I keep typing up and deleting #uranium posts so I think it’s best to end my occasional twitter uranium commentary with a few quick hits before I ride off into the sunset. It’s been fun, guys. 🖖

https://twitter.com/jeffgeringer92/status/1696591524644131249

(1) The #uranium bear case (at least down at $30/lb) wasn't that price wouldn't go up, but that you the investor wouldn't make any money when it does. The deck is stacked against retail investors in junior mining and valuations in this sector are WILDLY different. Be careful…

Common #uranium question: what inning is it?

It’s currently the ninth inning. The closer is trotting in from the bullpen and they’re playing his music.

MLB teams play 162 games in a season - and I think we’re nearing the end of one now, and it’s definitely not game #162. The ninth inning is a high-leverage situation.

Nominally, all 27 outs across nine innings have the same importance, but there’s a special energy to the 9th. Everyone in the park is laser-focused on the action if the game is close. It’s spectacle.

The core #uranium thesis is fairly universal at this point:

1. Contracting volume increases
2. Uranium price increases
3. Uranium equities increase in value

But lately I’ve been thinking - why does contracting volume increase in the first place? In the prior cycle (mid 2000s) we saw how an impending (but ultimately never realized) nuclear renaissance created a strong term demand signal and fear of uranium scarcity that was then significantly amplified by supply disruptions, mine accidents, and broken contracts.

Years before COVID caused a supply shortage, a wise fuel buyer said that "conversion is like toilet paper - you don't care about it until you need it and don't have any." It's a good analogy. In some years, conversion accounted for <10% of annual fuel costs. #uranium Conversion facilities process uranium concentrates (U3O8) into uranium hexafluoride (UF6). Under a bit of heat, UF6 sublimates into a gas which is pushed through centrifuges to increase the U-235 concentration to make it fit for (most) reactor usage.

Part of the great potential of SMRs is to "build reactors like airplanes and not airports." And often, airplanes provide us with great insight in how to think about SMRs.

Introducing the B-36 Peacemaker - the last of the great propeller-driven strategic bombers. The year is 1941. The US has not yet entered World War II, but Britain is taking a beating from Nazi airstrikes and it's a very real possibility that they lose the war. If Britain falls, Europe falls.

Greetings from the NEI International #Uranium Fuel Seminar Day 2. My thoughts, in no particular order:

https://twitter.com/808sandu3o8/status/1582161871376826369

(1) Transportation is hard. Like really hard. Nuclear power is extraordinarily energy dense, and while that’s a huge plus for nuclear power, it means the nuclear materials make up a relatively small volume of any ocean or rail shipment. It’s *maybe* a weak spot.

Greetings from the NEI International #Uranium Fuel Seminar in sunny Las Vegas. Step into my office.

Day 1 thoughts in no particular order: A major nuclear utility discussed the impact of the Inflation Reduction Act. New economics might justify unit “uprates,” i.e. increasing the power level of existing reactors.

Bottom line: ~6% generation increase (probably with proportional #uranium demand increase)

It’s a little too early to expect model updates, but the 2023 editions of many #uranium s/d forecasts are going to be messy.

I’m expecting both secondary demand and secondary supply within the enrichment models, and both inventory drawdown and restocking depending on region. One major thing to sort out will be how uranium inventory is distributed within the utility sector. How convergent are {Russian exposure, uncovered SWU requirements, low inventory levels}? E.g. are the utilities now signing high assay SWU contracts also lighter on U inventory?

@ChapmanScpa does some good work here with the information that is available to him. And here I am to offer my extra bit of colour. A few of my thoughts below:

#uranium

https://twitter.com/chapmanscpa/status/1565003826356273156

Firstly - Chapman identified the enrichment level of some inventory (~2%) and that BWRs are wonky. Put another way - if one were to sell material, it’s easier to sell “standard assay” in the 4.X range (esp 4.95%) and harder to sell low assay odd lots.

This conflates two diff things. Russia is allowed to import ~20% of the EUP used by US reactors, and it possesses 39% of the global nameplate SWU capacity.

