Q2 2020 Energy Fuels Inc Earnings Call

[music].

Good morning, My name's cold and I'll be your conference operator today.

Time, I would like to welcome everyone to the energy fuels Q2, 2020 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to answer it.

Ask a question during this time simply press Star then one on your telephone keypad. If you would like to withdraw your question. Please press Star then the number two I. Thank you Mr. Chalmers you may begin your conference.

Thank you calling.

Good morning, everyone welcome to our webcast.

Same as Mark Chalmers, <unk>, President and CEO of energy fuels.

Joining me today will be day Friedland, our CFO in general counsel that turned out ski or Chief accounting officer, and Curtis more geeky, a marketing corporate development.

The short off I, just want to say energy fuels is continuing to make big things happening.

We strengthened our balance sheet.

Resumed Iranian production.

We continue to build our industry, leading uranium inventory position.

One of the most exciting parts of this call is we are making phenomenal progress on rare earth elements and I'll repeat that phenomenal progress.

I look forward to providing you with this update and as Colin said, we'll answer questions at the end of my presentation.

Very quickly just a reminder, a everyone on this call that that is is there controlling their own slides. So I'll do my best to tell you next slide you can make sure that you don't get ahead or behind but you're actually in control <unk> Mi I have quite a bit to get through so let's get started.

So my first next slide.

I will be making a number of forward looking statements today. Please review disclaimers at the end of the presentation.

Next slide.

Dislike describes our main investment themes and many of you seen it before but I just want to reiterate we are first and foremost uranium producing company, we have more assets that can produce.

Quicker faster than any of our peers.

Were also a leading U.S. vanadium producer and actually were the the leading and only conventional Canadian producer the rare earth potential that we're working on a it's developing very quickly and I'm looking forward to give me more during the presentation on the rare Earth.

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There is a growing support U.S. government support for critical minerals as a whole.

Particularly on the uranium front for the U.S. uranium reserve.

The nuclear fuel working group was a very very strong policy document.

There is a lot happening on the Russian suspension agreement fun.

We're also have a significant financial strength.

And we are retiring debt. We currently have in the order of 53 million of cash securities or concentrate inventory as of June thirtyth.

Next slide.

Well sure I'm talking about uranium.

Yes, I said, we're resumed grain production at White Mesa and the second quarter. Our guidance. It's 125270 5000 pounds of urea production in 2020, I believe in very comfortable with its guidance I hope, it's conservative but that is what our current guidance is a set.

Second quarter, we produced 83000 pounds I'm currently at the end of June we had 575000 pounds of inventory. If you tell you that at current spot prices, it's nearly $20 million, we expect to have 640000 to 690000 pounds of into.

<unk> at the end of 2020 and that is our guidance, but again I believe it is conservative Nickels Ranch eyesore facility was placed on standby in first quarter of this year, but we continue to maintain Alta Mesa and our conventional minds on standby and as I said, we can scale up.

Any production quicker faster than any other producer next slide.

Q2 was a busy time for uranium markets, particularly with the significant production cuts Ttcogen 19 pandemic I'm sure. All of you aware the grain prices rose about 30% in March and April mainly due to the shutdowns and cosmetics on candidate in the media and elsewhere trade.

Eric has announced that thus far this been about 14 million pounds removed from the market Cameco, just recently announced restarted cigar Lake in early September in Kazakhstan is extending with some of those shutdowns.

Spot market has primarily been dominated by producers mainly people like cameco and even kids out a problem.

Intermediaries spot market has been fairly light, but we are seeing some utilities coming back in looking for.

Near term and longer term demand.

The market and still assessing the effects of cigar Lake restart, but also the likely extension of the Russian suspension agreement, which I'll talk about more later.

Next slide.

Now I'd like to say something about the medium.

As I said energy fuels is was the largest primary producer vanadium actually in the United States introduce was the largest producer in 2019, but we stopped in early 2020 due to weak market.

We had a produced about nearly 2 million pounds of medium in 2019, we currently hold nearly 1.7 million pounds of a very high purity inventory at current prices that's valued at nearly $9 million.

The uranium or vanadium recovery project was very successful foremost that it was the first time, we recovered the medium from our tailing solutions, we still have another one and a half to 3 million pounds. It can still be recovered from those sources.

