thank you I'm Charlotte McLeod with investingnews.com and here today with me is Justin hewn founder and publisher of uranium Insider great to have you as always thanks for joining me today it's my pleasure good to see you again Charlotte yeah really great to be talking with you especially because we're coming off a pretty exciting week for Uranium so prices I believe we had them at a 12-year high and on top of that I believe you said in one of your recent videos we have the spot price up above
ten dollars over the course of four weeks or so so we're going to talk about some of the drivers behind that move but where I wanted to begin is if you could talk about just how I guess contextualize that in a market where we know usually moves pretty slowly sure um yeah you know I mean we've been in a quote-unquote bull market for uranium and for a number of years I mean I wouldn't necessarily call the beginning of the bull market the first move up after bottoming but uh kind of breaking
out above previous resistance so let's say we're in a bull market over the last three years for the commodity um there's been some price spikes there's been some mild drawdowns there's been a decent amount of consolidation over the past year and a half especially for the equities but also for Uranium as we Spike to 63 50 a pound last April April 2022 that move of course was entirely driven by Financial interests broad physically range specifically um but really what we're looking at here
is Confluence of a number of events both acute and uh I don't want to say chronic but kind of longer term macro uh developments so the the overall embracing of a nuclear is sort of just this underlying Foundation to the thesis that uh makes the demand story relatively predictable it's it's basically pretty static and slightly growing in fact the growth numbers are continuing to move higher where a few years ago the growth in nuclear was looking like it would be one or two percent per year uh compound annual
growth rate going out you know 20 35 20 40. now that uh cagr is closer to four or five percent possibly even up to six percent depending on who's doing the analysis so we have this underpinning of this beautiful demand story in this re-embracing of nuclear and um carbon neutrality goals and energy Security in a in a during a time where energy is being weaponized in certain parts of the world and so that's sort of this underlying demand thesis that's relatively easy to model out the supply
side however is is a big fat question mark where you've had a situation where there's been abundance and relatively cheap supply of uranium for a very long time even in the previous bull market we had kind of Supply scares uh on the backdrop of a pretty robust Chinese build out and we had a mine flood of course in at cigar Lake in 2006 and even prior to that the price had started to recover but we never were actually in a deficit a supply and deficit when it came to um relative to Total demand and we had a
number of secondary Supply factors back then that don't exist now um so the supply side were ever so slowly and then over the last few months I would say the last six months very very quickly so it's kind of like slowly and then all at once right so very slowly that ship started to turn the price started to recovered the swoop price started to recover uh enrichment conversion price started to cover all elements of the fuel cycle have been moving up we had a couple of um uh we had a couple of unique events
which was of course covid and then more recently the invasion of Ukraine that definitely stirred things up within the fuel cycle but finally we're at this moment in time where the supply side has gotten so uh so squeezed for lack of a better word that very very low volume demand in the spot Market is moving the price significantly and this is a big wake-up called utilities because most of these utility fuel buyers have have been around for a while a lot of them if not most of them experience the
previous bull market they understood what happened when the financial players came after uranium they understand the markets decently well but what hasn't happened ever regardless of how long they've been in this industry what hasn't happened ever in their careers is a situation where they had a hard time actually finding the uranium that they needed at any price and we're actually approaching that situation here and it's it's a bit alarming but from an investment standpoint it's quite exciting I think
that we're in store for some pretty significant moves in the uranium price and what we just experienced over the past four to six weeks is evidence of that never have we really seen a big move in in August at least over the past decade with an exception of 2021 which was spots ATM went live right August 2021 is when we saw a price move in the rain that month but usually the summer is slow we usually see the spot price flat if not slightly pulling back this year was different even with um relatively low activity in the spa
Market the price stayed firm and in fact Rose and then just over the past few weeks we've seen an almost ten dollar move in the spot price and it's um there's a lot of reasons for that I hope I touched on a few of those but it's a very very tight Supply market right now and really the question everybody should be asking is where is that relief going to come from and I don't think anybody really has a great answer for that myself included okay yeah I think that does get us started on understanding where this this
pretty big move has come from in the last several weeks so you described and I'm hoping you can go into this in a little bit more detail in some of your recent commentary you're talking about an inflection point here and let me see if I get this correct I believe you're referring to you know this this increase in the price we're seeing uranium move more by these supply and demand fundamentals whereas previously increases in the price that we saw were driven by things like this uranium trust
