[Music] I'm Charlotte McLoud with investing news.com and here today with me is Mark walber founder of contrarian codex or you may know him by his Twitter handle which is yellow go 11 thank you so much for joining me great to have you here thank you for having me it's a very exciting time for uranium and nuclear power as well yes I'm really excited to be talking to you again during this exciting time but before we get started since it is our first time talking I wondered if you could start with just a
quick introduction to yourself your work and maybe what first got you interested in the uranium sector I got interested in uranium a few years ago what really got me interested is just the fact that I was looking for an investment feis that had was completely UNL so I guess you could call it from a kran perspective but when I looked into uranium what I found was a very very unloved even hated sector when I first started writing about it and sharing it I got a lot of hate coming away I also got a lot of very good questions people
who didn't even know that you could invest the uranium but that was P with a lot of hate as well so I knew I was looking in the right place and what I found was a commodity that was facing a major Supply demand Gap as well as just in general the equities being completely beaten down but what I also found was that uranium was completely necessary for all nuclear power PLS that we are running in the world and that nuclear power was especially at that time contrary to popular belief still a growth industry it was not a great
growth industry growing about like 1.5 to 2% a year but it was a growth industry nonetheless so I knew we needed more uranium and at that point that between like an8 and $25 um price per pound it wasn't really incentivizing seeing a lot of new production it was even bringing some production offline so at that point I started looking into the sector and I'm sure we're going to get into this as well but the feces at that point that got me interested and excited for this Uranian bull market it has just gotten
upgraded like 15 times over the past few years it is absolutely incredible so that is what got me interested in it and that's what I also based my platform to contr Tran codec and my Twitter account y 11 on where I interview very smart people in the space companies experts analysts and also do writeups and newsletters um of course we also based on other Commodities and a bit of macro as well but my main focus is and always has been uranium because try as I might I really haven't been able to find
another investment opportunity that comes close to the fundamentals that uranium offers okay really interesting to hear your background and definitely the thesis has progressed since you first came into the space it sounds like so I know a lot of people when they're looking at where we're at in the uranium cycle they like to consider it in terms of innings so nine innings in a baseball game for example when we're in the second inning or the third inning you have a different way of looking at it
which I found pretty interesting and it's it's the stadium model so I wondered if you could explain where we're at in the uranium cycle in those terms yes the uranium Stadium model it is a model that I when I first got started I wanted to like visualize or perhaps like use an analogy to explain to people okay where are we in the cycle um without like being too like convoluted or overly complicated so being from the Netherlands I didn't really go with baseball I went with you might call it soccer I call it football
um the building of a stadium so what this means is that I used 2016 to 2020 as kind of the range where the stadium was built this is where the like the basis for the investment feces um is being built setting up for the game at hand so in 2016 the price of uranium bottomed and then through 2016 towards 2020 you saw the feces like the basing of the feces being laid the foundations being put in place for this Stadium then I used 2021 as the timeline for when the buses would arrive so when the bus would arrive means that more
people come to the sector it gets more attention uh there's more Capital flowing in in the end that is also what ended up happening because at the end of 2020 up to November 20121 we saw a lot more Capital coming in we saw of course Sprout coming in as well we saw a lot more retail invest being interested as well and after that you of course wait for the game to start people take their places people buy a hot dog buy a beer whatever you know to drove if you ever been to a to any sports game in a
stadium for that matter but that kind of coincided with a correction as people waited for the game i s i signal that as the 2021 through 2022 tit with time period and then the game begins and what I mean with the game beginning is that is when the correction is over and you really see more and more Capital floating and I feel like the first half this game is now well underway we broke $60 which was kind of a line in the scent because a lot of people were viewing that especially a few years ago as kind of the equilibrium price level I
don't agree with that anymore I think the equilibrium price level for Uranium is now close to 85 to $90 but this was kind of the line in sth at 60 to $65 range that is where most people were keeping an eye on well after the w& we absolutely sliced through it and at the time of recording we were at $ 72.5 per pound so price momentum has certainly k kicked in and I think that right now we are moving towards uh the second half but of course before we get to the second half there is always a
