By Greg Klein

Rainbow stakes BC Graphite Prospects

Rainbow Resources Inc (TSXV:RBW) announced May 17 acquisition of graphite prospects in southwest BC. The company has staked two claim blocks covering over 40 square kilometres west and southwest of its flagship Big Strike Gold-Silver Project in the Slocan Mining District. The 2,100-hectare Claim Block #1 lies immediately north of Anglo Swiss Resources’ (TSXV:ASW) Blu Starr Graphite Property and 14 kilometres from Eagle Graphite’s mine, one of North America’s two flake-graphite producers. The 2,100-hectare Claim Block #2 is contiguous to Blu Starr’s southern boundary.

Rainbow holds historic airborne survey information for its graphite claims, which the company has begun prospecting. Rainbow also plans to drill Big Strike’s Gold Viking area.

Arrowhead finds Quebec Graphite Mineralization

Arrowhead Gold Corp (TSXV:AWH) announced May 17 a graphite find on its Gateau Property in the Chibougamau Mining District of north-central Quebec. A review of drilling completed in 2008 found one hole with 48 metres of coarse-grained graphite mineralization. The graphite horizon is within a basalt unit just below a contact with a quartzite unit, the company stated. A 2011 airborne survey outlined a 7.5-kilometre-long east-west electromagnetic conductor that coincides with and appears to be caused by the graphite horizon. The survey found up to five other conductive horizons that may also be related to graphite mineralization. The 2008 drilling was intended to test a uranium target so carbon content wasn’t measured at the time. The core is still on the property.

Arrowhead plans to have a crew re-examine the graphite horizon and prospect the EM conductors for graphite. The 3,975-hectare Gateau Property is approximately 240 kilometres northeast of the town of Chibougamau.

Uranium North reports Nunavut Graphite Samples up to 4.13% C

Uranium North Resource Corp (TSXV:UNR) announced May 16 graphite sample results from its Amer Lake Property in Nunavut. Six randomly chosen samples from two drill holes showed assays of 4.13%, 3.2%, 3.84%, 0.6%, 3.22% and 3.77% carbon. The two holes, 3.1 kilometres apart, and a third hole 15 kilometres east, intersected graphitic beds that have been identified in three outcrops spanning an area 22 by 10 kilometres. The samples will undergo mineral liberation analysis to determine the nature and particle size of the graphite. Uranium North has staked additional claims over areas with outcropping graphitic rocks.

The project has an inferred uranium resource estimate of 19.3 million pounds grading 0.04% triuranium octoxide (U3O8) using the industry-standard cutoff of 0.01%. The project is 70 kilometres from an all-season road linking Agnico-Eagle’s (TSX:AEM) Meadowbank Gold Mine with the town of Baker Lake.

Lomiko expands Quebec Graphite Property

Lomiko Metals Inc (TSXV:LMR) announced May 14 a letter of agreement to acquire a 100% interest in the Quatre Milles West Property in south Quebec. Under the agreement, Lomiko pays Zimtu Capital Corp (TSXV:ZC) and two other vendors a total of $3,000 and 1.8 million shares. The vendors retain a 2% NSR, half of which Lomiko may buy for $1 million.

The 2,180-hectare property covers the western extension of the geology that hosts the graphite-bearing structures shown in historic drilling at the company’s Quatre Milles Property. The combined property expands Quatre Milles from approximately 1,600 hectares to 3,780 hectares. Lomiko’s exploration program for the Quatre Milles Property includes mapping, prospecting and drilling to test and confirm historic high-grade graphite found by Graphicor Resources in a 26-hole, 1,625-metre drill program.

Read an interview with Lomiko CEO Paul Gill.

Read a feature story about Lomiko Metals.

Zenyatta updates Ontario Graphite Drilling

Zenyatta Ventures Ltd (TSXV:ZEN) announced May 14 a drilling update for its Albany Graphite Deposit in north Ontario. A stepout hole 450 metres east of the original discovery hole intersected 94 metres of near-surface graphitic breccia. A second hole collared from the same location but drilled in the opposite direction intersected 14.8 metres of graphitic veining and breccia followed by 108.2 metres of graphitic overprinting. Assays for the first hole are pending. The second hole will be redrilled due to mechanical problems with the rig. The company is currently drilling the first of two additional holes.

The graphite discovery is 30 kilometres from the Trans-Canada Highway, a powerline and a natural gas pipeline, 70 kilometres from rail and about five kilometres from an all-weather road. The deposit is near surface, underneath glacial till overburden.

Read a feature story about Zenyatta Ventures.

