Growth and Value: What’s the Difference?

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While the majority of American investors understand the importance of diversifying across growth and value investments, few are able to achieve a passing grade on a test of their knowledge of the differences between the two, according to a new American Century Investments survey.

Growth and Value: What’s the Difference?

While the majority of American investors understand the importance of diversifying across growth and value investments, few are able to achieve a passing grade on a test of their knowledge of the differences between the two, according to a new American Century Investments survey.

Test your knowledge with the Growth & Value IQ quiz below:

1. Which best describes a growth stock?

a) Stock that offers guaranteed rate of growth tied to consumer price index.

b) Stock in a company specializing in agriculture, lumber, landscaping, and other organic products.

c) A stock in a company demonstrating better than average profit and earnings gains.

d) All of the above.

2. Which best describes a value stock?

a) Stock in fast-growing company specializing in high-value, low-cost products, like a discount retailer.

b) Stock in a company specializing in valuable goods, like precious metals and jewelry.

c) Stock that has a low price-to-book ratio.

d) All of the above.

3. Which statement is true?

a) Value stocks outperformed growth stocks between 1927 and 2001.

b) Smaller company value stocks outperformed larger company value stocks between 1927 and 2001.

c) Maintaining a portfolio with a combination of growth and value stocks generally is considered a prudent investment approach.

d) All of the above.

4. During periods of strong economic expansion, which fund generally performs better?

a) Growth.

b) Value.

c) Neither.

d) Both.

5. Generally speaking, value funds outpaced growth funds in 2000 and 2001.

a) True.

b) False.

6. Generally speaking, growth funds outpaced value funds during the 1990s.

a) True.

b) False.

7. Which type of fund is more likely to invest in stocks paying a significant dividend?

a) Growth.

b) Value.

c) Neither.

d) Both.

8. Higher price-to-earnings ratios normally would be associated with stocks in which type of mutual fund?

a) Growth.

b) Value.

c) Neither.

d) Both.

9. What kind of stock is described in this example: “Established baked-goods company with strong balance sheet and good cash flow experiencing temporary drop in reaction to changes in senior management.”

a) Growth.

b) Value.

c) Neither.

10. What kind of stock is described in this example: “Software company, enjoying steady sales increases, is in the process of rolling out an eagerly anticipated update to a popular software application.”

a) Growth.

b) Value.

c) Neither.

Key: 1(c); 2(c); 3(d); 4(a); 5(a); 6(a); 7(b); 8(a); 9(b); 10(a). – NU

Day Trading Online in the United States

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Day trading online in the United States has become a powerful trend in recent years.

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Day trading online in the United States has become a powerful trend in recent years. And while growth rates in the US have been sluggish in recent years, the US has still maintained a strong dollar, which is still used as the unquestioned international standard.
Unemployment rates have been better than where they are now, but consumer spending is at a normal pace.

But what does all of this have to do with the stock market?-Surprisingly a lot. Macroeconomic trends are quite simply the sum of microeconomic decisions and realities. If the economy overall is suffering, there’s a good chance that most firms are also experiencing slow growth rates, which will be reflected in share prices on the NASDAQ.

This also means that day traders will feel the strain; some may even avoid trading altogether out of a sense of despair, which may further lag growth rates.

Most of stock trading websites are actually based in America. So that means that you will always have a huge selection of companies to choose between for your stock trading services.

Day trading online in the USA is a big business and a lot of people setting up online companies are making a lot of money, often through sign-up and service fees. But the real winner can be the consumer–the one who signs up for the website: these people get into the online stock trading world and can make a real killing when they are buying and selling all the right kinds of stock.

But you do need to have some kind of knowledge about buying and selling stocks when you are taking part in online stock trading. Brokers are available to give you any advice when you need it; and if you are always failing to earn, then you should really give a broker a call, just to see if they can help you out of your losing streak.

USA is recognized by many as the home of the strongest and largest stock market. This is why foreign investors from around the world choose to invest a good amount of their money in US-based business. For you to make the most out of the US stock market, you need to be able to know when to buy and sell. If you do not know when to say that enough is enough for that share, then you should not be trading at all. A lot of people have exact strategies-technical or fundamental-to determine exactly when to buy and to trade and exactly how much to diversify to manage risk appropriately; and these are the people who are usually earning a steady income.

An Analysis Of Overstock.com (OSTK)

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Why is a value investor writing about an unprofitable internet company? Because value investing is about finding dollars that trade for fifty cents; with a market cap of less than 75% of sales, Overstock.com (OSTK) looks like it may be exactly that.

But isn’t it too risky?

The greatest risk in any investment is the risk of overpaying. So, the real question is: what is Overstock worth? I think it’s worth at least $1.5 billion. With Overstock’s market cap currently sitti…

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Why is a value investor writing about an unprofitable internet company? Because value investing is about finding dollars that trade for fifty cents; with a market cap of less than 75% of sales, Overstock.com (OSTK) looks like it may be exactly that.

But isn’t it too risky?

The greatest risk in any investment is the risk of overpaying. So, the real question is: what is Overstock worth? I think it’s worth at least $1.5 billion. With Overstock’s market cap currently sitting around $500 million, my valuation certainly looks far fetched. But, there’s only one way to know for sure. Let’s take apart my argument piece by piece, and see if any of my assumptions are unreasonable.

