CLE Course Review

A Companys Story Must Carry Impingement Value to Obtain Widespread Publicity

In two previous columns, we talked about how quality management attracts Publicity, or PR. Nearly every company is constantly trying to attract the attention of the media. What brings the media to a companys door? Thats what every public relations man or woman would love to know. For this is what PR people get paid to obtain for their clients.

Quality management is certainly a key motivation in attracting a reporters attention. This helps persuade the reporter or a radio/TV producer that the proposed interview isnt going to be with someone who has nothing to say or just rehashing a clich or tired, old story. The higher the title and the better known a company, the greater the impingement a PR pitch (thats what publicity people use to sell a reporter) impacts upon a member of the media. If someone from the publicity department at Microsoft calls Fortune magazine to ask about profiling Bill Gates, the pitch will have major impingement value. Few names have this kind of clout, either personally or corporately.

In any event, the senior editor of the major magazine will still inquire about the story angle. The editor will want to know, What are we going to talk about? Ultimately, it is the outstanding story that sells magazines or newspapers, not just the big name. Not all such stories involve a big name speaking or spouting his thoughts for the day. Often, better stories evolve when there is a strong newsworthy angle. Lets look at two recent stories one which involves a uranium company and another one about a coalbed methane (CBM) company, which weve covered in this column.

On Thursday, Pacific Asia China Energy (PACE) was featured in the Financing section of Canadas Globe and Mail newspaper. Headlined High-Energy Performer, the opening sentences told us why the reporter was interested: PACE holds contracts to help China explore for and develop its coalbed methane (CBM) resources fuel China needs to help satisfy its energy demands.

The big story, which drew the newspaper to Pacific Asia China Energy, was China. PACE piggybacked that story because the company may be helping to offer a legitimate solution to the countrys energy mix. Part of the big story is the possible size of the recoverable gas, estimated in a technical report by Sproule International to be as large as 11.2 trillion cubic feet of gas.

Those two items enhanced the reporters interest in PACE. China needs alternative energy sources, such as CBM, to improve their energy mix from a near total dependence upon coal. And, PACE has a potentially huge resource, which could last a good number of years. Such a gas resource could be sufficiently large to make an impact on China. After all, China has proven reserves of a little more than 30 trillion cubic feet. Another 11 trillion cubic feet, should the potential be proven up, would represent a significant increase of available gas in a very large country. By itself, this could later develop into a major international energy story, reported upon by a great number of news media. Another impingement about the reporter is having the satisfaction of reporting upon a good story, well before others write the story.

Chatter in the newsroom:
Did you hear about PACEs gas discovery in China, Bob?
Bobs Reply: Oh that one. Yeah, I wrote about it eight months ago!

Therefore, there are multiple impingement points in this story. Each draw, or a reason to attract eyeballs to the story, is another point the story must score, for the reporter and his editor, to overcome the hurdles of being featured in a major publication. China is a draw. The size of the PACE coalbed methane gas resource is a draw. The potential impact upon Chinas energy mix is a draw. Writing about it before the rest of the pack jumps on the bandwagon? Thats a draw, too. In this case, four draws sufficiently attracted media coverage for this small CBM development company.

Sometimes, the timing is just perfect, and the overpowering big story accidentally introduces a lucky guy onto the worlds stage. On the same Thursday, the PACE story was carried in the Globe and Mail, the Chief Executive of a tiny Canadian uranium company impinged on a Russian news service reporter in Hong Kong. Such was the good fortune for Craig Lindsay, a Certified Financial Analyst, who has spent more than 16 years in corporate finance, investment banking and business development, according to the website of Magnum Uranium, for which he now serves as Chief Executive.

While Magnum has a market capitalization of about $15 million, and Lindsay is neither a geologist nor engineer, RIA Novosti news agency touted him as a well-known energy expert. Admittedly, Lindsay gave a great speech at the Hong Kong Club for foreign correspondents. Cleverly, he announced, Uranium may be the next oil, during his speech. As many other industry experts have predicted, Lindsay also forecast uranium may hit $50/pound by the end of the year. So many are now announcing this it is likely to become a self-fulfilling prophesy.