Northern Graphite announces Agreements for Ontario Spherical Graphite Tests

Northern Graphite Corp (TSXV:NGC) announced May 14 two agreements for further tests to manufacture spherical graphite from its Bissett Creek Deposit in east Ontario. The company has engaged Hazen Research and the National Research Council Canada to continue testing and optimizing Northern’s process for manufacturing spherical graphite, which is used to make the anodes in lithium-ion batteries. The company has already developed a proprietary manufacturing process. Hazen Research will confirm lab results using bench-scale models of commercial purification equipment for the full-scale process. This program will likely be followed by pilot plant testing, engineering and design work to define the capital and operating costs of a commercial facility.

The NRC will test Northern’s spherical graphite in lithium-graphite batteries to optimize and customize its performance to meet the specifications of potential offtake customers and strategic partners. Bissett Creek is a high-purity, large-flake, scalable deposit close to infrastructure. Northern plans to complete a bankable feasibility study in 2Q 2012, followed by permitting. Subject to feasibility results and financing, mine construction could then begin.

Read a feature story about Northern Graphite.

Logan acquires Quebec Graphite Property

Logan Copper Inc (TSXV:LC) announced May 14 acquisition of the Carheil Graphite Property in northwest Quebec. The 2,185-hectare property was staked on the Gestim website of Ressources naturelles et Faune Québec. During the 1970s Noranda Exploration undertook geophysics and drilling on 145 hectares of the property.

The project is approximately 280 kilometres northwest of Val-d’Or. Other Quebec projects of the same name include Standard Graphite’s (TSXV:SGH) Carheil Project in the Labrador Trough of northeast Quebec and NQ Exploration’s (TSXV:NQE) silver-polymetallic project in the northern Abitibi region.

Disclaimer: Lomiko Metals Inc, Standard Graphite Corp and Zimtu Capital Corp are clients of OnPage Media and the principals of OnPage Media may hold shares in those companies.

Read previous Graphite Digests here

Read more articles like this at resourceclips.com.

All information on this website is: (a) for informational purposes only; (b) not to be used or construed as an offer to sell, a solicitation of an offer to buy, or an endorsement, recommendation, investment advice or sponsorship of any entity or security; and (c) not necessarily reflective of the views or policy of the Financial Post. Prior to making any investment decision, it is strongly recommended that you seek advice from a qualified investment advisor. The Financial Post does not provide or guarantee any financial, legal, tax or accounting advice or advice regarding the suitability, profitability, or potential value of any particular investment, security or information source, especially as it relates to mining companies. For further details, please Section 22 of http://www2.canada.com/aboutus/termsofservice.html.

The Graphite Digest — A roundup of recent news from graphite explorers

Economic nuptials were supposed to end European political acrimony by binding the continent in common monetary cause. The many who objected to the union were ignored, their protests mere quibbles over the trivialities of a grand vision.

The flaws in the constitution of the European Monetary Union have since drawn markets to the realization that this marriage of nations is poisoned. But while two years of financial revolt have frayed solidarity, eurozone officialdom remains publicly committed to the currency union. Europe’s leaders, for the most part, insist the relationship is salvageable.

Mounting evidence suggests the contrary, says a vocal faction predicting the eventual dissolution of the eurozone. Their opponents say the economic and political consequences of that would be catastrophic. They may all be right.

The options available to the eurozone are quickly narrowing to two: “make up … or break up,” as British prime minister David Cameron laid it out this week.

“That is the choice they have to make and it is a choice they cannot long put off,” he said. “If the eurozone wants to continue as it is, then it has got to build a proper firewall, it’s got to take steps to secure the weakest members of the eurozone, or it’s going to have … go in a different direction.”

Canadian finance minister Jim Flaherty laid out the same stark scenario. “They have to do the right thing, use some of their taxpayers’ money to bail out some of the weaker members of the eurozone — or start moving away from the eurozone and just say this was an experiment that has not worked,” he told CTV this week.

THE CANADIAN PRESS/Sean Kilpatrick

Finance Minister Jim Flaherty holds a press conference in the foyer of the House of Commons on Parliament Hill in Ottawa on Monday.

“The whole future of the eurozone is up for grabs,” Mr. Flaherty said.

Although Europe has managed to trod through the sovereign debt crisis for more than two years without firmly committing to either course, the time available for hesitancy is running thin.

“This way of framing the debate is probably the right one,” said Nicholas Spiro, managing director of Spiro Sovereign Strategy in London. “Without a shadow of a doubt we are approaching the denouement of the eurozone.”

Forces both financial and political are increasingly insistent on a definitive course.

Risk premiums on the sovereign bonds of indebted southern eurozone countries, particularly Spain, are again approaching critical levels.