First Assumption: Over the next five years, Overstock will neither generate truly free cash flow nor consume cash. In other words, its free cash flow margin will average 0%. Cash generation in some years will exactly offset cash consumption in other years. Obviously, this assumption is unreasonable, because there is almost no chance the cash flows will exactly offset.

That’s not a problem if it turns out Overstock does generate some free cash flow over the next five years. In that case, my assumption simply errs on the side of caution. If, however, it turns out Overstock actually consumes cash over the next five years, there is a problem ?possibly a very big problem. So, which scenario is more likely?

Overstock’s revenues are growing quickly. Gross margins look solid at 13.3% in 2004 and 14.9% over the last twelve months. Overstock’s unprofitability is the result of its selling, general, and administrative expenses (SG&A) which have been growing exponentially. Will these expenses continue to grow? Yes, but not as fast as revenues. Over the last twelve months, Overstock’s spending on cap ex has been 5.6% of sales. That number is an aberration. In the long run, spending on cap ex should not exceed 3% of sales. Considering the business Overstock is in and the expected sales growth, the company will, more likely than not, generate some free cash flow over the next five years. Therefore, the assumption that Overstock will be cash flow neutral over the next five years is not overly optimistic.

Second Assumption: Over the next five years, Overstock’s sales will grow by 15% annually. Is this an unreasonable assumption? Again, I don’t think it is. Very few industries are expected to grow as fast as eCommerce. Overstock’s revenue growth in 2003 and 2004 was over 100%. In the past year, that growth has slowed. However, it is still closer to 50% than it is to 15%. Overstock isn’t in a cyclical business. So, there is no reason to believe current sales are abnormally high.

Also, all that spending on advertising is increasing consumers?awareness of Overstock. A review of Overstock’s traffic data shows it has not only been gaining more visitors; it has also been climbing the ranks of the most popular web sites. While it is a long, long way from the Amazons, Yahoos, and eBays of the world (and will never reach those heights) Overstock is becoming a well known internet destination. This fact was most clearly evident in the weeks leading up to Christmas. Shoppers who visited Overstock during the holiday season obviously know it exists, and may very well return at some other point in the year. Analysts are predicting very high growth rates for Overstock; however, they are also recommending you sell the stock. I don’t put any weight in their estimates. But, for the other reasons given, I believe the assumption that Overstock will grow sales at 15% a year for the next five years is not unreasonable.

Third Assumption: Six to ten years from today, Overstock will have a free cash flow margin of 3%. Ten years from today, Overstock’s free cash flow margin will rise to 4% and remain at that level. Now, of all the assumptions I’ve made, this one is the most questionable. Sure, Amazon has that kind of free cash flow margin, but Overstock isn’t Amazon, and it never will be Amazon. Overstock’s gross margins are less than Amazon’s. In fact, Overstock’s gross margins are less than Wal ?Mart’s. However, Overstock’s fixed costs will eat up a much smaller portion of its sales than is the case over at Wal – Mart.

If you compare Overstock to other online retailers, you will see that if Overstock does experience strong sales growth, a 3% free cash flow margin six years from now is not unreasonable. I assumed Overstock’s sustainable free cash flow margin will be 4%. There’s a case to be made that 4% is too high. I won’t make that case, because I don’t believe in it. Remember, that 4% number comes ten years out. That gives Overstock plenty of time to grow sales and thus reduce SG&A as a percentage of sales.

Fourth Assumption: Six to ten years from today, Overstock will be growing sales by 12% a year; eleven to fifteen years from today, Overstock will be growing sales by 8% a year; thereafter, Overstock will grow sales by 4% a year. Let’s see what this really means. According to these assumptions, Overstock’s sales will be as follows:

Today: $707 million

2011: $1.59 billion

2016: $2.71 billion

2021: $3.83 billion

2026: $4.66 billion

2031: $5.67 billion

2036: $6.90 billion

Seven billion dollars is not an unreasonable target ?if you have thirty years to achieve it. To put that figure in perspective, Amazon.com currently has sales of about $8 billion. So, even after thirty years, these assumptions don’t lead to Overstock reaching the same size as today’s Amazon. Don’t forget these numbers assume some inflation. For instance, if inflation averages 3% a year over the next thirty years, Overstock’s projected $6.90 billion in sales only translates to $2.84 billion in today’s dollars. So, these assumptions only lead to a fourfold increase in Overstock’s real sales over a period of thirty years. I think that’s pretty reasonable.

If you take these four assumptions together, you get a value of $1.5 billion for Overstock. Today, Mr. Market is offering it for $500 million ?that’s why I’m writing about an unprofitable internet company.

An Overview Of The Stock Market

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When you are interested in investing in the stock market one of the first things you will need is a reliable and affordable stockbroker

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When you are interested in investing in the stock market one of the first things you will need is a reliable and affordable stockbroker. At one point in time, a stockbroker was seen as a very high priced person that was extremely hard to understand. In today’s world, stockbrokers have become much different, they have begun to make their services cheaper to obtain and in such a way that is easier to understand. This is an extremely wonderful change for the simple reason that you will not be able to trade in any way, shape, or form without a stockbroker.

