My 2c on $KAP this am… #uranium

(1) effective MET tax rate jumps from 6% in 2024, to 9% in 2025 and ~10.5% in 2026 on a blended basis - all things equal will hurt EBITDA but less significant when you net against corporate level taxes

(2) bad for JV partners - if you look at KAP's asset base, all of the largest assets are JVs.  This means that KAP's majority owned assets won't see a huge shift in taxation but JVs with Cameco, Orano and Rosatom / Uranium One are going to get hit pretty hard (Russia's new Bud #6 mine will be an 18% tax when ramped - pretty punitive to the Russians). 

(3) This is another sign to U.S. and European utilities that the cost curve is moving higher globally and that non-western partners can shift the state of play in unpredictable ways.  Think western production continues to be viewed as a premium product for this reason. 

(4) would not be surprised to see production rebalanced across KAP assets to minimize the impact - i.e., where possible assets will produce just below the threshold which would trigger an increase in taxes - they have two years to do this and any flexibility in subsoil agreements will be exercised. 

Net-net does make them less likely to greenlight / invest in larger projects in the future and incentivizes them to slow their ramp up in 2026 / 2027.  High level conclusion is that this is good for western producers and developers broadly with the caveat that Cameco's cost of production from Inkai just increased and so could be viewed negatively as Inkai have historically been their lowest cost pounds - will be interesting to see how Cameco reacts to the change on their upcoming earnings call… Some further thoughts after speaking with $KAP this morning.

First - the change in tax code actually brings the #Uranium tax regime in line with the oil and gas sector whereas uranium extraction had a significantly preferential treatment previously. It does not feel like the government is targeting the uranium space specifically, but rather thinging it in line with other extractive industries.

See article 743 in the tax code: adilet-zan-kz.translate.goog/rus/docs/K1700…

London has been beautiful for this week’s @WorldNuclear Working Group meetings - learned a lot as always.

World #Nuclear Fuel Cycle meeting kicking off now with Treva from @U3O8TradeTech discussing #uranium fundamentals with @cameconews @Oranogroup @NAC_Kazatomprom Jason Murphy from @ConstellationEG giving a great talk on the company’s #nuclear fleet - very impressive stats all around. Emphasized that the company intends to pursue life extensions to 80 years for the whole fleet. Also- contracting strategy starts 6 years before any reload!

1/ Lots of folks asking about @NAC_Kazatomprom $KAP today given it's relative underperformance vs. the broader #uranium sector - a few short thoughts. 2/ First, today's sharp drop and brief halt was triggered by a shift in GDR treatment by a number of major western banks. Goldman Sachs told us they could no longer accept London GDR orders due to uncertainty with respect to ongoing settlement of Clearstream and Euroclear.

1/ Some quick takeaways from this morning's @NAC_Kazatomprom management call with new CEO Mr. Mazhit Sharipov. Note that due to the Russian to English translation, some of the transcript is choppy.

#uranium #nuclear #nuclearpower

kazatomprom.kz/en/media/view/… 2/ First, the Sharipov opens by clearly stating that their strategy of value over volume will not change and cuts will continue as planned. They are also seeing supply chain impacts to their production and cost base. Also seeing tightening supply and increased customer interest.

Just touched down in Savannah, GA for the @NEI International #Uranium Fuel Seminar, the #nuclear industry’s first in person conference in almost two years. Should be an interesting few days… stay tuned for updates! Pretty direct messaging from Kazatomprom $KAP to kick things off. Major focus on security of supply and the need for committed long term contracts to drive #uranium production decisions.

1/ Some brief thoughts on $SPUT / $U-U and why it trading lower on today's open is a good thing for #uranium -- Yesterday's daily update showed that #Sprott did not purchase material or issue units. 2/ This confounded some investors, given the close to 30% premium of the vehicle...

There is a simple explanation: While updating an ATM, it is common to have limitations on market activities.

1/ A thread on Nexgen’s Arrow & the #uranium cycle ($NXE)

https://twitter.com/_/status/1352447776798420993

2/ Given the scale and cost structure of Arrow, it makes sense that investors are intensely focused on its delivery timeline. This thread will discuss possible timelines, current market expectations (i.e., what’s “priced in”) & how different Arrow scenarios will impact the mkt.

My tweet regarding the $EU last night clearly rubbed some people the wrong way. While not entirely unexpected, I thought I would explain our motivations for tweeting on the topic and clarify a few points. A long thread:

https://twitter.com/JekyllCapital/status/1347364486336884736

As I noted in several responses to my initial Encore tweet, the goal was not to attack management. While we do not have much of a relationship with Bill, we like and respect Paul and have known him for years.

There seems to be some confusion on the $YCA #uranium option - how to exercise, order of events, some idea of a credit line?!?

Here is a short thread on how it would work:

1) Yellowcake management submits an exercise notice to $KAP signaling an intent to raise capital to buy U 2) KAP has some time period to respond with an indicative price which is then verified by $YCA management as "market" when compared to third party price reporters

3) Once a price and indicated size is agreed upon, THEN management has a couple weeks to raise capital in the market