Company Interviews

The World Nuclear Association conference in London last week provided some valuable insights into the current state of the uranium market. There was a noticeable shift in sentiment among participants compared to previous years. The mood was more somber among uranium producers as they recognize the challenges ahead to raise capital and ramp up production after years of low prices. However, there is also an underlying tone of quiet confidence that higher prices are coming due to looming supply shortages.

On the demand side, there is broad consensus that nuclear power capacity needs to expand significantly, possibly even triple by 2050, to meet carbon reduction goals and energy security concerns. This would require ramping up annual uranium demand to 500 million pounds from current levels of less than 200 million pounds. Utilities are starting to take concrete steps like accelerating contract activity and making requests for future fuel deliveries for small modular reactors coming online in the late 2020s. This is shifting nuclear from a theoretical climate solution to an actual growth industry again.

However, the supply side remains uncertain. While over 450 "zombie" projects popped up during the last price spike, very few actually reached production. The existing developers face challenges raising the hundreds of millions in capital now required while also competing for experienced talent. Experience matters when unavoidable problems arise with complex projects. Consolidation via M&A deals is likely as smaller developers get taken out before reaching production. However, the current high valuations may be disconnecting company values from their actual ability to produce future pounds. Utilities are increasingly scrutinizing suppliers' track records and future pound production potential.

In the term contracting market, the shifts are subtle but telling. Terms like allowing utilities to vary annual delivery quantities, extension options, and reactor operations clauses are disappearing or becoming more restricted. This reflects suppliers' stronger leverage to demand stricter terms. However, base term prices remain in the $50s range for now. The floor prices in collar contracts are rising though, indicating utilities' acceptance of higher long-term pricing. Overall, the availability of sub $60 contracts is declining quickly while $60-70 contracts are increasing. Some early movers have signed initial deals to gain credibility, but the broader long-term market still has significant contracting ahead.

In the spot market, there is very limited material available. Major bids for a few million pounds could easily move prices up by several dollars very quickly. Traders expect spot prices to rise into the $65-75 range in the next year absent a change in buyer behavior. Much depends on how quickly new financial buyers deploy their capital and how aggressively they purchase material. Unlike utilities, their investment mandates could change suddenly as market conditions shift.

Overall, experts believe this is the period where the excess uranium inventory that has depressed the market for years will finally be depleted. Despite doubling over the past two years, prices need to rise significantly higher to incentivize required production growth. The confluence of demand growth, lack of primary supply, financial buyers entering, and utilities becoming more concerned about long-term security of supply points to continued upside in uranium prices. However, the timing remains uncertain. While higher prices are widely anticipated, it will likely take strong contracting and field development progress to transition sentiment from expectation to realization in the uranium market.

View All Energy Show Episodes: https://www.cruxinvestor.com/categories/themes/the-energy-show

Interview with Marc Henderson, President & CEO of Laramide Resources (TSX: LAM)

Our previous interview: https://youtu.be/n4qLWNy5o8A

Recording date: 6th September 2023

Laramide is dedicated to the exploration and development of top-tier uranium assets in Australia and the western US, holding a collection of prime uranium projects in areas known for historical production or promising geology. These projects, including the significant Westmoreland Project in Queensland with a 13-year mine life projection, and the adjacent Murphy Project in Australia's Northern Territory, demonstrate strategic asset acquisition, emphasizing scale and potential. In the US, Laramide's holdings feature the NRC-licensed Crownpoint-Churchrock Uranium Project, anticipated to utilize in-situ recovery (ISR) methods, the La Jara Mesa Project in New Mexico's Grants mining district, and the underground La Sal Project in Lisbon Valley, Utah.

Interview with Brandon Munro, MD & CEO, and Olga Skorlyakova, VP of Market Strategy for Bannerman Energy (ASX: BMN)

Our previous interview: https://youtu.be/w8NJxlyVtvs

Recording date: 6th September 2023

Bannerman Energy is an Australian uranium development company focused on its large-scale Etango project in Namibia, the world's third-largest uranium producer. Bannerman CEO Brandon Munro and new VP of Market Strategy Olga Skorlyakova discuss how uranium term contracts get signed from a project development perspective.