One of the major rules within the stock market is that no person is allowed to trade within the stock market unless they are a certified stockbroker. A stockbroker, within the United Kingdom twelve million investor’s trade in the stock market, performs every trade that occurs and each one has enlisted the services of a stockbroker.

So you are probably now wondering, what exactly can a stockbroker do for me? There is a wide range of abilities and services that any stockbroker can offer you, at the same time there are also various ranges of fees that will be collected from them. Typically, a stockbroker will charge a commission, a set fee, or some combination of the two. In regards to the services a stockbroker can offer you, there are three basic levels that include only execution, portfolio management, and advice.

When a stockbroker only deals with the selling and buying of particular shares, per the instructions you give them, this is generally called execution only or in softer terms dealing only. With this type of service, they do not offer you any type of advice on any action you want perform. Typically, investors that are experienced or novice in investing will use this type of service. Execution only is cheaper and extremely efficient the fees the stockbroker charges can range anywhere between ?0 to hundreds of pounds, this will depend on the specific stockbroker you choose.

Portfolio management is extremely detailed and the most expensive type of service performed and dealing with advice is typically a little more expensive than execution only, because the stockbroker will offer advice and views on what is happening within the stock market. The stockbroker at this level of service will also take the time to explain anything you may not understand very well.

Within the portfolio management service, you can separate these into two other categories these are advisory and discretionary. When under the advisory category, the stockbroker will create a proposal of a portfolio for you; however, he or she will not take any action without express permission from you. Within the discretionary category, your stockbroker will completely run all aspects of your portfolio and will give you reports as needs on how the portfolio is working.

An Industry Blueprint To Stocks And Shares

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In this day and age, a lot of things have changed from how they used to be, which can be new and exciting for most.

Because of the large size of the stock market, beginner investors appear to feel overwhelmed as to where to even activate investing their money. To most people, the stock market presents a messy web of options but does not reveal the highway map of clarity to guide their way along way in their investment adventure. The key to investing in the stock market is …

stock market, investment tips, investment advice, stock market tips

In this day and age, a lot of things have changed from how they used to be, which can be new and exciting for most.

Because of the large size of the stock market, beginner investors appear to feel overwhelmed as to where to even activate investing their money. To most people, the stock market presents a messy web of options but does not reveal the highway map of clarity to guide their way along way in their investment adventure. The key to investing in the stock market is to become as educated as it is possible so that you know exactly what is taking place at all times. This helps people to make plausible and sound decisions about their money, thus, dropping the stress involved with investing.

The usual person, when beginning to entertain the idea of investing in the stock market, falls into one of two categories. Class one is the gambler who feels that investing is definitely a form of betting and no question what they do, they are certain that they will drop money slightly than make money. It seems that this opinion of investing in stocks is either formed from friends and family that have been baffled by the stock market or private experience and lost money. If someone has personally made losses in the stock market, it is pretty evident that they were not educated enough at the time of their investment in the stock market. Therefore, they must become educated as to what exactly the stock market is as well as how its system works in order to become a successful investor. Class two, on the other hand, represents the “go-getter?investor, which is an individual who knows that they should invest into the stock market for the safety of their monetary future, but they have absolutely no idea where to begin. The “go-getters?lean towards avoiding their monetary decisions and leave it up to professionals; therefore, they are powerless to justify why they own a certain stock. A usual “go-getter?operates in blind faith, as one stock goes up in value, they more than likely will hold it. The “go-getter?is in poorer shape than the gambler in that they will invest like everyone else and then wonder why they receive an unsatisfactory or devastating outcome. This just proves that the typical person should become thoroughly educated about the stock market as well as stocks before investment takes place.

Essential to every economy is business…businesses that started out as small operations that have grown to become money making giants, raising capital by promoting stock in them to people who want to invest to make their futures financially secure. As small businesses start to grow, one of the supreme obstacles is generating enough money in order to develop into a superior operation. Businesses either scrounge the money in the form of a offer from a bank or venture capitalist, or someone that will invest money into a business in which they feel they will receive a high rate of return, or a reap from their investment into a business, in order to create the currency to expand. The most common choice for a business to gain money for the view of expansion is to take out a loan; however, there is no agreement that a bank will offer money to any given business.

What we have explored up to now is the most important information you need to know. Now, let’s dig a little deeper.

In this case, business owners roam to the stock market for help in the form of issuing stocks. Firm owners relinquish a tiny fraction of control over their business and in reciprocation; the stock market provides that business money that does not have to be salaried back, in order to guarantee expansion. As an added bonus, the business is permitted to “go public,?a saying that means a brand is selling stocks for itself for the first time, so that business owners no longer are required to borrow money from banks because they can merely use their own stocks for getting monies to use for expansion. Thus, as the business grows and sells their stocks to people, the better chance a sponsor has on gaining a return on their investment as opposed to a loss.

As an investor, it is to your advantage to efficiently study each and every business in which you propose to hold stocks. The more facts you know about any certain business, the easier it is to make a plausible decision as to whether you should hold stocks or want a different business in which to work with.

Try searching for a particular keyword from the title of this article on your search engine and you are sure to find a wealth of knowledge.