Meanwhile, political crises threaten the fragile bailouts-for-austerity arrangements.

A new fiscal pact was meant to be the linchpin in the plan to repair the strained relationship among eurozone members. Once fiscal integration and budget oversight were in place, a commonly issued eurozone bond could restore stability to sovereign debt markets. Germany will not entertain the notion of euro bonds until a centralized fiscal regime is installed, said Jan Randolph, head of sovereign risk analysis at IHS Global Insight.

“There’s no budging on that. They will not use more of their financial resources until they’re sure there’s no more hazard of other governments abusing the German balance sheet,” he said.

Over the past six months, Germany has tested the capacity of the eurozone to commit to austerity and swallow the loss of budget sovereignty.

The results of the tests were not promising.

French voters ousted president Nicolas Sarkozy, installing Socialist party leader François Hollande with a mandate to revisit French austerity in favour of a recovery plan emphasizing economic growth.

REUTERS/Pascal Rossignol

France's new President Francois Hollande (C) shakes hands with supporters as he arrives for a traditional ceremony at Paris city hall on the day of his investiture in Paris May 15, 2012.

The man who may become Greece’s next prime minister, Alexis Tsipras, the 37-year-old head of the Coalition of the Radical Left, is giving representation to Greek discontent, calling for a renegotiation of its bailout package.

That kind of talk has eurozone leaders openly speculating on a Greek exit.

About time, said Jamie Dannhauser, senior economist at London-based Lombard Street Research. “It’s fairly clear they’ve chucked a lot of good money after bad here,” he said. “We’re getting to the point of no return, where this has got to be resolved in one way or another.”

However, there is a powerful deterrent to entertaining the possibility of a eurozone breakup: fear of the unknown. From the outset, fear has guided this crisis, Mr. Spiro said.

“Anybody who suggests a Greek exit from the eurozone can be semi-orderly is simply deluding themselves,” he said.

The European banking sector’s direct exposure to a Greek exit is largely known, and greatly reduced since the haircut that saw private bondholders write down their holdings of Greek bonds by about two-thirds in March.

Far more daunting are the effects of a Greek exit and hard default on confidence, Mr. Spiro said.

“What we’re not clear about is the extent to which Spanish and Italian bond markets would virtually collapse out of fear, out of a self-fulfilling panic,” he said.

“Would (markets) see it as a one off? Would they see it as a dangerous template for Portugal? Would they see it as a conduit to contagion in Italy in Spain? What would this do for the austerity drive? There are so many black swan-type possible events. These are uncharted waters.”

Avoiding the wrath of markets is perhaps the most persuasive argument for preserving the makeup of the eurozone.

The possible political implications of a collapse of the currency are also difficult to overstate. Leaders are understandably resistant to the prospect of re-exposing old political divisions.

“Outside of Europe, we all fail to grasp the depth of feeling about the euro. This is essentially a project they’ve been working on for 50, 60 years,” Mr. Dannhauser said. “A lot of this comes down to a very strong desire to keep this show on the road.”

With nationalistic and extremist factions gaining electoral momentum, and with 11 eurozone governments fallen in the last year, the currency union can hardly be declared a success in installing political stability, however.

“The irony is that the project was conceived to unite Europe and in fact has divided it,” said Sebastian Mallaby, director of geoeconomic studies at the Council on Foreign Relations. “But things can always get worse.”

Among the possible catalysts for a political fracturing is the exit of Greece from the euro.

While almost 80% of Greeks say they prefer to remain in the eurozone, their disgust with austerity, unemployment and recession could provoke a split from the currency bloc.

REUTERS/Yiorgos Karahalis

A health worker shouts slogans during an anti-austerity rally in Athens this past February.

Many argue that withdrawing from the euro is, in fact, in Greece’s own interest, holding up Argentina as the poster child for recovery post-default by way of currency devaluation.

“It’s a huge shock to the system. But Argentina bounced backed very quickly,” Mr. Dannhauser said.

But in Greece’s case, with little export capacity, a devalued drachma may not be such a potent remedy.

Greece also has a primary budget deficit, so even after defaulting on its obligations would face a fiscal gap it could not plug with financing after losing access to credit markets.

With little success to date in arriving at fiscal balance through austerity, the country may be forced to print money to close the gap.

“This will create hyperinflation, which will quickly eliminate the value of a devaluation,” Mr. Mallaby said. “Greece would find itself without a credible currency, a destroyed banking system and no added competitiveness.”

But even if neither Greece nor the eurozone actively chooses a Greek exit, a dissolution of the relationship may be unavoidable.

