0:05

This is Macro Voices, the

0:07

free weekly financial podcast the

0:09

free weekly financial podcast targeting

0:11

professional finance, high net

0:13

worth individuals, family offices, and

0:15

other sophisticated investors. Voices is all

0:17

Voices is all about

0:19

the brightest minds in the

0:22

world of finance and

0:24

macroeconomics telling it like it

0:26

is, bullish or bearish, bearish?

0:28

barred. Now here are your

0:30

hosts, Eric Townsend and Patrick Sorezna.

0:34

Macrovoices 457 was

0:36

produced on 5th, 2024. I'm

0:38

2024. I'm Eric Townsend. newsletter

0:41

editor Justin Hume returns as this week's feature this

0:43

week's feature interview guest. the

0:45

discuss the nuclear renaissance, Justin's

0:47

bottom call on the nearly

0:50

year -long correction in uranium mining

0:52

shares, fundamentals that will affect

0:54

the sector in coming months

0:56

and years, and and much more.

0:58

more. And I'm Patrick with the

1:00

with the Macro over week as

1:02

of Wednesday, as December 4th, 2024,

1:04

The the December S &P 500

1:07

features up 116 basis points, at

1:09

6098 as the market continues the market

1:11

continues. highs. to take a -time highs. that We'll

1:13

take a closer look at that

1:15

chart and the key technical levels

1:17

to watch in the postgame segment.

1:19

The dollar index 11 basis points, trading

1:21

at at 10635 continues consolidating its

1:23

two -year highs. The The January WTO

1:25

contract down 68 68 basis points, trading

1:28

at It .54. a It remains in

1:30

a primary downtrend, but consolidating

1:32

at a support line established over

1:34

the last three months. We'll

1:36

take a look at that chart

1:39

in the chart in have the game

1:41

and Eric data have the January

1:43

are data. The January R. Bob points

1:45

trading at 51 basis points February at

1:47

contract up 15 basis

1:50

points trading basis points trading at 2676

1:52

in a in a choppy after

1:54

putting in its highs a

1:56

month ago highs a month up

1:58

96 basis points trading at

2:00

420, the uranium up 39 basis

2:03

points to 7750, and the U.S.

2:05

Tenure Treasury yield down 6 basis

2:07

points trading at 419. Key news

2:10

to watch this Friday is the

2:12

much-anticipated jobs numbers, and next week

2:14

we'll see the CPI and PPI

2:16

inflation numbers and the monetary policy

2:19

statements from the Bank of Canada

2:21

and the ECB. This week's

2:23

feature interview guest is

2:26

Uranium Insider newsletter editor

2:28

Justin Hewn Eric and

2:30

Justin discussed geopolitics uranium

2:33

and more Eric's interview

2:35

with Justin is coming

2:37

up as Macro Voices

2:40

continues right here at

2:42

macro voices.com. And now

2:44

with this week's special

2:47

guest here's your host

2:49

Eric Townsend. Joining

2:52

me now is Uranium Insider newsletter

2:54

editor Justin Hewn. Justin has prepared

2:56

a slide deck to a company

2:58

today's interview. Registered users will find

3:00

the download link in your research

3:02

roundup email. If you don't have

3:04

a research roundup email just go

3:06

to our home page macrovoices.com. Look

3:08

for the red button above Justin's

3:10

picture that says looking for the

3:12

downloads. Justin I want to start

3:14

by giving you credit for calling

3:16

the bottom of this massive uranium

3:18

correction. that we've seen. You were

3:20

at the WNA conference in London.

3:22

You literally rushed back at the

3:24

end of the conference to your

3:26

hotel room knowing that the US

3:28

markets were still open to first

3:30

panic buy as much uranium shares

3:32

as you could get because you

3:34

knew it was a bottom. and

3:36

then you made a video late

3:38

at night from your hotel room

3:40

in London saying guys this is

3:42

it right here right now i

3:44

really think this is a bottom

3:46

and you nailed it was like

3:48

40% in a lot of your

3:50

focus list issues up from there

3:52

so congratulations on that call i

3:54

appreciate that thank you yeah it

3:57

was a it was a very

3:59

stark contrast experiencing that that conference

4:01

with the back the shares continuing

4:03

to slide and just absolutely a

4:05

horrendous sentiment being expressed on social

4:07

media. So it was relatively easy,

4:09

but it was easy because I

4:11

was at the conference and it

4:13

was very, very clear that the

4:15

market was getting it wrong. I

4:17

know those are, that's a dangerous

4:19

statement to make in the investing

4:21

world that the market is wrong,

4:23

but you have those moments every

4:25

once in a while where you

4:27

can clearly see that it is.

4:29

And I saw that it was

4:31

and thought I had to express

4:33

that, so I appreciate that acknowledgement.

4:35

Thank you. You're very welcome and

4:37

it's very much deserved. So there's

4:39

quite a bit that's happened. We

4:41

haven't had you on this program

4:43

since April. I can't believe it's

4:45

been that long. The Triple Nuclear

4:47

Initiative had already happened when we

4:49

had you last on, but the

4:51

financing of Triple Nuclear, that happened

4:53

much more recently, September 23rd I

4:55

think of this year. And then

4:57

we've subsequent to that at the

4:59

COP29 conference, six more signatory countries

5:01

signed on to triple nuclear, so

5:03

they're up to 31 countries now.

5:05

We've really seen a major shift

5:07

in governments, public attitude, and also

5:09

the green community has really come

5:11

behind nuclear as the right way

5:13

to accomplish base load energy transition,

5:15

you know, for green energy. So,

5:17

so many things have happened that

5:19

are just so incredibly bullish, and

5:21

we've seen it in the uranium

5:23

mining stocks, especially the speculative issues,

5:25

the exploration issues, but not in

5:27

the actual commodity. If anything, we're

5:29

still down a little bit since

5:32

that W&A conference on the spot

5:34

price of uranium. Before we even

5:36

dive into the slide deck, what's

5:38

the big picture here of, you

5:40

know, is this what Jeff Curry

5:42

told us last week, of just

5:44

the market has to balance present

5:46

demand, not future demand? Why is

5:48

the spot price not reacting, especially

5:50

when we've got a very popular

5:52

ETF that a lot of speculators

5:54

go into? order to try to

5:56

get a position in uranium, it

5:58

seems like Sput is not driving

6:00

the market higher. What do you

6:02

make of this? Well, I think

6:04

one of the things that's important

6:06

to acknowledge is that the spot

6:08

market really what it is is

6:10

a surplus disposal market. This is

6:12

not the market where utilities secure

6:14

the bulk of their fuel requirements,

6:16

right? So, and uranium of course

6:18

is not fuel, it's the first

6:20

step, the fabricated fuel is the

6:22

last step of the fuel cycle,

6:24

but uranium is the foundation, it's

6:26

the core element that goes to

6:28

various processes before it becomes fuel.

6:30

Now the long-term contracting market is

6:32

where deals are done for 12

6:34

months, delivery, and beyond. So the

6:36

spot market is 12 months or

6:38

less settlement for a purchase or

6:40

a transaction. But it also is

6:42

the market, the spot market, that

6:44

is the most transparent. And that's

6:46

really saying something because it's not

6:48

all that transparent. But you'll get

6:50

price quotes at least daily, sometimes

6:52

intraday, depending on the service that

6:54

you may or may not subscribe

6:56

to, to get those price quotes.

6:58

But really we're talking about negligible

7:00

volumes in terms of the overall

7:02

volumes that are actually transacted. So

7:05

unfortunately, that is what is visible. However,

7:08

the term price for uranium is up

7:10

20% year to date, right? So for

7:12

2024, the term price has gone from,

7:15

you know, the high 60s all the

7:17

way into the low 80s. And the

7:19

spot price started off the year right

7:22

around 90 bucks. It peaked out at

7:24

106 and it's back down into the

7:26

high 70s here. So while the spot

7:28

price has spiked and then settled back,

7:31

the term price has continued to slowly

7:33

march higher. And that's really the true

7:35

indication of where this market is at.

7:38

Spot price is what the investors see,

7:40

so that's what gets all the attention

7:42

and all the talking points. But if

7:45

we really look at the prices across

7:47

the fuel cycle, including the long-term contracting

7:49

price for uranium, everything is in a

7:52

very, very obvious and continued up trend.

7:54

And I'll just throw in my perspective,

7:56

I don't know if you'd agree with

7:58

this or not, but I think that

8:01

for the uranium market, because it's something

8:03

that institutional finance not covered at all

8:05

for years and years. I think the

8:08

market's kind of dumb on this stuff.