Ancient Meteor Impact May Hold Key To Uranium Exploration Success At Cluff

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ESO Uranium to Angle Drill near a Promising 1970’s Hole

“I look at about 100 different projects a year, most of which go into the round filing cabinet on my floor,?said Tony Harvey, the senior technical advisor to ESO Uranium (TSX: ESO), and formerly a senior manager of Wright Engineers-Fluor Daniels, which was involved with the design and construction of 14 mines worldwide. Harvey quickly ticked off what is necessary to attract his eye, “I need to see history. I need to …

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ESO Uranium to Angle Drill near a Promising 1970’s Hole

“I look at about 100 different projects a year, most of which go into the round filing cabinet on my floor,?said Tony Harvey, the senior technical advisor to ESO Uranium (TSX: ESO), and formerly a senior manager of Wright Engineers-Fluor Daniels, which was involved with the design and construction of 14 mines worldwide. Harvey quickly ticked off what is necessary to attract his eye, “I need to see history. I need to see signposts before I give it any credence.?So why is he advising little-known ESO Uranium, after a long, prolific career? Harvey helped found Amex-listed Azco Mining, and more recently was a director of Mexican mining firm, Cobre del Mayo, which sold two of its last three mines, which he helped discover, to Phelps Dodge (NYSE: PD).

“I believe this one has a huge amount of history,?Harvey argued. “Not only have you got the Cluff Lake mine, which already confirms the presence of uranium, but you have got the Shea Creek drilling intercepts which validate it. We have the conductors streaming onto our property. We have the boulders, which is also another sign post.?The boulders, of which Tony Harvey refers, are the six uranium-mineralized boulders near the ESO Uranium project on the company’s Cluff property. Near those boulders, a promising drill hole from the 1970s indicated 0.85% U3O8 over 2.3 meters. It was all but forgotten until the recent explosion of exploration activity in Saskatchewan’s Athabasca Basin, an area which has helped Cameco (NYSE: CCJ) grow into a company with a market capitalization of nearly $12 billion.

What ESO Uranium’s geological team will be looking for at the company’s Cluff property are Cluff Lake style uranium deposits in basement rocks with the Carswell structure close to the unconformity with sandstones of the Athabasca group.

Drilling in the Meteor’s Wake

“The value of the ore extracted at the Cluff mine, in today’s terms, would be equivalent to $2.6 billion,?explained Harvey. “That’s how much was extracted at the Cluff mine.?The company’s vice president of exploration, Benjamin Ainsworth, who is both a senior geologist and a mining engineer, helped explain the Cluff structure. “A meteorite probably impacted at this location and with sufficient force to break right through the layers of Athabasca sandstone on the surface. On rebound, basement rocks got lifted back up. In bouncing back out, it also lifted up the surrounding Athabasca rocks and tipped them up, if you can imagine, like an opening flower.?As a result, the basement got lifted up to the surface and made it easier to find and mine the uranium at Cluff. Ainsworth added, “The significance of that for me and our group is that shows very high grade uranium deposits in the western side of Athabasca.?
Drilling a property helps the geological team better understand the area. Since the Cluff property was mined out, two decades ago, additional scientific study has opened up new doors. At the 67th Annual Meteoritical Society Meeting, University of Quebec Earth Science professors presented a paper entitled, “A Re-Evaluation of the Size of the Carswell Astrobleme.?The Montreal scientists concluded in the 2004 annual conference held in Brazil, “The Carswell impact structure is therefore older and larger than previously estimated?the central uplift considered to be under the annular dolomitic unit would suggest a crater size in the basement of 118 to 125 kilometers wide.?While some believe the meteor hit about 478 million years ago, recent evidence suggests it may have been closer to 1.8 billion years ago.

Angle Drilling This Time

ESO Uranium plans a six-hole drill program to learn more about their Cluff property. The first hole hopes to confirm what was found earlier, “We’re going to drill right up against the CAR-425 hole drilled originally in the 1970s, which indicated uranium of about 0.85 percent U3O8 over 2.3 meters.?They will drill adjacent to the uranium-mineralized boulders. Ainsworth explained how the company’s strategy is different from previous drilling, “We’re drilling angle holes to give us a better opportunity to find more of the structures that can be carrying mineralization in that sort of system.?In the 1970s, holes were vertically drilled. Harvey added, “We’re going to be stepping out to the southeast, which bring us then closer to the original Cluff mine.?The company plans 150 to 200-meter holes. Ainsworth noted, “The CAR-425 drill hole, which we’re coming up close to, is 146.5 meters deep.?
Robert Beckett, ESO Uranium’s exploration manager, agrees about the 55 degree angle holes the company will be drilling at the Cluff property, “They were drilling vertical holes, and we’d like to go back and check it with an angle hole on the theory, which we interpret as some kind of subvertical system.?Beckett talked about additional drilling to the south, after the property had been explored, revealed “the structure extends from the edge of the basin all the way through Shea Creek.?He added, “We believe it extends onto our property to the north at 11 o’clock, just to the north. We see the extension of those conductors coming up through Shea Creek ?conductors and by extension, structures, extending up onto our property. And the structures are the key thing ?the destruction of the upper fold and the unconformity in the bedrock, it gives you the right kind of conditions for the deposition of uranium.?Before Beckett joined ESO Uranium, he had been district geologist for Esso Minerals and for the Saskatchewan Mining Development Corporation, which later merged with El Dorado Nuclear to become Cameco Corp. He was the exploration manager at Midwest Lake and the project manager of the Port Radium mine.