We plan to produce and sell when market conditions warrant.

So all of you may have hurt that recently there was a Canadian section two three to initiated by Mg Canadian and US. The ATM, we were not directly involved with that that could significantly benefit.

Energy fields, because the median is a critical.

Metal.

The department of Commerce initiate that in June and the deal see Department of Commerce has until February 27 to issue report with recommendations to the President. The President will then have 90 days after receipt to impose trade remedies, if any but.

This is something that we submitted comments on were not directly involved but we could certainly benefit if there's really given in the vanadium area.

Next slide.

Now again as I said, we're very excited about the rare element sector.

We've been talking about it for a few months and whats Amazing to me is we announced just four months ago that we're getting into the rare earth.

Sector, and we have made great progress since.

We are becoming increasingly confident of the role that white nature can play.

In the revival of US were industry and you know and as I've said, we said previously one of the key elements is in all proposition our value proposition is many of the rare earth aurs contain uranium.

That uranium must be recovered before the reverse or screen can be further process are separated and that's where we fit in.

Currently China is the only a country that is recovering the uranium from the rare Earth monocyte streams that we're looking at.

In the White nation that mill as we all know is existing it's constructed it's paid for.

And it can process reserve or recover uranium under existing licenses or routine amendments. So that places us in a very unique position our ongoing test work is very positive.

We've engaged a very significant team of experienced rare earth.

Commercial and technical experts and that is growing we are in active discussions with several entities with regard to supply routes or to the mill and also to others with regard to selling concentrate produced by energy fuels. So this is moving very quickly and it.

It's also an area that is also potential for significant government support and very much eight A.H.

Received the support bipartisan support.

From the Democrats and Republicans due to the critical nature of reversed to the United States America.

Next slide.

Advantages of the mill.

Well first of all.

We're going to start small, but we believe we're in a unique place to two to cost effectively ramp up or production.

As we've seen shift in as we grow.

And we also look for to us separation in the future. If we're successful the white Mesa mill is very flexible facility. It can be reconfigured as required I already mentioned it has licenses.

And this is something that others very long lead time to habits facility to can deal with modest like streams, because the lead time and the cost to.

To develop such a facility.

It was aurs present, no additional health safety and environmental impacts.

We have been treating uranium ores and ultra feed responsibly for over 40 years. So we're very well equipped to handle this material.

We also have the skill sets for many of the different process steps required for rare Earth recovery.

And we are working to generate and we're confident that we're working to generate positive cash flow from rare earth with in 12 months now we still have a number of steps to take there, but we are moving rapidly.

Next slide please.

I also want to talk about our our building relationships building relationships, particularly with new performance materials, Neil could potentially be a buyer of concentrates from energy fuels in the future.

Our.

Latest announcement with our financials, we announced that we get signed a letter of intent with Neil just a few days ago Neal's, one the world's leading producers of advanced industrial materials, including based engineering products.

In global markets.

We will continue the relationship with cost I think three Annapolis.

And his team at Neal.

So team when you first became an adviser to energy fuels was not executive chair of Neil. He has now been appointed President and CEO of the company heat founded in July of this year.

And he is one of the most successful rare earth industry executives in the world. So we'll continue working closely with.

With Neil developing technical and commercial aspects of the rare Earth strategy, it's not an exclusive agreement, but it is a very strong agreement and I'm very excited how we can work together to help sol issues of were purchasing not in China or former Sylvia.

Daniel.

We continue to have very strong working relationship with Bronco, Kelly as an advisor and as I said in the past balk work for.

Many decades at mountain pass.

And is currently working at the color of school mines focus on or is potency, we still have a longstanding relationship with and stope in recent we signed up Jack Lifton, who has decades of experience in rare Earth industry.

Including advising governments in serving on several technical Advisory Board. So we are.

Putting into place.

I think a extremely impressive group of individuals who are helping us and have also decided to join us for the right resets people that have been doing this for decades and have done. It successfully so again I think that bodes well for how we move forward.

Next slide.

Okay, now I'm going to switch that can uranium.

And I'd like to say two words on U.S. government front.

Slot of this is not means to you, but I think it's good to go through again.

The nuclear fuel working group issued their report and April April 20, Threerd. It was one of the strongest government.

Commitments in documents in issued for the divestiture aim industry in decades, it's a non partisan policy document supports a variety variety.

