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 [Music] [Music] I'm Charlotte McLoud with investing news.com and here today with me is Scott nelby he's Executive Vice President at Uranian energy the CEO president and director at Uranian royalty and president of the Iranian producers of America thank you so much for joining me great to have you here char it's great to be here and talk about uranium at at such an exciting time in our industry and with nuclear power more broadly uh becoming more widely adopted and accepted these are good times in the

uranium space yes I think it's the perfect time to be talking about uranium really good to have you here and we're actually talking at we're catching up after a little bit of time I think the last time we spoke was back in mid 2022 so certainly a lot has changed since then and I thought we could start with the basics at what point are we in the cycle for uranium right now yeah it's uh it's very interesting because we've seen uranium move over the last 13 months from uh basically $50 to over $100 a

pound it's now pulled back a little bit to around 95 but immediately you know the the the analogy is is this another lithium you know it's moved too fast too high obviously set a peak is going to come down we couldn't uh disagree more with that because the fundamentals behind the uranium supply and demand the demand for nuclear power which is is driving the need for uranium and new mine production couldn't be uh more different than than where lithium is today so we're still very much in uh the

first or second inning of of what is going to be a historic bull market um again we we've gone through previous bull markets uh everyone kind of points to the 2004 to 2007 and really through 2010 uh we're exciting times in uranium space but the fundamentals today are far more um uh the fundamentals are deep stronger and have the story has more legs under it today than it ever has yeah and you're telling me as we before we began this interview there's kind of three main buckets that you would look

at when we're seeing where the uranium Market is today so maybe maybe when you go over those Basics really the what's Driven uranium uh prices to go to where they are and and really the thesis behind uranium or broadly are three things um you know clearly the the green energy transition um and where nuclear fits in that that's been profound um I just returned from cop 28 in Dubai where the climate uh change industry if you want to call that um didn't even want to have anything to do with nuclear five or

six years ago and now we're center stage with uh 128 countries pledging to Triple nuclear power by 2050 another 150 companies which our two companies were part of the pledge to make that happen on on the industry side that's really something and so it's not surprising we have 96 reactors have come online around the world in the last 10 years 92 more under construction and now we just beginning to have the small modular Advance reactors the second point is really geopolitics and you know after

the breakup of the Soviet Union we really opened the Western nuclear fuel industry to the Russians and now we can't run away fast enough with Russia Ukraine and that's really gotten the attention of governments particularly the United States there's legislation that is promoting um uh not just the growth and revitalization of the domestic uranium fuel cycle in the US but it it it to to make sure that it happens quickly and then the last is just how you would measure any commodity is supply and demand uh production

demand inventories we're in a structural deficit today of around 40 50 million pounds between production and consumption we've been in that situation for a long time that's not new um but what is new is in the past we always had a buffer of inventories and secondary supplies which it didn't matter if a producer missed production guidance because the inventories were there to moderate a price increase now with that gone if it's camoo it's kazad prom it's any producer issuing their their past

tier guidance and their outl or their C past tier production actuals and their guidance for the coming year that actually has an impact on the spot price more importantly we need 8 to 10 new mines beyond the kazaks and the Russians and those big uh first tier mines coming online between now and 2030 and the timeline of them coming into production and the the rate at which they produce at now has critical importance because we need those Pals okay I think that that's a really good way to set up the market so we all

understand what's going on a number of follow-ups there and I think maybe the first place to start because I think you're probably very well positioned to talk about this is this potential us ban on Russian uranium Imports and what's going on there very timely literally I'm checking my my my uh my phone for updates but um I think you know the incredible bipartisan support for nuclear power that we've seen in the United States um I I Lobby on Capitol Hill and and i' and I've been in front

of various Republican and Democrat administrations I've never seen this situation where Democrats are trying to outdo the Republicans as to who loves nuclear power more and we just like it because it doesn't matter you know with a change of of the US president in uh in uh 2024 it doesn't matter whether Republican or Democrat gets elected for our industry we're bipartisan supported so we are seeing legislation passed like the nuclear fuel Security Act passed and signed into law at the end of the year

um the funding for that the Appropriations that would expand the Strategic uranium Reserve to include enriched uranium in the US that's currently in the budget discussions which are very contentious over things like Ukraine Israel border funding but it's not the uranium issues the house has it in their budget the Senate has it in theirs so if we can carve that off in an energy and water bill which is what's being attempted over the weekend to get that passed that would provide up to

