[Music] I'm Charlotte Mloud with investingnews.com and here today with me is Justin Hune, founder and publisher at Uranium Insider. Great to have you as always. Always good to see you, Charlotte. Thanks for having me on again. Of course, really good to be speaking with you and as usual, there's so much for us to go over today. Where I thought we could begin is with some relatively recent news at this point and that is going back a couple weeks ago to when Trump signed those executive orders
related to nuclear power. So I haven't had too much of a chance to go into those with anybody yet. So curious to get your take on the key takeaways and overall significance there. Sure. And this this is something that is kind of a culmination of some teasing from the Secretary of Energy Chris Wright and from the White House and from their uh multiple White House energy related ex accounts for the past 3 4 months has been quote the nuclear renaissance is upon us unquote. Um the Trump administration will do more to
support nuclear than any other administration. whatever all these types of headlines and and sort of snippets on social media and everybody was like, "All right, we've heard enough. What are you going to do about this?" And we knew from kind of the very early stages of of the Trump administration that something would come out of the administration that would be nuclear supportive. and and all of the signs were there, whether it's um Doug Bergam as the I believe the Secretary of the Interior and then uh
Secretary of Energy, Chris Wright, both pro-uclear um Trump himself having multiple mentions about being positive on nuclear energy. uh people on his uh kind of his on his right hand whether that was Elon Musk or the um AI and cryptozar David Sachs like all of these people generally speaking see the problem which is enormous electricity consumption growth and the the uh problematic nature of having too much intermittency on the grid. So we we need we need base load stable energy. And so all of that led us
to believe that we would see something from the Trump administration probably in the first year around plans for building more nuclear and nuclear support. And we didn't know what that would look like. And now that's sort of coming to light with these executive orders. So four executive orders were signed 10 days ago um to end the previous week. And these four executive orders were uh in support of nuclear through various means. So the first one reinvigor invigorating the nuclear industrial base. This had probably the
most for lack of a better word kind of bullish language about building new nuclear which was both a a plan to facilitate 5 gawatt of up rates at existing nuclear power plants. So upgrades basically an existing power plant can either uh utilize fuel that is slightly higher enriched. They can um implement more uh efficiency mechanisms whether that's in the actual operations or the actual functioning of the plant. So uh upgrading the steam turbines and things like that. There's various types
of upgrades. Some of them will require more uranium if like if it affects the fuel. Um some of them do not. But either way, 5 GW of upgrades across the fleet in addition to having 10 new large reactors at least begin construction by 2030. And that's very very positive to have that kind of language coming out of the United States. There was another executive order that it was and is quite critical of the Nuclear Regulatory Commission aiming to reform the NRC to basically change the um change the way that the NRC
interacts with radiation concerns. So having a zero radiation um platform and uh functioning of their of their safety protocols and going to a reasonable amount of radiation. You get radiation when you eat a banana. You get radiation when you fly in a plane. So having a standard of zero largely has has influenced the NRC to um be far far more safety concerned without actually acknowledging the the need in the national security imperative to build new nuclear. So the Trump admin is saying we need to expand nuclear energy
and we want the NRC to to adopt that same need in addition to the safety protocols. So they highlighted things like the NRC since in its inception we've only built two reactors since 1978 when the NRC replaced the atomic energy commission that was set up by Eisenhower. Uh and since then only two reactors have been built in uh let's say over 40 years which is a very very long period of time to not build nuclear. um for a very long time there were actual people on the board of the NRC that were
explicitly anti-uclear which doesn't make any sense whatsoever. So yeah, executive order to reform the NRC, executive order to reinvigorate the nuclear industrial base which will um establish a a Halo supply and a Halo stockpile um will support the fuel cycle across the fuel cycle uranium mining conversion and enrichment. the actual details of the how and the funding for a lot of these imperatives in the in the executive orders is still kind of a gray area and we hope to get some clarity on
that once the Senate eventually passes the budget bill which did already pass the House. So the other two executive orders reforming the nuclear reactor testing at the Department of Energy um which aims to construct three new nuclear test reactors and achieve criticality by July 4th of next year. That's incredibly optimistic. But either way, it's it's great to see this this accelerated need to get these things done. And then the last one was deploying advanced nuclear reactor technologies for national security. So