halftime break and the reason I want to mention this halftime break is because given prevailing macro circumstances and also because s is very bullish in uranium right now I think we could see some form of Correction in near term just so equities can have something of a brief or maybe if we see a broad equities Market correction because this is still a considered risk at risky ass class and also being relatively liquid and small I think that some of the wind can get knocked out of the sales of in
particular the equities I don't think the price of fiscal Ur sorry uranium has a lot of downside um but the equities could certainly take brief or how bad that brief will be I don't know but that could be halim and I think halim could be Q4 this year but after that 2024 as I noted in the stadium model that I um that I constructed years ago as one I shared with everybody that was uh that was following me at the time the second half I think will blow the first half out of the water and the second half I
think consists of two parts I think it moves into 2024 perhaps also 2025 and then you have the bill of the second half is when the institutional Capital comes in you see more retail investors coming in that's when you see the bulk of the price move then you have the final few minutes and I Fleck the final few minutes has a time where you really don't want to stick around especially not with your entire portfolio still running on the game at hand because maybe you want to get out before the
traffic jam happens maybe before you want to get up before any final minute disappointment but in the final few minutes that is where you see the like the real parabolic top happening like maybe you're running up 20 or 30% even more and if you leave before the final few minutes yes it is not going to be great and yes other people are going to enjoy the last part of the game just a little bit more than you perhaps did but at that point you're going to have to take your profits because when the final
whistle goes everybody goes to leave the stadium everybody is stuck in the traffic jam whatever else happens that is when the backside of that chart that went so parabolically to the upside is just as steep on the downside so don't risk it you're going to miss the top just like at the start of this feces a lot of people miss the absolute bottom that is just the way that that the markets work it's just the way that the investment fees is going to work so I would scill out the Tres and I would not
leave a lot on the table for the final few minutes so that is basically the stadium on after that the stadium probably gets torn down again and we start building another stadium for another commodity okay I think that gives us a good idea of where we are and where you see us going you mentioned a lot of points but one of ones that I want to follow up on is the wna event event that happened I think a couple of weeks ago at this point but still really important to go over so you wrote I believe a
60-page report many over 60 Pages for your followers definitely that's beyond the scope of this interview but I wanted to ask you about that and if you had to pull out one or two takeaways from that w&a event that you wanted investors to know about what would they be I would say that there are a few things that I took from the w& first of all when I was walking through the House of the w& event one thing that really struck me is that people were just very positive uh a lot of people that were going through
these events years back in the bare Market that were nuclear po was not really having the positive um like feedback loop that it is that it finds itself there right now people are definitely a lot more negative a few years ago right now everyone was saying everybody's so positive everybody's so bullish so that is definitely a sign of the times and a sign that we are really getting into some very positive momentum for both uranium as well as nuclear power and the second one I would say is
that utilities are really waking up now and that's not just coming from me that's also coming from the utilities themselves the two main quotes that I took from the event one being from a fuel buyer one being from the largest nuclear power operator in the US being Constellation Energy I'll start with that one they sat on stage at a panel when a nuclear fuel report was shared and cation energy noted that utility should not be dependent going forward on inventory draw down and or secondary
Supply because inventories have been drawn down for a long long time and at age of inventory overhang is over as was reported by one of the largest uranium price reports in the space last year and a second part for with regards to secondary Supply that is also foldering this year we are looking at between 15 and 17 million pounds of secondary Supply that is half of what it was a few years ago so that means that utilities but also other entities can't rely on that as a source of secondary Supply
anymore so they noted that utility should be focused more on primary Supply which is where Contracting comes in which is where also the major part of the price Discovery comes in the second quote I will to share comes from a fuel buyer and when I was speaking with him he noted I asked him so okay with inventory draw Downs now being over inventory stocking being on the arising because inventory is probably Pro cyclical uh in an upward price movement I asked himself with that being the case and with secondary Supply being
