September 2014

Coinflation:

Zinc passed the $1.80 mark today, that means the current “penny” has a melt value of $0.0101867. All the coins in your penny jar are worth more than their denomination (except for steel cents made during WW2).

There’s been a lot of discussion lately about the elimination of the one cent piece. Jim Kolbe, the sponsor of the original bill in congress, has been mentioned several times with the Mark Foley scandal and it’s unlikely his legislation will ever make it to the voting floor.

Personally, I think some kind of action is required. However, I would rather see the metal composition changed to steel or aluminum (similar to Canada) instead of outright removal of the denomination.

Shortages of cents and nickels is probably coming, maybe a lot sooner than most people think. Metal compositions of future coins should be changed before a disruption takes place, but I’m not sure there’s enough time.

If copper/zinc/nickel prices continue to trend higher, not sure how mass melting could be avoided.…

CBS marketwatch:

The housing slowdown has turned some parts of the Phoenix and Las Vegas metropolitan areas into “ghost towns,” where many unsold homes stand empty, Janet Yellen, president of the San Francisco Federal Reserve Bank, said Monday.

Yellen said that she heard the ominous description from a “major home builder,” who told her that the share of unsold homes in some subdivisions around the two Southwestern cities has topped 80%.
“Though the situation isn’t that bad everywhere, a significant buildup of home inventory implies that permits and (housing) starts may continue to fall, and the market may not recover for several years,” she warned, according to the text of a speech delivered Monday at the Hong Kong Association of Northern California in San Francisco.
The housing slowdown was one of several factors Yellen cited in which she argued that the current level of interest rates is “moderately restrictive,” and that it makes sense to keep it that way “for a time.”
Nationally, inventories of unsold homes have climbed as housing became less affordable, Yellen said in a meeting with reporters after her speech.
Speculation had been quite high in areas such as Phoenix and Las Vegas and now that prices may not be heading higher anymore, those speculators seem to be dumping inventory on the market, she added.
“The market (in these regions) has seized up to some extent and inventories are building,” she said.…

Petrolifera Petroleum Limited (PDP – TSX) announced today that it has tested its RN. PM. a-1014 well. On test, light gravity crude oil flowed without water at a calculated sustainable rate of approximately 1,200 bbl/d through an 18 millimeter choke, primarily from the Punta Rosada Formation. In this regard, results are similar to those encountered in the offsetting although structurally higher 1011 well. This is Petrolifera’s tenth successive completed crude oil well and ninth successive flowing Sierras Blancas or dual Sierras Blancas/Punta Rosada oil well on the Puesto Morales Block in the Neuquén Basin, Argentina.

The company also wishes to confirm that the drilling rig which was utilized to drill the 1014 well has now moved to the 1024 location, situated south and east of the excellent 1013 well, as the surface location at 1019 was not ready when the rig completed operations at 1014. In the absence of any development to cause a change of plans, Petrolifera anticipates drilling the 1019 location following completion of drilling operations at 1024, which have now been underway for approximately six days.

Analysis: This just keeps getting better and better. We are up over 120% here since June 2006 and look at the move in Dune Energy today. We are up over 40% in just over a few weeks. Nice moves with rising production profiles in both companies. Both are buys on weakness.…

YAMANA GOLD INC. (TSX:YRI.TO – News)(AMEX:AUY – News)(AIM: YAU) is pleased to provide an update on the start-up of its Chapada copper-gold mine and a production update for its Sao Francisco and Jacobina mines, its two other principal gold mines in Brazil. Yamana operates six mines in Latin America, five of which are in Brazil including the Chapada, Sao Francisco and Jacobina mines. The Chapada mine is Yamana’s largest mine. The period ended September 30, 2006 is the first quarter of commercial production at the Sao Francisco mine and the first full quarter in which Yamana has owned the Jacobina mine. Yamana is also in the process of assuming ownership of the advanced stage Gualcamayo project in Argentina resulting from its successful take-over bid of Viceroy Exploration Ltd.