taking a a national security standpoint in terms of the actual implementing of the guidelines within the executive order to accelerate the support of advanced nuclear was specific for advanced nuclear. So small modular reactors, reactors of different designs, not just light water, boiling water, but new novel technologies that will typically take many years and hundreds of millions of dollars to go through the approval stage. And these executive orders are saying we've got to get this done ASAP. So across the board, very
positive. Still the specifics of how we're going to get all of this done are somewhat of a gray area to the general public. In the background, we have the utilities, the federal government, the tech companies, the uh nuclear developers like the nuclear company. All of these folks are working together in the background to try to get this all this stuff over the line. And finally, when we have the specifics within the budget that we hope will eventually get passed by the Senate in the next month
or two, then the industry can say, "Okay, this is exactly what we know for the tax incentives and here's the amount of funding in the DOE's loan program for nuclear." And then they can start to make those decisions. So, I would say within the next 3 or 4 months, we would be very surprised to not hear explicit announcements of new reactor plans uh for construction in the United States. Okay, really great overview of what's going on there. So, this is significant, but we still need more time. We need
some details, but we'll be watching to see how that plays out. Very interesting. The other point I wanted to ask you about in terms of the US since we've last spoken is the uranium project fasttracking that we're starting to see. So, seems like good news, but we know that even if you fasttrack a mining project, it's still a slow process. So I also wanted to get your your take on that significance and how much it can really help us speed supply along. Sure. There's uh you know most of the projects
that are let's say brownfield in the process of restarting in the United States or potentially even some green field especially in Wyoming and Texas and in some cases Utah. Those are kind of the three main states where primary uranium production will be coming from. A little bit from Arizona as well with energy fuels. Um, but most of the projects there are already permitted. They're just higher cost projects that will take higher prices to incentivize those, especially in Utah. Uh, the restarts are happening, the ramp ups are
happening in Wyoming and Texas right now. Currently, they're going slowly. Most of those projects have hit um some speed bumps in terms of actual ramp up efficiency and total production expectations. But um either way, it's good to see the administration say we're going to fasttrack any of these unpermitted projects. and we've already seen a little bit of evidence of that for both Laramide Resources and for Anfield Energy. Um, you know, there's some projects that are that are sort of
held up in either um jurisdictions that are that are against uranium mining or uranium mining is illegal. So, one of those would be kind of the northern Arizona strip. There's a lot of projects there. Some of those with higher grade deposits that still they can't be mined at this um under the current laws. Some would be uh another would be like a Kohl's Hill in Virginia which is owned by ISO Energy. This is a very large potentially open pit deposit that's um currently not legal in the state of
Virginia. Will that be overturned with this momentum um uh federally? We'll see. Couple of the projects Encors uh Duly Berdo in South Dakota still facing a couple of bureaucratic uh hurdles but overall most of the expected production ramp up and grain field development in the United States are projects that are already permitted. So we don't really see that as being a huge meaningful um impact on on future mining in the United States. But I could be wrong. There's some areas where we just did not
expect production to ever happen from again which is like New Mexico for example. There's still a lot regardless of permitting issues and bureaucracies. There's still a lot of um social licensing that has to happen in in areas like New Mexico. So, we'll see how it goes. We're very bullish. United States uranium absolutely. Um but how quickly and how much will be produced is is still remains to be seen. Okay. And I think that feeds into another question that I wanted to ask you on the supply
side. So I saw you describe elsewhere in a different interview the mirage of uranium supply and I thought that was a really interesting concept that helped me understand. So I'm wondering if you can go over what exactly you mean by that. Sure. And that actual term credit where it's due came from an article published by uh by Matthew Gordon from Krux Investor and I just thought it was such a perfect analogy um something that you see off in the distance that never really manifests. And we agree with this
article largely which basically is claiming that the industry let's say the utilities are seeing the same thing that investors are seeing in terms of the messaging coming from the mining companies. So the mining companies especially for development projects these are the most important right the the brownfield restarts are are easy more easy to predict future production because they produced in the past and the ramp up is is typically easier even though almost all of the brownfield projects to date that have been
undergoing restart from 2020 till now have come up against problems missed production targets slower to restart etc. Either way, brownfield easier. Uh green field development projects are historically very very difficult and take many many years, blow out the capex, um delayed by years often to get to first production. But the companies, they do these feasibility studies and so they have to kind of plant their flag somewhere, right? So they have to say, "Okay, we've done the engineering work.