What elevated Lindsays publicity was not what he said in his speech. Most of his commentary has been already been reported in numerous publications, including in our columns. (What reporters really hate is rehashing old news to give someone publicity!) It was to whom Lindsay was speaking, and especially the timing as to when it was said. Here is how Craig Lindsay got his 15 minutes of fame.

About six hours earlier, the very same Russian news agency reported that Russia and Kazakhstan had signed a uranium deal worth $1 billion. The photos of Russian President Vladimir Putin and Kazakh President Nursultan Nazarbayev appeared as the photo op which goes with such really big stories. This was a major event involving two very big names, and among the biggest names and countries in the uranium sector. This was also Russias first contract to import uranium; Kazakhstan is the worlds third largest uranium producer. All of this is big news.

The clever Russian freelance reporter, who attended the Lindsay speech in Hong Kong, probably text-messaged or emailed his editor by Blackberry, tried to piggyback the Russian-Kazak story with his own story. Yes, that is how timing works. As soon as a major event takes place, other journalists rush to piggyback the event with their story. The Russian reporter scored points with his editor and got his story filed (slang for published).

Two cunning gentlemen, the Russian stringer (slang for freelance reporter), and Craig Lindsay (whose name was spelled Kreig Lindsay in the article), both accomplished their purposes. Mr. Lindsay got his company into the worlds spotlight. The Russian stringer got a great story. The reporter threw up a softball question, for which Mr. Lindsay supplied the desired answer.

What was the question the reporter asked Lindsay? Thats pretty obvious from what the reporter published in his article. Here is a clip from the Moscow News article:

Foreign investors are ready to invest in Russias uranium industry, if Moscow wants this to happen and establishes a necessary legal base, Lindsay said. I believe that Russia is one of the most promising directions for this kind of investments, it is an undeveloped market, full of opportunities. My company will be the first to come to Russia, if the necessary conditions are created, he added.

Nowhere in Lindsays speech did Magnum Uraniums Chief Executive discuss investing in Russia. However, the reporter NEEDED a good quote. It had to tie-in with investing in Russia for uranium development. Lindsay accommodated. He didnt commit to investing in Russia, but he kept the door open. Magnum Uranium recently announced the acquisition of a 1,080-acre land package in Converse County, Wyoming. The company is also exploring for uranium in both Wyoming and the Athabasca Basin. Its finances are probably already stretched from both exploration and acquisition activities. Magnums market capitalization would probably be insufficient to launch investments into Russia, at this time.

However, Lindsay did a great job getting his company this caliber of publicity. And he got the uranium sector excellent publicity. He capitalized upon an impinging story a story that did show up on the worlds radar by correctly supplying an answer the Russian journalist was trying to prod out of him.

This is the essence of how journalists and publicity-seekers work together. If the PR person gives the journalist the story angle he is looking for within the bigger story, chances are it will appear in print. Piggybacking a main event is the most common way to increase ones impingement value to a reporter. And by being a cunning interviewee for his Russian reporter, Craig Lindsay just got Magnum Uranium into this column as well!

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An Inside Look At Camecos Smith Ranch Uranium Facility

Cameco Corp (NYSE: CCJ) is the 800-pound gorilla of the uranium sector. Cameco is to uranium what Wal-Mart is to retailing, and what Saudi Aramco is to petroleum. On a percentage basis, Cameco dominates its sector more so than either of the two. Cameco probably has more clout in turning off the electricity now powering your computer than any other company in the world.

This week, the spot price of uranium rose to $40/pound, for the first time since Ronald Reagan was president. That should help grow the uranium business in Wyoming by leaps and bounds. In Part 5, we look at the largest U.S. uranium producer, Cameco-owned Power Resources.

Understanding In Situ Leach Uranium Extraction

It took $284 million Canadian to build, and it operated with 546 people, said Patrick Drummond, Plant Superintendent for Cameco subsidiary Power Resources Smith Ranch facility. He was pointing to Kerr McGees Smith Ranch underground mine on the wall across from desk, which was later converted into an ISL operation, first run by Rio Algom. This operation cost US$44 million to build and 80 people to start. Drummond was referring to the In Situ Leaching (ISL) uranium extraction facility, known as Smith Ranch. That should give you the scale of the ISL versus an underground mine, he explained.