The Hook Property

Another property in the ESO Uranium portfolio, which requires additional preparatory geological work and exploratory drilling, is called the Hook property. It’s about ten miles south of the Shea Creek deposit and covers approximately 130,000 acres. The western one-third of the property has been minimally explored. ESO Uranium CEO Jonathan George said about it, “The Hook is one of the areas I’m particularly excited about, now that we’ve received the airborne geophysical survey, is because the conductors have shown up very strongly, coupled with dravite, which is an alteration clay, a key indicator to uranium deposits.?Mr. George believes his company may have a new targeted area. “Cameco is drilling right on the doorstep on another project they have,?he added. Cameco, he pointed out, is drilling just to the south and east of ESO’s southern rim, below the company’s border.

Ainsworth was also optimistic, saying, “That’s part of the reason why that ground was selected earlier ?Cameco had that position, and I could see, in the available information that there were structures and good probabilities of other types of systems being available.?George said, “We’re going to be drilling because we see an intense alteration on surface, of which that source has never been found. The alteration coupled with the structure leads us to believe we’ve got a great shot down there.?
“I think we’re much closer to having a hit at Cluff immediately,?Ainsworth insisted. “It is probably a good thing to get some news on the table very early on.?He did warn that there is a lot of risk in drilling for uranium deposits. “The geometry of these things is damn small.?George pointed out that the world’s richest uranium deposit, McArthur River, hosting about 400 million pounds of uranium, had half of its deposit in an area about half the size of a football field. “I think that’s mind boggling,?he said, “that a $7 billion project would be on an area that small.?
Conclusion

Drilling is imminent on the Cluff property, depending upon ice thickness in Saskatchewan. News should be available fairly quickly. Ainsworth warns, “The individual deposits at Cluff are actually quite small.?While quite a bit of work has been done in the Cluff area, many have recognized it’s very easy to miss. But Ainsworth cheerfully exudes, “The key thing here is that the grade is so high that pursuing it further makes it worthwhile.?
Another key to ESO Uranium is the strength of their exploration team. Technical adviser Tony Harvey has numerous credits to his long career. Robert Beckett has spent decades exploring in Saskatchewan and for the precursor company to Cameco, he was the in charge of the northern half of the Athabasca Basin. Benjamin Ainsworth held numerous senior positions with Placer since 1965, having once served as president of Placer Chile.

According to ESO’s Corporate Communications Manager, Tom Corcoran, “We currently raised about C$4.7 million, which has been earmarked for exploration on and in the ground. If we don’t spend it on drilling or exploration work, we have to give the money back.?ESO Uranium planned to start drilling in early February, having had to slightly delay the start of drilling, according to Robert Beckett, until the weather got colder. Drilling is imminent, and results should appear fairly quickly. Ainsworth offered an insight about how soon we will know about drilling results, “One thing about uranium, unlike drilling for gold and other metals, you get a radioactive signal on a drill core as you’re logging it. So you get a pretty good idea if you’ve got something there or not. You’re not going to get a very precise assay at that point, but at least you can focus very quickly. You can see these uranium minerals with a naked eye.?
We’ll be looking forward to seeing those drill results shortly.

A Spiraling Market and Rising Penny Stock Opportunities

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It’s been a wild and wooly couple of weeks on the international stock markets [June, 2006]. But is the recent slide grinding to a halt…or just taking a breather before tumbling some more? And more importantly, what does it mean to astute penny stock investors?

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It’s been a wild and wooly couple of weeks on the international stock markets. But is the recent slide grinding to a halt…or just taking a breather before tumbling some more? And more importantly, what does it mean to astute penny stock investors?

Wall Street recently stumbled to its worst week of the year, and global stock markets fell dramatically on concerns about rising interest rates and slowing growth. After rising almost 9% in the first four months of the year, the Dow Jones industrial average has fallen about 6.5% from a six-year high, reached May 10, 2006.

Stocks have been ailing because penny stock investors fear the Fed could be so focused on inflation that it ignores signs of an economic slowdown, raises interest rates too high and sends the economy into a recession.

Global stock markets were sent reeling last week after golden-tongued U.S. Federal Reserve Chairman, Ben Bernanke shocked penny stock investors in saying the Fed will continue raising interest rates to keep inflation in check.

And that decision will have a direct impact on the penny stock market. Higher interest rates hurt penny stock prices because investors believe it will curb economic growth and corporate profits.

But why is inflation heating up? Higher energy costs. Traders and penny stock investors are also worried that with the hurricane season officially under way, Gulf Coast refineries and oil production sites could be damaged again this summer and fall.

And higher interest rates have the ability to affect the entire economy. Finance charges on credit cards will rise. So too will rates on mortgages and home equity loans, putting additional pressure on homebuyers and a softening housing market. Ultimately, it will cost more to borrow for expansion.