$2.7 billion for this initiative it also has a very um uh uh clear tie that that funding will not be made available unless a legislative or administrative ban on Russian uranium is passed that also has unanimous support if not for Ted Cruz uh again right before Christmas holding up the passage not because he's he loves Russia and and hates uranium particularly Texas uranium he should be very keen uh to that issue um he's holding it up on another unrelated issue on semiconductor chip permitting and

Licensing so it's not if it's really when we could see real uh developments this week with the passage of the nuclear fuel Security Act funding so uh it's time that we you know we we develop Western uranium sources for Western needs it doesn't all have to come from the United States but the US can't be producing zero uranium in an industry that consumes 50 million pounds a year W okay so very timely and maybe by the time we we'll obviously try to post this interview as soon as we can but maybe by

the time it's up we'll have an answer there so that would be exciting the other thing I'm glad you brought out what's going on with the price right away and kind of getting that out of the way cuz I know that some people are looking at what's going on and they feel a little bit worried I don't don't even really want to call it a pullback though it feels more like a consolidation or pause so maybe you can talk about more thoughts on the price and where it could go yeah so it it you know a move um from

50 to 100 um you know is a profound move in in any commodity in a more efficient Comm let's just take copper if you had a doubling of the copper price you would have a production response almost immediately with standby mines in South America Africa and elsewhere um we really don't have that so I we can't lose sight of the fact that yes we assume cico is going to produce at full production from MacArthur and Scarlet yes the casx are going to produce at 55 60 million pounds a year we still need 8

to 10 mines coming online um we have visibility to a number of those in uh Australia Africa and a number in the US which I'm really excited about um but those you know those need to be you know need to come online and and the new mines beyond the the sort of lwh hanging fruit still need to be permitted licensed built and and uh come into production so um I think uh you know that there's nothing to keep uranium from going to $150 $200 a pound in this kind of environment now is that the long-term equilibrium price for Uranium

no but we've never been at that magical theoretical cross in the graph where those things intersect but we're either way below or way above but I think even when the price pulls back to a more of a long-term clearing price um it's not $50 $60 like we saw in the past inflation of new mines especially big billion dollar mines that need to be built uh inflation and capex is a real uh real issue so uh I think uh again uh it'll be several years before we get the production needed to really moderate this now for

the utilities um I don't think it kills the Golden Goose uh uranium demand is it elastic they need to have it for nuclear power plants they're running 24/7 it is 5 to 10 % of their generating cost so it will have not a no impact but it it will not impact the competitiveness of electricity from nuclear power like you would have with natural gas which is so fuel cost uh dependent okay and you know price I was going to use this as my segue into what's going on with uranium energy right now because we've been hearing for

years we need the right price to have operations come back online and just in January the company announced some production will come back on line so I'm sure there's more than price that went into that decision so can you talk well we we said that uh with our our production costs in Texas and Wyoming at around $40 all-in cost you know we really are in the lower end of the of the production grass curve globally but still we said we wanted to see sustainable prices above $60 a pound well we blew through 60 to to 100 so now

you know the focus is clearly getting um our minds back into operation and so our first mover is erary Christensen Ranch in Wyoming between announced the startup of uh operations in August and uh obviously be ramping uh ramping that up at the same time by probably second half of next year we'll bring Burk Hollow in South Texas into production um the advantage we have we have existing infrastructure we have central processing plant facilities in both uh states that serve as the mill if you will for our ISR operations and even