spot so I wondered if you could go into that a little bit more sure um yeah the the Sprout physical uranium trust is really kind of a a unique a unique vehicle and a unique moment in time with its Inception over the past couple of years so and they had two periods where we had significant risk on Capital environments and money was flowing into this vehicle and they were raising a lot of money via their at the market financing vehicle to ATM and buying a lot of uranium so they took over UPC uranium participation
Corporation in I think it was April of 2021 March or April 2021 ATM went live in August and they immediately saw incredible Capital flows where they were raising 20 30 40 50 in fact they raised up to 100 million dollars in a single day on a couple of occasions it's a lot of money um they purchased a lot of uranium they purchased over 40 million pounds of uranium in the past you know over the past two years and that was primarily done during these two periods of time the first was late August 2021 until
about mid-november and then again March April 2022. since then they've been trading at almost an exclusive discount to their net asset value which doesn't allow them to raise cash and therefore buy uranium they've had to draw down their cash balance and only until recently started raising cash again but the most important element to understand with sprott's effect on the market has to do with the above ground mobile inventory that they essentially consumed um that uranium has you know
unofficially gone to uranium Heaven as they just basically store that uranium however they have recently brought up that they're considering filing for a Redemption mechanism with the Ontario Securities Commission to be allowed for industry players with certain restrictions that we don't know about yet to redeem for a physical uranium but that I think is a brilliant move I really hope that it gets approved when they do uh actually put forth that application but because that'll keep them very close to discounts now I've
been satisfy some utility pressure based on this trust is hanging on to these pounds but um uh I regress going back we had an incredible above above ground mobile inventory following the previous decade so the bear Market the kazakhs continued to produce a lot of uranium that flooded the market they were able to make money primarily because of an Arbitrage at the currency they had a fast depreciating currency with the Kazakh tenge which their production costs were in but they were selling in US Dollars and that essentially allowed
them to produce and actually make a profit at prices that were basically lower than even they were able to produce at right so their cash costs are very low but the all-in costs especially the fully allocated costs now that the Republic with the dividend you know they still need probably in the you know forty dollars a pound range as the lowest cost producer so the price overshaw to the downside significantly but this environment was such that the utilities basically they never had a concern about Supply it
was always there when they needed it it was so cheap that they could buy from the kazakhs they could buy from the uzbeks they could buy from the Russians at way lower prices than were um necessary for the Western producers so that would be camaco and orano primarily that they had to actually shutter production which they did they shuttered MacArthur River the biggest Buy in the uranium mine in the world in 2018 and taking a very long time to work through that inventory well this inflection point we're at now
essentially is we are through that inventory the only inventory that exists now in the world is strategic so this is held by nuclear utilities and their inventories historically speaking are relatively low and by nation states so by far the biggest holder of inventory is China you know they probably have somewhere to the tune of 400 plus million pounds of inventory and sounds like a lot but when you look at their build out it's really not that much uh they they have six construction starts this year already
and another six to eight in the next six months it's incredible how quickly they're building plans they're going to need that uranium so that's all to say that Sprott has done the heavy lifting already and one more piece of color I'd like to add to that is it wasn't just above ground mobile inventory that they worked through because there were two periods of time when they were buying where we saw the spot price jump up pretty significantly above the term price the long-term price of uranium so that's
considered a backward aided market right the front end of the curve is higher in higher price than the than the long end of the Curve what that allowed traders to do was sell to Sprott their uranium that they held on their books that those pounds had an eventual home a Trader had a a midterm contract of the utility and two three years out on the curve those pounds would be delivered to that utility yet they're holding them on their books now and the price just went up from 35 to 50 bucks and here I am
holding these pounds and I can sell those to sprout for 50 bucks and I can go back and cover in the midterm for 40 bucks and they did that and so what what I'm trying to say is that some probably close to 40 50 percent of the buying that Sprott has done has come from what might be referred to as a carry trade unwind these are pounds held by Traders that they basically are pulling forward pounds on the curve when the price gets backwarded and there's a lot of buying coming from a financial
entity so that's all to say that Sprott didn't only clean out kind of the last remaining Above Ground mobile inventory that had been sort of sitting around from the previous decade they also shook out pounds that had committed homes they pulled forward that demand now the midterm of the curve is extremely undersupplied and I I don't want to keep rambling on but this is one more really important point with when you're thinking about the midterm because I'm I've started calling the