Utilities are showing renewed interest in new uranium supply amid recent disruptions from top producers Kazakhstan and Nigeria. Namibia is a tried and trusted 45-year supplier. Bannerman is now at the forefront with Etango, having completed feasibility studies, pilot plant testing, and advanced engineering design. The project is ready to supply utilities when needed.

Term contracting is a long process in nuclear, sometimes taking years from initial discussions to signed deals. Bannerman has time on its side and doesn't need to rush. The company has always taken a patient, conservative approach to developing Etango since 2006. Bannerman is willing to wait for the right market conditions and pricing.

The mining licence application was lodged a year ago and approval timing is not prescriptive under Namibian law. The Ministry is currently overwhelmed with applications but Bannerman is comfortable with this timeline given the positive uranium market momentum. The mining licence is the last major hurdle before Bannerman can make an FID.

Initial contract volumes likely won't be massive as Bannerman must first establish itself as a reliable new producer. But major utilities can offer scale, e.g. 500,000 lb contracts, to form the portfolio base. Bannerman aims to pick a starting price range that doesn't lock away all upside potential but meets shareholder requirements.

The current environment means Bannerman has leverage in negotiating contracts. Utilities need geographic, supplier and pricing diversification. Bannerman offers supply security from a stable jurisdiction like Namibia. Buyers are willing to pay a premium for this.

Bannerman has assembled an experienced uranium team, both corporate and on-the-ground in Namibia. This reduces a key execution risk as skilled labour is scarce. The company is leveraged to higher uranium prices given Etango's large size and expansion potential from 3.5M lb to over 7M lb per year. The after-tax NPV more than doubles from $209M to $435M by adding just $15/lb to the assumed price. Sentiment suggests spot won't stop at $65/lb, making Bannerman an attractive uranium investment.

Interview with Wayne Heili, CEO of Peninsula Energy (ASX: PEN)

Our previous interview: https://youtu.be/GRL-D7iE9jU

Recording date: 6th September 2023

Peninsula Energy is an evolving uranium developer focused on advancing its significant Lance Project into a long-lasting, sustainable uranium enterprise. Located in Wyoming, a top-tier mining and uranium jurisdiction, the Lance Project is one of the most expansive US uranium endeavors, boasting a JORC (2012) Resource of 53.7Mlbs¹ U3O8, encompassing the Ross, Kendrick, and Baber regions. Uniquely, Lance is the sole US-based uranium project sanctioned to utilize the cutting-edge low-pH ISR process, a trusted and efficient method for uranium production. As a testament to its capacity, over 60% of the world's uranium produced in 2021 used this method. Moreover, Lance's production capabilities are notable, with an existing plant output of 0.82Mlbs U3O8 annually, licensed potentials of up to 3Mlbs U3O8 per year, and Peninsula anticipates restarting commercial activities by mid-2023.

Peninsula prides itself on its seasoned team, skilled in uranium technology, development, and operations, and has already achieved significant milestones in staffing, technicality, regulation, and pre-operation preparations. The company also possesses a well-established contract portfolio, ensuring sales for up to 5.25 million lbs U3O8 until 2033, catering to major utilities both in the US and Europe. With the global emphasis on uranium as an eco-friendly energy source, propelled by worldwide decarbonization initiatives, once Lance becomes operational, Peninsula is set to play a pivotal role in powering a more sustainable future.

Interview with Dan Major, CEO of GoviEx Uranium (TSX-V: GXU)

Our previous interview: https://youtu.be/85ryT3n2QhQ

Recording date: 6th September 2023

GoviEx is a company specializing in the exploration and development of uranium assets in Africa. Boasting an impressive resource inventory, it holds over 130M lbs U3O8 in measured and indicated classes, alongside 89.3M lbs U3O8 in the inferred class. GoviEx's primary aim is to emerge as a leading uranium producer by further exploring and developing its primary Madaouela Project in Niger, the Muntanga Project in Zambia, both with mining permissions, and its diverse Falea Project in Mali.

