Thread by @BambroughKevin

I wonder if the @Official_WSB crowd got around to reading this and thinking about it over the last few days?

Just consider:
$80 column 4 yr avg ~$58
$140 column 4 yr avg ~$65

$60 spot move and they pick up and extra $7

Wow! How exciting to be a $cco shareholder in a #uranium bull market!

Now continuing on with my early thoughts on this subject, what happens to their cashflow if we have a spike to $140 or higher?

If they need to buy spot #uranium in the market to deliver into contracts they they would lose ~$53/lb on those purchases!

And I would imagine that even at $140/lb the loss per lb on buying at spot to deliver into the contracts would be greater than the gain per lb for Cigar lake vs the sales contracts.

Mark to market loss on the contract book is ugly and I’m not sure how to record this under IFRS

I don’t know how they would need to treat this and what effect it has on the balance sheet but someone should be asking them. And of course the debt covenants?

Just remember I think people say that to restart Mcarthur it will take $250mm? And 18m-2yrs. 1000 employees to hire etc. Don’t know if that can be sped up or if it could take longer. Don’t know if in this environment the costs will be more or less.

They do have the ability to borrow lbs and kick the can down the road. Based on q1 q2 information they put out it seems they are content to write these sorts of contracts going forward.

So what does all this mean to us Uranium junkies?

1. $cco $ccj isn’t going to benefit much in earnings and cashflow from the price of uranium going from $60-$140+

2. They potentially have real cashflow risk

3. WSB put out a note about playing uranium by buying calls on $cco and I think they might be second guess this strategy

$cco is the big dog and big weighting in the uranium etfs.

We’ve had a hell of a 3 months.

People basically dancing in the streets.

$cco might actually want to talk the market down and prevent a squeeze. Buy time to hire people and prep for Mcarthur restart

There’s a rumour today being circulated amongst the uranium traders that a producer is willing to sell $46.50 2025 uranium but only to a utility.

Who would put that out there? Who would offer that? Someone who don’t want the price up that’s fucking who!

Perhaps this would be potential seller offering this deal only to utilities is a way of sending a message to utilities. Don’t buy at spot. Come contract and we will give you a backwardation curve.

Anyhow. I think someone is crapping there pants about the price rise. Why else would a bonafide seller not want to get the best price possible? I promise you with 100% certainty that this seller knows they can more than that. This my uranium friends is a sign of panic

Someone is trying to talk down the market and perhaps buy spot themselves to cover short term needs.

I’ll say this as well, we’ve seen people post want adds to hire staff for Mcarthur River. We know $cco has been on record talking the need for higher pricing to restart it.

Be prepared for them to announce the planned start up of Mcarthur sooner rather than later. Imho. This will be only happen if they are actually very bullish on the future uranium price.

I personally think they have woken up and see the news like the Illinois license extension

They see all the talk of new builds, restarts and other life extension. They see SPUT gobbling lbs and they realize they missed the turn and fucked up continuing to contract like it’s a bear market during the last year of this new bull.

Regardless of what think, they aren’t currently set up to benefit from very high prices. No matter they say or do this is a fact and I will take everything they say publicly with a grain of salt.

I’m 100% confident that someone is trying to stop this rally and mess with the very illiquid uranium market.

I don’t know who and this is all just my speculation. Nothing more.

I’m just a guy sitting on his couch, reading stuff on his iPhone and contemplating what games might be going on behind the scenes.

But, my nose says someone in the industry absolutely does not want financial players in the uranium market and is trying to scare people out

Well, read all my dm’s and comments here. Most seem happy to consider the info I presented others are mad at me and think I’m the rally killer. Lol

I’ve got to be one of the biggest uranium bulls around. But I’m not gonna sit around and pretend that $cco is some great company

I just want people to understand how little upside they have to spot and that it’s likely that they don’t want the uranium price to spike. I have a lot of history with the company and companies like them. They don’t want us playing in their sand box.

They don’t understand that the market and there share prices would be better off if they just said they are willing to remain open to spot. I’d utilities want Mcarthur open they need to pay $55/lb floors with escalators.

Sorry if you can’t understand that someone was offering 2025 $46.50/lb uranium to only utilities today to try to kill the rally and steer utilities away from spot.

Sorry if you don’t understand that cco is concerned about the cashflow squeeze risk and is gonna rush the restart of Mcarthur.

And for those saying look at the inventory they have. Well I remember when they had mine floods in the past and also had a shut down to to covid.

They don’t want to sell down their inventory cause it puts them in greater risk. Especially when you sell contracts like they do. Price spike is not what they want and they will continue to work against it. Sooner you all understand how they think and operate the better