Mr. Tsipras, the hard-left leadership contender, insists on a new arrangement with the eurozone while expressing confidence that Europe would be unlikely to cut off funding should Greece fail to comply with its bailout conditions.

He’s wrong, Mr. Randolph said. “It’s not going to work,” he said. “If that is not accepted by the Greek government … financing will be severed and Greece will run out of money in July.”

Given the costs of an outright divorce, this could lead instead to a kind of estrangement, whereby euros still circulate in Greece, which would lose the benefits of membership in the currency union, Mr. Randolph said.

He cautions, however, against prematurely writing off the eurozone experiment as doomed to fail.

After all, he said, “it took America four attempts to create a dollar union.”

Why breaking up the eurozone could be painful

Count Irwin Michael, the founder of ABC Funds, as among the growing group of shareholders of Rona Corp. who are getting impatient with the performance of the Canadian distributor and retailer of hardware, home improvement and gardening products.

“We bought it because it was cheap but there should be some changes. The company could do better, ” said Michael, whose funds own 3.775 million Rona shares — about 3% of the company.

“Management has lost some credibility and they are running out of time,” he said, noting 15 months ago the stock was trading around $15, or 50% above Friday’s closing price. As well, the company recently reported quarterly results below expectations.

In contrast, Home Depot Inc., one of its competitors, is generating much better results for its Canadian operations.

As a result of “really doing nothing over the last few years, there is quite a bit of investor fatigue in the market place,” said Michael, who praised Rona’s decision to buy back about nine million shares since last November.

“It not only saves dividend payments but it is also very accretive,” he added. Rona is trading at lower multiples compared with some of its competitors.

For Michael there are a number of possible investor friendly outcomes:

• It could “bunk in” with a major competitor, a move that would generate economies of scale. Lowe’s Corp., a U.S.- based company that has operations in Canada, has been mentioned as a possible buyer either for all or part of the company.

• Rona could be taken private.

“We are open to the company doing something on a takeover basis. Carved up, we think the sum of the parts is worth substantially more than the whole right now, ” said Irwin who thinks Rona is worth between $15 and $20 in a takeover scenerio.

“It may take two or three years for the existing management team to get it to that price,” he said, noting shareholders’ impatience is also tested by the contrasting performance of Rona and Home Depot.

Michael wants “some definitive moves in getting the company back on track, including greater direction from the board — and shareholders. We want to see better earnings,” he said.

Norm Levine, a managing director at Portfolio Management Corporation, is another Rona shareholder who is concerned about performance, both absolute and relative, and is looking for change. One possible outcome could be an offer from Lowe’s but for that to happen, the bidder would probably need some indication of shareholder support. “Lowe’s is a natural buyer for their big stores,” Levine said.

Calls to Rona seeking a comment weren’t returned by press time.

Building a better Rona

General Motors Co will not advertise in next year’s Super Bowl because it is too expensive, the top marketing executive for the U.S. automaker said three days after the company said it was dropping paid ads on Facebook Inc.

The 2013 Super Bowl will be broadcast by CBS Corp, which is selling 30-second ads for as much as US$4-million.

Spots on NBC’s broadcast of this year’s National Football League championship game, the most heavily watched annual event on U.S. television, cost about US$3.5-million per 30-second spot. NBC is majority-owned by Comcast Corp.

“We understand the reach the Super Bowl provides, but with the significant increase in price we simply can’t justify the expense,” GM global marketing chief Joel Ewanick said in a statement.

GM, which ran four ads during this year’s Super Bowl broadcast, also chose not to advertise during the Super Bowl in 2009, just ahead of its June filing for bankruptcy protection.

CBS spokesman Dana McClintock declined to comment.

When the New York Giants defeated the New England Patriots for the Super Bowl title in February, more than 111 million Americans tuned in, making it the most watched TV program in U.S. history.

The NFL championship game annually draws the biggest viewing audience and advertisers jockey for the available TV spots, which makes GM’s absence something CBS is not likely to miss, analysts said.

“A couple of years ago, GM pulled out of the Super Bowl. I don’t think that had too much impact on pricing,” said Brad Adgate, senior vice president of research at research firm Horizon Media. “It’s an opportunity for others. I would venture a guess that someone would pick up the slack and see this as an opportunity.”

The largest advertisers in Super Bowls every year include automakers, movie studios and beer maker Anheuser Busch.

GM, which ranks behind Procter & Gamble Co and AT&T Inc in advertising spending, spent US$1.1-billion on U.S. ads last year, according to ad-tracking firm Kantar Media. Overall, GM’s spending on advertising rose 5.2% last year to US$4.48-billion, according to the automaker’s annual report.