midterm basically the supply black hole we're talking about 20 24 to 2026 most of these primary producers are essentially sold out of uranium you're talking about camaco because Adam from uh irano they've been not only signing a lot more in the term contracts recently over the past 18 months but also their legacy contracts with utilities have been fully flexed up so all the utilities that have signed contracts in the past with these main producers have uh opted to receive more uranium
in that allowance in the contract then the original amount so this was one of those things that was negotiated by utilities and this is classic bear Market low commodity price sort of action when it's a buyer's market the buyer can dictate the terms and it's a seller's market the seller dictates the terms so previous decade was the buyer's market and when you're signing a contract in 2019 with camaco and you've got 45 dollars fixed as let's say half of the contract the other half of the
contract is Market reference well if you're a utility now and you've got uncovered needs out of the future and you have to come back to the table anyways at some point and you can push that off and hope that the market comes back down to where you want it to which it's not but let's just play this out um you're going to exercise that option to bring more you more uranium to uh to to the table in that contract at a fixed price it's way cheaper than what you can get it for right now so all the
utilities have done that all the main producers have seen all their legacy contracts flecked up flexed up to the extent that they could and that has also tightened that midterm because now we have producers that are having to sell down inventories or uh have production from right now and next year go to these Flex contracts instead of selling into the midterm it's just a very very tight Market until and unless we have new production restarted Brownfield or Greenfield uranium mine production
coming online and we're still a ways away from that coming in in any significant volumes okay we're we're going to keep talking about Supply but before we before I ask you a little bit more about that I want to ask you about that physically uranium trust limited Redemption feature just because you started to talk about it I know you cut yourself off but I think it's interesting to look at because it's been it's been introduced but they've really said hey we don't really want to
talk about this too much right now and I'm curious if there's any other color that you can add to that because I think people are pretty curious about it sure um I can I can sort of you know speak to what was stated in the press release but also kind of pontificate on on what we're reading in the tea leaves and hearing around the industry that is unsubstantiated but essentially what they what they stated in the press release was that um redemptions would be allowed to certain entities
um on no less than an annual basis so my understanding based on that statement is if you're um if you're a utility and you own trust units in the spot physic uranium trust and you want to redeem for physical you can only do that ever so often so maybe once a year you can actually redeem for physical there's also going to be size limitations probably on both ends they're not going to deliver to anybody who just who owns a couple hundred units of the trust and they're going to
deliver a few pounds in a in an Amazon package you know that's not going to happen like that it's it's only from what I understand it's only meant to be delivered to Industry players and users part of the reason for that I'm sure that the end users are are or will be putting pressure on the industry because of how tight the supply situation is that we've got this financial entity just sitting on 60 million pounds that's your aim we could really use well if we can free some of that up that will
satisfy that a little bit but um it won't necessarily be pounds that are going to be sold into the market so there's always been a concern that eventually we get to such a high price broad's just going to start dumping the pounds in the market of course you know anytime you ask John chapalia the CEO of sprad it'll be like yeah that's ridiculous we have no intention of doing that that would require a shareholder vote and our shareholders would never allow it but this mechanism would would
also have kind of the primary or I guess secondary effect of keeping the trust trading much closer to nav the reasoning being if you buy trust units at a discount you redeem physical you redeem for physical at now so if the trust is trading at five six seven percent discount to nav you're and you're an industry player and you have I mean you've met all of the other requirements based on this mechanism that has yet to be approved um you can actually be redeemed to physical at NAB and therefore the
purchasing purchasing at a discount you're literally buying uranium at a discount that's very attractive to Industry players so what that means is we're not going to see assuming this gets approved we're not going to see a 15 discount now that is going to be bought that it's going to be bought up far prior to that steepness of a discount by utilities by industry players that can can buy physical at a discount and redeem so there's a lot we don't know about this even in the press
release they were like don't ask me anything this is what we're giving you so far just just leave it we'll tell you more when we know more so that's my understanding limitations on size both on uh minimums and maximums uh limitations on frequency limitations on who can actually do this so there's going to be a there's going to be it's not going to be a uranium free-for-all and it's also going to have the secondary effect of the trust is going to trade very close to nav from here on