Interview with Cory Belyk, CEO of CanAlaska Uranium Ltd (TSX-V: CVV)

Our previous interview: https://youtu.be/nEhJhngruQs

Recording date: 6th September 2023

CanAlaska Uranium Ltd. (listed on TSX-V: CVV; OTCQX: CVVUF; Frankfurt: DH7N) possesses rights to around 350,000 hectares (or 865,000 acres) in the Athabasca Basin of Canada, often referred to as the "Saudi Arabia of Uranium." This significant stake has drawn the attention of prominent global mining enterprises. Presently, CanAlaska collaborates with both Cameco and Denison on two projects in the Eastern Athabasca Basin. Positioned as a project initiator, CanAlaska aims for discovery achievements in the globe's most uranium-rich region. Additionally, the Company explores areas with potential for nickel, copper, gold, and diamonds.

Interview with Simon Clarke, CEO, and Ted O'Connor, Executive Vice President of American Lithium Corp (TSX-V:LI) 

Our previous interview: https://youtu.be/9kNFT-GEATM

Recording date: 6th September 2023

American Lithium is actively working on the expansion of large-scale lithium initiatives in mining-friendly areas across the Americas. The company is presently concentrating on the ongoing development of its TLC Lithium Claystone Project, situated in Nevada's resource-rich Esmeralda lithium district. Additionally, efforts are underway to progress its Falchani Hard-rock Lithium Project and Macusani Uranium Project in southeastern Peru. Preliminary economic assessments for TLC, Falchani, and Macusani projects have shown promise, indicating strong potential for expansion and enjoying widespread community backing. Pre-feasibility studies are nearing completion at Falchani and have kicked off at TLC.

Interview with Stephen Roman, President and CEO of Global Atomic Corp. (TSX: GLO)

Our previous interview: https://youtu.be/-R_UIu4eYek

Recording date: 6th September 2023

Global Atomic Corp. is a Canadian and TSX-listed resource company with assets in Turkey and Niger. The company’s portfolio provides access to both high-grade uranium mine development and cash-flowing zinc concentrate production. The company’s flagship project is the Dasa uranium project. The Dasa uranium project is a high-grade uranium deposit, located in the Adrar Emoles III licence area, approximately 105 km south of the town of Arlit, in the Republic of Niger. The project hosts 129.1 million pounds of U3O8 in the indicated category as well as 128.4 million pounds of U3O8 in the inferred category, at a cut-off grade of 100 ppm U3O8. 

Interview with Mark Chalmers, President & CEO of Energy Fuels Inc. (NYSE:UUUU)

Our previous interview: https://youtu.be/CYRgRRJUahA

Recording date: 6th September 2023

Energy Fuels is a critical mineral company led by CEO Mark Chalmers, specializing in the production of uranium, rare earth elements, and isotopes such as radium-226. The company's focus lies in contributing to the decarbonization and electrification efforts. The US rare earths supply chain, long dominated by China, is undergoing changes, with Western companies and countries seeking to establish their own capabilities in this crucial sector. However, challenges such as skill sets and knowledge gaps need to be addressed. The fragmentation of the rare earth industry has led to smaller companies realizing the need for consolidation to achieve critical mass, expertise, and financing. The complexities and costs associated with rare earth mining and production are becoming apparent, causing longer timelines and higher funding requirements than initially anticipated. Governments are beginning to recognize the importance of supporting miners in the critical minerals space, but implementation and support measures are not yet aligned. Overall, the rare earth industry faces a growing supply-demand gap, urging companies to find innovative solutions and collaborate to ensure a sustainable future.

Interview with Cristian Moreno, Managing Director of Torque Metals

Recording date: 5th September 2023

Torque is a smart exploration company with a proven discovery methodology combining drilling results with machine learning algorithms and geological interpretation. This compelling geological model has resulted in multiple discoveries to date and continues to offer significant opportunities for Torque Metals shareholders.