GM spokesman Pat Morrissey said the 2012 advertising budget will be about even with last year. But GM has been shifting its marketing budget around, announcing on Tuesday that it would stop running paid ads on Facebook.

Ewanick has led a consolidation of GM’s ad agencies globally that is expected to save the Detroit company US$2-billion over five years.

However, Edmunds.com analyst Michelle Krebs questioned GM’s decision.

“It feels premature for GM to make such a big decision regarding Super Bowl, especially since GM will be launching a new line of full-size pickup trucks and full-size SUVs around Super Bowl time,” she said. “The Super Bowl audience is ideal for those vehicles and the timing is right.”

Next year, GM will begin selling new versions of the Chevrolet Silverado and GMC Sierra pickups, which analysts say generate profits of US$12,000 to US$14,000 per vehicle.

© Thomson Reuters 2012

GM passes on Super Bowl TV ads

WASHINGTON — Mitt Romney is vowing to approve TransCanada’s Keystone XL pipeline on his first day on the job if elected U.S. president in November.

In a campaign ad unveiled on Friday, the presumptive Republican nominee asks voters to imagine Day 1 of his presidency, and lists Keystone as a top priority.

“Day One, President Romney immediately approves the Keystone pipeline, creating thousands of jobs that Obama blocked,” the ad’s narrator says.

Romney has been maligning U.S. President Barack Obama for months for failing to give the green light to Keystone. The president rejected the $7 billion pipeline earlier this year, but invited TransCanada to apply for another permit once the Calgary-based company rerouted the project around a crucial aquifer in Nebraska.

“I will build that pipeline if I have to myself,” Romney said last month.

TransCanada recently came up with a new route for Keystone XL, one that skirts the Nebraska aquifer before joining up with the original proposed path of the pipeline.

Environmentalists say the new route continues to pose threats to Nebraska’s drinking water since it still traverses the aquifer, only avoiding a portion of the state’s Sandhills region where groundwater is close to the surface.

U.S. environmentalists have mounted a massive campaign against the pipeline, calling it a disaster waiting to happen and insisting it would sustain America’s addiction to “dirty oil.”

Keystone XL would transport oilsands crude from northern Alberta through six U.S. states to Gulf Coast refineries.

The debate over the pipeline became a political migraine for Obama. Keystone XL proponents said he was turning his back on much-needed American jobs by stalling on the Canadian pipeline, while environmentalists urged him to stand up to the oil industry as he promised to do while running for president in 2008.

The State Department will make the final decision on the pipeline because it crosses an international border.

Romney vows KXL approval on first day in White House

OTTAWA • If the Bank of Canada was looking for justification to finally begin squeezing the trigger on interest rates, it’s unlikely Friday’s inflation numbers brought its target any closer.

While the annual rate of price increases edged up more than expected last month, it was still within the central bank’s comfort zone.

And despite a string of strong economic numbers — pointing to steady, moderate growth — the latest debt-crisis flare-up in Europe will overwhelm domestic considerations, according to BMO Capital Markets deputy chief economist Douglas Porter. “Look for the bank to maintain its tough talk, but not to act on it any time soon.”

The consumer price index was up 2% in April from a year ago, with increases in all eight of the categories tracked by Statistics Canada.

Last month’s rise put CPI right at the Bank of Canada’s mid-range target of between 1% and 3%. But the 2% reading was slightly higher than the 1.9% average forecast of analysts, which was the same level as March.

The core rate — stripping out volatile items, such as some food and energy products — rose to an annual rate of 2.1% from 1.9% a month earlier. Market expectations were for the core rate to remain at the March level.

“I find it interesting that there is some underlying strength in core inflation, but I don’t think it’s enough to be concerned about at this stage,” Mr. Porter said.

Surprisingly, energy costs increased in April at a slower pace than the overall index for the first time since October 2009, with price rises slowing for gasoline, electricity and natural gas.

“Gasoline prices have been rising in recent months, pushing April’s gasoline index to its highest level since July 2008,” StatsCan said. “Nevertheless, the year-over-year increase in gasoline prices in April was the smallest since September 2010, partly due to near-record prices in April 2011.”

In fact, energy price easing had a dampening effect on the overall number. Excluding energy costs, CPI was up 2.1% in April from a year earlier, after rising 1.6% in March.

By province, Newfoundland and Labrador had the highest inflation rate last month, at 3%. Nova Scotia and New Brunswick were also above the national average, both at 2.6%. The lowest rate was in Alberta, at 0.8%, on falling costs for electricity and natural gas, while British Columbia had an annual increase of 1.6%.

In between were Quebec, at 2.4%, and Ontario and Saskatchewan, both at 2.1%.