out which means they're going to be able to raise money more often okay okay so very typically opaque at least for for this point in time but that that is kind of exactly what I was hoping you would get at because I think maybe when I first read that I was like oh my goodness is this all going to come back but no it sounds like at least from what we know so far that's not something that's gonna happen correct so we very much like this development and hope that it goes through okay very good to know
and so if we go back to supply so you've painted us this picture of how sput came in they cleaned up the market and more than cleaned up they brought forward that Supply as you were talking about so meanwhile we also have some recent developments we have chemical and it's it's production cut for this year I Believe by 2.7 million pounds or so we have uh the Kuan Niger which I believe the company is there at first said okay it's fine but there have been some developments since then so we've got
these these disruptions in Supply that I thought we could also talk about and if there are any others that you think of that that you would mention sure yeah the supply story is really it's really where I think investors should should focus on most of their efforts if they're doing due diligence on the sector and it's really where we've been focusing a lot of our efforts as well um because the demand story is just so robust and yeah there's Nuance there's reactor restarts there's there's Life
Extensions there's new builds announced um occasionally we have an early retirement though it's been a little while since we had one of those um I think the last one was in Belgium but even Belgium is life extending the remaining reactors so the demand side is um is awesome but it's not uh it's not necessarily worthy of all of your time and Research into the sector if you are doing so uh the supply side is really where all the Nuance is and you have a number of factors right now so yes kamiko did
announce they were likely to not hit their production targets they're now shooting for I think it was 15 million from from MacArthur uh to 15 million from cigar you know the numbers I'll tell my head I apologize I don't have them but yeah it was 2.7 million less than they were expecting um and so that that you know shook up the market a little bit it's not a huge amount of uranium but for a company that's having all their contracts flexed up and doesn't have a lot of capacity
going out a few years and a company that is um kind of at the Forefront of the industry and kind of the industry darling if they're having problems with Supply chains with hitting production numbers with Labor uh how is it going to be for the Brownfield or let alone Greenfield developers people that are building a brand new line especially in a jurisdiction that's less uh you know not necessarily kind of like a first world jurisdiction and less robust in terms of labor labor availability and
jurisdictional safety like like Saskatchewan so that's one one element so questions about kamiko hitting their marks another element like you mentioned in Niger there was a coup about six weeks ago if I recall correctly about six weeks ago um and most importantly in Niger irano has been a producer there for about 50 years they continue to operate at the mine site but they have recently announced that they are going to temporarily halt the processing of ore because the Border essentially is closed to them in or out
um and so they wouldn't be able to ship that material if they continue to operate their their processing so that's a significant thing because the the country has seen something like uh five or six coups I think or it's possibly even more over the past 50 years and it has never interrupted their their mining operations ever and so this feels a little bit different but really kind of the other big story Niger is global Atomic is building one of the more near-term um Supply stories one of the more
near-term supplying Minds The Dosa mine that the industry is essentially banking on you know three four five million pounds of uranium coming out of the Dosa mine in just a couple of years and this has definitely delayed that it's delayed the financing for the company um this will still be a mine but it's just yet another it's yet another piece of evidence that the supply side is in question and it's fragile it's fragile um so we remained it remains to be seen how the center is going to play out in
Niger like I said Dawson is the highest grade deposit in the entire continent it will be a mine whether or not Global Atomic builds it they get bought out somebody else takes over I don't really know can't really speculate on that but they do have a couple of contracts in a couple of off-take agreements right that we're expecting some uranium 2025 2026 well that's pretty much off the table at this point so you know it's it's and it's not a huge producer of uranium uh
Niger but it's not nothing it's five or six percent of annual production the last big thing I should mention would be just Kazakhstan you know Kazakhstan is is the primary producer in the world period the end nothing comes close nobody comes close because Adam prom has a couple of challenges um one their most recent large mine uh joint venture was pushed through back in December with rosatum with with the Russians that of course was something that shook out a lot of Western investors in the stock and it's uh in a
time where Western uranium demand in terms of Western nuclear utilities are starting to kind of go um I'm not really sure this this jurisdiction that we've relied on hand over fist over the past decade is starting to look a little bit more tricky shipping is a little bit problematic through the port of St Petersburg in Russia and the Western route to go through the Caspian the Black Sea and uh it's a mess it's a mess to put it lightly and it's an expensive mess it's you know the cost of shipping
