Thread by @BambroughKevin

Couple of Friday #uranium thoughts. I see some people are commenting on Artie Hyde’s commentary. Lol

For the record, I’m not short Cameco, never have shorted $cco and probably never will.

I did say that I recommend $urnm over the other #uranium etfs because it has a lower weighting in $cco $ccj. I also explained my belief that physical #uranium will out perform Cameco and if long $urnm you could hedge out the cco position with a 12.5% short and long more $u.un

This does not short $cco. It’s just hedging out the position owned by purchasing $urnm.

One point Art doesn’t really address is how terrible the cco contract currently is and the fact that we aren’t provided much information of when (if ever) it will improve

Sure they have lots of lbs in the ground. But we also don’t know for sure if Mcarthur River will perform well in the zone 4 as it will be no longer minding in the basement rock. Remember last cycle they did have a flood that helped fuel the epic rally.

My ‘bearishness’ on cco is relative to the certain of owning physical uranium and the risk / reward it delivers.

As for there ‘short uranium’ position. The numbers are the numbers. And Art correctly points out that it could be just a couple million lbs per year

Perhaps only 5-6mln lbs that they need to purchase. But if they start of Mcarthur River is delayed it could be over 10mm lbs or even 15mm lbs. labor shortages, supply chain issues etc. It’s difficult to predict and it is a risk.

Perhaps some people think the ‘risk’ of uranium going to $200 or $500/lb is very low. But, $cco at to buy even 5mm lbs at crazy high price they would burn up all their cash and perhaps have to raise significant equity to purchase uranium to cover their liabilities

If they had to buy 10mln lbs or 15mln and lose hundreds of dollars per lb the numbers become crushing in the short term. Mean while companies like $KAP will be printing money and their share price will be flying.

The most glaring miss this weeks market commentary I’ve read from fund managers and uranium analysts is their lack of focus on what will likely prove to be the most significant supply side catalyst for this bull market.

I’ve been doing my due diligence and will be writing on this situation in due course. I will say this…the biggest story in the uranium space will be permitting difficulties and major mine delays. I believe that when the market understands this we will head towards a super spike

#uranium remains the best risk to reward play and am looking at offering 4.5x leverage to a couple of institutions.

If uranium marches to its all time inflation adjusted high this will deliver 12x return on bets I can make today and 25x on bets I did make when uranium was $30/lb

The capital I used to make those bets at $30/lb uranium came from uranium stock bets I made in March - April 2020 that had an average return of +8x

I’ll be extremely happy with 5x’ing those 8x profits for 40x. And I love to dream that I might 20-25x them and 200x

There are many so called ‘Uranium experts’ and some felt the need to insult me, suggesting I over state my ‘expertise’ and contacts with zero knowledge of who I talk to and how I’ve invested this uranium bull cycle or the last.

In the next couple weeks, post my vacation, I’ll share some highlights from my recent and ongoing discussions with my old and some new contacts. Will be interesting to see if any of the uranium experts on Twitter source similar information and write about it…

It’s only the most important development / catalyst for the uranium market ever… $u.un

If I’m correct that a super spike in the #uranium price is coming, you’ll want to be invested in companies that are either uncontracted or who have contracts mostly open to benefit from the spot price.

It’s hard to know if ‘uranium experts’ like Art Hyde are advocating for people to invest in Cameco or not when they attack me about the fact that they are positioned to burn cash in a uranium spike environment.

I really don’t understand the point or conclusion he was trying to make on $cco other than to suggest that people pointing out the terrible contract book are idiots.

What’s ridiculous is that anyone bullish on #uranium can’t see the $cco contract book as terrible tragic mistake

If the price of #uranium rises hard and fast $cco will at best give up billions in earnings and a much stronger share price appreciation. At worse they will experience a massive cash flow burn that will require them to issue equity go deeper into debt or borrow uranium

It’s very possible that even borrowing uranium could prove very costly to shareholders. Imagine spot is at $140 and the long term price is at $90/lb. There’s a real opportunity cost to lend lbs to them rather than sell them and replace them with contracts $50/lb lower.

I expect that anyone will the ability to lend lbs will want to be rewarded for such a loan. If I was orano and $cco came begging for lbs when spot is $140 and the contract price is $90/lb I would offer to lend them lbs in return for getting more lbs in return. $140/$90 = 1.55

In that sort of price environment lenders of lbs would likely demand 1.5 lbs in return for each 1 lb lent. Entering into an agreement like that would result in more shareholder profits given up. The conclusion that those modelling $cco mess if a contract book are all coming to

Is that the prudent thing for them to do (should have done) is buy 5-10mln lbs of uranium. I just don’t understand why they didn’t get more aggressive when they shut down due to covid? They’d be in great shape if they had exchanged balance sheet cash for more uranium inventory

Hindsight is 20/20 but some of us suggested they do that in the fall of 2020 and still believe they should. I doubt they will buy aggressively now because doing so would basically require management to admit they are a year late recognizing this

The likely scenario is they will have to purchase very expensive lbs at a later day and burn much more shareholder cash.

Enough tweeting and reading. It’s hot and need a swim…