We've we've gotten bids from contractors to build X, Y, and Z part of the project. and this is what we believe it's going to cost us if we start at this point. This is how long we believe it will take. And they have to plug in a certain uranium price to get the uh to get their numbers. And based on um energy cost at the time, they'll have their all- in sustaining cost projections. So the investors say, "Okay, this project's going to be first production in 2028 and it's going to
cost this much." And the utilities see the exact same thing. And if you've been following this market for a number of years, you can see for example, and not to pinpoint this on this particular company, and maybe I I just won't even keep I'll just keep the company anonymous. 2018 feasibility study already done for high-grade project in North America. They expected first production in 2023. Here we are in 2025, midpoint 2025, and first production for this same project is best case scenario 2028. So, that's a
5-year delay. And keep in mind, this is a lowcost project where you go back to 2018 and the uranium price is 25 bucks, 30 bucks term, whatever it was. You know, they arguably could have gotten that project into development then and still have been slightly profitable. And since then, the price has only gone up. So, over the past 5 years that this project has been delayed, 7 years this project has been delayed, the price has arguably been um in a range that is definitely profitable for this project
to be built. yet it hasn't been built. Permitting delays um are are a big part of that. But also just the pricing environment changes. Inflation affects everything. And if you inflation adjust the previous price moves and the previous two big bull markets for the commodity, we're still uh very early in terms of this price move. If we were to compare to those other price spikes, of course, everything is different in this market in some way than the previous markets. This has been an evolving industry. Um, major differences
in secondary supplies. We can get into that if you want to, but still the overall point is that when a company says to utilities that we expect production on this day, the utilities believe them and so do the investors. And that's not to blame them for that. But to look historically, we're going to see example after example for 99 out of 100 projects that they just don't come on time online or on budget. And the best example of that already would be NextGen's Arrow. This is the largest
undeveloped uranium deposit in the world. Their feasibility study had had this at, let's see, I think it was originally 1.4 1.6 billion capex. It's already over two. It's been adjusted to over two uh 2 billion. So that's an exist an an extra5 to700 million in capex that wasn't there two years ago. Um the feasibility study also is saying their initial production is going to be 29 million a year for 5 years. And it seems to us that that is kind of um let's say maximizing the nav of the
project perhaps to make it look as attractive as possible to a suitor. Maybe maybe not. Okay. So their time frame for development was um uh 40 months. Then it went to 42 months. The last update is now 48 months. The project was expected to be first production in 2029. It was 2028 as of 2 years ago. Then it went to 2029. Then a few months ago when they updated it was 42 months construction time. And the uh the last hearing for the project, the public hearing before permitting will be in Q1 of next year. So midpoint next
year, best case scenario, shovels hit the ground. 42 months put us at 2030. Now 48 months put put us mid 2030. Realistically, best case scenario. First cake in a can in 2031. So this is already this is already 4 years later than what the market was expecting two two and a half years ago. And this is for the lowest cost biggest project on the planet in a great jurisdiction. So everything everything is lined up for this company and this project but it just gets pushing get it's pushed down the road and NextGen signed contracts in
December for first delivery in 2029. Now they hold some inventory so they've got a little buffer. I'm sure that there's because it's a green field project they probably have the ability to to postpone those first deliveries but it's already 2 years after for best case scenario first production from the their first committed deliveries. And we think that green field project delays are a base case. And as these big projects, and I use arrow, but there's multiple, right? There's Arrow, there's Dennis's Phoenix,
there's the uh production ramp up and uh increase in production in Kazakhstan. That's that's problematic here. There's other big mines like Itango and Tumas and Namibia. They're just not getting built. Both of those companies has said, "Yeah, we're delaying our final investment decision because these prices in the contracting environment are not supporting these projects." So, this is supply will be able to increase and it is increasing now, but it isn't keeping
up with demand. And the demand picture is the much easier part to model because we can see what's operating. We can see what's under construction. We know what is likely to be life extended. We're not modeling for certain restarts like uh or life extensions like in Spain. Uh if Germany restarts in reactors, we're not modeling for that. So the demand is is stable and growing and supply is only balanced in the future if all of these projects get built. And so far the ones that are expected to be built and even
the brown fields that are that are increasing production or coming into production have been delayed and are missing production goals largely. So totally agree supply looks like a mirage here. We will have some increased supply but from what we can tell now it's practically inevitable that this happens. It's just it's like you see the light at the end of the tunnel of the freight train coming. It's just going to take a minute to hit you. And that's where the industry is right now. Really
illustrative examples on the supply side there, I think, to tell us where we are. And yet, as you're seeing, so the utilities are still buying into the narrative that supply is going to come online as planned. So, can you talk a little bit about what the utilities are doing right now in terms of contracting if that is their current mindset? The utilities right now are not really contracting very much. So, we only have 26 million pounds secured uh year to date. If we annualize that, that's about
30% of replacement rate. And we're not going to see replacement rate without higher prices. And the reason for that is at the current prices, there just isn't a lot of uranium for sale. So the actual contracts that have been signed have been with certain developing companies that continue to sign fixed contracts at the long-term price. Um, and that's kind of some of the small volume in the long-term market. But what utilities have been doing year to date, it slowed down a little bit in the past