8:10

They're looking at the spot price, what

8:12

you just explained, which made perfect sense

8:15

about it's really the action is all

8:17

in the term market, not in the

8:19

spot market. I don't think most of

8:22

the people that are looking at this

8:24

are understanding that. They're looking at the

8:26

stagnant plot price saying, yeah, this thing's

8:29

not really going any place. When in

8:31

reality, it is going someplace. Would you

8:33

agree with that? Yeah, I would. I

8:35

would. I mean, it's difficult, right? Because

8:38

investing in any other commodity, you're going

8:40

to get much more transparency into the

8:42

market. There's futures markets. You have way

8:45

more transparency. So for an investor to

8:47

see a month and print of print,

8:49

of a month and print of the

8:52

term price, and that's all they get

8:54

for a 30-day period. That's just not

8:56

enough. So the spot market certainly shows

8:59

not only just the surplus disposal and

9:01

the trades that are being made in

9:03

the physical market. It doesn't matter. but

9:05

the real story of the trend of

9:08

price is in the term price and

9:10

that has continued to march higher. But

9:12

yes, the spot price also has become

9:15

intrinsically connected to investor sentiment. So and

9:17

risk is on and you see the

9:19

equity starts to move up and you

9:22

see the sprought physically random trust start

9:24

to trade close to and potentially even

9:26

at or slightly breaching Nav. then you'll

9:29

actually see some physical market activity in

9:31

expectation of spot coming into the market

9:33

to do a supply. So the spot

9:35

market has kind of been linked to

9:38

the investors equities market and vice versa.

9:40

And that's how it kind of gets

9:42

wrapped up into the investment thesis. It's

9:45

much more exciting, much more transparent than

9:47

the boring and infrequently updated long-term price

9:49

or let alone the the fuel cycle

9:52

prices as well which are updated sometimes

9:54

weekly but the monthly print is for

9:56

the long-term uranium price so yeah the

9:59

investing market I would say really doesn't

10:01

quite quote-unquote get it but for better

10:03

for worse that's the reality the spot

10:06

price is what is visible so that's

10:08

what we all watch let's go ahead

10:10

and dive into the slide diagram talk

10:12

about some of the longer term fundamentals

10:15

starting with big tech embracing nuclear give

10:17

us the rundown. So this is really

10:19

snowballed since we last spoke Eric. It's

10:22

been quite the trend in the making.

10:24

We identified this trend about a year

10:26

ago maybe a little bit more than

10:29

a year ago with expectations that simply

10:31

the rising demand for electricity that in

10:33

many ways is being driven by the

10:36

growth of data centers and the growth

10:38

of AI-specific data centers, that that rising

10:40

electricity demand would lead to higher cost

10:42

electricity and would de-risk the existing nuclear

10:45

fleet. So that's kind of like step

10:47

one of the thesis of how AI

10:49

and data centers are, are, quote unquote,

10:52

bullish for nuclear. And that has absolutely

10:54

happened. It's going to continue to happen,

10:56

especially in the United States. It's still

10:59

the largest market in the world for

11:01

nuclear. And it is currently and probably

11:03

will be for the foreseeable future in

11:06

somewhat of an arms race with AI

11:08

with China. So we think that that

11:10

is going to be very de-risking to

11:12

the existing fleet. We've also heard, of

11:15

course, unless you're living in a cave,

11:17

you probably heard the same. In September,

11:19

it was announced that Constellation Energy, the

11:22

largest nuclear operator in the United States,

11:24

has made a deal with Microsoft. This

11:26

is a 20-year power purchase agreement at

11:29

prices, purportedly, you know, 2X, pushing 3X,

11:31

the existing market for electricity, to restart

11:33

Unit 1 of Fremah Island. Amazon, of

11:36

course, is supporting two SMR projects, one

11:38

on the East Coast, one on the

11:40

West Coast, and they have made an

11:43

investment into X Energy of $200 million.

11:45

It was just announced a couple days

11:47

ago. They're investing an additional $334 million

11:49

for this first project. Google has secured

11:52

a 500 megawatt deal with Cairo's power,

11:54

another advanced nuclear developer. Oracle. So all

11:56

these multi-trillion dollar tech companies are supporting

11:59

nuclear now. Oracle to build a gigawatt

12:01

scale nuclear power with three small modular

12:03

reactors linked together. And just today, literally

12:06

minutes before we hit record, Eric, Meta

12:08

announced they have released an RFP, a

12:10

request for proposal. one to four gigawatts

12:13

of new nuclear by 2030. So we've

12:15

seen this enormous wave of tech companies

12:17

recognizing the very obvious trend of huge

12:19

electricity demand and also recognizing that base

12:22

load, clean energy, is the ideal source

12:24

to be powering these things. we're going

12:26

to see other electricity sources kind of

12:29

pick up the slack in the near

12:31

term because new nuclear is going to

12:33

take some time to get off the

12:36

ground especially in the state so we're

12:38

probably going to see and we're already

12:40

seeing massive sales of gas turbines for

12:43

example natural gas is probably going to

12:45

be a beneficiary to mid-term but nuclear

12:47

looks like it's going to be a

12:49

big big winner with this trend for

12:52

the mid to the long term. Now

12:54

I have a perspective that is completely

12:56

subjective that I'd love to get your

12:59

feedback on. I don't think people get

13:01

the significance of what these deals are

13:03

going to mean for uranium demand. And

13:06

specifically what I mean is I don't

13:08

think people understand They know it's high-tech,

13:10

they know it's next generation, they know

13:13

it's generation four, but in your opinion

13:15

Justin, do the people who are looking

13:17

at this, look at the Cairo deal

13:19

or the X energy deal and say

13:22

those are both treso-fueled reactors? That's a

13:24

different fuel cycle, it has a completely

13:26

different set of requirements. Oh wait a

13:29

minute, let's look at Sam Altman investing

13:31

in Oklo, that's a fast sodium reactor

13:33

that depends on Halo fuel. We've got

13:36

a major bottleneck problem with halo, and

13:38

even if we didn't have that problem,

13:40

it's a 50 to 1. It takes

13:43

50 times as much raw, that's the

13:45

U 308 yellow cake uranium, takes 50

13:47

units of that to make one unit

13:50

of halo. Do people get those kind

13:52

of things and understand that these new

13:54

reactors are going to require a whole

13:56

lot more both swoos in order to

13:59

do all of that greater enrichment to

14:01

produce halo and so much more uranium?

14:03

Or is it just kind of like,

14:06

yeah, tech pros or buy-ins? it's cool.

14:08

I have the impression most of the

14:10

market has no idea what the implications

14:13

of the more advanced fuels are going

14:15

to be in terms of demand. I

14:17

would agree with you. I don't think

14:20

the market understands as well. I also

14:22

think that the market probably likely doesn't

14:24

really think that this has near-term implications

14:26

for their investment thesis, right? So in

14:29

which is which is generally kind of

14:31

true, even though we have seen already

14:33

we've seen SMR demand. So for example.

14:36

G. Hetachi is building BWX 300 units

14:38

in Ontario, Canada, and they have already

14:40

put out RFPs for that uranium. So

14:43

we're already seeing some SMR demand in

14:45

the market, but yes, you're absolutely correct.

14:47

The high assay low-enriched uranium takes much

14:50

more feedstock. to achieve that higher enrichment

14:52

level. They go through fewer refueling cycles

14:54

so that some of these advanced reactors

14:56

can run for 5, 10, 15, 20

14:59

years on a single fueling of this

15:01

higher enriched uranium. But no, I don't

15:03

think the market fully understands the implications

15:06

and I don't think the market will

15:08

understand the implications until they start to

15:10

see an actual pull on the physical

15:13

uranium. via the demand from these projects.

15:15

So this is all well and good

15:17

and it's of course it's a huge

15:20

sign to see the big tech companies

15:22

that have basically an endless amount of

15:24

cash and need the electricity that are

15:27

going to make this happen. So that's

15:29

enormous and that's positive and that's bullish.

15:31

But we have yet to really see

15:33

the demand hit the physical market and

15:36

a lot of times investors, you know,

15:38

a big theme of investing is trying

15:40

to discount the future and trying to

15:43

predict the future and this is smacking

15:45

us in the face of what is

15:47

going to happen. But what hasn't happened

15:50

yet is meta, Google, Oracle, Microsoft, Amazon,

15:52

actually coming into the market and either

15:54

via themselves securing the fuel sources for

15:57

these projects or actually funding the projects

15:59

and the project developers coming into buy

16:01

that fuel. So this hasn't happened. in

16:03

many ways. And so this is a

16:06

future projection. It's very positive. It's very

16:08

bullish. But I don't think investors are

16:10

going to truly quote unquote get it

16:13

until they start to see the needle

16:15

move in the physical market. And we

16:17

will. When that happens is a more

16:20

difficult question to answer. All of these

16:22

projects, these advanced nuclear projects are late

16:24

decade at best. But we could see

16:27

fuel demand, uranium demand coming to the

16:29

market for some of these SMR projects,

16:31

advanced nuclear projects, you know, within a

16:33

two or three year period, we could

16:36

absolutely see some physical market implications. I

16:38

definitely agree with you that it's late

16:40

decade when it all happens and gets

16:43

realized, but I'm also going to add

16:45

to that prediction that I think things

16:47

are going to go a whole lot

16:50

faster than most people assume. The AI

16:52

data center demand is going to keep

16:54

growing. The tech boys have lots of

16:57

money, as you said. They also have

16:59

the connections that are necessary in order

17:01

to get things pushed through government. So

17:04

I think what we're going to see

17:06

is an industry that's used to everything

17:08

happening at a snail's pace. Oh, we're

17:10

going to get some new reactor design

17:13

in the next 30 or 40 years.