have extensive um uh satellite well field uh ated well Fields obviously permitted LIC well fields that can come on quite quickly so it always has been a economic decision now uh at at uranium energy Corp it's it's uh what can we do to produce more over this time I don't think we can move the timeline of August any sooner but obviously we'll look um with additional resources drilling what have you to produce more faster is is the motto now okay and you know with operations coming back on line sounds

like it's going smoothly how has it been in terms of finding Personnel because this is a market that's coming out of some pretty tough times yes it's very real issue um I think one of the advantage advantages that we've had particularly in the Staffing up that we've been doing in Wyoming um obviously we we have key uranium people that we got with the acquisition of uranium 1 so we have the people that operated those those facilities um right up to 2018 so we have core people in Wyoming in Texas

and at at at the corporate level that that have the experience but getting the people on the ground The wellfield Operators uh uh uh uh operating uh control room operators things like that we are pulling from uh other industries in Wyoming like the coal industry like oil and gas in citu mining is probably more in common with oil and gas development that it has open pit mining but even folks coming from the coal mines who have worked in in plants and and those kind of environments now we have to get them trained up to you know

uranium operational culture including safety culture um so if anything that is the critical path that's keeping us producing sooner than August is just making sure these new hires are um fully you know able to to to to go into production we probably still have another uh 10 open positions that we're we're hiring as we speak and then uh probably another 10 to 20 um as as we're starting up and we're expanding in and incrementally adding additional well fields and growing from probably a half

a million pounds of production in the first year but ramping up to a million 2 million pounds at each operation and eventually targeting 5 to six million pounds by by the end of the decade between the two very very good the other thing I wanted to bring up related to production so as I as I understand the output right now currently 100% ear HED so I wondered if you could talk about that strategy what it means if that's likely to change yeah so we're very unusual in that regard and and I have

the benefit of of having been you know in the business of buying and selling uranium for the last 40 years so I've I've worked with companies that are fully edged I mean I managed cicos uh um Global uranium activities uh for 23 years I was in the Marketing Group there so I get the pros and cons to hedging and not hedging um for a company our size with our production both scalable with ISR that can adjust to realtime market conditions very hard to you know 1.52 billion underground mine you kind of set a a mine path in

place hard to vary from it so we can afford to be unhedged we want to have 100% of our sales marked to the the prevailing spot price now that doesn't mean we just mindlessly dump uranium in the spot Market um we're very Savvy and and and are utilizing relationships with utilities producers Traders and even um you know the the financial players like like brought um to achieve the highest price possible for our shareholder our job is not to hedge the upside price risk of the utilities that's their job

ours is to get the investor um you know 100% exposure and I think it's very important because where we are in the cycle we're not selling primary produced production into an overs supplied Market it's it's under supplied and the market needs those pounds so we're confident that our production levels of 1 to2 million a year going to 5 to six are not something that will be a negative uh impact on the price anyway and more importantly I think we'll have one of the highest average selling prices of

any producer I wonder on that note if you can weigh in a little bit on how utilities are feeling right now because I imagine they would like to sign long-term deals um yeah they're they're coming to us and and wanting uh contracts with us and we're very willing to work with them and we've even signed an agreement with the utility that's an agreement to sell to them at the prevailing spot price at the time of delivery you know with no floor no ceiling so we're willing to have those

utility relationships but just you know we're opposite from the other producers that are coming to them saying I need a 10-year contract or I'm not going in production we're the opposite we don't want to be locked into prices if we were have sign contracts anytime over the last 5 years we would have Legacy contracts that are well below the the prevailing spot price today I and and certainly you can see that in some cases but they're very eager um it's a game of musical chairs right now where the

chairs are available mine production and now that they're Contracting at higher levels these existing mines and even this next generation of new mines that are being built are getting very heavily committed and so it it puts pressure on the new additional mines to to be built on time on budget and get into production because those pounds are now not just extra to the market they're needed to the market and the utilities are very keen to see that happen well and how how doable is that to get there