couple of weeks, but year to date um over 70% of the volume secured in the spot market has been on behalf of utilities. Usually utilities are less than 20% of traded volume. So most of the traded volume in the spot market has been involving utilities this year. A decent amount of that has also been carry trades. So there was a sufficient spread between the midterm delivery price and the spot market price. And so you had financials and traders come in and sign sign midterm smaller uh lower volume contracts with utilities cover
off by buying in spot. That happened a lot uh February, March, April into early May. It's slowing down a little bit because the spot price has risen and the demand in the midterm has softened a little bit and largely that's because um we've seen the spot price rise. There's not a lot of volume available at those prices. So when the buying the utilities are not stupid, okay? So, and the investors want to pound that narrative that they are and they're not. And you can argue that they have um historical
biases and absolutely they do like everybody. Uh but they've never come into the market and not had uranium. But if they go into the spot market, they want to buy £500,000 and it's just not there at that price, it'll take $2 higher. They'll just pull back. And that's kind of what's happened now. So long-term contracting still is quiet and we're still waiting for multiple uncertainties to clear. And one of the big ones for US utilities especially which is still the largest market in the
world is the the conflict between Russia and Ukraine or more specifically Russia and the United States and um that clearing somehow. So when will that conflict end? What does that peace agreement look like? What's going to happen to my deliveries that I'm expecting from Russia in the next two years? Um, will I be able to contract more into the future from there? Will the RSA be adjusted? These are all big questions around around Russia. There's actually a bill that's being bipartisan
bill right now that's being that that's going through the House that is promoting a 500% tariff on any country that does any business u with Russia. So any any country that's buying Russian energy products would be smacked with a 500% tariff by the United States and that's going through Congress right now. So the utilities see this stuff and this is this doesn't give them a lot of assurance for making big decisions going forward. Also, and this is again more specific to the US is what's going to
happen with this budget bill from the Senate. um what are my plans as a utility for investing in upgrades, investing in new nuclear uh buildouts because that does affect the bottom line. It also affects how much uranium I need to procure. So all of these things are are kind of spinning around right now. There's a conference as we speak happening in Sydney, the world nuclear nuclear fuel markets conference that has um representations from utilities around the world, from producers, fuel uh fuel
cycle participants. They're all there right now. So, we're watching the physical market very closely to see if something starts to move and shake coming out of this conference. We know there's a lot of uncovered demand, especially from the Japanese and the Koreans and the US utilities and that's going to have to come to the market sooner rather than later. Is it possible they stay quiet for another couple months in the summer? Sure, anything's possible. There are sufficient inventories for another couple of months
to pass. But things are kind of set up here and with a structurally tight physical market, it isn't going to take much. We're now at 12 months of the long-term price being within uh, you know, a $2 trading range, 79 to 81. We're at 80 bucks a pound right now. So, this is a long consolidation for the term price. despite lower volumes being secured, it's stable and hanging in there and is actually only remaining at $80 a pound because of these developers offering up these fixed price contracts.
Soon as that's out of there, this price is going higher. Um, so all of that is to say very slow long-term contracting this year. Instead, utilities have been nibbling in the spot market and and engaging in carry trade deals. A lot of buying has to be done at the end of the year. So whether or not that starts over the summer, and we've seen that before, we saw that in 2023 with an RFP from PG&E and then the Koreans kind of kick things off. Um either way, big conference in uh in London, the WNA
conference in early September and usually things kick off at the end of the year. We're expecting a very very strong end to this year. Very strong second half of the year. um if that starts off quiet for that first month or maybe two, entirely possible. Hard to predict from here, but so much demand is coming into the term market and it's going to start um second half of this year. Okay. And and maybe now is a good time to talk a little bit more about prices. So it seems like as you're
saying everything's kind of building toward the end of the year. Do you have a specific level of price that you're looking for in either the spot or term market? say say by the end of 2025 the spot market is harder to predict because it's driven um the price can be driven by significantly lower volumes being traded and basically once once it starts to move and is moving consistently. So we saw sort of let's call it a dead cat bounce kind of from 63 up to low7s and the volumes increased
during the month of month of March and April. A lot of a lot of spot market transactions and carry trade transactions were done and that moved the price up and now it's kind of stabilizing sort of stagnating here for a minute the last couple of weeks. When that trend is really in place and that will that will not be the spot market in a vacuum. It'll be the spot and term market moving together. That's something that we haven't seen yet in this spot market move. So the spot market bottomed
at 63 and change went up to about 72 7250. All of that move term price didn't move. So when the term and spot start moving together, what happens is the willing sellers sort of pull back and the willing buyers step in uh even further. And once that trend is established, you have to understand the utilities have been watching and allowing the spot price to continue to drop because the trend was on their side. And you don't you why come in and interrupt that that downward trend? Cuz it it benefits me as a utility fuel
buyer not only in negotiating new contracts, but if I'm receiving deliveries of legacy contracts that are referenced at least partially to the market, dropping spot price benefits my bottom line when it comes to paying upon delivery. So let that trend play out, but watching the trend and when that trend reverses and it sustains, I'm back in because why am I going to wait at 75 8085 when this thing is likely going to top out higher than the previous peak, which is 104. That was last January. So