17:15

Maybe it'll get approved. I think they're

17:17

going to push these things through pretty

17:20

quickly, and by late decade, I think

17:22

that the numbers you're talking about now,

17:24

Google secures 500 megawatt deal with Kairo's

17:27

power is one of the bullets on

17:29

the slide here. Well, that's the deal

17:31

they've already signed up for. I think

17:34

by late decade, it's going to be

17:36

5 or 10 gigawatts with Kairo's, and

17:38

it's going to be more with X

17:40

energy. And these guys that are all

17:43

running Halo or Treso fuels, you know,

17:45

it's... I don't think anybody has begun

17:47

to discount what that's going to mean

17:50

for conversion and enrichment demand. And what

17:52

I don't see coming to the table

17:54

is who's going to build out all

17:57

of the conversion and enrichment that will

17:59

be necessary. Not in the next year

18:01

or two. I agree with you it's

18:04

a few more years out than that.

18:06

But between now and the end of

18:08

the decade when we're going to need

18:10

to fuel of those new high-tech reactors

18:13

that demand much more enrichment swoos. Do

18:15

you see a pipeline coming online of

18:17

a whole bunch of new enrichment capacity

18:20

being built? I don't see it. It's

18:22

happening. happening slowly, right? So we have

18:24

Uranco in the United States building out

18:27

their facilities a bit. We have Arano

18:29

in France building out their facilities a

18:31

bit. Centris is adding some centrifuges as

18:34

well. We have the advent of global

18:36

laser enrichment, hopefully getting a project up

18:38

and running for re-enriching depleted tails by

18:41

the end of the decade or maybe

18:43

the early 2030s. So it is happening,

18:45

it's just happening slowly. Enrichment and conversion

18:47

are slow to build. They're also very

18:50

unique markets that have experienced extremely painful,

18:52

extremely difficult, and extremely euphoric swings in

18:54

price and demand. To give you one

18:57

example, Comberdyne in their metropolis facility in

18:59

the United States, they shut down in

19:01

2018. They just reopened that facility last

19:04

year. And this facility went, we had

19:06

conversion trading, I think all the way

19:08

down to $4 a KGU was the

19:11

lowest price. It's now we had a

19:13

deal done almost $100 a KGU to

19:15

end the week last week. Now they've

19:17

seen government intervention, they have seen the

19:20

market absolutely crashed, they've seen the market

19:22

soar, they've seen enormous amounts of underfeeding

19:24

coming from Russia, that underfeeding basically is

19:27

a source of UF6, therefore making it,

19:29

reducing the demand for conversion. There's

19:32

been all sorts of geopolitically influenced

19:34

elements to these markets that make

19:36

them very difficult to operate within

19:38

and also very difficult to invest

19:40

in. And so there's been pressure

19:43

and questions coming to Combinine of

19:45

the last three years, especially since

19:47

Russia invaded Ukraine and Russia being

19:49

the largest provider of conversion in

19:51

the world. Combinine, when are you

19:53

guys going to expand? You're telling

19:56

us you can expand. You're running

19:58

it. tons a year and you're

20:00

telling us you can expand to

20:02

13 to 15 relatively easily. Why

20:04

are you doing it? And every

20:06

single time at every single conference,

20:09

the Comberdyne rep is like, okay,

20:11

how about you guys stop buying

20:13

EUP from China and sign some

20:15

contracts with us and maybe we'll

20:17

think about it. Like, Honeywell doesn't

20:19

give a damn about this project.

20:21

It's a. It's a rounding error

20:24

for honeywell. So, but what we

20:26

are hearing from industry chatter is

20:28

we believe that Comerdine will eventually

20:30

expand. It's possible they might even,

20:32

the Honeywell might even spin off

20:34

Comerdine and become a publicly traded

20:37

company. So these are all potentials

20:39

that could happen. We know that

20:41

Camico. with Westinghouse is looking at

20:43

restarting the spring fields facility in

20:45

the UK. And like I mentioned,

20:47

GLE as global laser enrichment actually

20:49

will be a source of UF6,

20:52

not enriched uranium. So all of

20:54

these things are slowly happening. Irano

20:56

is slowly expanding. So we think

20:58

that the market elements will influence

21:00

the expansion of these services in

21:02

time. For the time being, these

21:05

are bottlenecks, but they're only bottlenecks

21:07

because the demand has gone through

21:09

the roof in the past couple

21:11

of years because of the geopolitical

21:13

problems, right? So any utility, especially

21:15

in the West, let's say in

21:17

the EU or the US, that

21:20

has been concerned about a potential

21:22

ban of Russia material or has

21:24

been concerned about just dealing with

21:26

Russia going forward in the future

21:28

because of these geopolitical elements of

21:30

strife has voluntarily created a bifurcated

21:33

market and secured conversion enrichment in

21:35

the West. Eric, if you take

21:37

a look at slide number seven,

21:39

the graphic showing the enormous price

21:41

rise for both conversion and enrichment

21:43

in the past two years. Now

21:45

in any commodity investment, any commodity

21:48

market What influences the

21:50

price to go up? Well, you

21:52

either have a supply disruption or

21:54

you have a demand overshoot, right?

21:56

The demand increases, the supply decreases.

21:58

Supply of both conversion and. have

22:01

increased in these last two years. Converdine

22:03

has come online. The Chinese are building

22:05

out both conversion and enrichment. Now this

22:07

is largely or if not entirely to

22:09

fulfill their own domestic needs. They have

22:11

30 reactors under construction right now. So

22:13

they are building out a fuel cycle

22:16

as well to service their own needs.

22:18

But these two markets have expanded their

22:20

capacity during the period of this enormous

22:22

price rise. So what does that mean?

22:24

This means that utilities have plowed into

22:26

these two markets with much, much greater

22:28

demand that these two markets had seen

22:31

over the past, you know, five to

22:33

ten years. And why is that? If

22:35

you are a utility, you're concerned about

22:37

getting your fuel fuel, you're going to

22:39

secure the elements that are closer to

22:41

the end of the fuel cycle first,

22:43

and that's conversion and enrichment. The last

22:45

step of course is fuel fabrication, but

22:48

that's a little bit of a different

22:50

market. So you get your conversion, you

22:52

get your enrichment. Some of these utilities

22:54

have you 308 inventories that they can

22:56

feed into those conversion deals and some

22:58

of them do not. So these big

23:00

price spikes, while they have caused a

23:03

bottleneck because conversion is Basically static until

23:05

more capacity is built out. Whatever capacity

23:07

is there is what we have. So

23:09

if you need conversion right now and

23:11

you need it like six months from

23:13

now, you're going to pay through the

23:15

nose for Camico or Converdine or Arano

23:17

to be able to give you a

23:20

little tiny piece of whatever they might

23:22

have capacity available, which isn't much. So

23:24

what we expect to happen is not

23:26

for these two markets to crash back

23:28

down according to this slide, but for

23:30

the uranium market to catch up to

23:32

it. Yes, we'll probably see some backing

23:35

and filling in the enrichment conversion markets

23:37

as new capacity does come online in

23:39

the next two or three years. But

23:41

the uranium is going to have to

23:43

catch up. Why? Because you can't buy

23:45

conversion and not have the uranium to

23:47

feed into that service. And I'll give

23:50

you one more element if you go

23:52

back to slide number six, Eric, talking

23:54

about the Russian ban. And we haven't

23:56

really discussed this yet, but Russia has

23:58

actually cut off the extra. of

24:00

enriched uranium to the United States. One

24:03

important element of this that's related

24:05

to that previous chart in to that is

24:07

that chart on slide seven contracts allow

24:10

for return allow for So you can

24:12

buy a contract for enrichment from

24:14

Russia, they will send you the

24:16

product of that service which is

24:18

enriched of that service, which is and you can

24:20

send the UF6 back to them.

24:22

send the UF6 back to the extent

24:24

that that a that you have

24:26

signed with Russia as a U .S.

24:28

a U.S. utility is going to have to

24:31

be and you have you have to source

24:33

that enrichment from or Arano, you have you have

24:35

to provide the feedstock up front. And we

24:37

we believe that is one of the

24:39

things that is leading to this

24:41

squeeze that's happening literally right now within

24:43

the last week And the the conversion market

24:45

is there are some utilities that are

24:48

not going to get their next shipments

24:50

of a U .P. EUP and going to

24:52

have to buy buy and have it

24:54

converted. it converted. So that's going put a squeeze

24:56

in an already tight tight market and it.

24:58

just just. The geopolitical strife that is happening

25:00

between the Russia in particular is in particular

25:02

is causing major ripples throughout the fuel

25:04

cycle. a huge theme a huge theme for

25:06

this year. it's And I don't know

25:08

how it's gonna go going forward.

25:11

We have a lot of uncertainties around

25:13

new Trump Trump as well well as far

25:15

as this is concerned. Justin,

25:17

I should apologize for jumping

25:19

ahead on you. Let's go

25:21

back to to slide two, everything

25:23

that you've said tells me, said

25:25

they are actually doing what

25:27

they can to increase conversion

25:29

and enrichment capacity. We ought

25:31

to be able to support

25:33

maybe a two or a two

25:35

or three percent terms of expected EUP

25:37

demand. But guess what? The

25:39

electricity demand expectations are not

25:41

two or 3 % keger.