material West versus through the port of St Petersburg is pushing 20x that's not nothing so more and more of the pounds coming from Kazakhstan are highly likely to just remain in the East because they're increasing their ties with Russia they're increasing their ties with China the Chinese are building a huge uranium Warehouse right on the border and most of the nuclear uh in therefore uranium demand is in the western part of the world and so it's a huge shake-up and the when you're
looking at this this Supply black hole going out a few years you know three to four years from now we don't have a lot of relief we've got some small stuff coming online some ISR projects in the US ISR stuff in Australia uh you know the uzbeks are trying to ramp a little bit um the the kazakhs are going to ramp a little bit but we're talking about you know five six seven eight million pounds a year maybe more than what we're producing now globally three years from now okay it's not a lot and it's way
insufficient and so we don't even approach anything resembling a balanced Market until we've got Dosa producing honeymoon producing all of the US ISR producing um uh Phoenix Denison mines project in the Athabasca producing Arrow producing I mean best case scenario we're talking five years from now and even then it's like a moment in time snapshots Supply maybe reaches that structural demand but structural demand is just the burn up rate in the reactors for that particular calendar year we're not talking about
inventory builds we're not talking about smrs we're not talking about financial and secondary demand or producer demand for that matter so it's it's a structurally undersupplied market and nobody knows where that relief is going to come from okay so if you are right now a utility how are you how are they feeling at this moment what is your sense are they feeling the heat because we hear a lot that they're price agnostic they don't mind if the price goes up they just need
to buy but if we're getting into this black hole of Supply scenario that sounds like maybe something that you would worry about even if you don't mind paying a high price sure well I think that there's there's a handful of utilities who whose fuel buyers have been first movers and they look pretty pretty damn Smart in hindsight um some of which I remain uh you know in contact with who who are covering their needs out to the end of the decade you know two to three years ago um and they of course were in contact
with the investing side and the investing side because they have their own money on the line they tend to do even better work than the industry itself the industry price reporters and analysts um they're they're they don't really have a responsibility to see the future they don't have a crystal ball and it's not their job to say to tell a utility this is what the price is going to be in 2026. you know their their job is really to report on what's happening in the industry and and report on pricing this
deal was done at this price and this deal was done at that price not necessarily to say this is about to happen whereas the investing side inherently is always trying to Discount the future which is why there are so many not so many but you know amongst the investing side uh the the Dozen institutions that have even looked at uranium a few of them have done an incredible deep work uh station Cove in segro and Tribeca and uh old west and L2 primarily um they've all done incredible work on the sector and they were making very
large contrarian bets when the sector was out of favor but they could see what was going to happen and it has happened I mean Mike alkin and and Tim Tulare from Sachem and the guys from Sega I mean they were right they were right and then we were right so here we are and we're still I think in somewhat early stages because the Contracting cycle is literally just starting uh so but to Circle back to your question I think that the utilities to your point you often hear a question like why didn't they load up more when uranium is
cheaper and I think that the easy answer to that is that a fuel buyer a has to answer to a budgetary committee so there's only a given budget and that budget is based around market pricing so when you're looking at your annual purchasing uh budgetary allowance and you're looking at the current market prices you say okay we can buy this this year and that's what you do given those constraints B there's no incentive for a nuclear utility fuel buyer to um make a a bold move of predicting the
future price and buying more than what they're necessarily allowed to or should be buying at that moment so if you're covered out to 2025 let's let's actually even push that even further because this is another interesting point with this sector it's so different from any other commodity that demanded the 2030s matters right now we're starting to see evidence of that but let's say your nuclear utility and right now you're covered until 2026 you've got some uranium some you have six some eup
and you've got the next load uh the next two core loads of fabricated fuel in your inventory you're covered until that point where you're going to start looking uh you're going to start looking for that 2027 to 2032 period maybe three years before it's needed and you don't necessarily have to be looking for that prior to that because you've never had to before ever in your career have you had to try to jump the market and get material because material was in short supply
that has never happened well that's what's happening right now so you don't have an incentive to hopefully be right and buy more than is necessary um so one more example on this front if you can buy material from the Russians in 2018 for thirty dollars a pound and kamiko's telling the market we need 45. not a single utility came to that and said hey we're going to take one for the team and pay 15 a pound more than the rest of the industry just so you can keep your mind operating like nobody did