where it is what do you make of the current way that you of viewing this uh Supply demand cap and he noted to me that over the past 10 years there was never really any question whether there was Supply available or not he always mentioned that there was no really really worry because Supply always came from somewhere and then he followed that up with but somewhere has dried up so the fact that a fuel buyer here noted that this somewhere has thred up really tells you all you need to know about where this Market is going so I think
that people at the wnaa are really waking up to that reality right now and I think that's that was reflected um in price as well because we saw some rfps coming in we're still seeing more rfps coming I believe four or five more utilities will be looking for five million pounds each over the coming year so that's definitely something to look forward to there's even an RFB out for January for a healthy amount of uranium so that is all near turn the matter I think that the wna is really uh woken
some people up so to speak I think the third one uh would also be the reality that the price needs to go a lot higher to incentivize new production what we're looking at right now as I alluded to earlier in our chat is that equilibrium price level was closer to $85 90 right now so what that means is that we still have a long way to go to even get to that point after which we likely see price spike because in these commodity cycles and I always say the same thing and if I sound like broken record here
because people because of if people listen to my interviews more often I always note this that these commodity price because they're so cyclical they never stop at equilibrium price level they go through it on the downside in the bare Market they go through it to the upside in the bull market so I think we will see this same thing happen again and I think a supply response uh will be muted a lot of people that I spoke with on the wna are were very positive okay if the price goes up we'll see a lot
more Supply coming online but my research is pointing to that not being the case I think the combination of a lack of supply chain or sorry lack of Supply being available for say as material but also uh for also Workforce supply chain issues to get that material there Transportation issues but also so a profound lack of intellectual capital for people that actually know how to build a urum mic because these things are very complex so with all that being in place I think a supply response even at much higher prices will take time to
come online which means that prices likely will go much higher for much longer so those were the main things that I took from wna overall a very positive events okay thank you for for going through that with us so I'm going to come back to price but first I want to ask you a follow-up question on Supply so it's really clear from speaking to you speaking to others that there's a real Supply crunch going on in uranium which is good for prices good for equities but I'm wondering you know if
we have a real bottleneck in Supply develop I'm starting to think in the back of my mind does that put in danger the the Goodwill that has developed for nuclear power you know everybody's really excited about this as a source of fuel but if we come to a time when it's really so hard to get your does that pose a problem you think that and you will be right uh for think that if the price would stay where it is now or even few dollars lower we would definitely be facing more supply chain or sorry supply
issues going forward and there has definitely been some issues for example with the sanctions on Russia what the West is doing right now they are trying to replace that uh fuel cycle capacity that Russia probably with it by bringing online uh things like cordine uh Canadian uh Supply as well on that end also if France or Reno is looking to expand their richers capacity the UK is looking to do the same ureno in Netherlands is looking to do the same so the West is definitely trying to make their own secure supply chain for
nuclear fuel in that regard but every um every commodity that is looking at a supply demand Gap it usually 95% of the time and that also fits with uranium this time is not a 5% of the time where it doesn't get fixed it gets fixed by Price high prices are the Quee for high price I'm sure a lot of the listeners listening to this have heard that Mantra 100 times before but that's because it's true as uranium gets to a high enough price there are plenty of projects out there that will be very very profitable
they will be brought online even with that lack of intellectual Capital even with those delay du the supply chain issues they will be brought online because they are simply profitable enough for shareholders to invest in these projects and for teams to go out and make sure that they develop these projects uranium is not scarce it is just hard to get by at certain prices so once the price gets high enough it will incentivize new production it will incentivize new capex production what we've lacked so much over the past
decade of um so yeah there is definitely supply issues right now and the supply demand cap is getting close to a supply demand cm in my opinion but that is nothing that a price and time can fix so I think that we will be just fine as long as the price gets to a well enough incentive price for high enough for long enough to make sure that that Supply actually goes to the market for the end uses okay that does make me feel better and that takes us back to price so I think people who are watching the