Given the uncertain environment coming out the recession, the Bank of Canada has left its trendsetting interest rate at 1%, a near-record low, since September 2010 to help underpin the recovery.

An offshoot of ultra-low borrowing costs was a huge jump in household debt and a heated housing sector. Those twin concerns have led the Bank of Canada and the federal government to persistently caution consumers not to get too far over their head.

Both have also warned that interest rates will eventually rise and the housing market could cool.

Many economists now expect the central bank to begin gradually raising rates before for the end of the year.

Carlos Leitao, chief economist at Laurentian Bank, said “the reason for those modest rate hikes is purely from a financial stability point of view, not because of inflation and not because the Canadian economy will be so hot that it requires tighter policy, but because the housing market requires some assistance in making sure it does slow down.”

The Bank of Canada’s next interest rate decision will be on June 5.

As Canadian inflation remains steady, interest rate hikes still loom

FREDERICTON — New Brunswick is proposing a number of extra costs for the energy sector including stiffer fines and a greater share of the industry’s profits as the cash-strapped province seeks to develop its oil and natural gas resources.

The provincial government released a discussion paper Thursday containing 116 recommendations that address a number of issues including well design, royalties and protection of water supplies.

For companies that violate resource development rules, the paper recommends fines as high as $1 million — a steep hike from the range of $640 to $10,400 fines that exist now.

The recommendation comes after Natural Resources Minister Bruce Northrup alleged last fall that Windsor Energy had violated the Oil and Natural Gas Act by conducting seismic testing in Sussex without the consent of town council.

The matter was referred to the RCMP who later concluded there were no grounds for charges.

Northrup said Thursday the proposed changes would give his department the ability to act right away on any violations.

“We weren’t able to do that in the past,” he said. “But I feel very confident from here on in that we’ll be able to act on every situation on that day or the next day as far as imposing fines, hauling back the licences and suspending the licences.”

The paper also calls for a greater share of royalties to go to the province and landowners where natural gas and oil wells are located.

Under that proposal, the government would continue to receive a 10 per cent royalty on the value of any gas or oil coming out of the ground, but it would also collect 40 per cent of an energy firm’s profit.

Municipalities within a 25-kilometre radius of gas and oil wells would receive two per cent of whatever the government collects, while landowners with wells on their properties would get 0.5 per cent.

For landowners, that’s expected to be about $8,000 each in 2015 and about $74,000 in 2031 if the industry grows as projected, the government said.

Angie Leonard of the Canadian Association of Petroleum Producers said it’s too soon to comment on the paper’s recommendations.

“The royalties that were announced today are quite vague and we’ll have to look at that in depth,” she said.

“We are very happy the government is taking these steps to clarify the regulatory regime in New Brunswick and we’ll certainly be taking a look at them in more depth and taking advantage of the comment period to give some comments from an industry perspective.”

The public will have 60 days to offer input before the government comes back to the legislature this fall with its formal response.

The paper comes as a number of companies are exploring for shale gas in the province despite a public backlash to fracking from people who say the process threatens water supplies — a position the industry disputes.

Fracking involves the use of high volumes of water and chemicals pumped into a well to fracture layers of rock to release trapped pockets of shale gas.

Denis Landry, the Liberal natural resources critic, said the government should provide the public more time to offer feedback on the contentious issue.

“It took two years to get to where they are now,” Landry said.

“They should take the same time to give the chance to people who want to look at that paper and want to look further into all the details.”

The Liberals continue to call for a moratorium on shale gas development and want a special committee of the legislature to be established to study the industry.

The Conservation Council of New Brunswick said it remains opposed to shale gas development, regardless of whether there are rules governing it.

“It doesn’t matter what type of regulations we bring in. It’s not an industry that is suitable for New Brunswick or probably anywhere in the world,” said spokeswoman Tracy Glynn.

“We’ve seen cases in Quebec with leaking well pads and issues with the amount of water that’s used.”

Environment Minister Bruce Fitch said the proposed regulations would ensure environmental protections are in place before any oil or gas well is approved, and monitoring of each site would continue.

Three test wells for shale gas were drilled in New Brunswick between 2008 and 2010 and all three were fracked. A fourth such test well was drilled late last year but has not been fracked.

Northrup said he didn’t expect any wells to be fracked this year.

In all, there have been 82 gas wells drilled in the province since 1990, 49 of which have been fracked.

The Natural Resources Department estimates up to 200 gas wells could be drilled and fracked each year if enough gas reserves are found.

Last month, researchers from the University of New Brunswick said fracking should not proceed until there is an environmentally sound option for the disposal of the waste water that is a byproduct of the process.