25:43

It's It's like digits. digits. I still see a

25:45

see a major and here. the

25:48

reason that it's so

25:50

concerning to me if I if

25:52

I think about a

25:54

conversion and enrichment problem, it makes

25:56

makes me worry that

25:58

a lot of investors are to

26:00

be a little bit out over their

26:02

skis speculating on, oh, this just has

26:05

to mean incredibly high uranium prices. Well,

26:07

ultimately it does, but you can't have

26:09

higher demand for uranium until you've got

26:11

the conversion and enrichment facilities to process

26:14

it. And it seems to me that's

26:16

where the bottleneck is going to be,

26:18

really, for the rest of the decade,

26:20

because what you're I think saying is

26:23

they're already growing as fast as they

26:25

can. And what Slide 2 says to

26:27

me is, they're not growing anywhere close

26:29

to fast enough. Sure, yeah, well the

26:32

slide, you know, these slides on slide

26:34

two, or these graphics I should say

26:36

on slide two, are showing just the

26:38

enormous energy consumption, not necessarily the growth

26:41

of nuclear, we'll get to that on

26:43

slide number five, but this, the energy

26:45

growth, the energy demand growth, I should

26:47

say, and the AI trend is real.

26:50

I mean, that's really what I want

26:52

to emphasize with these two graphics. This

26:54

is not speculative at this point. This

26:56

is absolutely happening, it's going to happen.

26:59

And the energy availability, electricity availability is

27:01

going to be the limiting factor. In

27:03

fact, that was something that Zuckerberg just

27:05

came out and stated. Within the last

27:08

couple of days, I mentioned the RFP

27:10

that Medd has put out today. electricity

27:12

availability is going to be the limiting

27:14

factor. And that's why we've seen the

27:17

announced restart in Three Mile Island. It's

27:19

why the Palisades reactor in Michigan is

27:21

restarting. They're looking at restarting Duane Arnold

27:23

and Iowa. They're actually looking at even

27:26

picking up where they left off the

27:28

construction of the VC summer plant in

27:30

South Carolina, which was a major financial

27:32

calamity. This is a AP1,000 is being

27:35

built kind of along the same time

27:37

frames as the Vogel Plant, Georgia. They

27:39

halted that project and it didn't get

27:41

picked back up. They're talking about potentially

27:44

restarting the construction of that project. So

27:46

all of these, the electricity demand is

27:48

leading to much more interest in nuclear,

27:50

especially in the markets where we're going

27:52

to see major data center growth. So

27:55

I shared these two graphics that are

27:57

primarily to just to just emphasize that

27:59

this this trend is real. We think

28:01

that the AI trend is going to

28:04

be as big if not bigger than

28:06

the internet. know how that shaped the

28:08

world for the last 25 years. So

28:10

this is a major, major theme. And

28:13

I'm very pleased to see that nuclear

28:15

is growing along with it. As far

28:17

as conversion and enrichment capacity being built

28:19

out, those are being built out currently.

28:22

It's a bottleneck primarily right now because

28:24

of the massive amount of demand that's

28:26

come into the market in the last

28:28

two years, not because those markets have

28:31

been squeezed or the capacities dropped. So

28:33

if you go out 2029, 2030, 2030,

28:35

which is really kind of tomorrow. in

28:37

terms of how utilities will secure their

28:40

future needs. Capacity opens up and it

28:42

opens up pretty significantly. So to the

28:44

extent that utilities are uncovered in the

28:46

short term, that is usually pretty rare

28:49

and not just because of this moment

28:51

in time with the problems that are

28:53

happening with Russian supply. But usually utilities

28:55

are covered for the next 18 to

28:58

36 months to speak very generally. So

29:00

if you go out to the end

29:02

of the decade, you start to see

29:04

capacity open up. You're trying to secure

29:07

enrichment, conversion, uranium to the 2030s. It's

29:09

absolutely available. So we think that there's

29:11

plenty of capacity currently for the uncovered

29:13

needs, but if we see growth that

29:16

is proffered by, let's say, the COP28,

29:18

COP29 goals by the Department of Energy's

29:20

liftoff report, we're going to need much,

29:22

much, much more of every single element

29:25

of the fuel cycle. So in some

29:27

extent, I absolutely agree with you. It

29:29

seems to me what's happened so far

29:31

is the tech boys get it. They've

29:34

figured out that nuclear is the only

29:36

sane way to power this. They've got

29:38

the money and the influence in order

29:40

to make it happen. But what I

29:43

don't think they've figured out yet is

29:45

that they're going to have this huge

29:47

dependency on conversion and enrichment. And I

29:49

don't hear anything about Google and meta

29:52

making, you know, can we join the

29:54

Camico and Sylex partnership and make GLE

29:56

bigger? Let's make the Paducah laser enrichment

29:58

facility triple its size. You know, meta

30:01

wants a slice of it. I'm not

30:03

hearing anything like that yet, and I

30:05

think that's what needs to happen next.

30:07

Yeah, I think that the evidence... have

30:10

to appear that it's a major, major

30:12

problem right now. It's just expensive for

30:14

utilities, right? So, you know, the tech

30:16

companies are probably largely wanting at least

30:19

initially to rely on the capitalism to

30:21

figure these things out. So we want

30:23

this thing and we're willing to pay

30:25

for somebody to make it happen. So

30:28

the fuel needs for nuclear are not

30:30

really on their radar yet. And really,

30:32

if we go back historically, we've never

30:34

ever seen ever a nuclear power plant

30:37

not get the fuel that it needed

30:39

at any price. So if you're looking

30:41

at a multi-billion dollar nuclear build-out to

30:43

power a data center, for example, spending

30:45

$100 on conversion, $150 on uranium, $75.80

30:48

for swo, plus fuel fabrication, these are

30:50

rounding errors on the total cost of

30:52

the project and the importance of that

30:54

data center and the profitability of AI

30:57

for the tech company. So I don't

30:59

think the costs of the fuel cycle

31:01

are really even on their radar whatsoever.

31:03

And I don't think they will be

31:06

unless until they really believe that the

31:08

fuel won't be available. Now, if we're

31:10

talking about advanced nuclear, What we already

31:12

know is that the DOE is basically

31:15

told Terrapower that they're going to be

31:17

able to provide that first fuel load

31:19

from downblending warheads. But that's not going

31:21

to be a long-term solution. Why? Well,

31:24

A, geopolitical tensions are on the rise.

31:26

B, military stockpiles in the US are

31:28

at historical lows. In fact, we think

31:30

the US is going to be buyers

31:33

of uranium. And for military and other

31:35

purposes, strategic uranium stockpiles, nuclear navy, etc.

31:37

All of these things are coming together

31:39

to show an enormous demand picture for

31:42

uranium. But as far as the tech

31:44

companies are concerned, They're used to writing

31:46

a check and having things just appear,

31:48

right? So that's probably where they're at

31:51

here. They recognize the problem with electricity

31:53

availability. They recognize the solution as far

31:55

as what is going to get in

31:57

the way of that. we're going to

32:00

have to see how that plays out

32:02

in the coming years. As far as

32:04

the nuclear fuel cycle, historically speaking, price

32:06

has led to supply appearing. And just

32:09

as in most markets, this usually happens.

32:11

So we've yet to see how that

32:13

will play out and whether or not

32:15

this bottleneck will continue based on the

32:18

expected growth of the sector. You

32:20

said that most of the contracting

32:22

for enrichment and conversion is done

32:24

on a forward basis. There's forward

32:26

contracts. So those typically assignable because

32:28

it seems to me we've got

32:31

this vehicle already spot, the Sprought

32:33

Physical Uranium Trust, to speculate on

32:35

uranium. You can buy some physical

32:37

uranium so that if the price

32:39

of uranium goes up in the

32:41

future you had a chance to

32:43

make money on it. I'd much

32:45

rather speculate on the price of

32:47

conversion and enrichment. I want to

32:49

buy the sprat contract for a

32:51

signable contract for conversion and enrichment

32:53

in the late 2020s because I

32:55

think the price of that is

32:58

going up. Is that something that

33:00

could be turned into a fund

33:02

that people could invest in? It's

33:04

hard to say, and you know,

33:07

the uranium participation corporation before Spratt

33:09

took it over did hold both

33:11

E3008 and UF6, UF6, being the

33:13

product of the conversion process, but

33:15

we'll see. I mean, it's possible

33:17

that Comberdyne ends up as a

33:19

public vehicle. Camico is publicly tradable

33:21

and they have the Port Hope

33:23

conversion facility, of course, I don't

33:25

really think that anybody really cares

33:27

much about that element to their

33:29

business strangely. And of course, they

33:31

have 49% ownership of Westinghouse, which

33:33

owns the Springfield facility that is

33:36

likely to be up and running

33:38

at some point in the future.

