China’s is researching thorium, as a replacement for uranium in reactors. Andy Sirski explains what this could mean, gives us an update on his portfolio
In this column I will touch on research China is doing on the use of thorium instead of uranium to run reactors to produce electricity. The U.S. did a lot of work on thorium back in the 1950s but the administration wanted to develop nuclear bombs so it chose to focus on uranium instead.
Now China has committed big bucks and many PhD researchers to study thorium and how to build a cooler-running reactor to generate electricity. This could take years or the researchers might hit it lucky and get a prototype going in a fairly short time.
I don’t think this means uranium will lose out to thorium any time soon. But if thorium reactors can be developed, they will produce energy for a lot lower cost (than uranium) because the reactors will cost less to build and run. And they are a lot safer to operate which could or should reduce the Not In My Back Yard (NIMBY) resistance to reactors that run on uranium.
At this time I have not been able to find a company that might be ready to build reactors that run on thorium but maybe it is a little early.
Here is an update on some of the stocks I’ve been looking at so far in 2013.
In early January BNP cut its dividend from 12 cents a month to seven cents, bought or leased more land and bought some infrastructure that is supposed to cut costs. When I sold calls on my shares I decided to play defense, so I sold calls for July strike price $14 which brought in a premium of $1.28 per share. That cut my cost from $15.80 to about $14.50. But after the dividend was cut, share prices dropped to just under $14.
I will watch this stock and, if need be, I will buy that July $14 call back for less than I sold it and then sell a call for July at a strike price of $13 or even $12. I don’t need to make that decision at yet, so I will let you know how things turn out.
The dividend of seven cents per month is still 84 cents per share per year, which is about six per cent per year. That’s still good compared to many shares. But it sure took the wind out of the sales on Bonavista stock.
First off, in a recent issue of Grainews, the words on Sherritt in the last issue read that I started buying S at $15.15 — it beats me how the extra “one” got in — I actually started buying S at $5.15. The company pays a dividend of 15 cents a year, this is just over 2.5 per cent, more than most savings accounts pay.
The company’s website (www.sherritt.com) has a lot of information. This company has been around for decades, has oil and a mine in Cuba and also has developed a huge nickel mine in Madagascar. I couldn’t get anyone to tell me how much it cost to develop the mine, but I suspect it was around $1.5 billion. The mine is expected to run for 27 years.
Management put some unique thinking into this mine. For example, it is an open pit in the hills of Madagascar and the processing mill is near the ocean, 1,000 feet below. They mine the ore, make a slurry and send it down a 140-mile two-foot pipeline. In 30 hours the slurry is at the mill.
After the tailings settle out, water is treated until it’s close to matches salt water, then it’s piped out into the ocean. The dried stuff is shipped by boat and train to Fort Saskatchewan and used in fertilizer. I bought more shares and have not sold calls. I plan to hold this stock for capital gain for now.
Thompson Creek Mines (TCM)
This company will save around $100 million over the next two years because it stopped stripping dirt off the molybdenum ore. If molybdenum prices stay low, TCM will shut its molybdenum mine in Nevada and wait for higher prices.
In the meantime TCM is developing a copper mine in BC called Mt. Mulligan which will cost $1.5 billion and should run for 22 years. There’s quite a bit of gold mixed in with the copper ore which will reduce the cost of the copper. The company set up financing in the spring of 2012 to pay for the new mine but the loan will be converted into shares in 2015 and I suspect the dilution has already been accounted for. The mine in BC is expected to be in production in the third-quarter of 2013. Keep in mind is will be a start up.
I own a lot of shares and I’ve sold puts on a few thousand.
As you have likely heard, car companies are planning to build about 20 million cars in 2013 and many use platinum in the catalytic converters. Not all platinum gets recycled, and a couple of mines will be cutting back production, so there is a growing demand for the stuff.
A company called Platinum Metals Group (PTM) is developing a platinum mine in South Africa. The company issued a few hundred million shares at 80 cents per share to pay for development costs. The mine should open later in 2014.
If you’re in Beausejour, Man., on the evening of February 11, 2013, join me to learn more about investing. This meeting will be very hand-on (we’ll have computers). We’ll be talking charts, selling covered calls, and cycles. Register ahead of time by calling 1- 204-268-6094. †