we know we're going to see some movement 80. I'm going to say the long-term price probably finishes the year between 85 and 90. If it's above 90, I would be uh very happy to be wrong. Spot price if we that really depends on whether or not we're going to see robust participation between uh traders, utilities, and financials. Will financials get involved again? And they did in the previous move up. So, I would not be surprised. Those same players are still here. Um you know, Goldman Sachs and others. So, will
we see them step back in? Probably. So the spot price, the next move for spot is going to take it beyond the previous peak. I'm fairly confident in that. Does it happen this year is harder to say, but I think we see 85 to 90 plus in term. I think we could see 90, you know, potentially the same pricing uh mechanisms for spot as well by the end of the year. Okay. I think that that gives me some good context on what you see coming. And I know timing is always hard, but I'm going to ask another
timing question just while we're on this note. So that's what's coming for the price. What about the uranium equities? I think we've seen on this US news a lot of wake up in terms of the stocks and investor sentiment, but summer can be a slow time. So I think people are wondering, all right, are we heading into a summer slowdown? Could we see see a continuation of this trend? So what are your thoughts on on that topic? I can't really say until we see what happens after this conference. So, we
have to just watch the physical market and look for the evidence. Right now, the evidence in the physical market is that it's quiet. Um, so it's it's it's quiet right now and it's always dead quiet during a conference because all of the all of the utilities and the traders go to these conferences. So, the fact that they're there means they're not at their desk buying and selling uranium. Um, so it's quiet at the moment. Ask me later this week or next week. We'll see
how that looks setting up for the summer. Again, it's impossible to predict for the next couple of months. But what has me the most excited from an investing perspective for uranium equities is that the the first real move for this market, this quote unquote bull market for uranium, which we are still in, by the way, and you can track that by the long-term price. Spot price has huge fluctuations. The equities have even bigger fluctuations. the price of uranium in the market where most of the
volume is secured is stable and rising and that's the term market. So the first big leg of this really was based on you know nuclear is still here. China's building a decent amount of reactors. It's the sector is set to grow about 1 or 2% per year compound annual. It's n you know 10% of global electricity production. It's important. Nobody cares about it. the price is well below the cost of production and it has to rebound. That was 2016 to 2020, right? So that was and and then the big move really happened
started in 2020 to 2021 and that was kind of a recognition of this contrarian play and looking for prices to rise because they had to. That was lay one. Now we're in this environment where the demand picture has blown out to the upside and things that we're seeing right now we couldn't have wished for in our wildest dreams in 2017 or 18 or 19 which is you know I mean the disruption in Russia not to say that's was within our wildest dreams but it definitely highlighted the importance of of of
national security and energy and where fuel sources are coming from. um a full-on global nuclear renaissance. To see 68 reactors under construction currently right now is insane. To see the US have policies to develop and and build out new nuclear reactors, to see the growth of AI and data centers and and to look in the developed world that has seen flat electricity demand for 20 years and now to see that rising in hockey stick formation. um to see the global environmentalist political left embrace nuclear that was not the case in
2017 or 18. Um to see every country in the world except for Austria and maybe Spain, Taiwan, and Germany are kind of in the gray area flip and go to pro-uclear whether they phased out their their actual nuclear um anti-uclear legislation or they have plans to build new nuclear. I mean all of these things the restarts the life extensions almost across the board is hugely hugely bullish for demand and demand has gone from that 1 or 2% compound annual to now about 4 plus% possibly even higher and that doesn't
even include the COP 28 goals of uh tripling nuclear by 2050 or Trump's goals that he had to go a little bit more and say quadruple nuclear by 2050. If we get 10% towards that goal, it's beyond what we have in our model. So, the demand has been utterly derisked and it's blowing out to the upside and the nuclear renaissance is it's on. It is absolutely game on. Where's the focus on the fuel chain besides looking at Russian enrichment in the United States? Where is it? Where's the focus on
uranium demand uh and uranium supply and the problems with uranium supply? Is the price in a place that is incentivizing every project in the world to start putting a shovel in the ground? Absolutely not. And that incentive price 5 years ago that was 6575 is now at 100 bucks a pound plus. And we're not going to see we're not going to see miners develop large difficult expensive open pit underground uranium mines to break even. Okay? They exist to bring value to shareholders. They exist to operate at a
profit and they have to. Why? Look at what just happened. They all went through absolute hell during the 201s. All of these companies, 99% of the companies that were operating operating in 2007 disappeared. Um, the biggest miners on the planet had to shutter mines and put mines in care and maintenance. These things go through wild, very, very difficult swings and the miners had to go through that in the previous decade. Now, it's time for them to print some money. And that is what they exist for. And that's why you hear
the Camos of the world saying, "Sorry guys, we're not selling uranium at at 80 bucks here. We're going to do market reference contracts. We're going to have a floor in the mid70s to the 80s and ceilings 135, maybe even higher." That's what Kamo wants. And what Kamo wants, they'll get. And what why are they not signing contracts here? Because the utilities are not accepting those terms yet in volume. That is coming because it has to. It has to. And that's the type