33:40

But I think that that's probably

33:42

pretty unlikely, Eric. Unfortunately. I mean

33:44

that's what I want to speculate

33:46

on. Let's move on. One of

33:48

the things that has been a

33:50

theme we've talked about and you've

33:52

written quite about in your newsletter

33:54

is that the geopolitical breakdown between

33:56

the United States and Russia has

33:58

led Vladimir Putin to say,

34:01

you think you can ban me,

34:03

I'm going to ban you. So

34:05

he's basically banned any export of

34:07

enriched uranium products, trying to cut the

34:09

West off from access to Russian conversion

34:11

and enrichment facilities. You've written quite a

34:14

bit about that being a major

34:16

factor before President Trump was re-elected. What

34:18

is this going to mean moving on

34:20

to page 3 the Trump administration

34:22

with respect to the Russia ban and

34:25

in general with respect to energy policy

34:27

and nuclear energy policy? Sure, well I

34:29

think I'd actually just jump to

34:31

slide 6 to start that answer Eric

34:34

just to kind of give people some

34:36

background on what happened. So the

34:38

United States of course passed the House

34:40

Bill 1042 that was signed into law

34:43

in May that became law in

34:45

August of this year and that bans

34:47

the importation of Russian-enriched uranium effective immediately,

34:49

but there are waivers being offered out

34:52

to December 31 of 2027. Basically

34:54

to 2028, a US utility can apply

34:56

for a waiver with the Department of

34:58

Energy. to receive material if they

35:00

can prove that they literally cannot find

35:03

it elsewhere. Now, as was expected, the

35:05

waivers, the first few shipments did

35:07

get waivers. So that was a handful

35:09

of utilities. That was centrist as a

35:12

broker for a handful of utilities. We've

35:14

already seen a couple of shipments

35:16

come through since August of Russia material

35:18

to the United States. However, it has

35:21

been a concern from the beginning

35:23

that Russia could actually cut off those

35:25

exports, and that obviously made a lot

35:27

of sense to us. Why? A,

35:30

we're their adversary, we're essentially in a

35:32

proxy war with Russia, and we've already,

35:34

you know, seized Russian assets and sanctioned

35:37

other Russian materials, and now we've

35:39

sanctioned the actual uranium importation. So it

35:41

would make sense on a tit-for-tat basis

35:43

for Putin to do the same.

35:45

B, these legacy contracts that Ten-X, which

35:48

is the Russian state-owned enrichment corporation, has

35:50

signed with U.S. utilities two, three, four,

35:52

five years ago that it is

35:54

being delivered upon now are at way,

35:57

way lower prices than what they could

35:59

sell that enrichment for in the

36:01

present marketplace. So they could play geopolitics

36:03

and cut off those exports. that would

36:06

be perfectly understandable consent, or we've

36:08

already done that to them, and they

36:10

could highly profit from doing so by

36:12

reneging on these contracts and sending the

36:15

material elsewhere. Now, Russia's ban is

36:17

also offering waivers, but those waivers have

36:19

to be applied to the Russian entity

36:21

via Tenex, not from the US

36:23

utilities, is not applying for these. Tenex

36:26

has to apply for these. And our

36:28

understandings of the first shipment that

36:30

was set to leave the Port of

36:32

St. Petersburg, well, that ship sailed, and

36:35

it does not have the enriched uranium

36:37

uranium uranium on the ship on

36:39

the ship on the ship, headed to

36:41

the United States. So as of now,

36:44

this material is not coming here.

36:46

Now this is called a temporary ban

36:48

because it supposedly will end unless they

36:50

extend it on December 31st of

36:52

next year of 2025. Okay, so going

36:55

back to Trump and the Trump admin,

36:57

what we expect on slide number three.

36:59

Well, there's certainly plenty of people

37:01

that believe that Trump is a friend

37:04

of Putin and that all of this

37:06

will just go away. And I

37:08

don't believe that's the case for multiple

37:11

reasons. One, during Trump's first term, there

37:13

was a petition called Section 232

37:15

that was brought forth by U.R. Energy

37:17

and Energy Fields in the United States,

37:20

and they wanted 25% of the Iranian

37:22

requirements for U.S. utilities. to be

37:24

mandated to be purchased from US minors.

37:26

And Trump basically said, yeah, I'm not

37:29

going to do that because he's

37:31

a free market capitalist, essentially. But he

37:33

said, I will look into this issue.

37:35

And the case was made in section

37:38

232 that the US is highly

37:40

reliant on Russia and Eastern, let's say,

37:42

Central Asian supply, which is absolutely true.

37:44

25% roughly of the United States

37:46

in rich uranium, uranium needs come from

37:49

Russia. And that has, and that's only

37:51

because it's limited on the Russian

37:53

suspension agreement to not breach that level.

37:55

So the Nuclear Fuels Working Group put

37:58

together by Trump basically came out with

38:00

a report. 2020 and if you

38:02

remember 2020 there was way way way

38:04

more on his plate to deal with

38:07

than then this particular matter but

38:09

the working group basically said yes this

38:11

is a problem yes we should do

38:13

something about it they established the

38:15

beginning the first phase of the uranium

38:18

the strategic uranium reserve and so we

38:20

think that's he's unlikely to push for

38:22

reversal of this ban because the

38:24

ban highlights the the sovereign energy concern

38:27

of being reliant on Russia, and along

38:29

with the ban came a number

38:31

of other elements of funding to support

38:33

the fuel cycle domestically. The other element

38:36

is that the Russian ban in

38:38

the United States was legislated that did

38:40

not come about via executive order for

38:42

Biden. So Trump can't just say, yeah,

38:45

give me a pen, I'm going

38:47

to make this go away. You would

38:49

have to introduce or someone would have

38:52

to introduce legislation to reverse this

38:54

ban and it would have to be

38:56

voted on by the bipartisan Senate and

38:58

House. And we think that it is

39:01

highly, highly unlikely, unlikely to happen

39:03

considering that basically this was a unanimous

39:05

vote to ban this material. So

39:08

the other elements of this new

39:10

administration, of course, is that we

39:12

believe that Trump is keenly aware

39:14

of the energy situation. We believe

39:16

that he understands that the growth

39:18

of AI and tech and data

39:20

centers is going to put an

39:22

enormous strain on the grid. And

39:24

it's also interesting for him to

39:27

have Elon Musk in his ear

39:29

seemingly on a daily basis right

39:31

now. Elon of course runs X

39:33

and X has Grok which is

39:35

an AI platform built into that

39:37

built into X. Also of course

39:39

running Tesla. Tesla with our self-driving

39:41

software that is AI driven. There's

39:43

going to be a full understanding

39:45

of this AI growth situation, the

39:48

arms race with China and concerns

39:50

with AI, and what will be

39:52

needed in order to remain competitive

39:54

and quote unquote win this race.

39:56

And all of that. our estimation

39:58

is going to lead to support

40:00

of growth of energy and support

40:02

of nuclear in the United States.

40:04

Justin, let's talk a little bit

40:06

more about Christopher Wright, who is

40:09

President-elect Trump's choice for Secretary of

40:11

Energy. Seems to me like this

40:13

is a guy who really gets

40:15

it, and I don't want to

40:17

put Jennifer Granthone down because she's

40:19

an idiot. Complete just night and

40:21

day difference, I think, in terms

40:23

of having a clue in terms

40:25

of who's in charge of Department

40:28

of Energy. But he's also, I

40:30

mean, he's on all closed board,

40:32

so he clearly gets advanced nuclear.

40:34

He's also, you know, a fracking

40:36

guy. Seems like President Trump's energy

40:38

strategy is going to be very

40:40

much drill baby drill. Let's really

40:42

get oil production back up. What

40:44

do you think Christopher Wright's focus

40:46

is going to be? Is it

40:49

going to be more in the

40:51

oil and gas space or more

40:53

in the nuclear space or a

40:55

little of both or what? Well,

40:57

I think it's probably pretty obvious

40:59

that his focus will most likely

41:01

be in the oil and gas

41:03

space considering that he's the CEO

41:05

of Liberty Energy, which is a

41:07

fracking company. But he also, like

41:10

you said, he's on the board

41:12

of Oklahoma, which is an advanced

41:14

nuclear developer, and he's on record

41:16

of being supportive of nuclear, especially

41:18

advanced nuclear. the energy humanist moniker,

41:20

that was something that was proffered

41:22

by Duneberg. I think that's a

41:24

very accurate description of Christopher Wright.

41:26

I think he's very, very sharp.

41:29

And like you said, I also

41:31

agree that he gets it. Either

41:33

way, this should be very bullish,

41:35

generally speaking. for nuclear going forward.

41:37

Even though he is the CEO

41:39

of a fracking company, being on

41:41

the board of Oklahoma, that's not

41:43

something that's accidental. I think he

41:45

understands that we need growth across

41:47

the board for energy in the

41:50

United States. Justin, let's move on

41:52

to page four where you're charting

41:54

supply and demand for uranium in

41:56

the outlook. Sure, I wanted to

41:58

give kind of an update. There's

42:00

nothing that's really all that different

42:02

on this picture other than the

42:04

demand growth has. shot up to

42:06

the upside since the projected demand

42:08

growth, since last year and I

42:11

talked. And this slide and the

42:13

slide on slide number five are

42:15

both from a recent report from

42:17

RBC. And RBC importantly is getting

42:19

this data from their sources of

42:21

UXC, which is the largest nuclear

42:23

fuel analyst. the World Nuclear Association,

42:25

which does incredible work across the

42:27

board on nuclear, the IAEA, which

42:30

is the International Atomic Energy Agency,

42:32

and then of course RBC's own

42:34

input. So they're getting this data

42:36

and they're graphing out this data

42:38

from the people that live, eat

42:40

and breeze this world. So this

42:42

is not, they're not just pulling

42:44

it out, right? This is solid

42:46

data from the most respected entities

42:48

in the industry. and they're showing

42:51

basically that the mine supply, the

42:53

long-term deficit starting kind of in

42:55

the mid-20-30s looks to be really

42:57

really severe. And this moment in

42:59

time where the market could balance

43:01

is highly speculative based on how

43:03

smoothly and efficiently and quickly the

43:05

expansion of supply will happen in

43:07

the later part of this decade.