especially on time right now it seems like it's a little bit trickier Than People yeah I mean anytime you start up a new operation um it's you know it's difficult if you're going into a green field area where you're you know you're going into a new area it's a little more challenging I think you've seen success in the US industry because a number of these mines like 's mines are a restart of existing mines so they operated right up to 20208 we've tested everything over the

course of last year to ensure that we haven't lost any anything in the well field in terms of pumps valves Control Systems um so we're quite confident you know in in a restart but I mean if you're talking about new mines in you know with geopolitical developments uh you know Kazakhstan is is a big one I mean I think the West was really counting on a lot of pounds coming from the world's largest uranium producer while China and Russia have other ideas and they're very quickly

consolidating um what will be you know largely 80 90 100% of of kazak production in the future will be going to China and Russia that's good for them that's good for the global balance but it doesn't help Utilities in Europe UK hadada of the United States so we need Western L right yes that's what I was alluding to so thank you for going in that direction so we've talked a lot about what's going on with uranium energy because there's so many developments there to cover but we

should go into uranium royalty as well and just maybe tell us about the strategy right now would you be looking to add to that worldy portfolio ABS that's job number one for us and um you know when we launched in December of 19 2019 we were still in a uranium industry that was coming out of a very you know historic uh bare Market uh but the fact that we launched when we did and we now fully you know funded and operational um this is the perfect time for us because we're a capital P provider for M

developers uh for that cohort of companies like ueec but elsewhere around the world in Africa Australia Canada and the US that need capit development to get into production we come alongside provide 2050 even $100 million UPF front in exchange for royalty or a stream and help them bring their mind into production we compete with debt and Equity but we've um especially with prices where they are today in the uranium Market um we found that we can be you know the low cost uh of capital competitor to those S more traditional

uh ways of Finance I know in in base and precious metals this source of Mind development Finance has become mainstream it's still relatively new to uranium so um we're educating but uh we're also getting out on the road we're traveling to Australia and and we need to get to Africa and meet with all the producers in in in those regions to see how we can uh help fill that gap of new mines that are needed by 2030 and Beyond and and there is also I believe a physical uranium element to the company

maybe you could go into yeah so between um both ueec and uranium royalty we've purchased uh close to 10 million pounds over the last three and a half years we've sold about 5 million of that but uh the companies still have um a nice inventory of physical uranium in urc's case is held at Kamas facility in Ontario um it's about 2.5 million pounds today um we're adding to that that that uh portfolio why because until our mines start getting into steady state cash flow which really has just begun in the

last year like MacArthur River scar Lake uh Lance Peninsula and Langer Heinrich are our earliest movers in the portfolio but we wanted early shareholders to be exposed to the uranium commodity through physical purchases off the bottom and uh I think URC eventually will turn that uranium into royalties it's a source of it's kind of our war chest or investment in royalties and streams at UE um I think you know probably they Focus now is more on producing pounds than than purchasing it's a lot better to produce

a pound for $40 than to buy it at 100 okay wi so thank you for going into that and we've covered a whole lot here but we're going to we're going to wrap it up and I wondered if you had any final words for Uranium investors heading into the year I think they're generally pretty pretty Savvy but things you think they should know well I just I'm I'm happy for the the uranium investors whether they're the long-term sort of uh bull bull investors bull Market investors of uranium that they you know

they've they've hung in there through thick or thin or the the number of both retail and institutional institutional investors that have come into our space looking at the same sort of fundamentals that we've just talked about and coming in for the first time I'm really excited because I think uh generational wealth is going to be um achieved by by investors in the uranium space uh and again this is a early stage of of something that's going to develop over decades now not not not months or or

even a couple years so just excited for the the perseverance and uh uh patience that the investors did show during the downturns and now it's time to really uh realize those gains it's exciting time yeah let me tell you it's very nice to be actually having some positive uranium interviews so really good to have you we'll check back in with you hopefully soon and once again I'm charot McLoud with investing news.com and this is Scott Melby with uranium energy and uranium royalty

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