of investing setup that I love. When you can have very high confidence in demand picture and something has to happen for supply to meet that demand. That's what we're invested in. So the nuclear stocks, the nuclear story, those are getting all of the love right now. I mean, the uranium equities are having a great day as we're speaking, but um getting all the love right now as it makes sense. the uranium equities are going to trade largely in line with the uranium price. So these are all great
stories and nuclear is growing and we're we're 100% here for that. The money coming into the uranium equities right now is money that is making a bet on what we believe is going to happen or what we know is going to happen. So in some cases it's contrarian to buy uranium equities in this environment when the nuclear side of the story is getting all of the attention because the pull on the price of uranium is the next step that's coming and that's where we want to be positioned before it happens
because when the price starts to go and money really flows into this sector it it moves so fast and you really want to have a seat at the table before that happens. Absolutely. I think that really shows exactly your mindset on what's going on and what's coming. And I just want to pull out something that you touched on during that last answer, which is the the data centers. So, we we had just very recent news on that note that I think is worth bringing up. We have the Meta and Constellation 20-year
nuclear power deal. So, I wonder if you want to go into the details there and pull out anything that you think we should be aware of. And of course it sounds like this is this is something that's going to continue. Yeah, this is this is just further evidence of the of the actual electricity demand and the focus on stable power by the by the AI um AI focused companies, the big tech companies. Meta had put out an RFP um in Q4 of last year that was due in February that was saying we want to build one to
five gawatts of of nuclear and we're looking for um collaborations and some offers from any entities who um could be the builder to power our data centers. That was quiet. We haven't heard anything after the RFP. We were expecting here something February and then March and then April and then May. Nothing. So, this is the first piece of that is this 20-year power purchase agreement from um the Clinton uh nuclear power station in in um in Illinois operated by Constellation. Part of this news release is the constellation is
saying not only are we going to have an upgrade, maybe a 30 megawatt upgrade at Clinton, but we also already have permits and early sight construction permits to expand capacity here and build new nuclear, whether that's could be an SMR up to an AP-1000, which is what they had stated in the release. They want to build new nuclear in the state of Illinois. Um, I think there's actually legislation going through the state of Illinois right now that Pritsker had shut down most recently, but that will allow for new large
nuclear to be built because as of now it was just uh advanced reactors, small modular reactors. But yeah, this is just another piece of evidence that that there is a focus on that. And there were a couple of blips, you know, earlier this year that Microsoft had pulled back on some of their capex for for AI data centers. um the Deep Seek scare in January where you know China's um open- source AI model supposedly had been built at a fraction of the cost and the operating costs were supposedly much
lower and that turned out to be essentially false but did freak out the market that maybe all of the momentum we saw in Q3 and 4 of last year around this story nuclear and and AI and big tech was kind of a a false story. It's not the case whatsoever, Charlotte. There's more than 300 billion in capex being spent this year on AI data centers by the big tech companies in the United States. That's an enormous enormous amount of money to be spending on this. AI is such it's such a deep subject, but
it's it's here to stay. The growth rates are are happening. Those aren't really being revised much. The ex the expected electricity demand growth is still absolutely in line with some of those big numbers that were put out over the last few quarters. Um really interesting also is the potential for the tech companies to be further u involved in building new nuclear andor resuming construction. though the VC summer plant in the state of South Carolina that was being constructed the early stages of
construction along with the Vogle plant um the AB-1000 that uh when Westinghouse went bankrupt the VC summer plant they just stopped and of course everything that happened in Georgia to resume construction of Vogle that happened there but VC summer never resumed uh construction so the owner of this plant put out an RFP saying we're curious who else out there might be interested in in investing in uh the resumption of construction of this power plant and or buying it outright. and they had I think
it was 90s something responses including uh about half of those responses they said were financially viable responses but multiple of the big tech companies did respond to that RFP wanting to either invest in or actually literally just buy out the VC summer uh I think it's unit 2 and potentially restart the construction of that AP-1000. So the big tech is absolutely in this. It's going to be very very interesting to see how they do or do not get involved. We think that they will in new large reactors
being constructed in the United States and we think we're going to see announcements on that this year. Okay, great overview of that as well. And while we're here on the demand side, I think no uranium conversation would really be complete if we didn't bring up the SPRA physical uranium trust. So, I want to get your thoughts. They did this 25 million or so raise a few weeks back, I believe. At this point, I'm wondering if you can explain what that was all about and and how we should be feeling
about that news. I I thought it was really interesting that that that news kind of just got brushed over so easily. It it didn't really make its rounds and make waves in the market in the way that I thought that it would or that it should have. So essentially SPR themselves in addition to a number of institutions paid a premium to the market price to buy blocks of of sput units offmarket in a private placement and they did so because buying the units on the open market when trading at a discount would
not put money in spat's pocket. Only way spot thus far until this private placement was done recently would be able to add to their coffers was via the ATM and they couldn't issue units on the ATM unless it was trading intraday at a premium to the to the previous day's closing nav. And when the ATM first launched back in 2021, they raised hundreds of millions of dollars over the course of a few months and bought a ton of uranium. They now are holding, I think, 64 million pounds of uranium.