43:09

There's still... very very large deficits

43:12

looming right now between now and

43:14

let's say 2029 2030 because what

43:16

happens in 2029 2030 well the

43:18

market expects that Kazadim Prom and

43:20

Kazakhstan on a hundred percent basis

43:22

will be able to expand production

43:24

substantially which maybe they will but

43:26

it's going much much more difficult

43:28

than anybody expected. The market expects

43:31

that NextGen's Arrow project will start

43:33

production, which starts out at 28,

43:35

29 million pounds a year for

43:37

the first few years. Denison's Phoenix,

43:39

Global Atomic Dossa, various other expansions

43:41

of brownfield and maybe a couple

43:43

of other smaller greenfield projects. And

43:45

if everything goes right, we have

43:47

a point in time of this

43:49

market balancing. But nothing ever goes

43:52

right in the mining world. I'm

43:54

sure you know that just as

43:56

well as anybody else. And we've

43:58

already seen multiple brownfield restart. that

44:01

are not hitting their production goals.

44:03

So whether that's you are energy,

44:05

whether that is boss energy, whether

44:07

that is Paladin's restart of Langer

44:09

Heinrich, all of these projects are

44:11

coming up short on their production

44:13

targets, even from a mine that

44:15

already was pre-existing. So when we're

44:17

talking about these major major Greenfield

44:19

projects, it's highly speculative whether or

44:22

not these will get into production

44:24

at all, let alone on time

44:26

on budget. So we still have

44:28

a very very large up into

44:30

the right demand bar supply is

44:32

a question mark and you can

44:34

see that that that lighter colored

44:36

shading at the top of these

44:38

bars is secondary supply which is

44:40

shrunk in a lot since you

44:43

go back into the early 20

44:45

teens and that was megatons the

44:47

megawatts plus enormous amounts of underfeeding

44:49

and as we've discussed multiple times

44:51

in this chat today Eric enrichment

44:53

is relatively constrained so when you

44:55

have constrained capacity enrichment you don't

44:57

have underfeeding So that secondary supply

44:59

has dropped a lot. Let's move

45:01

on to page 5, Justin. Sure.

45:04

So I just wanted to highlight

45:06

again that this actually is a

45:08

growth industry. This is something that,

45:10

and maybe that's clear to everybody

45:12

at this point, but this was

45:14

something that nobody really understood going

45:16

back a few years that the

45:18

sector was actually growing. The nuclear

45:20

technology isn't dead, it's not only

45:23

being phased out. Some old reactors

45:25

of course are incrementally being phased

45:27

out, but they're largely being replaced

45:29

with much, much larger new reactors.

45:31

So this graphic on slide number

45:33

five highlights exactly that. Again, the

45:35

source data coming from the W&A

45:37

and the IAEA. just showing how

45:39

much nuclear is growing and specifically

45:41

where it's growing. So you can

45:44

see China of course is the

45:46

biggest growth story in all of

45:48

nuclear with 30 reactors under construction

45:50

right now. They are shooting to

45:52

have 150 gigawatts of nuclear by

45:54

2035. They're on pace to hit

45:56

that. And of course, you know,

45:58

backing up this foundation. showing

46:00

the enormous growth of nuclear is the Chinese

46:03

practices of the last few years in terms

46:05

of procuring uranium. China does not have a

46:07

lot of domestic uranium resource in the ground.

46:09

They're building out a lot of conversion and

46:11

enrichment for their own sources, but they have

46:13

to procure uranium elsewhere. So they're assigning deals,

46:16

they're taking over projects, and they're signing long-term

46:18

contracts. Two more very large long-term contracts were

46:20

secured with Kazanapram and two different Chinese nuclear

46:22

utilities. So they are doing everything they can

46:24

to scoop up the pounds from the prolific

46:26

producers of the world, which is Kazakhstan. It

46:29

also shares the border with China. So it's

46:31

convenient in that way. They are much more

46:33

aggressive on the procurement side than anyone else

46:35

in the world. And why Western Utilities have

46:37

not reacted to this practice yet is somewhat

46:40

of a head scratcher and they will. And

46:42

we're going to look back five years from

46:44

now and see just how intelligent the Chinese

46:46

were by acting early and in a bold

46:48

manner in terms of the volumes that they're

46:50

securing. So the Chinese are building out like

46:53

crazy and they're also procuring like crazy. And

46:55

if anybody's concerned that the Chinese inventories are

46:57

going to be sold into the market, the

46:59

Chinese will be net buyers at least out

47:01

to 2030 and probably beyond. And all of

47:03

those Chinese statistics that you just quoted were

47:06

the conventional nuclear build out that China has

47:08

planned. On top of that, they're also doing

47:10

a whole bunch of advanced development, including thorium-fueled.

47:12

And as you say, They're short on uranium

47:14

deposits in their own country, but they're not

47:16

short on thorium, and they're building out the

47:19

thorium supply chain that we ought to be

47:21

building in the West. So I couldn't agree

47:23

with you more on that. Final question, Justin,

47:25

before we close, is I assimilate all of

47:27

the things you're telling me. First of all,

47:29

as you said, nothing ever goes right in

47:32

the mining business. All it would take is

47:34

just for the Dassa project in Niger, which

47:36

is definitely at risk right now. don't

47:38

know what's going to

47:40

happen politically in Niger.

47:43

in Niger. I hope it

47:45

gets worked out. I've

47:47

got a big chunk

47:49

of global atomic stock.

47:51

But if that project,

47:53

by itself, by itself, else

47:56

were to go wrong,

47:58

wrong, that totally unbalances

48:00

your supply and demand demand

48:02

chart. And it seems

48:04

like it's a no

48:06

brainer, like you just

48:09

have to go all

48:11

in on but hang on anytime

48:13

on, seems seems like a

48:15

no brainer, I always

48:17

want to stop and

48:19

think and say, say okay

48:22

where could I be

48:24

getting the investment thesis

48:26

wrong? What could I

48:28

be missing? and it

48:30

seems to me like the biggest

48:32

candidate for what we could be

48:34

missing here here demand really increasing dramatically is

48:36

if we get that conversion and

48:39

enrichment bottleneck where yeah there's yeah, there's demand

48:41

for enriched uranium product, but there's

48:43

not enough conversion and enrichment capacity

48:45

to consume as much uranium as

48:47

everybody thought was going to get

48:49

consumed. thought was Is that the right

48:51

thing to worry about? I don't

48:53

know, if that's not the right

48:55

one, what else could go wrong one

48:58

what else could go wrong to to undermine an all-in on in

49:00

on kind of of investment thesis?

49:02

Well, like I mentioned earlier, if you

49:04

go out a few years beyond the the current

49:06

the current current bottleneck exists for

49:09

both conversion and enrichment, which

49:11

has been driven by a massive

49:13

increase in demand, not by

49:15

capacity right? So that's super, super, super important

49:17

to understand is that these price

49:19

spikes did not happen because

49:21

a conversion facility caught fire or

49:23

an enrichment facility went down

49:25

for some other reason. This is

49:27

happening because demand is into these

49:29

into these markets, largely because of

49:31

the geopolitical situation, but that's

49:33

happening either way and that has

49:35

a follow on demand for uranium.

49:37

It's theoretical, It has to it has

49:39

to happen because of physics. something You something

49:41

to feed into that conversion process. the

49:43

only thing that you can feed into

49:45

that process process is you three away. So demand is

49:48

yet to really hit. hit. And that

49:50

is what we're expecting for next year for

49:52

the years after that. the years As

49:54

far as going As the as going out

49:56

into the we're just gonna have to

49:58

see how the market adjusts. the demand

50:00

that comes into those markets. So

50:02

if as a nuclear utility, if

50:04

you have a facility that's set

50:06

to shut down in 2032, and

50:08

then you get a life extension,

50:10

and then you go out to

50:13

buy your enrichment, you go out

50:15

to buy your conversion for those

50:17

periods of time, the coverage that

50:19

you need, and it's not there,

50:21

then we can see continued price

50:23

increases. We have yet to ever

50:25

see, like I mentioned, in the

50:27

history of this industry, that there

50:29

was insufficient uranium conversion or enrichment

50:31

to the point where a facility

50:33

didn't get its fuel. So the

50:35

scenario that you're discussing hypothetically where

50:37

there just isn't enough conversion and

50:39

enrichment to equate to uranium demand,

50:41

well, that's the same situation that

50:43

there isn't enough conversion or enrichment

50:45

to actually fuel the reactors. And

50:47

if that's the assumption you're making,

50:49

then all of these graphics you

50:51

can throw out of the window.