uranium Market they are pretty used to seeing the price do nothing in the last several years they've been used to seeing prices slowly creep higher but now it feels like we're getting to a point where we could see prices rise higher much more quickly and I wonder for you so you've talked a little bit about what you see coming for prices but do you see I think one of the debates out there is if we're going to see a price where we go way way up so do you see that happening and what could be
the Catalyst if that does happen well I would say that my base case scenario when we talked about the stadium model when I when I first created that one I was not I was bang I was banking on some sort of Price bike but not a momentous one like I am expecting right now so what I mean by that so my expectation was always a robust price move to the upside Steady As She Goes 2 80 90 95 and then perhaps it blow off top right now I think a parabolic price bike is the right way to look at this and I think that has blown
my base case scenario especially after the DNA out of the water so we talked about Supply we talked about demand and I think that those two factors given the way that they have been developing right now and also given the prevailing circumstance for what we're seeing right now are already enough to see a price bike happen the reason that I want to preempt that with the word potentially parabolic is because of the finan iial entities started in the space a lot of you also will have already known of the
Brad fisical uranium trust well if they see a lot more flows again like they did in 2021 and the start of 2022 they will be buying a lot more pounds and they will be buying a lot more pounds in a fiscal Market that is increasingly getting Tighter and a lot more tight than it was at the time when they were started buying pounds because they Unwound the carry trade that is not here anymore to really um act as like a price cap so they will go into a much more liquid Market but here is the catch they won't be alone they will have the
a&u fund that will also be looking for pounds they will have yellow cake PLC out of London they will have the pfyn capital group out of Singapore which has a line of sighted racing from what I've heard between four and 500 million dollars as well to stack pounds with great advises on the board and a great structure of the fund where we should get more information about soon one of the visors is asaro former cassad CCL well actually will be interviewing next month for the codec so that will should
be make for a very informative chat but for all this capital and there are even two or three more uh New Capital groups that or financial entities rather that should come online in the coming months uh to the tune of between 75 and $125 million dollar each and of course you also have Zuri invest where also raised a let's call it a pretty penny to stack bounds as well so you have all these Financial entities as well as lot a few hedge funds that are looking to play a part in this market if they deliver on their potential or God
forbid if they overperform their potential there will really be a massive price bik because there is simply not enough Supply available to really absorb this massive FL these hundreds of millions perhaps even billions of dollars if we really see Capital flows coming in so I think that is where you get the possibility of a parabolic price spike and where that ends I don't know I've seen people talk about 200 250 300 even $500 uranium could that happen anything is possible I'm not necessarily
banking on it I'm taking this thing one step at a time and looking at it in a very conservative manner just to make sure that my downside is are protected but when looking at upside potential throwing conservative conservatism out of the window I think we have we still have a long way to go and I think a parabolic price spike is has become more likely than not give prevailing circumstances okay so again you've given us a really good picture of what the landscape looks like right now and as
we're finishing up I want to ask a question that I think is fun to ask so we'll see how it goes I'm wondering what you think the most misunderstood aspect of the uranium Market is right now given that this a mar this is a market that is pretty hard to understand sometimes I think there are three things that we can discuss in this regard I think one of the things that is underestimated at this point is the impact that smrs could have on this uranium bull market as well as just nuclear in general because smrs are Feud
of something oh there going to be something for the next decade it's going to be something that impacts the next pool cycle but I think it impacts this Bol cycle as well and I can make a pretty good bet that it will because um all a we talked about you spoke with Justin as well well so I think it was a month ago that Justin he posted about a SMR RFP for uh fuel already being out this year into the market which tells you that demand is coming down the pipeline so I think he's going to be
spot on with that that SMR theband is in nobody's models right now it's not in my model I wouldn't know how much demand exactly comes in so being conservative I'm going to leave it out of my model but I know a lot of people are also doing the same thing and I think that having spoke to a few SMR companies at the W as well I think that the band will start to trickle into the market and gain momentum as this bull Mark goes on to 2024 2025 perhaps even 2026 and that is additional demand that is again as I