The aging, but sprightly, Drummond knows his uranium. Hes worked in underground mines, open pit mines, and uranium mills since 1980. From 1996 to the present day, hes worked in Wyoming for Power Resources at the companys ISL uranium extraction facility. I started off in the coal mines in Scotland, boasted Drummond, who claims he can spot a coal miner in a bar, just by looking at the veins in his hands. I worked up in Elliot Lake and the massive underground mines up there. Clasping his hands and looking down, he seemed to apologize, Its also a massive environmental problem to clean up, a major undertaking. Quirk Lake was one of the bigger mines up there. It cost a lot of money to clean it up.

The New Face of Wyomings Uranium Mining is the ISL uranium extraction method, also known as solution mining. The differences between mining uranium underground and an ISL operation are both minor and vast. Both methods mine uranium beneath the surface. So both methods are underground mining. However, that is where the similarities end. With underground, you bring up the ore, grate it, crush it, and extract the uranium from the ore, Drummond explained the basics of underground uranium mining. That ore becomes waste, which is known as tailings. You then have to service these big tailings and then decommission.

ISL is the new breed of mining. With ISL, we dont do that, continued Drummond in his day-long lecture to our editorial team during a VIP tour of the Smith Ranch facility. To mine underground with ISL, you drill the holes where the uranium is and extract the uranium from the underground ore, he said. Then, you process that into yellowcake.

Its not all wine and roses for Drummond, though. He pines away for his underground mines, From a mining perspective, its not mining so it is not as exciting. Drummond laughs, ISL is like a water treatment plant. We take water out and remove some ions. He makes it sound so simple, We remove the water from the underground and remove the ions, being the uranium ion. Then, we put the water back under the ground. All of the water goes back into the ground? Actually no, Drummond explained, We take our water out and we put 99 percent back in. The one percent we call bleed. Its a control function.

Drummond cites more comparables, To start an underground mine, it would take a year to do the shaft before you could start mining. Then, theres the development cost of the mill complex. You have all that outlay of cost before you can get any benefit. Its expensive to do underground — $200 million plus because of the upfront development costs. From his perspective, the miner in Drummond has come to like solution mining. ISL is easier. It is a lot cheaper: less expensive capital costs and less operating expenditures. It is less labor intensive. Asked about the deadly radon emissions, often cited as a danger in underground mining, Drummond shot back, This is a zero emission facility.

Analyzing the two methods, he said, You can start producing faster with an ISL operation. You start your first header house, and you can start producing and make money. He added, So you get a return on your investment faster. Whats the downside? We also recover less uranium with ISL, Drummond admitted. Some of Camecos mines in Saskatchewan are running around 5, 10, 15, and 27 percent uranium. In this area, or in an ISL, it runs less than one or two percent. Its very low. Plus the uranium ore body must be found below the water table. He added, You can only do ISL in rock thats porous and has water in it in the first place.

To put it in the simplest terms, billions of years ago, the uranium found its way into the underground aquifers of Wyomings sandstones. We add oxygen and get the uranium back into solution, Drummond remarked. We complex it with CO2 to keep it in solution, and then bring it to the surface. We extract it with an ion exchange base. According to Drummond, extracting uranium works on the same principle as a water softener. We add salts to the resin to get the uranium to back off from the resin. Then, we take that uranium and make it into a final product called yellow cake.

And why it is called yellowcake? Some of it is yellow; some of it is green or dark green. Some of it is black, Drummond patiently explained. The color is a function of how we dry it, not how we process it. There is a very definite correlation between drying temperatures of yellow cake and color. It all depends on what chemicals you use while processing uranium. At Smith Ranch, we make uranium peroxide. It is very clean and yellow. We complex uranium with hydrogen peroxide to make our product. You can make different types of yellowcake. You can make a uranium diuranate, a complex made with ammonia. Yellowcake can be made with other chemicals.

How is Wyomings ISL uranium dried? We dry the uranium with vacuum dryers, said Drummond. The benefit of vacuum dryers is first of all, its a vacuum so everything is sucked inside the canister so nothing escapes into the environment. There are no gases that escape.