But does this signal doom-and-gloom for the penny stock market? Au contraire. While the temptation to sell everything can be overwhelming, some see this as a great opportunity. “I would not be selling. I would tend to be buying,” said one New York analyst.

So how exactly is this an opportunity? It just so happens that many companies caught in the market’s downward spiral are cheaper than they were a few weeks ago. And as any seasoned penny stock investor will tell you, buying a great penny stock when it’s been beaten down isn’t a bad way to make money over the long haul.

If you can stomach some of the volatility that is. While many blue chip investors have difficulty handling the market’s unpredictability…it’s par for the course.

So, “snap out of it,” said another watcher. A month of dizzying selling has brought the markets into an attractive range. Is it possible the markets will fall more? Absolutely. After all, no penny stock is a sure thing. But one thing is certain: “Stocks are much cheaper now than they were two months ago.”

Explosion in Nuclear Energy Demand Coming

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Sprott Asset Management uranium expert Kevin Bambrough talked with us about the “second leg?of the current uranium bull market. He sees a massive nuclear build up heading our way with “the environmentalists leading the charge.?He said many price projections may be inaccurate because “people are underestimating future demand.?

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Sprott Asset Management uranium expert Kevin Bambrough talked with us about the “second leg?of the current uranium bull market. He sees a massive nuclear build up heading our way with “the environmentalists leading the charge.?He said many price projections may be inaccurate because “people are underestimating future demand.?
StockInterview: Price forecasts on spot uranium are widening. Some insiders have predicted uranium prices may drop back into the $30/pound range; others, such as yourself, continue to suggest $50/pound or higher. Any comments on the forecasts others are making?

Kevin Bambrough:
There are many people forecasting uranium prices now. It’s important to consider their track record of forecasting prices. Look at the contracts that have been written by many companies in the industry, over the last number of years. Anyone who had ceilings, or had signed fixed-priced contracts, has been punished. Very few people in the industry predicted what has happened. Looking forward, I think that in our view, the cost of production of current producers isn’t going to be as relevant as it has been in the past. It will be the more marginal, much higher cost producers who will be setting the price.

StockInterview: Isn’t there a sense of false optimism that “projects in the pipeline?will ensure an ongoing stream of uranium oxide for the nuclear fuel cycle?

Kevin Bambrough:
There are a lot of people looking at the supply situation going forward while underestimating future demand. They are very optimistic that mining projects are going to go as planned. We had recent news that Cigar Lake had a problem. There was a flood the. There’s a couple million pounds shortfall to most people’s models for at least two years. All because of one mine’s six month delay.

StockInterview: Would that have the kind of impact the McArthur flooding (Athabasca Basin, Cameco) had on the spot uranium price a few years ago?

Kevin Bambrough:
I think it could. It was forecast to go up to 18 million pounds of production. That would have been ten percent of the world’s current consumption. Cigar Lake would need to ramp up over a three year period, once it gets started. Now, there is a six month delay. What if it’s delayed a year? That really changes the production profile for the next decade. There are many projects that could see delays. The mining business is always full of delays. Remember that when we bring on new nuclear plants, they take on average about 1.6 million lbs when commissioning. What will happen, if in a decade, we bring on just 10 or 20 reactors each year? That’s another 16 to 30 million pounds per year of demand just because of the start up.
StockInterview: Does this mean the current uranium bull market still has strong legs?

Kevin Bambrough:
I think we’re entering the second leg of the bull market here. It is going to move away from a supply shortage story, where we focus on the fact that we only get about 60 percent of the current consumption from mines, while the inventories are being worked off. Now, we’re moving into a situation where we’re seeing an explosion in demand growth. Just a couple of years ago when we first started investing in uranium, we could see probably about a dozen nuclear facilities being planned for construction throughout the world. Now we’ve got well over 100 being planned. It seems there are new additions and talk of more additions every day.

StockInterview: How you envision this nuclear buildup rolling out?

Kevin Bambrough:
I don’t think it’s unreasonable to think, looking ten to twenty years out, there are going to be a lot of countries that will be trying to get in the position that France is in, with a much higher percentage of their power coming from nuclear generation. We could see a move to where maybe 50 percent of global energy production or more could eventually be supplied by nuclear. There is nothing else that can really step up and fill the void and take care of this problem that we’re having. France produces 78 percent of their electricity from nuclear. Why isn’t that reasonable for others? Look out a decade or two, and it doesn’t appear like we’re going to have the oil and the gas in order to handle our needs. Obviously we can do more with coal, but if we’re going to keep using coal we’ve got to put in place technology to take care of the carbon dioxide sequestration. If you want to have a stable, secure supply of electricity, it seems that you’re going to have to go with more nuclear or eventually with these new coal technologies. I think there is going to have to be a balance of both, because the oil and gas just isn’t going to be there.

StockInterview: What do you think is the catalyst for this anticipated growth in nuclear energy demand?

