Company Plans to Mine Asteroids

Peter Diamandis and Eric Andersonn are the co-founders and co-chairmen of the Seattle-based company Planetary Resources, Inc., and to them, a near-Earth asteroid is not the stuff of modern disaster movies. Rather, it represents the next frontier in the mining of valuable resources.

Asteroids are composed of water and metals, and every time one passes by the Earth, the opportunity to obtain its resources escapes. The company's mission is to develop robotic spacecraft to analyze asteroids and mine them.

This may sound like a futuristic fantasy, but it's not. The company already has the backing of such heavy hitters as Larry Page and Eric Schmidt of Google, and according to Diamandis, the first mission will take place in 20 months.

The prospecting and mining of asteroids will rely on the use of the company's extremely light Arkyd-series spacecraft, which Diamandis characterized as "the smartphones of spacecraft."

He said that they will remain in Earth's orbit to detect and analyze asteroids that come close enough. They will then co-orbit with the asteroid and attach to it via one of "a multitude of attachment capabilities" that the company is now exploring, according to Diamandis. Afterward, they will extract the desired materials, and return to earth.

"Our primary business is looking at these asteroids as a resource to benefit humanity, with three major value propositions," he said. "The first is many of these asteroids are rich in water, and water is valuable for hydrogen and oxygen, which is effectively rocket fuel. A 75-meter asteroid, if it's rich in volatiles, has enough water on board to fuel all 135 Space Shuttle missions."

The second category is platinum group metal-rich asteroids. "A single 500-meter LL chondrite has more platinum on it than has been mined in the history of humanity," he said. "Our goal is to go to asteroids, match their orbit, prospect them with cameras and imaging systems to clearly identify what they're made of, and determine the percentage of platinum and gold palladium."

The third category is the asteroid with the potential to hit the Earth. "Of the millions of asteroids out there orbiting the sun, some small percentage actually comes close to the Earth," he said. "A thousand or so are about a kilometer in size, the size that killed the dinosaurs. If you develop asteroid mining capability, you can alter their trajectory and deflect these asteroids almost for free. It's a side benefit."

Diamandis said that this capability is very close to reality. "We have contracts with DARPA [Defense Advanced Research Projects Agency] and NASA, and we're developing highly autonomous systems," he said. "We're flying hundreds of spacecraft over this decade, and we're doing prospecting in about five years."

Only time will tell whether Planetary Resources ends up saving humanity from an extinction-level event, or simply mines enough precious metals to raise the country's gross domestic product. Either way, the company has made the future a little bit brighter.

SAC Hit with $1.68 Billion in Withdrawals

Investors in SAC Capital redeemed $1.68 billion recently, according to people familiar with the matter, a nod to a raft of legal issues that have embattled the hedge fund in recent months since a new government insider-trading case raised questions about founder Steve Cohen's potential involvement in illicit activity.

SAC is fighting that case, made in November by the Justice Department and the Securities and Exchange Commission, arguing that Cohen and the firm did nothing improper. But Citigroup (NYSE:C), Blackstone (BX), and other major investors in the $14 billion company have nonetheless been spooked by the possibility that Cohen might be charged and that their investments could be left with a company whose future is very uncertain.

On Thursday, which was the deadline for removing investor capital by the end of the first quarter, many of those investors voted with their feet.

Blackstone pulled some of its roughly $550 million SAC investment, along with a raft of other investors of all sizes and strategies. (Citigroup had previously announced a planned redemption of nearly $200 million.) All in, about $660 million of the redeemed capital will be returned by March 30, with an additional $1 billion or so to follow by Dec. 30.

Despite the headline damage, SAC overall will not be hurt by the redemptions, said a person familiar with the matter Friday morning. Solid performance has tipped its total assets to more than $15 billion in recent months, roughly $9 billion of which belongs to Cohen, SAC president Tom Conheeney, and other insiders, who have of late added small amounts of capital and plan to add more.

If the pace of last year, in which SAC's gross profits were $270 million per month on average, continues, the firm will make up for the lost investor capital by year end, this person added. In addition, the departure of more than 10 portfolio managers and a general mandate since the financial crisis to keep more money in cash has given SAC greater access to liquidity.

Still, the removal of nearly $2 billion in capital is a symbolic blow to Cohen and his colleagues, given that expectations were reportedly more in the $1 billion range.

The next three months will be crucial for SAC, as it seeks to fight back allegations that Cohen was involved in a decision to sell two pharmaceutical stocks in 2008 that may have been based on inside information. In addition, the SEC has threatened to charge SAC on a corporate basis with securities fraud, a move that would take the firm's legal challenges to another level.

Some investors, including Blackstone, opted Thursday to take advantage of a newly-installed incentive to keep capital with SAC for another quarter and still receive a full redemption by the end of the year if they chose to pull capital in three months. By the middle of May, Blackstone and others hope to have greater clarity on the pharmaceutical case-for which prosecutors face a looming statute of limitations-among other things.

Gold Tumbles Over 3%

Gold futures settled sharply lower Friday as upbeat U.S. economic data helped dull its haven appeal, prompting prices to briefly breach the $1,600-an-ounce support level.

News that George Soros’s hedge fund cut holdings on a major gold fund also added pressure as investors assessed reported comments from the Group of 20 nations. A U.S. Securities and Exchange Commission filing showed that Soros Fund Management LLC cut its holding in SPDR Gold Trust by 55% in the three months to Dec. 31, while Bacon’s Moore Capital Management LP sold its entire stake in that fund by the end of last year.

“Looks like technical selling pressure, along with a ‘herd’ mentality as prominent funds such as [Soros Fund Management] cut back on gold positions,” said Jeffrey Wright, managing director at Global Hunter Securities. Prices may either go lower and “test the $1,550 level in the next couple of weeks or snap back if perceived value buying returns.”

Gold futures for delivery in April dropped $26, or 1.6%, to settle at $1,609.50 an ounce on the Comex division of the New York Mercantile Exchange after touching a low at $1,596.70.

According to FactSet Data, that was the lowest settlement price for a most-active contract since Aug. 15. For the week, prices lost 3.4%, the largest weekly percentage decline since the week ended June 22.

“Speculation that G-20 may water down yen weakness” was among the reasons for gold’s fall, said Chintan Karnani, an independent bullion analyst based in New Delhi. “Buy stop losses got triggered when gold fell below $1,619, adding to the selling wave.”

News reports said the draft of a communiqué to be issued by G-20 finance ministers and central bankers on Saturday contains a pledge to avoid competitive devaluations but that Japan won’t be taken to task for policies that have contributed to the yen’s sharp fall versus major rivals since last fall.

The news cut short a rebound by the Japanese yen, with the dollar trading at 93.41 yen, up from ¥92.85 late Thursday. The ICE dollar index climbed to 80.491, from 80.288 in North America late on Thursday.

A stronger dollar often puts pressure on commodities, including gold, by making their prices more expensive to holders of other currencies.

“There is some degree of certainty on G-20 statement on currency price movement,” said Karnani. “If there was an uncertainty or confusion over G-20 currency statement, then gold would not have fallen this much.”