that because you couldn't you would never be allowed to do that from your upper management as a nuclear fuel buyer so the smart fuel buyers bought more than they needed when the price was low but there weren't a lot of them and most of them cover their needs when their needs need to be covered so if you look out and see that 25 percent of the industry is uncovered in 2026 and even more going out in 2027 and more every year after that incrementally the you know that that buying pressure is happening now and we're starting to
see that we're starting to see rfps stack up in the market um with delivery starting as soon as next year so some utilities are coming out for material next year um which is crazy but it is what it is there are going to be early movers but there are going to be late movers and the lane movers are just going to have to pay what the market requires them to pay because they can't be without fuel period so yes they will pay what is necessary of course depending on the electricity Market um if we see 150 200 pound uranium and
you're operating you have to compete with natural gas or solar in the United States that becomes a problem so uh we'll cross that bridge when we get there but 65 70 75 80 you know the contracts are being signed right now it's a seller's market so they're Market referenced mostly if not entirely with floors and ceilings and what we continue to hear is those floors and those ceilings keep moving up so we've got floors in the mid 50s ceilings in the 80s pushing the 90s and that's just
going to keep moving up moving up moving up so yep the market I mean these contracts are telling you both the buyers and the sellers know you know why would you put a ceiling at 85 bucks because the utility knows the price is going to go past that they want some protection on that front and and and the seller is willing to do that because the you know 85 bucks the current producers are making money hand over fist so it's it's a pretty wild market and the supply side is just very very fragile
yeah I think that's really helpful to understand the mindset that we're looking at there and one other follow-up question there is it possible that we could get to a point where we see contracts being done with companies that are in development not yet in production yeah we've actually already seen that so um so and some of the companies are holding out and typically those are the companies that will not be producing producing a lot of uranium so um even if everything goes right two or
three years from now they're producing two million pounds of uranium that can very easily be sold into the spot Market without disrupting the market and they'll they can get the spot price from that so they haven't it and if they're well financed and the development is going smoothly they don't necessarily need to de-risk for Capital reasons or operational Reasons by signing contracts for that future production but um you know Paladin to sign some contracts for the Brownfield restart of linger
Heinrich uh Global Atomic signed a couple of contracts for future production so yeah it is already happening and what we're hearing is that the companies that are especially the Brownfield uh companies that are that are developing re that are restarting Brownfield mines whether or not they've been signing contracts they're getting a lot of phone calls from utilities so there's a lot of demand requests coming to them from utilities for their future production and either they're choosing not to sign
those contracts uh because they want to capture market pricing by the time they get into production or then they won't necessarily be producing a lot of uranium and don't need to de-risk for Capital reasons or operational reasons buy selling those contracts have elected to not sign contracts so the demand is is definitely there for the developing companies um yeah right so sellers Market as you've been emphasizing 100 right and so for you I think based on everything that you've been saying well you can tell there's
there's much much more room for Uranium to run so if you're an investor who's looking at this uh hopefully you've already gotten it hopefully you're sorted out uh but I did want to ask you know are there things that people may want to do say you have your portfolio set up things that you might want to do to hone it in different ways as the the market progresses it's you know it's an interesting point in time right now because we've seen a decent run in the equities over the past
couple of months most equities in the space are up 25 35 50 some have almost doubled off of the summer lows which is pretty incredible it's been a good move uh most of these stocks technically speaking at least looking at Daily relative strength are pretty overbought so what we always recommend to people is to enter positions and tranches um just you don't go all in try not to chase when when things are looking overbought don't fomo into into positions but at the same time you know you
probably want to have a seat at the table because I think this run right now has legs I think we're probably maybe six or eight weeks into a quote-unquote wave two run of this of this Market that could go way way higher and and I think that it will primarily based on the fact that uranium is going to go higher and usually the equities generally speaking follow the price of uranium when uranium moves up the equities move up um not uh not necessarily every single day and not necessarily even every
single week but on balance for the bulk of the market the equities follow the uranium price and that is going to continue to move higher how high I don't know if you look at just what is necessary for the market for the the supply side of the market to actually function properly and bring on new production you know these companies are not are not in existence to do a favor to the industry they want to make money okay they're taking a lot of Risk by operating whatever wherever they're
operating and to build a mine is really really really really really difficult it's very expensive it never goes as planned and uh the companies are going to make money off of this off of these projects so what does that look like um I think that uranium price has to get minimum 85 to 100 to really and stay there to incentivize the projects on the margin so we're talking about primarily that would be the large low-grade uh mines in Namibia there's a bunch of development ready mines that have