Kevin Bambrough:
The most interesting thing is the fact that some environmentalists are leading the charge to go more nuclear. It’s because they realize nuclear energy is the only practical alternative and because of the situation with the carbon dioxide (CO2) levels. There have been some recent reports about CO2 levels reaching 381 parts per billion, just spiking out of the range that has kept the world in a relatively stabile environment for the last 400,000 years. If you look at the work of people like James Hanson, the correlation between CO2 levels and temperature is undeniable. Basically, mankind has increased the CO2 levels beyond a level that hasn’t been seen in over a million years. We are just starting to see the weather impacts. There are problems with droughts across the world as well as elevated hurricane activity. Going nuclear on a mass scale is starting to become recognized as one of the only ways to have a real impact. I think what we’re going to see is an unprecedented build out in nuclear capacity throughout the world in the coming years and decades. I’d equate this to what happened when we went from using oil for just lamps and home heating to using it as a transportation fuel. What’s going to happen with the people who have the higher quality uranium reserves and lower cost production? They are going to be able to reap massive profits over the coming decades.

StockInterview: Looking ahead, do you think we’ll see more deals between a small uranium producer, such as Uranium Resources (OTC BB: URRE) and the Japanese multi-national conglomerate, Itochu Corporation?

Kevin Bambrough:
I have no doubt that it’s going to continue to happen. More importantly, I’ve heard that some of the major builders of nuclear facilities around the world, companies such as Areva are quite concerned about the availability of supply going forward. When these companies are talking to countries and utilities that potentially could contract to build nuclear facilities, they’re basically being told that buyers want uranium supply assurances, or they aren’t going to give an order to buy a nuclear facility. I’ve heard they are looking to do joint ventures or at least contract with emerging producers to try to get future supply. Then, they will be able sell their nuclear technology to countries and ensure supply.

StockInterview: Will the Chinese be satisfied with the uranium they plan to buy from Australia, or will they have to tap into uranium production from another or other countries?

Kevin Bambrough:
I think that the Chinese will probably look elsewhere as well. Countries have strategic oil reserves. Why shouldn’t they have strategic uranium reserves to supply their nuclear reactors? It makes sense to have a good stockpile of uranium considering the relative cost of nuclear power versus anything else. I don’t think that the nuclear power industry should operate on a just in time basis, considering the costs and the risks of making sure you can secure supply. Don’t get me wrong. There is plenty of uranium in the world, but we’re just going to have to pay up for it. I believe we’re going to consume lot more than what we’re consuming nowadays ?a decade or two out. The world is waking up to the reality of peak oil production, and how it is going to affect all aspects of energy production.

StockInterview: How much of a factor will Russia play in the nuclear build up?

Kevin Bambrough:
Looking at some of the recent statements made by Russian officials, it’s completely clear to me that we’ve been correct in what we’ve been thinking for a long time: the HEU agreement (to deliver highly enriched uranium and have it blended down) is probably not going to be renewed. The Russians are planning to make nuclear technology a key export for them, really as a value added product to go with uranium production. They desire to be able to offer a complete solution, not just uranium, but the actual building and technology around the nuclear facilities themselves. They will also have growing uranium demands domestically and have voiced concern about being able to meet their own needs beyond 2015.

StockInterview: But nuclear energy critics claim all of these power plants won’t secure financing and most plans are just pipe dreams never to be built.

Kevin Bambrough:
Two years ago, the critics said there would never be any more nuclear plants built in the U.S. People used to say nuclear was over for Germany, and that many countries would exit nuclear power. Now we’re seeing the exact opposite. We’re seeing proposals being done, incentives put in place, and a multitude of projects moving ahead. If what the leading scientists from NASA, the NOAA and from many organizations around the world are saying about global warming, and the acceleration we’ve recently seen continues, people are going to be begging to have more nuclear facilities and cut CO2 emissions. The environmentalists will be leading the charge.

StockInterview: How long will it take before the proposed nuclear build up impacts the uranium mining companies?

Kevin Bambrough:
The actual build of all this takes time. I think the increase in the positive perception, of the nuclear industry is going to continue to accelerate. All demand for uranium can come from just the planning stage for nuclear power plants, as companies look forward and try to contract future supply. Ultimately, that’s what will keep driving the uranium price higher.

StockInterview: How seriously is the nuclear industry taking the global build up?

Kevin Bambrough:
I think the industry is starting to take it very seriously. That’s why the uranium price keeps pushing higher. People are going around trying to contract for uranium, and they are finding it more difficult. People are also starting to realize that as you have problems, such as the McArthur River flooding, which got the uranium bull market jump started, and now a problem at Cigar Lake, you really should have a good build up of inventory in order to protect yourself in this environment. Especially when the relative cost of having to switch off a nuclear facility to go to something else in a pinch is multiples higher.

Investor Awareness Campaigns: A Look at the Other Side

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So you’ve signed up for a newsletter which promises to give you great stocks picks. Trust their stock picks and you wont miss out on the latest stock market darling. You dont want to miss out on another company who’s shares have moved up over 100%. Follow their advice and you will never have to do your own due diligence again!

investor relations, firm, stock profiles, investor awareness

So you’ve signed up for a newsletter which promises to give you great stocks picks. Trust their stock picks and you wont miss out on the latest stock market darling. You dont want to miss out on another company who’s shares have moved up over 100%. Follow their advice and you will never have to do your own due diligence again!

If only it were that simple!