um they haven't been able to raise a lot of money in the past couple of years. It's a closedend trust. Kind of the fate of closed end trust is is sort of to trade at a pretty persistent discount to NAV, but it has been a common trade for institutional players to buy it when it's at a 15% discount, sell it when it gets to to low single digits, rinse and repeat. But what these institutions did was invest in this private placement, buy a block of units off market. They paid a premium. Um, I think it was
pushing a seven plus percent premium on the day that it was done. The previous day's NAV. I'm sure when the money was allocated, it was probably closer to a 3 or 4% discount or premium, excuse me. But either way, that 25 1.5 million went into Sprat's uh balance sheet. So now they don't have to sell any uranium to raise cash. That was interestingly sort of a narrative that was being tossed around by by these pod shops in New York. you know, these these funds that have that have um kind of segmented
focus and there there are pods that are nuclear/ uranium focused and a lot of those pods are short and short the sector because they basically one of the main reasons was SPRA's going to have to sell uranium. Sprout's going to have to sell uranium. Doesn't matter that it was only going to be maybe £50,000 to put a little bit of money in their pocket and they'd have to do that every 6 or 8 months. Not a meaningful amount of uranium as far as the physical market's concerned wouldn't move the market. But
the narrative was there and so I think some of these institutions that took part in this private placement wanted to crush that narrative. But it to me this opens up the possibility of them to do this again at any point when the discount gets small enough that institutions are willing to pay that premium. And maybe the next one isn't 25 million. Maybe it's 75 or 100 and all of a sudden they can get back in and buy some more uranium in the market. So, one more mechanism for them to raise money
potentially in the future in addition to the ATM when they're at a premium to NAV. Okay. Really interesting and also quite tricky. So, so the fund has said they they won't sell, but there was this narrative going around that maybe that will happen. What are what are your thoughts on if that could come to pass? So, if they get their cash balance way down again and they aren't able to do another placement like they just did, they can sell uranium into the spot market to raise cash. Their mandate is
to not sell uranium. The mandate is to hold uranium and to be a vehicle um with ownership of this uranium to give investors exposure to the commodity itself. That's the mandate of this broad physical uranium trust. So, as far as buying low and selling high of the physical commodity, they don't do that. They won't do that. So if they have to sell in the future a little bit of uranium, 50 or 100,000 pounds of uranium once a year or whatever it might be to to raise some cash, then they might have
to do that in the future. As far as the utilities believing that these 64 million pounds of uranium are going to hit the market at some point, that's utterly false. Can the Sprat physical uranium trust be bought out entirely in one fell swoop? That's pretty much the only way that these pounds are ever coming out besides a trickle sale to to bolster their their coffers. What would have to happen for that is a 2/3 shareholder vote. So 2/3 of the total outstanding units would have to vote yes for this buyout. So you would
have to imagine well first of all with 64 million pounds and a nav I think here of4 something billion that's a very very very large transaction that's a transaction that would have to be at enough of a premium that 2/3 of the unit holders would actually vote for that to take place knowing that 64 million pounds going into the hands of whoever is buying that which I imagine would be what a consortium of utilities knowing that that would keep those utilities from having to buy uranium, which could
theoretically hurt the thesis in the future. To arrive at that point where you're going to have multiple utilities coming together to have what a 8 9 10 plus billion dollar transaction at that point likely we are already years down the road. The uranium prices is much much much higher. It isn't something that causes me to lose sleep. Is it possible that an takeout bid is made and shareholders, unit holders vote for it? Absolutely, that is possible. The point at which something like that would
happen is a point that we all hope for as investors in this industry. Yeah. Okay. That's that's quite a scenario and I think of course it helps me understand there. So I I could listen to you talk about your rating for a very long time. It's always really good to get your thoughts, but as we're wrapping up here, where would you place this in the cycle right now just to start tying things up? That's that's always one of those difficult questions because nobody has a crystal ball, but we see this this
industry and this sector of having a very very long runway. And the main reason that we see that has to do with supply. So the supply of the future that will theoretically eventually balance the market a is price sensitive b it's primary production. So in previous even in previous bull markets for uranium we had a much much more robust supply of secondary sources. So you go back to 2007 and then in the bull market the blowoff top that happened then you were still in megat tons to megawatts which
was 20 plus million pounds a year of secondary supply from Russian down blending that was sold and provided into the US for US reactors that went on for 20 years right that's 400 million pounds of secondary supply from that program alone in addition to the underfeeding that was happening any other uh sources from from recycling anything like that. So you had arguably 35 maybe pushing 40 plus million pounds in an annual basis of secondary supplies. Now we're modeling secondary supply this year I think at 23 million
pounds. Most of the other models I've seen are lower than that. And so we have and most of that is underfeeding. Most of that underfeeding is coming from Russia. The western enrichers are not underfeeding whatsoever. So, not only is it just a declining amount of annual secondary supplies coming into the market, which it is declining, will continue to decline. We think it's going to bottom somewhere 15 12 to 15 million pounds 5 or 6 years from now on an annual basis. But the overall inventories of above ground mobile
inventories that have been a buffer for the industry forever just aren't there. They're not there any longer. So nobody is sitting on this this enormous amount of uranium that's theoretically for sale. The Chinese have a large inventory. They've been building that inventory for a decade. They have approved more than 10 reactors construction starts each year for the last 4 years. They're at just about 60 gawatt now. They're trying to get to 150 by 2035. So that uranium isn't for sale.