Production Update

Yamana is also providing a production update. Milestones achieved and events occurring in the three month period ended September 30, 2006 include the following:

– Total production for the third quarter of approximately 89,000 ounces of gold from its five other producing gold mines, consistent with mine plans.

– Upward trend in production at its Sao Francisco mine with monthly production increasing from approximately 8,800 ounces of gold in July to over 10,600 ounces of gold in September for total quarterly production of approximately 29,600 ounces of gold (including pre-commercial production in July).

– Production at the Jacobina mine of approximately 19,300 ounces of gold which is consistent with the mine plan.

– Initiation of cost improvements at the Sao Francisco mine primarily related to elimination of duplicated costs as the mine undergoes the transition from construction to operations.

– Initiation of production and cost improvements at the Jacobina mine including a change in mining method to reduce dilution, and the start of the initial phase of the Jacobina expansion which will result in throughput capacity increasing to approximately 5,000 tpd in the fourth quarter of this year. This is being achieved through the installation of an additional crusher and screening circuit. Yamana will continue to expand at Jacobina with capacity rising to 6,500 tpd by mid to late 2007 and up to 8,500 tpd by late 2008.

– Continuing development at Morro do Vento and other areas of the Jacobina mine to accommodate the increase in throughput at the plant.

Analysis: Good news here with rising production and lower costs as we move forward. This company is a buy.…

This is not about how horribly polluting coal is. It’s not about how dangerous coal mining is. It’s not about how much it contributes to carbon emissions and thus to global warming.

No, this is to fight the meme that coal is plentiful.

If you consider a linear growth in demand for coal, the average demand over 2005-2050 will be 2.5 times current demand, which means that we’ll have used 112 of these “reserve-years”, and, at 4 times current production in 2050, we’ll have about 10 years left of reserves worldwide at that rythm of production (not even considering if these reserves will actually be accessible and usable at such rates).

The same calculation for the USA, if you consider that demand for coal on current trends (+71% between 1975 and 2005) is roughly set to double, would lead to conclude that in 2050, at those then prevailing rates of production, the USA would still have 90 years of coal reserves.…

The new head of the Nuclear Regulatory Commission thinks he can cut the time it takes to license a nuclear power plant in half, to about two years.

Chairman Dale Klein will have many opportunities to try: The commission expects applications for 29 new nuclear power plants ahead of the 2008 deadline to get federal incentives. That includes nine reactors in Texas.

If it takes about 48 months to actually build a plant, “42 months to license seems a bit long,” Mr. Klein told reporters Friday. He said it’s “not unreasonable” to cut that licensing time in half without compromising safety.

“We look at too many little things and miss the big things,” said Mr. Klein, who was assistant to the secretary of defense for nuclear and chemical and biological defense programs before taking his current job in July.

Cutting the time it takes to license a plant could help some companies put plants into production more quickly, especially those in the very early planning stages.

For consumers, it could mean getting the relatively cheap and clean nuclear electricity sooner. And it could also pressure the U.S. government to resolve the issue of where to store nuclear waste.

“We’ve been sort of counting on the more traditional time of 3 ½ years. If they can do it quicker, that’s good news, but we’d rather everybody feel comfortable with it,” said Steve Wynn, president of NRG Texas, which plans to build the next nuclear reactor in the state, by 2014.

The U.S. has 103 nuclear power reactors, which generate about 20 percent of the country’s electricity.

NRG Texas said in June it plans to build two more reactors at its South Texas Project and expects the first to be in production by 2014.

Last month, TXU Corp. announced plans to build up to six reactors at three sites across the state by around 2015 to 2020.

And on Friday, a spokesman for Exelon Corp. said the company plans to apply for a license to build one nuclear plant in Texas. Exelon spokesman Craig Nesbit said the company is evaluating eight sites in Texas, none of which has a nuclear plant now.…