relatively low grades that need that pricing in order to be able to risk three four five six seven hundred million dollars to build a mine and then operate at a profit and so um that's the price that the industry needs and just like it overshoots to the downside in the bear Market it always overshoots to the upside so you know that that wild card is the financial players and how much capital and how quickly will flow into the Sprott trust into Zuri into um uh into this new this new pfyn fund
that's coming out of Singapore anytime soon there's supposedly a decent amount of capital waiting for that fund um Anu energy that's in Kazakhstan that's you know IPO and Q2 of next year and they've already raised I think 74 million dollars they've got another 100 million and then a follow-on 400 million and I think they've got a line of sight on that Capital interest we're already seeing evidence that there's demand for uranium in the market for an SMR build that's not supposed to
be operating until the early 2030s that's that's happening right now so s of our demand Financial demand that's just kind of gravy on top that 85 to 100 is basically absolutely necessary for us to even have a remote Ray of Hope for the market to balance itself at some point in the next decade um I don't think it's going to happen I mean I don't think the market will balance itself I really don't but um I hope I hope that we get there out of I mean that's coming from my Nuclear
Advocate side it's sitting on this shoulder and then the investing side on this shoulder is like this Market's going to go nuts because there's not enough Supply and there's not going to be Supply you can't just snap your fingers and have a uranium mind pop out of nowhere it's makes it a lot of money a lot of risk a lot of time a lot of headache um and even then it's it usually doesn't ever come on time so it I think it's going to be a pretty wild next few years to be completely
honest with you and and I don't know where the price is going to go it doesn't really make sense to me to inflation to adjust the previous Peak because the previous Peak didn't make sense either you know the market then the balance needed 55 60 bucks a pound and it went to 135 it doubled it doubled the incentive price so could we go from 85 to 100 up to 200 absolutely absolutely am I betting on that no I'm not not betting on the market going to where it needs to go for it to structurally operate anything beyond
that is just is greatly on top okay and I have one last question I don't I don't think I've ever asked you this before and I'm going to assume that this is in the far out future for you but if we look at Exit strategies and what made me think of this is you're talking about a market that could potentially go into kind of a crazy Mania phase so how should people think about what their exit strategy how can they keep clear sighted when when possibly were facing these gains that
don't really make sense sure um I honestly think that's one element that puts us as at an advantage and uh in other institutional investors um had an advantage in that industry contacts are incredibly important it's going to be really really important to understand when some Financial entities that are holding pounds are starting to sell not necessarily that that selling pressure would um significantly lower the price because I don't think hedge funds outside of sput are holding a lot of uranium but if
you start to see hedge funds holding physical uranium cell that'll probably be one point to be looking for um you know I I honestly think and this is something that I've been thinking about over the past couple of weeks since we've seen such an incredibly tight Supply story right now is that just trying to understand what sort of flex in the system could come in and could be sellers in the market the only thing I can come up would be the Chinese um and I think that I already mentioned
that but I don't see I don't see them being sellers on balance unless and until there's a better Supply story out there so if they can let's say acquire a portion of next gen's Arrow or acquire all of Langer Heinrich they have a 20 or 25 percent off take right now um that might be able to supply them with uranium that they could then take advantage of higher prices and sell into the market but if they were to sell and do it let's say into a backer dated Market cell inventory right now how
would they be resupplying uh there's just such such a supply concern going out for the next five years that that doesn't make sense to me and as of now we have yet to see any evidence of anything like that happening they've turned from sellers to buyers this year in the spot market so there's no evidence of that yet but if we start to see entities that are holding perhaps what could be seen at the time as an excess inventory um then that might be some kind of signal but you know again that's not going to
be something that's going to be out on Twitter it's it's going to be based on connections with industry contacts that will be able to provide that information so we we maintain a wide web of Industry contacts to make sure that we're kind of on the Cutting Edge of this information as it comes out that's that's really important and of course there's just technical signals you know you you want to look for if the spot price gets if it starts to get chased after by Financial entities and we see
a very high price spike so the spot price goes way above the term price that's going to be an unsustainable price spike and you're probably going to want to take most if not all of your chips off the table at some point during that Spike and that of course is very difficult to do but I honestly think at this point the likelihood of a price bike is very high and it's entirely possible that in the next year or two we see a spike and it comes back down to incentive prices and then we kind of