The discussion paper recommends reusing the waste water or holding it in tanks for later disposal at an approved facility like the one that exists in Debert, N.S.

New Brunswick gets tough on energy sector

Canadians are used to hearing their country ranks among the world’s best places to live, but new research suggests that quality of life can depend a lot on where you live.

The first-ever quality-of-life comparison of provinces and territories to other countries suggests that while most Canadians live as well as anyone in the world, others are well down the list.

“I would think (the gap) is bigger than other countries in general,” said Andrew Sharpe, director of the Centre for the Study of Living Standards, which released the results of its study early Friday.

“The gaps are so large.”

Sharpe’s team took the Human Development Index and applied it to provinces and territories. The index is a statistical tool in wide use around the world combining factors such as health, education and income to compare how well people in various countries live.

The researchers found that British Columbia, Alberta, Ontario and the Northwest Territories — jurisdictions home to the majority of Canadians — are in a five-way tie for third spot overall with the Netherlands. Norway and Australia ranked marginally higher.

Other provinces and territories aren’t far behind. Quebec, at 11, is next on the list while Prince Edward Island, the second-last jurisdiction, comes in at 24th.

“There are not great differences,” said Sharpe.

Nunavut, however, is ranked 38, just above Hungary and Poland. The gap between Nunavut and Prince Edward Island is greater than the gap between all other Canadian jurisdictions.

“No, I’m not surprised,” Sharpe said. “We know Nunavut has problems and we know Alberta’s rich.”

Nunavut routinely compares poorly with the rest of Canada. Life expectancy for its residents is only 72.4 years, well below the Canadian average of 81 years. Rates of suicide and tuberculosis are many times those for southern Canadians and Nunavummiut generally have two fewer years of education than their fellow citizens.

Sharpe’s analysis, which was commissioned by the government of Nunavut, does suggest the gap may be closing. Over the period from 2000 to 2011, he found that Nunavut’s index has improved at the rate of more than half a per cent a year, over twice the Canadian average.

“When you’re at a low level, it’s easier to do well,” Sharpe said.

Sharpe cautions that the Human Development Index has flaws. It doesn’t, for example, account for political freedom, sense of community or cost of living — a lack that boosts the rating of the N.W.T., where both wages and expenses are high.

But the index, used by the United Nations, does provide one of the few statistical ways to compare how people live in different parts of the world, he said.

“It’s the granddaddy of all composite measures,” he said. “It’s a good place to start.”

Canada’s provinces, territories show large gaps in quality of life: study

International drugmakers are working with European authorities on emergency plans to keep medicines flowing into Greece if the country crashes out of the euro.

Discussions have intensified in recent days, according to industry sources, and manufacturers are looking closely at the experience of Argentina’s collapse in 2002, when some firms agreed to continue to supply medicines without payment for a period of time.

Executives at leading drug firms — particularly those with European headquarters — are under pressure to avert a health catastrophe, which could occur if Greek imports are halted by a massive devaluation of newly issued drachma.

“There’s a moral obligation to continue to supply,” said Simon Friend, global pharmaceutical leader at PricewaterhouseCoopers.

“Greece is not a big market, so most drug companies can absorb it … the reputational damage would, I think, more than outweigh the economic cost.”

Although plans are still in flux, the idea is to have a scheme ready for implementation at short notice that could bridge the gap by supplying critical medicines for a few months, according to one person familiar with the situation.

Richard Bergstrom, director general of the European Federation of Pharmaceutical Industries and Associations, confirmed his group was discussing the Greek situation but declined to go into details.

“We obviously are on alert and talking to people about it,” he said. “We are in very close contact with the European Commission and the Greece task force and we are monitoring developments.”

The European Union set up the task force last year under Horst Reichenbach to help Athens tackle its debt crisis.

Greece imports nearly all its medicines and is particularly reliant on branded drugs, as opposed to cheaper generics, which means it spends a relatively large amount per capita on medicines.

Any short-term initiative might be limited to certain categories of essential medicines and would probably not be a panacea, reflecting the need of companies to protect the interests of shareholders as well as patients.

Certain parts of the Greek healthcare system have already experienced drug shortages in recent months and drug manufacturers — owed 1.21 billion euros in unpaid bills from Greek state hospitals, according to the Hellenic Association of Pharmaceutical Companies — have adopted a range of strategies to limit exposure to an uncertain market.

Some, like Denmark’s Novo Nordisk, the world’s largest supplier of insulin for diabetics, have long demanded payment on delivery. Others, including Britain’s GlaxoSmithKline, say they have not changed the terms of business and are not demanding immediate cash settlement.