Stock promotion has been around for decades and when done for the right reasons, can provide potential investors with an opportunity to get in on the ground floor of an up and coming company. Unfortunately, like all good things, there are just enough bad seeds out there to give the whole investor awareness industry a bad name. Far too many investors have been caught in a game of pump and dump. Perhaps a look from the investor awareness side of things will help you avoid being caught.

Why do companies hire investor awareness firms?
Many small businesses are great at what they do. Many have found their own niche and continue to build their company. The problem is, they have difficulties getting the word out about their success story. As such, with no new investors, the share price remain stagnant, and long time insiders are unable to either raise money to finance growth, or to cash out some of their hard earned equity.

An investor awareness firm can help publicly traded companies get the story out to newsletter subscribers. With the facts in hand, these subscribers may decide to turn into investors. The more investors out there, the more opportunity for everyone to make money.

What should you, the subscriber, be aware of?

a) Investor awareness firms are paid a fee. It costs money to generate campaigns, press releases, newspaper articles etc, and the fee helps to compensate for these expenses, as well as pay for the firms time in creating the campaign. These firms are either paid out in cash, or if the investor awareness firm feels strongly about the future of the company, they may become shareholders. If the share price moves up, their compensation moves up also. Quite the incentive to do a great job for the company.

Its recommended that if the newsletter you subscribe to receives shares for their compensation, find out if these are restricted shares, or free trading shares. If they are free trading shares, you may end up buying their shares as the firm sells to cover expenses. Not all firms sell immediately, so its best to make sure. If the shares are restricted, its a safe bet that you and the firm are in it together for at least the life of the campaign or until the shares become unrestricted.

Most campaigns last 1-3 months, but many firms in fact provide coverage past that point.

b) Watch for insider selling. While there is nothing wrong with an insider monetizing their investment, if you see a substantial number of shares being sold at the same time as the campaign is going on, you may find yourself buying shares from the insiders and be left holding them for awhile.

Remember, if the company outlook is so bright, insiders will know better than you, and will hold knowing they will eventually get a much, much higher price.

c) Pump and Dump – its not just insiders you have to worry about. Its in the best interest of a company who has been compensated with shares in the company to see the share price move higher. Watch for an overly bullish spin on stocks that are being promoted by those who have received shares in the company. Find out if the firm has to hold the shares for a period of time, or are they able to sell the shares anytime. If there is a restriction placed on the sale of shares, you stand a better chance of making money on an even playing field.

Most credible newsletters will provide their subscribers with the facts and let the information speak for itself. You dont need to spin a good story: it spins itself!

d) Do your own due diligence – is this company making money? Do they have a product that will be in demand in the future? Is the company creating new products? Investing in penny stocks is no different than investing in large caps; only the risk is different. Ask the questions and only invest when you feel 100% behind the company.

Don’t automatically assume that just because an investor awareness firm accepts shares for compensation means that they are part of a pump and dump scenario. Here are a couple of things to keep in mind from the perspective of the IA firm as to why they might accept shares over cash.

1. Chance for a higher payoff. If the campaign is successful, they stand to make more money. Many of the owners of these firms are also investors. If the future looks good for the company, why wouldnt they want a part of that future?

2. It may have been the only way to make the deal. The investor awareness firm will do its own due diligence before deciding that the deal is worth it. Its their money on the line. For many publicly traded companies, they may not have enough funds available to pay $50 000 or more for a high profile campaign. They may however have enough shares on hand. Once the share price is high enough, they can go after financing, providing the company with cash to finance further growth.

Can you make money when a stock is being promoted? Of course, and many investors make a lot of money thanks to the attraction of new investors. The key is to find the companies who are geniunely attempting to increase shareholder value versus trying to line their own pockets at the expense of shareholders. Only your due diligence can help you do that. Penny stocks can provide investors with a high return, however, it takes more due diligence than luck to jump onboard the right one.

An Inside Look At Cameco’s Smith Ranch Uranium Facility

2047

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 presi…

investing, stock market, commodities, energy, utilities, stock tips, stock trading

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 McGee’s 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. He’s worked in underground mines, open pit mines, and uranium mills since 1980. From 1996 to the present day, he’s worked in Wyoming for Power Resources at the company’s 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, “It’s 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 Wyoming’s 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 don’t 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.?
It’s not all wine and roses for Drummond, though. He pines away for his underground mines, “From a mining perspective, it’s 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.?It’s 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, there’s the development cost of the mill complex. You have all that outlay of cost before you can get any benefit. It’s 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.?What’s the downside? “We also recover less uranium with ISL,?Drummond admitted. “Some of Cameco’s 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. It’s very low.?Plus the uranium ore body must be found below the water table. He added, “You can only do ISL in rock that’s 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 Wyoming’s 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 Wyoming’s ISL uranium dried? “We dry the uranium with vacuum dryers,?said Drummond. “The benefit of vacuum dryers is first of all, it’s 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 didn’t have good ventilation. In underground mining, you’ve 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 doesn’t 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, “That’s 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 what’s 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. It’s 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 we’ve 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 it’s very dry at the Smith Ranch, nearly bordering on desert, and because it is also very windy, slapping down the topsoil won’t 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 water’s 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.?What’s the difference? It’s 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, you’ve 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 water’s not fit for human consumption anyways.?He laughed, “Using acid over there cleans their water up.?