continue on with that bull market that's very likely to happen that's what happened last time honestly before the Fukushima daiichi accident is with this crazies price spike that was driven by not well utilities were chasing it up to about 100 bucks a pound and beyond that it was financials so we spiked up to 134 bucks it fell all the way back down during the financial crisis hedge funds sold primarily uh fell all the way back down to forty dollars a pound then it started recover back up to that
incentive price it got all the way back up to 70 75 bucks before Fukushima so we could have a similar situation where there's a squeeze on uranium the price goes crazy then that incentivizes some inventory to be sold the market the price comes back down and then we level off at a higher low at a price that the industry needs to operate that's entirely possible I don't have a crystal ball which is why we don't model out for financial demand because it's unpredictable but that that is entirely possible so uh
exits look for hedge funds selling look for some evidence of liquidity coming into the spot Market that was unexpected and uh and then follow you know technical signals just the charts of the equities and treat all of the individual equities individually you might not want to take a market signal and sell everything just because um so and then of course classically pay yourself on the way up you know don't try to time the top with a full portfolio a full positions in uranium equities that'll be very stressful very
difficult to time the perfect top in fact nobody will probably be able to do it so make sure you take some off the table all the way up okay I think those are all really good pieces of advice thanks for going through that and I've kept you longer than I intended to but it was it was really great hearing from you so we can wrap up there unless you had any final advice or if you wanted to lead people with where they can find you to learn more sure um uraniuminsider.com is our website I'm on Twitter relatively frequently and I
try to remain as accessible as I can to that so if you have questions about the industry about the market or service you can hit me up there um final thoughts really is you know nothing could have predicted what's happening now besides a focus on the physical Market uh there's been a lot of concern about markets generally that's kind of kept the sector sort of risk off over the past year or so um but really there's nothing that can predict this it's not correlated to anything else really sometimes it moves
in conjunction with oil and gas but sometimes it doesn't it's a unique commodity there's unique factors that affect it so um if you have money on the line you know it's important to do do the work understand the the fuel cycle look deeply into the physical Market it's where we put the bulk of our Focus because we want to understand supply and demand as much as we possibly can and that's what affects That's What affected our conviction over the past year and a half to hang on the positions or to add
you know during periods of very poor sentiment we've had multiple in the past year we've had three periods where the sentiment was just very very bad and the RSI was falling off the screen and the downside and you know we were aggressively pounding the table at that time because nothing changed on the fundamentals in fact they only continue to improve and you have to you have to know the physical Market if you have money on the line in the sector you have to and that's really what we try to do
is take that complex web of information distill it down into what matters for investors and and and try to um during moments of poor sentiment when we know what's happening in the physical market and we have a strong sense of what's about to happen um that we can communicate that to our members so um we're very excited right now we're very hopeful sentiments a little overheated the charts are a little overbought but I think this time it's a little bit I almost say this time it's different
because we've had this before but it's we're in a different situation now than we were on the short-term rallies that we've had over the last year and a half those were always met with a lot of skepticism and on the full retracement I don't think we're there I think we're we're healthily in the next leg up in this market and the Iranian price should continue to move meaningfully higher potentially into a spike scenario so you want to have a seat at the table when
that happens uh don't get too cute with trading in and out of positions just hang on it's a volatile ride but as you know Charlotte it can be a very very rewarding sector to invest in for for various reasons but the volatility is one of them and you can't have that upside upside volatility without the downside volatility so we've had enough of that over the past year and a half and yes I think we're in a recession and going in to a recession and I think that we could have some choppy markets
generally going forward for the sustainable future until uh things change on that front but same time uranium's going higher so uh take take what that's worth I don't know how much that is worth but um that that's where we're at we're very constructive on this market and and we're very long here okay I think that's a really good place to to wrap it up for today and I will say from my much more limited perspective it does feel it's starting to feel like this is different so thank
you so much for for taking the time to come talk during this exciting time yeah really great to have you my pleasure anytime of course and once again I'm Charlotte McLeod with investingnews.com and this is Justin here with uranium Insider thank you for watching if you like this video make sure you subscribe to our Channel we'd also love to hear your thoughts so leave us a comment below we'll see you next time [Music]
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