50:53

We believe that the growth of

50:55

nuclear is going to be important

50:57

enough for sovereigns and individual companies,

50:59

that it's going to incentivize the

51:01

industry to grow. basically via a

51:03

simple capitalist economics, right? And the

51:05

demand for something grows, the price

51:07

goes up, and the supply increases.

51:09

And the only thing with this

51:11

industry has just happened slowly. So

51:13

I don't believe that a conversion

51:15

enrichment bottleneck is going to slow

51:17

down the uranium growth story or

51:20

the uranium market or the price

51:22

rise for uranium, at least not

51:24

in the time period that we

51:26

consider for this investment thesis. How

51:28

this plays out in the 2030s

51:30

is just too far in the

51:32

future to really predict, but the

51:34

growth projections are there. As

51:36

far as what else could go

51:38

wrong, we always have the possibility

51:40

of a nuclear accident. That's always

51:42

there in the background. Whether or

51:44

not that leads to a demand

51:46

destruction event like Fukushima, with 53

51:48

reactors turned off over the course

51:50

of 12 months, that is really

51:52

what led to a decade-long bear

51:55

market, not the accident and sentiment.

51:57

That affected things pretty significantly for

51:59

quite a few years. you know,

52:01

I think that if you had

52:03

a small or less significant accident

52:05

is going to cause China to

52:07

stop building nuclear, you know, probably

52:09

not. So how is that going

52:11

to affect a demand picture? I'm

52:13

not sure. Would it be a

52:15

positive thing? No, of course not.

52:17

But that possibility is always there.

52:19

Is there another potential demand shock?

52:21

out there that we're not picturing,

52:23

certainly possible, a reduction in demand,

52:25

a reduction in the forecast of

52:27

demand if China already, if they

52:30

decided to slow down their build-out,

52:32

if the US for whatever reason

52:34

decided to not grant life extensions

52:36

to a bunch of reactors that

52:38

have applications after life extensions, these

52:40

sorts of things can change the

52:42

actual supply demand dynamic and should

52:44

change the forecasting of the investment

52:46

thesis, of course. As far as

52:48

the supply side goes, We have

52:50

a very hard time seeing an

52:52

unforeseen large source of supply here,

52:54

at least at these prices. If

52:56

we get up $150, $200 a

52:58

pound uranium and it stays there

53:00

for years, we're going to see

53:02

an incentive for new sources of

53:05

supply. So whether that's from... phosphates

53:07

in Morocco, whether that's from seawater

53:09

extraction, these things are out there,

53:11

but they're just not in play

53:13

right now and they're not going

53:15

to be in play for many,

53:17

many years. Like I said, unless

53:19

and until we have much higher

53:21

prices sustained for a very, very

53:23

long time. So for now, hard

53:25

to tell on the supply side

53:27

if anything comes in at a

53:29

left field, it's not looking highly

53:31

likely. On the demand side, we

53:33

could always have a shock that's

53:35

unexpected. Justin, I can't thank you

53:37

enough for a terrific interview, but

53:40

before we close, I want to

53:42

talk a little bit more about

53:44

uranium insider, the newsletter that you

53:46

published. As I mentioned at the

53:48

beginning of this call, you perfectly

53:50

nailed the bottom call on this

53:52

deep correction. I know you've got

53:54

something in excess of 400% return

53:56

since inception on your newsletter in

53:58

just a few years, so terrific

54:00

performance. Congratulations on that. Tell us

54:02

more about it. Who's it? it

54:04

only for professional investors? Is it

54:06

for the retail market as well?

54:08

How much does it cost? Where

54:10

do you sign up? Give us

54:12

the whole rundown. Sure, Eric. Yeah,

54:15

like I said, we've been running

54:17

this since August of 2019. We

54:19

have a small team behind us.

54:21

We are 100% focused on the

54:23

nuclear energy sector and the uranium

54:25

mining sector. So this is all

54:27

that we do. Who this is

54:29

for? This is for investors who

54:31

already have money on the line

54:33

in the sector or are interested

54:35

in putting money on the line

54:37

in terms of investing in the

54:39

growth of nuclear and in the

54:41

rise of the uranium price via

54:43

uranium mining stocks. So as you

54:45

can tell from the various directions

54:47

that this conversation has taken in

54:49

just a very short period of

54:52

time today, it's an extremely complicated

54:54

sector. What we always try to

54:56

do, and I think that we

54:58

do very well, is distill down

55:00

the incredible amount of information that's

55:02

swirling around all the time for

55:04

this sector into what exactly you

55:06

need to know as an investor.

55:08

And a lot of that focuses

55:10

on the physical market. trying to

55:12

understand who is buying, who is

55:14

selling, various sources that we have

55:16

built, connections that we built throughout

55:18

the industry over the many years

55:20

that we've been doing this, give

55:22

us up-to-date and accurate information. We

55:24

are able to distill that into

55:27

what you need to understand as

55:29

an investor. So we try to

55:31

take a very complicated sector, make

55:33

it simple so that you can

55:35

make investment decisions. And of course

55:37

we have our focus list of

55:39

security recommendations that has led to

55:41

that 411% return since inception in

55:43

August of 2019. So you can

55:45

find out more information at uraniumincider.com

55:47

and of course I have a

55:49

decent present on X as well

55:51

at uranium insider. Well Justin I

55:53

can't thank you enough for a

55:55

great interview we'll have you back

55:57

in a few months for another

55:59

update. Listeners just to let you

56:02

know what's in store later this

56:04

week I'll be pre-recording our Christmas

56:06

and New Year's specials we pre-record

56:08

those in order to give our

56:10

production team those holiday weeks off.

56:12

We're going to take a... deep

56:14

dive on advanced nuclear technology. The

56:16

first episode to air on Christmas

56:18

will be all about the advanced

56:20

reactor designs that are going to

56:22

be important for energy transition. So

56:24

if you're still scratching your head

56:26

wondering what's the difference between a

56:28

fast sodium reactor and a... a

56:30

molten salt reactor and a high

56:32

temperature gas cooled reactor. And what's

56:34

the, what does all this stuff

56:37

mean? We're going to cover that

56:39

in the Christmas episode, but then

56:41

in the New Year's episode, we're

56:43

going to take a deep dive

56:45

on nuclear fuels and nuclear fuel

56:47

cycles. including the newer fuels like

56:49

treso and halo and thorium fuels

56:51

that will supply the reactors of

56:53

tomorrow. So that's all coming up

56:55

in our holiday specials over Christmas

56:57

and New Year's. Patrick Sorezna and

56:59

I will be back as Macro

57:01

Voices right here at macrovoices.com. Eric

57:04

it was great to have an

57:06

update from Justin again now let's

57:08

get to that chart deck the soon

57:11

as you're going to find the download

57:13

link for the post game chart deck

57:15

in your research roundup email if you

57:18

don't have a research roundup email

57:20

it means you have not yet registered

57:22

at macrovoices.com just go to our home

57:24

page macrovoices.com and click on the red

57:27

button over Justin's picture saying looking for

57:29

the downloads now Eric let's cover crude

57:31

oil starting with the EIA inventory EIA

57:34

printed a drawdown of 5.1 million barrels

57:36

of crude oil, cushing Oklahoma building

57:38

50,000 barrels, but there were big builds

57:41

on the Finnish products with gasoline building

57:43

2.4 million barrels, distill its building 3.4

57:45

million barrels for a net petroleum build

57:48

of 0.7 million barrels, despite the drawdown

57:50

on crude oil. U.S. production holding steady

57:52

at 13.5 million barrels. The story is

57:55

pretty much the same as the

57:57

last couple of weeks. There's plenty of

57:59

room for more weak. energy prices on

58:01

macro fundamentals, but there's also plenty of

58:04

room for a dramatic spike higher if

58:06

the geopolitical situation escalates further. I'm flat

58:08

here and I really don't follow the

58:11

crude oil market as closely as

58:13

I used to, so I don't really

58:15

have a strong view. Well Eric when

58:17

we look on page two at the

58:20

crude oil futures you clearly can see

58:22

that the price action remains in the

58:24

favor of the bears now there is

58:27

a major support line the lows have

58:29

established there's a fair value zone

58:31

in this 68 to 71 dollar area

58:33

that continues to have a three month

58:36

consolidation in there but every time crude

58:38

oil rallies it's making a lower high

58:40

which means someone keeps leaning into selling

58:43

on every pop and now while the

58:45

support line is holding this is winding

58:47

up in one big wedge formation.

58:49

The bigger question is which way is

58:52

the next break? At this moment, it

58:54

remains below those key moving averages, lower

58:56

highs, distributive price action. There is entirely

58:59

possible that technically we break that support

59:01

line and head down to low 60s.

