventures Ltd., a very small company that has just released a major resource estimate on its Bayovar 12 project. . .the Bayovar is a strong phosphate region, and Focus' land package is surrounded by phosphate mines. It is a very straightforward project. Twenty drill holes were sufficient to outline a deposit with 215 Mt in resources at an average grade of 12.5% P2O5. The company has revised the exploration target upward of 300400 Mt. . .the mineralized layers are very horizontal, which makes it easy pickings for a shovel-and-truck operation. There are more than a dozen mineralized beds. For the top four beds, the grade increases to 14.4% P2O5 for 5051 Mt. That bodes well for the economics, because the project has excellent infrastructure. It is located near several ports in a phosphate region with two big mines already in production. This is a dream situation for any mining company. . ." (9/17/14) - The Energy Report Interview with Thibaut Lepouttre

Fission Uranium Corp.

"Many of the recent discoveries, especially the most high-profile ones, like Fission Uranium Corp.'s Patterson Lake North discovery, are either outside the basin or beneath it, hosted in basement rocks rather than rocks comprising the basin itself. I like Fission a lot. I'm a huge fan of Ross McElroy, its president and chief geologist. The only thing holding me back on Fission is it has 450M shares out and is a $500M company already. It's not a cheap stock but it's a great discovery." (9/17/14) - The Gold Report Interview with Eric Coffin

Roughrider Exploration Ltd.

"I just added Roughrider Exploration Ltd. for two reasons: Director Dale Wallster and CEO Scott Gibson. Dale and I go back a long time and Scott and I are close friends. I should note here that Roughrider is a stock I follow and update for subscribers but I don't rate it. I agreed to be a strategic advisor to the company. I think I may get paid for that but that isn't the real issue. There will be times I'm in possession of inside information so I can't rate the stock in the newsletter. Dale was the driving force behind Hathor and is a director of Kivalliq Energy. He made the decision to stake outside the Athabasca basin. Many of the recent discoveries, especially the most high-profile ones, like Fission Uranium's Patterson Lake North discovery, and the Roughrider discovery that made Hathor, are either outside the basin or beneath it, hosted in basement rocks rather than rocks comprising the basin itself. There is a northeast trending deformation zone that runs through the southeastern portion of the Athabasca Basin called the Wollaston-Mudjatik domain, which hosts all the in-production high grade deposits in the Athabasca Basin. So Dale and the people at Kivalliq chased that domain to the east in the basement rocks beyond the boundaries of the basin and staked a bunch of properties that people were ignoring. Kivalliq optioned this project, Genesis, to Roughrider. Roughrider can earn 85%, but Kivalliq is the operator.

Roughrider just finished the phase 1 program. There are few results back yet. The company is prioritizing eight target areas for a winter drill program and other targets may come out of the exploration program just completed. One of the advantages of being outside the basin, assuming the theory is right, is that you're dealing in an area where there's been a great deal of erosion. So rather than drilling 800900m holes, you're drilling 100200m holes. More bang for the buck. Roughrider should have about enough cash to do the winter drill program but without a lot to spare. So I would expect another small financing between now and the start of a drill program if only for prudence's sake." (9/17/14) - The Gold Report Interview with Eric Coffin

Focus Ventures Ltd.

"In Peru, I have been examining Focus Ventures Ltd., a very small company that has just released a major resource estimate on its Bayovar 12 project. . .the Bayovar is a strong phosphate region, and Focus' land package is surrounded by phosphate mines. It is a very straightforward project. Twenty drill holes were sufficient to outline a deposit with 215 Mt in resources at an average grade of 12.5% P2O5. The company has revised the exploration target upward of 300400 Mt. . .the mineralized layers are very horizontal, which makes it easy pickings for a shovel-and-truck operation. There are more than a dozen mineralized beds. For the top four beds, the grade increases to 14.4% P2O5 for 5051 Mt. That bodes well for the economics, because the project has excellent infrastructure. It is located near several ports in a phosphate region with two big mines already in production. This is a dream situation for any mining company. . ." (9/17/14) - The Energy Report Interview with Thibaut Lepouttre

Pan Orient Energy Corp.

