Tom Bulford (Penny Sleuth):

Joseph Stalin does not sound like a very nice man to have worked for.

He had this idea that digging up coal from underground in order to burn it as soon as it reached the surface was a bit of a waste of time and effort. Why not simply burn it while still underground and then simply draw up the heat and gases through a pipe?

Convinced that this was a smart idea he set his scientists to work on the problem. Unfortunately for twelve of these scientists, they failed to do so and Stalin had them executed.

But to be fair to Stalin, his idea was right but just a little ahead of its time. Last week the UK Coal Authority granted a license to Clean Coal, a subsidiary of the quoted Anglo-American (ticker: AAL) to put Stalin’s theory into practice.

Under the North Sea, within ten kilometres of the coast, is enough coal to satisfy UK demand for at least ten years. The difficulty is getting it out.

But thanks to a new technology called Underground Coal Gasification this is no longer necessary. Let me show you how it will work.

How to make hard-to-reach coal fuel a power station

A drill will bore its way through the ground at somewhere, on land, close to perhaps Grimsby. Having reached the required depth it will then take a ninety degree turn and head out sideways underneath the coastline until it hits the coal seam.
Next a second bore hole will be drilled into the coal seam. Once that is done the coal will be set alight underground, and will be constantly fanned by oxygen fed down one of the pipes. Up the other pipe will come a methane-rich synthetic gas able to fuel a power station.

This will not be the first time that this has been done. Similar projects are already up and running. In the course of investigating a penny share company last week, I came across another such plan.

This was Strategic Natural Resources (ticker: SNRP), and I managed to catch up with chief executive Jeremy Metcalfe, a man whose enthusiasm and energy defies his seventy years. . .

Click here for the rest of Mr. Bulford’s report at Fleet Street Invest, UK.

For the tale of the tape, the TSX Exchange fell 0.74%, while the TSX Gold Index plunged another 4.1% and the TSX Venture Exchange, Canada’s largest junior exploration bourse, ended the session down 1.50% with declining issues once again swamping the advancers this time by a 632 to 402 margin on stable volume of 189 million shares traded.

Nevoro has offered to buy Sheffield Resources in an all-share transaction that would see Sheffield shareholders get 0.8 of a Nevoro share for each Sheffield share held. Sheffield, which holds the Moonlight copper project in California, added C$0.09 to close at C$0.335.

Newmont Mining posted a first quarter profit of $370 million, or $0.81 a share, a five-fold increase from the $68 million, or $0.15 a share tabled in the same period a year ago. Despite the jump the falling bullion price had the World’s third largest gold producer by volume end the day down $0.85 at $43 in New York.

Potash Corp of Saskatchewan continued to ride the fertilizer train as the world’s largest crop-nutrient maker by market value posted a record first quarter profit of $566 million or $1.74 per share up from the $198 million or $0.62 per share tallied in the year ago period. After a stellar run up so far this year, Potash ended the day at C$193.90, down C$10.22.

In a case of total bewilderment, shares of Goldsource Mines soared C$0.405 to close at C$0.78 on nearly 1.2 million shares traded. The company recently completed six drill holes of a permitted 22-hole program on its mineral claim blocks in central and eastern Saskatchewan. No kimberlites were encountered and the only results of interest were a coal seam. More news pending?

The latest pullback in commodity prices from recent highs is having a rather dramatic impact on resource equities. To many this pullback will make a good entry point for the next leg up, while others think that the resource bull is now over. Based on the overall trend and current price point, I suspect the former to be closer to the truth. We will see what Friday trading has in store.

I live in Pittsburgh, and grew up here as well. Both figuratively and literally, Pittsburgh is built on coal. Coal is the remains of ancient plant life, buried within the rock record.

For example, one of the most extensive and valuable mineral resources in the U.S. is called the Pittsburgh Coal Seam. The Pittsburgh Coal Seam shows up in outcrops all over town, if you know where to look and what you are seeing. But there is a lot more to this hunk of rock.

The Pittsburgh Seam extends underground all over western Pennsylvania. The Pittsburgh Seam is high-grade coal and can be as much as 6-8 feet thick. That’s a lot of energy stored up in one place.