just mentioned it's not being modeled in right now so that could have an impact uh the second one I would say is that when people talk about the uranium barcase besides your usual um oh nuclear accident it's going to be bad for the market of course that's that's the main barcase a lot of people uh will first have on their Minds when you ask them for a barcase another one is that um the Chinese could throw their inventory on the market to suppress the price depending on who you speak with depending on the math you
Usef between 400 and 450 million pounds maybe more maybe less but roughly that ballark is I think is a good estimate um this so between four 400 and 450 million pounds and could they throw this on the market again anything is possible but given that they are focusing on building out their nuclear reactive Fleet to be by far the biggest in the world over the coming decades they have always taken a few of like a multi-decade VI of energy security and I would be very surprised if they throw this on the market because
perhaps for that current Fleet that 400 to 450 million pounds may seem like a lot but for the proposed Fleet it really isn't and I would argue that given the Chinese they are already in the tour market right now and they're looking for pounds together with a myriad of other entities as well as we discussed um I would argue they are more likely to add to their inventories rather than for on the market maybe once we really get a clear site of Supply coming on line that's going to change but that is not
here right now so I think that this definitely misunderstood there people that just label this as a barcase I think the third one can also kind of be labeled as a bease but it's again coming back to that intellectual Capital coming back to those timelines people are expecting a lot of Supply to come online once we get to that 80 or that 90 or that triple digit level or however High we may go in this bu Market that Supply it takes time there are SOL theost out there that they have hundreds of
millions of pounds in the ground pounds in the grounds aren't really worth much if you can't get them out and of course you need right price but you also need a lot of times these thing take five 10 15 years to be brought online so that's definitely something to take into account um yeah so don't underestimate the how the supply response can be slower and as we've already seen from Brownfield restarts and also from existing producers projects don't always come online on time they don't always come
online on budget and when they come online they can face issues if even the largest and best producers in the world in Cass prom and chemical face their own issues um these J mind as well face issues as well and I want to add actually one more thing I said I would do three but going to add one more W also spoke with some of the largest Transporters of class seven material which also of course includes uranium and they noted that there were a lot of Transportation issues after in my 60 page report I also dedicated part to
it to these Transportation issues and I highlighted the trans Caspian routes have G through the Caspian Sea through aeran Georgia into the Black Sea towards the West as a potential um additional piece of uh Transportation issues and in a few weeks after like we've just seen some conflict has been flaring up between Armenia and aaban uh which also could have an effect on this transpan route as well so these transportation issues are widespread and it kind of feels like wacka that's the analogy that
one of these guys used that when you squash one there's another Transportation issue just waiting around the corner to pop his head up so that is something that also adds um to just the entire feces that we're discussing okay this has been really informative and I've kept you a little bit longer than I intended to just before I do let you go I'll ask if you have any final thoughts for the audience right now or if you just just want to share a reminder on where people can find you online if they want to learn
more from you oh thank you for having me it was a great chat and I would say that it is good for people to absolutely be bullish because the fundamentals are amazing but also to be wary of any broad Market influence or any uh brever as you would call it after such a strong nearly just vertical runup or some equities so keep that in mind but over the coming months and years the setup is is just absolutely incredible and as I start said at the start of the interview I really can't find anything that has the
same fundamental setup so if you want to come along for this ride you can find me at patreon.com codex where I have sample portfolios for uranium and also other Commodities a spreadsheet that FS all the best commod or all the best uranium companies in the space including management team rating resources npv performance um as well as regular interviews with for example ascar I have but also other companies are experts in the space so if you want to join the community it's great others bring a lot
of value to it as well it's always great to have more people on for the ride and if you were to find me on Twitter you can find me at yellow 11 okay perfect really really a wealth of information out there with you so thank you so much for coming on to talk to us about what's going on in your raining right now this is really great thank you as well of course and once again I'm Charlotte McLoud with invest news.com and this is mar walart with contrarian codex 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 [Music] time
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