Swiss-based Roche, the world’s largest maker of cancer drugs, has a nuanced approach. It switched last year to a system of payment on delivery for hospitals with a history of bad payments but spokesman Daniel Grotzky said this policy did not apply to critical products like HIV drugs and CellCept, a medicine given to organ transplantation patients.

Drugmakers know from experience that turning off the supply tap may simply not be an option. Two years, Novo Nordisk was hit by storm of protest when it halted deliveries of certain insulins for around a month after Greece cut the price by more than a quarter. The cut-off ended when Athens agreed to somewhat smaller price cuts.

Greece represents just under 1% of the world drugs market but it has a potentially wider impact because the country is embedded in the European Union.

As a result, price cuts in Greece can trigger automatic cuts in richer countries through the practice of “reference pricing” to other countries — something industry is keen to avoid if Greece leaves the euro and prices in euro terms fall heavily.

Drug price cuts over the past two years have also helped suck medicines out of the country as wholesalers sell supplies to countries — like Germany — where drug prices are higher, although recently introduced quotas limiting exports of some drugs have tried to address this.

Such parallel trade is allowed under European free trade rules and can help keep costs down for European healthcare systems, according to the European Association of Euro-Pharmaceutical Companies, representing wholesalers involved in the practice.

Drug manufacturers, however, see it as a thorn in their side and any short-term emergency supply plan for Greece is likely to include a demand for assurances that drug deliveries will actually get to Greek patients. Fraud over medicine reimbursement in Greece is another concern.

On the ground, meanwhile, many patients are already struggling to get the prescription medicines they need, according to Apostolos Veizis, head of programs for Medecins Sans Frontieres in Greece.

One reason is a liquidity crunch among pharmacists, who face delays in payments from public insurers and, as a result, are unable to pay their suppliers.

But even when drugs are available, more and more Greeks have trouble paying the 10-25% of the prescription cost not covered by the public healthcare system.

“We’re seeing a massive decrease in patient access because of the economic crisis,” Veizis said.

© Thomson Reuters 2012

Drugmakers preparing emergency plans in case of Greece eurozone exit

The unrelenting and escalating sovereign debt crisis in Europe promises further losses ahead for the region’s already stressed equity markets, but a stock rebound could come sooner than many investors are expecting if Greece exits the eurozone, say analysts.

“The growing possibility of a Greek exit from the European Monetary Union suggests caution remains the watchword for now,” said John Higgins, an economist at Capital Economics. “But once the dust settles, stock markets could fare much better — even in Greece.”

Investors have redoubled their anxiety about eurozone economies that are drowning in government debt and struggling with severe austerity measures after taking a brief hiatus late last year through the early part of 2012.

The Euro Stoxx 50 index listing of the biggest stocks on the continent is down 17% since early February and regional benchmarks have posted even bigger losses. Spain’s IBEX 35 is down 26% over the same period and Greece’s ASE index is down 35%.

The only major European exchange that has made money for investors this year is Germany’s DAX, which, given its relatively superior economic performance, has become a refuge of sorts for investors.

Mr. Higgins said the sharp fall in equity prices has driven valuations down to attractive levels in many eurozone nations, both historically and relative to other countries.

While it’s too soon to expect eurozone stocks to recoup all of their lost ground, he thinks it wouldn’t be long before Greece’s stock market bounced back if the country leaves the single currency area. He said that’s because currency depreciation of a new Drachma would spur economic activity.

“Granted, it would probably be a rough ride in the short term as capital continued to flee the country and contagion fears prompted a world-wide increase in risk aversion,” Mr. Higgins said.

Mr. Higgins said stock markets of other weak countries that remained in the eurozone would also rebound after initially coming under further pressure. But gains would likely be less than those in Greek markets, because those countries would not benefit from significant currency depreciation.

Karen Olney, a strategist at UBS AG, said it is tempting to turn bullish on European equities, but doesn’t advise it at the moment.

In addition to Greece, she remains concerned about Spain’s banking sector — which remains undercapitalized despite additional provisions — and France’s change in leadership.

“[French President François] Hollande hasn’t announced any austerity measures,” she said. “If he does, someone suffers; if he doesn’t, the bond market could force it.”

Ms. Olney said the muted risk appetite of global investors also makes it hard for European stocks to rally, particularly when there’s not enough good news coming from the United States and China.

If and when confidence returns, she likes European value stocks, which have fared 40% worse than growth names since January 2011, and cyclicals that are down near their previous lows.

“Buy Europe over the United States given relative valuations look stretched,” she added. “Just not yet.”

Even Greek stocks may rally once Greece leaves the eurozone