That's strategic sovereign inventory that is held by the Chinese Communist Party and the state-owned uh companies throughout the fuel cycle and the operators. Uh that includes military stock piles by the way their inventories that are published. So we don't have an overhang of inventory and the actual supply that is being transacted that is being procured by utilities and will theoretically balance the market in the future is coming literally out of the ground. And that's why interruptions to
that supply which have been happening and will continue to happen are going to have much much more effect on the physical market the structure of the physical market and of course the price. So where are we? We're clearly not in inning one because the b the price has bottomed in any utility, you know, any commodity cycle goes through low prices, high prices. The classic Rick rule, you know, low prices cure low prices, high prices cure high prices. And we've gone from 18 bucks a pound all the way to 104
and back down to 72. For spot term has gone from about 30 now to 80. And that has been a much more steady and stable rise. those that price move has sort of cured the high price problem. Um we've seen some supply respond. We are seeing brownfield restarts. Lanker Heinrich came back online. Honeymoon came back online. Uh Kamico restarted MacArthur River a bunch of small projects in the US and the ISR project is just starting to grind to a start. Um so it is happening but the demand picture is so
robust that in order for supply to be where it needs to be to meet the industry demand needs by the end of the decade into the early 2030s and that is at the current demand picture. Whether or not we see an accelerated buildout here or in other countries is hard to say at this point but if that happens it's going to be even better is in terms of the demand picture. the supply that needs to meet that demand is quite literally having to come out of the ground. So, this really is a supply story and
disruptions are going to move the market. Where are we in this? It's crazy. And we've written about this, Charlotte, multiple times this year in our monthly newsletters, which is like, is it possible that we're still early? And yeah, it it actually is. Regardless of what I or anyone else has said over the past number of years with the fluctuations of the market, you have to take a snapshot of where we are now. And where we are now is that big projects that haven't started construction yet
have to get built. And the demand picture has changed for the positive over the years that we've expected this. If we go back to 2021, it was like, well, if the financials really keep plowing money into sput, this thing's going to spike to 150 bucks and then it's going to stagnate for five or six or seven years. And that didn't happen, but that was a possibility at that time. Now that has changed. And now we have a much more robust long-term demand picture with a problematic supply
picture and no secondary supply or above ground mobile inventory supply buffer to cushion any hiccups in that supply being developed. So we think we're very early. How long could this investment play out? We could have we could have some kind of exogenous event come in and disrupt supply in the next one or two or three years that sends us on a spike. Or we could have just the continued slow progression of supply coming online insufficient to meet demand that has a much more gradual steady increase in
price. Both of those things are possible. I would argue that the utilities are already too late. They should have been incentivizing development projects with the pricing that those development projects need years ago. They didn't. And so that's where we're at. And their fate is going to be what it is. Um we're pro utilities. We want utilities to be profitable and to continue to build nuclear, but the investors have been screaming at them for 10 years. And they've already made
their bed. And what is going to happen is already going to happen. We don't need any more catalysts. It's just going to play out. And that's kind of where we're at. Let it play out. So we think we have easily 2 or 3 years. Could this be a 5 plus year thing? Absolutely. Really depends on how robust that supply comes online, whether or not we see demand shocks to the upside or the downside. No crystal ball here, but I'll just say we're still very early. Okay. Well, I think that's a really good
place to wrap it up. Thank you so much for for coming on to go over supply, demand, pricing, companies. Always really good to talk to you. It's always my pleasure, Charlotte. Thanks again. Of course. And once again, I'm Charlotte Mloud with investingnews.com and this is Justin Keune with Uranium Insider. Thank you for watching. If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below. [Music]
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