B/c of trade barriers, TVEL produces less enriched #uranium per input SWU because much of their capacity is excess.

https://twitter.com/ClayDMontgomery/status/1563988768134160390

Europe is, on the whole, slightly more dependent on Russian EUP (and fuel fabrication services) - and Europe's Russian uranium imports policy is a recommendation unlike the US', which is law. In 2020, Russian uranium was roughly 20%, and Russian enrichment was about 26%.

So how does a nuclear production tax credit (PTC) increase #uranium requirements? Five key areas:

1.Existing reactors stay on
2.Reactor lifetime extensions
3.Reactor cycle length extensions
4.Reactor power uprates
5.Reduced need for flexible operations

https://twitter.com/DenisonMinesCo/status/1556436006705954818

Many US nuclear reactors face periods of negative power prices which are in part driven by existing PTCs for wind & solar. With the certainty of all nuclear generation being worth at least $15/MWh, operators can more easily justify capital expenses to keep existing plants running

I often hear that #nuclear power and #renewable energy can't work together.

In reality: they can, they do, and they will.

And they must.

Nuclear power is learning new tricks to adapt to electricity grids with high wind/solar fractions. Let's talk about a few: One of the core features of nuclear power is that a reactor can run at 100% power for 12-24 months without interruption. It's baseload power.

But reactors change power level all the time - for maintenance and when the grid requires it. And the modern grid *will* require it.

Not exactly a revelation, but the #uranium daily prices are often indicative and sometimes move on zero volume. *Literally* zero volume. And this has been true recently for small price movements in both directions. We want a daily price, but it feels like a “data vs. information” situation. Unlike, say, a front-month oil price which carries location, specification, and timing information, uranium is fuzzy.

Spot is 15 days out? A month? A year? Price is only one datum we need to understand.

Been a real Tale of Two Conferences for me lately - first to Montreal with the nuclear fuel buyers and sellers, and then to PDAC in Toronto with the broader mining industry and its many investors.

As far as #uranium is concerned, the vibes couldn't have been more different. Montreal was a tense room. It's the first big get-together since the Russian invasion of Ukraine, so its implications to the world nuclear fuel market dominated the program.

What was true before is doubly true now: we need greater nuclear fuel capacities across the entire cycle.

seeing more discussion on #uranium inventories, so remember that:

1. utilities use different accounting methods, so trying to evaluate inventory using book value won't yield useful comparisons b/w utilities
2. "strategic inventory" and "pipeline inventory" aren't the same thing regarding #2 - if someone says "utilities have 16 months of inventory," they mean that *in addition* to the pipeline of material which is being purchased to fabricate fuel on an 18/24-month cycle, there is additional material in reserve equal to 16 months of requirements

Spent some time tonight updating my #uranium enrichment graphics. A monolithic SWU price doesn't really tell us anything without context. I'll walk through a few examples below.

You can follow my math on Urenco's handy SWU calculator: urenco.com/swu-calculator Tails assay is the residual uranium-235 contained in enrichment facility waste ("tails"). Over the last 10 years, average tails assay has crept down from 0.30% to 0.18% (or lower).

Tails assay governs the ratio of uranium to enrichment work (SWU) used to make enriched uranium.

I’ve often struggled to intelligently discuss the temporal aspect of #uranium supply, but it’s really important to understanding market dynamics as we seek to divine how this market can play out over the coming years. Considering all uranium projects under the umbrella of “not currently producing,” you can place projects on a continuum of (1) cost and (2) time until production. Some projects are restart-ready but costly, others are cheap but face some barriers before they can enter production.

Two #uranium thoughts on my mind:

(1) I’m no trader, but I think it’s fair to characterize a uranium equity’s value as the sum of:

(a) value of asset(s) at current U price
(b) value of contract book & permits
(c) mgmt knowledge/experience
(d) an option on higher uranium prices Very few developers have much value in categories (a) and (b), and (c) can be noteworthy but de minimus in some cases.

It begs the question: if a uranium equity currently has a market cap in the hundreds of millions, how is the market valuing this “uranium option?”