Thorium & Renewable Energy vs Uranium

As the world impatiently watches whether Japan’s Nuclear power facilities cause a catastrophic event, the debate over the use of Uranium for energy and safe alternative fuels has again risen.

JapanSince the implementation of Nuclear energy in the 1950’s, the global debate for the use of uranium has led to many protests for and against.

The production and use of natural resources such as coal and crude oil has created a massive impact on global warming, and with diminishing supply levels, alternative fuels are needed now more than ever.

Japan’s current problem with the potential for radiation leaks as close as 80kms out of Tokyo are estimated as being the 3rd worst nuclear disaster to date. Topping the list is Chernobyl in the Ukraine (formerly of USSR) in April 1986 and then Three Mile Island in Pennsylvania (United States) in March 1979.

This has led us to investigate alternatives to uranium and renewable energy sources.

Thorium is a natural element that is an effective replacement for the highly volatile uranium and plutonium that is currently used in nuclear power plants. Where the situations like we are currently experiencing in Japan are derived from the use of uranium, Thorium would alleviate these problems as there is no possibility of a meltdown, it requires 0.5% as much as uranium and it does not produce weapons grade by products.

Compared to uranium, there is more availability of thorium around the world. And just like uranium, the greatest quantities of thorium are found in Australia. It is estimated that over 400,000 tonnes of thorium could be extracted from within Australia. As defined by Geoscience Australia (Australian Government), it is estimated that the cost of extracting and producing thorium is less than $US80 per kilogram.

As the price of uranium has increased and is trading around $US66.50 per pound, today, this makes thorium even more attractive as an alternative.

This debate is likely to be ongoing, but this could lead to opportunities in an emerging market. As outlined by Geoscience Australia, there is currently no production of thorium in Australia. But as it is present in the mineral monazite, Australia was involved in the exporting of this mineral up until 1995.

Key deposits of Thorium in Australia are found in the following locations:

  • Nolans Bore – 135km northwest of Alice Springs, NT.
  • Toongi – 30km south of Dubbo, NSW
  • Brockman – 1060km north of Perth, WA
  • Mount Weld – 30km south of Laverton, WA
  • Cummins Range – 130km southeast of Halls Creek, WA

The key companies that are most likely to pick up thorium production in these regions include:

 

Company

Code

Market Cap$

Fundamentals

Recommendation

Mount Gibson Iron Ltd

MGX

$1.92B

Weak

Target trade:

 $1.70 – $1.80

Arafura Resources Ltd

ARU

$347.98M

Weak

Navigator Resources Ltd

NAV

$68.86M

Weak

Lynas Corporation Ltd

LYC

$62.58M

Weak

Target Trade:

 $1.75 – $1.85

Alkane Resources Ltd

ALK

$33.87M

Good

Buy $1.25 – $1.30

Artemis Resources Ltd

ARV

$10.04M

Weak

 

The fundamentals for most of these companies we have deemed as Weak. This category reflects poor Revenue generation and decreasing profit/earnings, over the last three to four years. It is prudent to note, however, that as many of the above listed companies are low capitalized stocks, their available capital resources are utilized in the exploration for resources

These companies are considered speculative stocks due to the low revenue income, and will spike upwards when they announce the discovery of deposits as it denotes future revenue income.

Alkane (ALK), on the other hand, has Good fundamental data, and from a technical perspective, has been trending steadily over the medium to long-term. ALK currently offers a good entry point as the stock price has retraced from recent long-term highs.

Solar Panel

For the renewable energy sector, there are 4 key categories:

1)    Solar

2)    Oceanic

3)    Geothermal, and

4)    Biomass

The renewable energy companies listed in Australia are
mostly speculative companies. However, Origin Energy (ORG)
is involved in renewable energy, as well as other traditional
energy sources such as gas and oil exploration. The key
companies listed in Australia include:

Company

Code

Market Cap$

Origin Energy

ORG

$13.86B

Ceramic Fuel Cells Ltd

CFU

$144.16M

Dyesol Ltd

DYE

$79.54M

Solco Ltd

SOO

$19.71M

EnviroMission Ltd

EVM

$682.33M

BP subsidiary – BP Solar

Listed in US

$US141.11B

Pacific Hydro – owned by Industry Funds Services Pty Ltd

Private company

 

In conclusion, investment directly into the Renewable Energy sector of Australia would be speculative as the demand for these products, despite the sentimental desire to reduce global warming, has not yet transferred into the investment arena.

Opportunities will exist for Thorium producing companies on the development of this natural mineral as a replacement for uranium. As Japan attempts to control 2 of their nuclear power plants following unpredictable natural disasters, the world will focus on how energy will be produced in a safe manner that will not leave us with toxic end products.

ALK offers the investor opportunity for medium to long-term investment for exposure in Thorium. The short-term trader could also monitor this position for a Bullish trade opportunity.

Since 1998, Matthew has been involved in the Financial Services industry providing stock, option and CFD advisory services, trading advice, funds management and education services. Matt is an Authorised Representative of Halifax Investment Services, providing analysis and recommendations for trading Covered Calls in the US markets and using Exchange Traded Funds (ETFs) ...
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