It has often been said that 99% of an enterprise's ... - Atomic Electricity

LFTR’S DECENTRALIZED DEVELOPMENT AS A RISK MANAGEMENT STRATEGY PAGE 1 OF 5It has often been said that 99% of an enterprise’s assets walk out the door everyday at fiveo’clock. This is never truer than in a new company dependent on innovation and its successfulimplementation.Through comprehensive research, we have identified key scientists and centers of excellence thatalready focus on the ‘stranded development’ of molten salt breeder reactor technology. Theseindividuals and centers personify mature professionals committed to their working situationswith significant roots in their communities. We will invest in their productivity in these workingsituations where they are now, accelerating their current efforts and generating extensiverefinements and extensions of the two-fluid Liquid Fluoride Thorium Reactor [“LFTR”]intellectual property basis of our project’s world-class competitive advantage. This approachwill greatly accelerate the project’s velocity.The LFTR’s realization as the world’s best and least-cost energy generation system requires ourexecution and management of a complete supply chain. We have designed an IndependentPower Producer (IPP); this South African enterprise will deploy and operate LFTRs with wasteheat exploitation facilities (desalination, heat & refrigeration loops). The IPP will import LFTRsand fuel from a strategic alliance comprised of a System Integrator (Indian) enterprise and aComponents Manufacturer (German) enterprise.Risk Management StrategyAn arm’s length transaction, in which the buyers and sellers of a product act independently andhave no relationship to each other is a basic tenant of our strategy. The concept of an arm'slength transaction is to ensure that both parties in the deal are acting in their own self-interest andare not subject to any pressure or duress from the other party.In the LFTR Supply Chain there must be demonstrable, arm’s length transactions between theParties-at-Interest. This takes place in 4 distinct steps:(1) The developer has to purchase research that can be independently verified at a fair price thatenables the researcher to survive and flourish, but provides the developer with an output onwhich his investment can turn a profit.(2) The manufacturer must convert these research outputs into a standardized mass-producedmodular LFTR working plant whose specifications can be independently verified when soldat a fair price that enables the manufacturer to turn a profit on his manufacturing costs foreach plant.(3) The independent verification of the LFTR’s safety, operational, and managementspecifications must be conducted as an arm’s-length transaction by an independent systemsintegrator to the objective satisfaction of the IAEA and federal government export authorityof the systems integrator’s country of record.(4) The purchaser of the LFTR working plant should be able to acquire a working plant inaccordance with the independently-verified safety, operational, and managementspecifications agreed upon as the minimum requirements acceptable for the purchase of theplant. The purchaser should be able to acquire, deploy, operate and maintain a LFTRworking plant in accordance with the manufacturer-specified, and system integrator-certifiedmethodology at a purchase price and operating cost that enables the LFTR system generationand sale of electricity at the lowest cost of energy in the purchaser’s chosen energy markets.

LFTR’S DECENTRALIZED DEVELOPMENT AS A RISK MANAGEMENT STRATEGY PAGE 2 OF 5Peer review. This requires the evaluation of creative work or performance by other people in thesame field in order to maintain or enhance the quality of the work or performance in that field. Itis predicated on the concept that a larger and more diverse group of people will find moreweaknesses and errors in a work or performance and make a more impartial evaluation of it thanjust the creators alone.Peer review utilizes the independence of the reviewers in order to discourage cronyism (i.e.,favoritism shown to relatives, friends, or fellow employees of the same corporate entity) andobtain an unbiased evaluation.Peer review for the manufacturer. The Scientific Advisory Committee will encompass multiplepoints of view for each development area (e.g., 1--Brayton cycle development: UC Berkeley,Czech University, Scandia National Labs; 2—Molten salt reprocessing: Nuclear ResearchInstitute Rez, Oak Ridge National Lab, Kim Johnson, K.Sorensen, Teledyne Brown Engineering,and so on). Each one with a legitimately differing point of view -- the Chief Technology Officerand the Steering Committee will select and referee the efforts in each development area toachieve the LeBlanc LFTR design outcome cost-benefit requirements.Peer review of the LFTR. Neutronics computer codes will enable the modeling of all aspects ofthe LFTR. These programs will inform the development, but just as importantly, they mustobjectively monitor and verify each aspect of the development – build-up of noble metals / gases,TRU processing, heat exchanger and core / blanket barrier’s performance, molten salt flow –each plant component and behavior must be projected for regulators’ analysis and evaluationbefore the fact, and proved out in real-time tests.The objective measurements of safety and performance parameters must be defined anddemonstrated with computer modeling whose well-annotated operating methodology andextensive results iterations can be readily explicated and justified to regulatory authorities. TheSystem Integrator uses its neutronics computer codes and modeling to perform a fiduciaryreview and verification of all regulatory issues encompassing the working plant. This SystemIntegrator effort must be executed contemporaneously with the development and manufacturingefforts so that independent process can inform the other.These parallel and objective processes will thus generate an optimally safe and manageableworking plant costs-benefits solution within the shortest amount of time. Performing theseprocesses serially through a singular enterprise invites reiteration of the development phase toaddress after-the-fact regulator concerns before manufacturing can commence and LFTRworking plants can be certified for export.The regulatory authorities (IAEA and Indian Nuclear Export Authority) can be educated in thesafety / operating issues and concerns of two-fluid molten salt thorium breeder reactors. TheSystem Integrator’s modeling process will provide the regulatory authorities with a real-timeinterrogatory to inject questions and challenges to the working plant as it is evolved andtransformed into a mass-produced turnkey system. The third-party independence of this SystemIntegration effort is integral to its viability and acceptance by the regulatory authorities.Political Risks. India has organized its Global Centre for Nuclear Energy Partnerships todevelop new nuclear power generator designs.India has the second largest deposit of thorium in the world. India has very little uraniumdeposits.