59:03

Now I think that that may

59:05

be an overshoot and then it snaps

59:08

right back and may even be a

59:10

short-term buying opportunity. but it's really hard

59:12

technically to make a bull case. It

59:15

would take a substantial amount of price

59:17

action up in the mid-70s to start

59:19

technically repairing this chart to actually establish

59:22

some sort of a trend change,

59:24

but right now there's no sign of

59:26

that. Eric, let's talk about the equity

59:29

markets. What are your thoughts? Well, Wednesday

59:31

marked yet another all-time high on the

59:33

S&P, but let's not forget, booms are

59:36

generally followed by busts. And I have

59:38

no idea how long this particular boom

59:40

can last before it busts, but

59:42

I think it will eventually. Yeah, Eric,

59:45

absolutely that the markets continue to make

59:47

all-time highs. The pattern of accumulation is

59:49

so evident. Higher highs, higher lows, even

59:52

on a day-in-day-out basis. We don't go

59:54

and break previous day lows. Money keeps

59:56

flowing into this market. I've measured moves

59:59

up to the 61 to 6200,

1:00:01

so there's definitely room for even 100

1:00:03

more S&P points in this particular impulse

1:00:05

higher, but we do have the jobs

1:00:08

numbers coming up. And if there was

1:00:10

some kind of a news event that

1:00:12

could potentially at least cause some sort

1:00:15

of corrective pattern to ensue, it

1:00:17

would be some sort of event risk

1:00:19

and as like a surprise number. Now

1:00:21

I'm not saying that that's what I'm

1:00:24

anticipating, but watching These kind of key

1:00:26

events is going to be the important

1:00:28

turnpoints. It could be an inflation number,

1:00:31

it could be the FOMC, at some

1:00:33

point something is going to spur

1:00:35

a meaner version off this, but right

1:00:37

now the path of least resistance is

1:00:40

completely in the favor of the bulls

1:00:42

as they remain completely in control of

1:00:44

this price action with a little bit

1:00:47

further on the upside. At some stage

1:00:49

we will get a pretty deep market

1:00:51

correction. but with the way things

1:00:53

are shaping up this year it may

1:00:56

very well be a January story and

1:00:58

it could end up being a very

1:01:00

quiet Christmas period if this trend continues.

1:01:03

Now Eric let's talk about the dollar.

1:01:05

The Dixie has finally begun to consolidate

1:01:07

but there's no clear sign of

1:01:09

a trend reversal at least not yet

1:01:12

so I'm waiting to see what happens.

1:01:14

Well Eric we did have that print

1:01:17

up towards 108 and then we've seen

1:01:19

some sort of corrective pattern getting underway

1:01:21

and we talked about in last week's

1:01:24

talking charts there's room for the US

1:01:26

dollar to continue to mean revert

1:01:28

a little bit from just such an

1:01:30

extremely strong impulse since putting in its

1:01:33

lows in its lows in late September.

1:01:35

The consolidation could go down to even

1:01:37

the 105 level on the Dixie as

1:01:40

the euro can work its way back

1:01:42

to even 107 on the upside, but

1:01:44

there's a primary bold trend that's

1:01:46

been established and at this juncture there's

1:01:49

not a lot of reason to believe

1:01:51

that this bold trend is over. We

1:01:53

were just due for a correction and

1:01:56

we're seeing price action that resembles a

1:01:58

correction. I think that this... still

1:02:01

a buying opportunity. In my mind, the

1:02:03

euro is doing some significant technical damage

1:02:05

and is such a huge weighting in

1:02:07

this dollar index that if the euro

1:02:10

heads to parity or even lower back

1:02:12

to 2022 lower lows at 95 cents.

1:02:14

that the dollar index can easily find

1:02:16

itself at 112 or higher in that

1:02:19

kind of an environment. Will that all

1:02:21

materialize? Odds of it materializing in this

1:02:23

calendar year with, you know, three, four

1:02:25

weeks left in the year, it's more

1:02:28

likely the dollar is going to finish

1:02:30

the year in this consolidation, but it'll

1:02:32

be certainly an interesting story going into

1:02:34

January, February, whether or not the dollar

1:02:36

index has one strong bullish impulse left

1:02:39

in it. So moving on though, Eric,

1:02:41

let's touch on gold. There's a short-term

1:02:43

symmetrical triangle on the chart that really

1:02:45

should be at the end of the

1:02:48

road here. It should resolve up or

1:02:50

down. It hasn't yet. We closed Wednesday

1:02:52

pretty much right at the point on

1:02:54

the triangle there. So we should see

1:02:57

some directional indication soon and hopefully that

1:02:59

will be the tell on where the

1:03:01

next leg takes us from here. Well

1:03:03

Eric while I agree that there is

1:03:06

a triangle formation developing I still will

1:03:08

not rule out that it zigzags its

1:03:10

way for one more quick washout down

1:03:12

towards 2,500. Irrespect about whether there's one

1:03:15

more corrective cycle down or not. I

1:03:17

remain very bullish gold and view this

1:03:19

consolidation as an important buying area. So

1:03:21

if we did get a dip of

1:03:24

$100 or more on the downside of

1:03:26

gold, I think it would be a

1:03:28

compelling buying opportunity that will probably be

1:03:30

very short-lived if one was to have

1:03:33

an opportunity there. At some point we're

1:03:35

going to get a breakout, but if

1:03:37

we don't get it by the FOMC

1:03:39

meeting, then odds are that this is

1:03:42

going to push out into a January

1:03:44

story. Moving on, I wanted to touch

1:03:46

on that uranium chart. I know Justin

1:03:48

and yourself had an extensive conversation on

1:03:50

this, but this is the chart of

1:03:53

the Sprought Uranium Physical Trust. on page

1:03:55

6. And what we continue to see

1:03:57

is that this is creating a basing

1:03:59

formation for what was basically one big

1:04:02

2024 correction. Now the big question, of

1:04:04

course, like you were discussing with Justin,

1:04:06

is when do spot prices start to

1:04:08

react? Because that's the moment when something

1:04:11

like the spot physical trust are going

1:04:13

to start seeing that bullish break out.

1:04:15

It's going to need spot prices to

1:04:17

rise for it to be trading higher.

1:04:20

big question here is that does it

1:04:22

happen now or at these levels? At

1:04:24

this stage we do need a legitimate

1:04:26

breakout above $27 on this chart with

1:04:29

you 308 breaking legitimately back up into

1:04:31

the 80s in order to get this

1:04:33

going. Obviously with only a few weeks

1:04:35

left in the year it may still

1:04:38

just grind it out along this 50-day

1:04:40

moving average a little bit longer. But

1:04:42

it is setting up for what will

1:04:44

be probably a pretty compelling bullish breakout

1:04:47

in the new year Finally I wanted

1:04:49

to just touch on some bond charts

1:04:51

now normally we look at yields. I'm

1:04:53

specifically looking at bonds and whether or

1:04:56

not they're bullishly breaking out so that

1:04:58

on Page 7, I have the two-year

1:05:00

T-note futures. Clearly, there was a very

1:05:02

dovish stance in the market going into

1:05:04

September into the first rate cut. Since

1:05:07

then, we've seen the two-year note have

1:05:09

a pretty distinct retracement and correction. Now

1:05:11

the big question, of course, is, has

1:05:13

this now gone a little too far,

1:05:16

is the Fed policy going to shift?

1:05:18

Going into the FOMC, it'll be very

1:05:20

interesting to see whether or not a

1:05:22

short-term low has been put in here

1:05:25

in November and whether a new bull

1:05:27

trend starts to establish itself on anticipation

1:05:29

of the Fed path. And on page

1:05:31

8, we have the long bond, the

1:05:34

Treasury bond futures. And on the long

1:05:36

end we had obviously inflation fears and

1:05:38

other things cause a material, a mean

1:05:40

reversion. the way back to the summer

1:05:43

lows on the long bond. Since then

1:05:45

from a very oversold condition we've had

1:05:47

a reflexive rally the sentiment was just

1:05:49

so negative toward bonds and so now

1:05:52

that we've snapped back got back above

1:05:54

the 50 day moving average it is

1:05:56

very hard to make a case yet

1:05:58

that this is a new bold trend

1:06:01

just because when something is so oversold

1:06:03

the most common thing is for it

1:06:05

to bounce and react and we got

1:06:07

that but what will be very interesting

1:06:10

at this stage is whether or not

1:06:12

that November low ends up being the

1:06:14

bottom of this bond range. And if

1:06:16

we start seeing anything that brings back

1:06:18

recession risks or fears as economic slowing

1:06:21

numbers might eventually materialize, maybe there's room

1:06:23

for treasury bonds to actually have. a

1:06:25

rally back up to the top end

1:06:27

of these ranges. It's not a big

1:06:30

macro call, but rather simply looking at

1:06:32

whether or not bonds have once again

1:06:34

simply overshot on the downside and will

1:06:36

mean revert back to a more realistic

1:06:39

range considering where most asset prices are

1:06:41

currently trading. Folks, if you enjoy Patrick's

1:06:43

chart decks, you can get them every

1:06:45

single day of the week with a

1:06:48

free trial of Big Picture Trading. Patrick,

1:06:50

tell them what they can expect to

1:06:52

find in this week's research roundup. Well

1:06:54

in this week's research roundup you're going

1:06:57

to find the transcript for today's interview

1:06:59

as well as the charts that were

1:07:01

provided by Justin during the interview and

1:07:03

the chart book we just discussed here

1:07:06

in the post game. This also includes

1:07:08

a number of links to articles that

1:07:10

we found really interesting. So you're going

1:07:12

to find this and so much more

1:07:15

in this week's research roundup. That does

1:07:17

it for this week's episode. We appreciate

1:07:19

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1:07:21

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