Investigating the Environmental Issues

It was, at this point, we felt it appropriate to inquire about all the puzzling worries many of us might correlate when thinking about nuclear energy and uranium. How safe is all of this really? When we first started uranium mining, we inherited people from the gold mines, Drummond explained. They were underground, and smoking, breathing in the dust. In the early days, we didnt have good ventilation. In underground mining, youve got to keep the air moving. Hard rock underground mining produces dust. The shards of silicone you are breathing stick to the follicles on your lungs, he noted. But that doesnt happen during the ISL extraction process. No emissions, a farm of well fields with underground pipes and tubing, and very detailed safeguards explain they the lobby wall of Power Resources is lined with Safety Award certificates and plaques.

On a daily basis, when we leave the facility, we are scanned for alpha radiation, continued Drummond. Depending upon your position here, you get urinalysis once per week or once per month. We also check for radiation levels. How did Drummond fare on his most recent radiation check? I was way below, he laughed. There are guys on the beach in Malibu that have higher radiations than I have.

What precautions does Power Resources take to protect the environment during the ISL extraction process? Since 1996, we have had zero excursions, Drummond announced with steeliness in his voice. We take very great pains to look at the topography, so if we do have an excursion, we make sure it does not enter what we call the waters of the state. Any channel that could take that and move it into the waters of the state, is something that we are very cognizant of.

After the holes are drilled into the well fields, a company does a baseline sample. Drummond said, Thats a sample of the constituents in the water. When we mobilize the uranium, we mobilize other items. It is our duty here, after we start the well field, to return the aquifer back to baseline when we are done. He added, If we know whats in the water before we start, then we know how to restore it to background. Restoration of the underground tampering with Mother Nature can take anywhere from 18 to 36 months.

The company is meticulous in restoring the landscape as well. Any restoration work on the surface is called reclamation. That can involve farming. When we start a well field, we have to, by license, remove the topsoil and store it somewhere, Drummond explained. When we go back to reclaim the property, we take all the pipes out, we take the houses down, and cut our wells off. Its all identified. We put an ID marker on the well. In 50 years time, when Farmer Joe comes around and wonders what was there, the state can say, That was a uranium well. From the time weve stopped mining, we put everything back to normal.

It takes from two to four months, or up to seven years, to exhaust a well field, depending upon the roll fronts. While it can take up to 24 months to put in a well field, reclamation and restoration take longer. We put back the topsoil on, depending upon the weather, as soon as we can, said Drummond. We re-seed, during the spring or the fall, which is the best time for seeds. The seed we use is dictated by the regulators so we use a certain amount of native vegetation. Because its very dry at the Smith Ranch, nearly bordering on desert, and because it is also very windy, slapping down the topsoil wont last very long. First, we plant some fast-growing oats to establish a root bed, he explained. If we just planted grasses, it would all blow away. Because we plant the oats, we have fat antelope and fat deer. From our observations, the sheep were well-fed and frisky.

How does Wyoming ISL mining compare to other places, such as in Texas or in Kazakhstan? In Wyoming, the water is pristine, very clean, even compared to Texas, where they do ISL, answered Drummond. The waters pretty clean down there also. Is the uranium the same? When we bring our uranium to the surface, it comes up as uranyl dicarbonate, he responded. In Texas, it comes up as uranyl tricarbonate. Whats the difference? Its in the processing of the uranium. We get about 8.5 pounds of pounds of uranium per cubic foot of resin, he explained. In Texas, they get about 3 to 4 pounds of uranium per cubic foot of resin.

Drummond described the Smith Ranch ion exchange operation, We have two columns in the ion exchange, each with about 500 cubic feet of resin. The resin costs about $200/cubic foot and, barring mechanical damage, can last up to thirty years, according to Drummond. The polymer beads they look like tiny plastic ball bearings capture the uranium during the processing phase. In Kazakhstan, you get about two to three pounds of uranium per cubic foot of resin, he continued. They use hydrochloric acid because of the water conditions. Of course, youve changed the chemistry of the water and have all the acid to clean up. Drummond described the water in Kazakhstan as very brackish, and yellowish. The TDS (total dissolved solids) is very high, he added. The waters not fit for human consumption anyways. He laughed, Using acid over there cleans their water up.

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