"Pan Orient Energy Corp. has announced that its steam assisted gravity drainage (SAGD) demonstration project in Alberta commenced first bitumen production as of September 16, 2014, after injecting steam for three months. The company expects it can achieve a stable rate of bitumen production within six to eight weeks. . .the establishment of bitumen production is encouraging. . .we should have more definitive results in November 2014. We see significant upside if the initial bitumen production results and steam injection ratios indicate the potential commerciality of the Sawn Lake SAGD project." (9/17/14) - Bill Newman, Mackie Research Capital


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from the publisher
  Robert J. Moriarty

Welcome to 321energy.



Peak Copper

Roland Watson
December 16th, 2005

If oil is the most important commodity, then copper cannot be far behind. Being used extensively in electrical power cables, electrical equipment, automobile radiators, cooling/refrigeration tubing, heat exchangers, artillery shell casings, optical fibre, water pipes, drain pipes, plumbing and even jewellery, this reddish-brown metal is a commodity that the world can ill afford to be in short supply of.

But the fact of the matter is that copper is yet another metal that is in a mining deficit that was predicted to be 700,000 tons in 2004 by the USGS 2005 summary. That would be about 5% of the estimated 14.5 million tons produced worldwide. As a result, stockpiles have reduced and prices have increased to over the $2 a pound mark recently.

Against this backdrop, I was nevertheless surprised to read recent comments by Ross Beaty, the chairman of Pan American Silver and Lumina Copper, that global copper production was approaching its own version of "Peak Oil" or shall we say "Peak Copper"?

His remarks can be found in this article. But his main points centred on such facts as:

Only 56 new copper discoveries have been made in the last 30 years. He predicts Chilean copper output to peak about 2008 (Chile is the world's main producer). A lack of smelter and refinery supply is creating another bottleneck. 21 of the 28 largest copper mines in the world are not amenable to expansion. Many large copper mines will be exhausted between 2010 and 2015.

Does not all this sound familiar to the arguments of the Peak Oil debate?

New oil discoveries of the last 30 years are dwarfed by those of previous decades. Saudi Arabia, the world's main oil producer may peak soon. A lack of refining capacity is causing bottlenecks in gasoline, etc. Many of the super giant oil fields in the world cannot have their production expanded or even maintained. Supergiants such as Ghawar, Cantarell, Burgan and others will be well on the decline path by 2015.

When we look at the comparative reserve numbers for oil and copper we also get a sense of an impending dual peak scenario. Worldwide economic reserves of copper are stated to be 470 million tonnes by the USGS 2005 summary for copper. If the 2004 mine production figure of 14.5 million tonnes is held steady into the future, copper would be exhausted within 33 years.

If we also assume about 1 trillion barrels of oil remains to be economically recovered worldwide with a current annual production of 30 billion barrels then we come out with a similar reserve lifetime of 33 years. Coincidence? Not if we realise that increased energy consumption means increased metal consumption. The two go hand in hand.

When might this peak come around? That is probably a little easier to calculate than oil since secrecy about copper reserves is much less prevalent. But the shocking news that Chile, which produces one third of the world's copper, may begin to decline irreversibly in 2008 suggests that as Chile goes, so goes the world.

When Chile peaks, the world peaks.

Sounds a bit like the peak oil mantra "When Saudi Arabia peaks, the world peaks".

However, if you believe that reserves are purely a function of price, you may take comfort in the recent USGS suggestion that the total reserve base of copper (economic and uneconomic) is not the 940 million tonnes of its 2005 summary but a whopping 1.6 billion tonnes! Sadly, some reading between the lines of that statement reveals a more sobering truth that half of that estimated tonnage does not appear to have been discovered yet!

Perhaps the USGS is indulging in the same over-optimistic numbers that we have seen it display in its estimates for crude oil. We think so and will continue to work on that assumption.

In conclusion, what are the ramifications of copper supply diminishing in the face of potential increased demand? The answer is far higher prices to begin with. The second answer is substitution of applications using aluminium, titanium and plastics - depending of course on how strained their resource base is.

There is one hope for those consumers who yearn for lower copper prices. When Peak Oil finally arrives, we'll probably enter a severe economic crisis that will kill demand for copper. Then they'll have their lower prices and unlike gold and silver that will see fevered demand as safe haven investments, nobody is going to fly to copper as a store of value.

Roland Watson

email: newerainvestor@yahoo.co.uk

Roland Watson writes the investment newsletter The New Era Investor that can be purchased for an annual subscription of $99. To view a sample copy of the newsletter, please go to www.newerainvestor.com and click on the "View Sample Issue Here" link to the right.

He invites comments and questions at: newerainvestor@yahoo.co.uk.



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September 20th, 2014

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