LFTR’S DECENTRALIZED DEVELOPMENT AS A RISK MANAGEMENT STRATEGY PAGE 3 OF 5India has focused on developing and building an accelerator-based solid thorium fuel cyclereactor.There are several benefits from the proposed Indian LFTR involvement:• Developing a neutronics computer coding capability to study the safety and operations ofLFTRs represents a complementary nuclear energy service for India which is intent onutilizing its vast thorium deposits.• LFTRs will provide a fuel export opportunity for India.• LFTRs will also fund the development and deployment of a versatile neutronics computercoding enterprise that can profitably provide services for molten salt reactors as well as solidfuel cycle nuclear reactors.Challenges include Germany’s reliance on nuclear power plants evidenced by fierce longstandingopposition from German environmentalists and the Greens political party.“2010 was the year of the anti-nuclear movement in Germany. Not since the catastrophicChernobyl meltdown 25 years ago were there as many people on German streets protestingagainst nuclear power production as in 2010. More than 360,000 objected to the government’sextending the operating lives of atomic power stations. But they went ahead regardless against thewill of a majority of the population…” Independent Media Centre, Australia, THr., 06Jan11.“2011: An important Year in German Politics”, 29 Dec 10, theTrumpet.com – “With seven outof Germany’s 16 states holding elections in 2011, next year could see some dramatic changes inthe German government. The opinions suggest only 37 percent of Germans support GermanChancellor Angela Merkel’s government. Germany’s SPIEGEL ONLINE reports that there ‘is achance that her conservative CDU could lose every one of their votes whch would deal herauthority within the party a singing blow and could even scupper her chances of standing for athird term in 2013.“...Opinion polls suggest that the center-left SPD and the Greens have a realistic chance ofousting the CDU in Baden-Wurttemberg in what would be nothing less than a politicalearthquake. The Greens are so strong in the state they could even end up as the senior partner ina coalition with the SPD. …The CDU’s coalition partner, the FDP, may have won 14.6% of thevote in the last elections, but its approval rating has shrunk to only 3% now…”Centre for Eastern Studies (http://www.osw.waw.pl) - “The German energy sector: betweenpolitics and economics”, Lukasz Antas, 1 Sep 10 – “The conflict over the extended usage ofnuclear power and the ‘price’ to be paid by the plant owners for this extended operation isintensifying inside the German government. CDU/CSU and the FDP tried to extend theoperational period in the coalition agreement.“However some CDU politicians want this extension to be as short as possible. Less evidencesources of the dispute are the CDU’s position as a potential future coalition partner of the GreenParty” – there’s a fundamental conflict between politicians who support ‘green technologies’ withpolitical representatives of the power utilities.”“Economic impacts from the promotion of renewable energies: The German experience”,Rheinisch-Westfallsche Institut fur Wirtschaftsforschung, Final Report, 2009 – “Anaggressive policy of generously subsidizing and effectively mandating ‘renewable’ electricitygeneration in Germany has led to a doubling of the renewable contribution to electricitygeneration in recent years…With a feed-in tariff of 43 Euro-Cents (USD 59 cents) per kWh in2009, solar electricity generated from PV is guaranteed the largest support of all rewnable energytechnologies. The feed-in tariff for PV is more than 8 times higher than the wholesale electricityprice, and more than 4 times the subsidy paid for electricity produced by on-shore wind turbines…

LFTR’S DECENTRALIZED DEVELOPMENT AS A RISK MANAGEMENT STRATEGY PAGE 5 OF 5• the Wassenaar Arrangement, established to contribute to regional and international securityand stability by promoting transparency and greater responsibility in transfers of dual-usegoods and technologies, thus preventing destabilizing accumulations,• the Zangger Committee, whose members undertake not to provide (a) source or specialfissionable material, or (b) equipment or material especially designed or prepared for theprocessing, use or production of special fissionable materials, as well as• the Treaty on the Non-Proliferation of Nuclear Weapons (NPT).India is not a signatory to any of the aforementioned Export Control Protocols, or the NPT aswell. Yet, India has been endorsed by the Nuclear Suppliers Group (including Germany). Thefollowing, taken from the India Gazette, emphasizes India’s respect for and commitment toGermany’s support of India’s nuclear energy ambitions:“Visiting Indian Prime Minister, Dr. Manmohan Singh, on Saturday, praised Germanyfor supporting the opening of international commerce for India in the field of civilnuclear energy, adding that both sides have discussed the possibilities of entering intobilateral cooperation in civil nuclear energy. "We deeply value Germany's consistentsupport, including in the Nuclear Suppliers Group," said Singh in an opening statementissued during a joint press interaction here,” India Gazette, Sat., 11 Dec 2010, “SinghPraises German Support For Opening Global Nuke Commerce to India”.It is in the best interests of the LFTR Supply Chain venture to minimize its regulatory profileduring its early development and manufacturing phases.LFTRs must first be certified and licensed for export by India, be fueled and deployed in colocationwith their South African local distribution grid electricity customers, and sustain buriedoperations without incident for protracted periods. Once these steps are achieved, an elevation ofthe LFTR’s profile can educate the mainstream as to their enduring support of all stakeholders’prosperity.