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A Behind-the-Scenes “Guest Pass” to Profit in the World’s Most Secretive “Millionaire’s Market”

Beginning tomorrow at 7:10 A.M. EST, you can use your guest pass to go behind the scenes in the financial community’s best-kept secret: the “Millionaire’s Market.”

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Read on here…

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A century or more ago, coal from the Pittsburgh Seam was abundant and cheap. People heated their houses with coal, cooked with coal, powered simple engines with coal. And all over western Pennsylvania, people like Henry Frick and Andrew Carnegie pulled a heck of a lot of money out of that Pittsburgh Seam.

They built mines, powered mills and created immense industries based on burning coal. More fundamentally — if not philosophically — they profited from harnessing and releasing the stored-up energy from ancient sunshine.

Energy and Capital

Let’s think about that for a moment. It was not that capital was cheap back in the last century. Gold was gold. Money was money. When they borrowed funds, Frick and Carnegie paid the same interest rates as anyone else anywhere else. But they succeeded, and did so in great fashion. What was their advantage?

Well, it gets back to that Pittsburgh Coal Seam. In the last century, western Pennsylvania had rich seams of coal located near the surface. Pittsburgh had proximity to some of the best energy reserves in North America. So coal became the foundation of industry. Energy powered industry, and industry created wealth.

The rivers of western Pennsylvania made it easy to transport that coal. That is, using barges to float things down the rivers required relatively less energy per ton-mile to move the coal to Pittsburgh’s mills. And using the rivers meant that it required less energy per ton-mile to move the value-added products out to the interior of the country, and to the world. (For example, the steel locks on the Panama Canal were built at Pittsburgh and floated down the Ohio and Mississippi rivers, across the Gulf of Mexico and to Panama.) Yes, it took capital to gain access to the energy sources. But the energy sources also leveraged the capital.

In its own way, energy is a form of capital, isn’t it? And it is a major competitive advantage to control a source of low-cost energy.

In fact, control over reliable sources of low-cost energy may be even better than access to cheap capital, especially in years to come. There are so many dollars in this world that almost any darn fool can borrow them, or how else to explain what has been happening on Wall Street lately? But ample and low-cost energy can certainly multiply the effectiveness of capital. Ask Frick or Carnegie.

The Price and Consequences of Using Coal

Have you seen the price of coal lately? In 2008, thermal coal prices are set to double, from about $55 to $125 per ton. That’s based on a recent agreement between Japan’s Chubu Electric Power and the giant mining firm Xstrata, and it should become the benchmark for 2000-09 contract prices worldwide.

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Brace Yourself, It’s Coming

We asked all the market experts we know, and they all agreed on one thing: a coming stock market apocalypse. The writing is on the wall, and the catastrophe we’ve been hearing about could be here sooner than later.

If you haven’t started planning for these disastrous events, you’re already behind the pack. Start your survival plan now. Click here for details…

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Spot prices for thermal coal have tripled in the past 12 months. And spot prices for coking coal (used to make steel) have quadrupled in the last 12 months. Just in the last two months, those prices have doubled. Do you notice any patterns?

Let’s boil it down to a few key points. The cost of the world’s “traditional” energy source — coal — is skyrocketing. And about 40 percent of the world’s electricity is currently generated using coal. Many other industries use even more coal, from steel makers to cement kilns.

So if coal prices are going up, what will that mean for electricity prices, or steel, or cement or whatever? They are headed up, as well. I would say grab your oxygen mask. But that’s a bad joke, because of the carbon dioxide (CO2 ) issues that people blame on coal.

The Time for Geothermal Arrived

So where can we in North America get significant amounts of “clean” electricity with minimal CO2 emissions? Not from coal. How about windmills? Yes, when the wind blows. How about solar? Yes, when the sun shines. And how about geothermal? Yes, all the time. 24/7/365.

Really, the stars of economics and politics are aligning on this one. The time for geothermal has arrived. Welcome aboard.

Until we meet again…
Byron W. King

P.S.: As long as we’re talking about energy, did you happen to see oil prices yesterday? Somehow oil almost touched $120 and things are still looking grim. As OPEC continues to squabble and Peak Oil reaches the front pages, could $150 or even $200 oil be that far off? Click here to decide for yourself…