Possible solutions for the industry.

Provide strong justifications for congressional appropriations and executive actions, whether the support of National security clean energy kind of Russian influence.

Exporting of Us technology abroad.

Promoting global safety, non proliferation, and creating American jobs.

This report has given us substantial support in Washington D.C.

I also want to see the energy fuels has been the main company leading this charge on these initiatives we have been the only useless company continuously in this flight from the beginning and no. Other company can say this we are however, very appreciative of others because there have been others that have also provides substantial support.

And we want to thank them for their contributions.

Next slide.

Again, many of you've seen us, but I thought it'd be helpful to go back through the main recommendations on us uranium reserve, which is $150 million per year over 10 years Thats ongoing were excellent position to capitalize on that if there is money appropriated.

In addition to that there was nearly 20 million pounds that could be added to that from the American assured fuel supply.

The department of energy, it's going to end the bartering program.

The Russian suspension agreement negotiations ongoing and I'll talk about that more in a minute.

The NRC has the ability to nine imports of fabricated fuel from Russia streamlining of reform and land access to uranium is ongoing and this could be other.

Subsequent support.

We'll be considered as deemed necessary across 18 year period.

Excellent, Okay, all drill down little bit on uranium reserve and the Russian suspension agreement.

It has been put in the trumps 2021 budget as I mentioned there are several bills in the Senate and house working through committee in appropriations.

The U.S. Department energy is pushing aggressively for appropriations the timing is still a bit unknown.

Perhaps the most significant things and it's also going on at this time is the Russian suspension agreement limiting imports.

Of Russian uranium into United States, and this is where the nuclear fuel working group report is very very powerful.

The current agreement expires at the ended this year and is currently in negotiations going on to extend the agreement for 10 to 20 years.

The first time in a long time.

The U.S., we believe is playing hardball with the Russians.

The nuclear fuel working group report says that the the suspension agreement should be extended and perhaps reduced we think the government is focused in that regard.

There has been.

Threat through a preliminary administrative review to cancel the agreement that was to be potentially canceled on August four that has now been extended into mid late September maybe early October if they did canceling it could impose tariffs on Russian imports, which could shake up the mom.

Market substantially so kind of watch this space. The department of Commerce also found that the ending of disagreement that there was priced suppression by the Russians and.

So I think we're in the strongest position we have been in years on this front. So this is as we said keep an eye on it and it could be something significant to the market in the coming weeks.

Next slide.

Now I'd like to talk a bit about our financials.

As I mentioned earlier, we had.

Due to remain in cash in inventories at the end of June, including nearly 600000 pounds of uranium and 1.7 million pounds of the medium.

Currently we do not intend to sell inventory this year, unless we can capitalize higher prices and hopefully significantly higher.

Just to put it in the context for every dollar increase in the price uranium our working capital increases by over a half a million dollars for every dollar increase the prices vanadium, our working capital increases by nearly $2 million.

None of our peers.

Have this kind of leverage to these commodities, we also paid off half our debt.

In July July 14th So we're working away at our debt by contrast, many of our peers are ensuring more debt.

On this front I would like to talk a little bit about dilution. The energy fuels has incurred first we are raising cash on our timing and our tongues I think many of you have seen other companies that have gone over extended on debt and it can be disastrous for shareholders.

And also instead of looking at all companies that are just adding onto their debt service.

Fund their operations, which eventually will have to be addressed well we are addressing it now to dress up on our terms of the said earlier you know much of this debt as we've taken on very tough times, including very high interest rates.

And servicing debt.

As I said earlier can be extremely destructive and burdensome for shareholders.

We also.

Have far more fully permitted operational assets in any other company in the United States It cost money to keep these properties in good standing.

And.

There are other companies that have a project or two at best if you're lucky, but we're maintaining several of these projects at the end of the date.

If you're incurring losses your diluting in every North American uranium company is the leading except cameco. We believe we're doing what it's best to get the lowest cost of capital in the least disruptive way possible.

For shareholders and we will be debt free ended this year. So we are addressing the debt it will be gone and we will not have to dilute to pay off debt looking to the future unless we have cash flow.

Related line of sight to cash flow for those purposes next slide now this slide is a good slide for people understand where energy deals fits into north American uranium space. It also shows how we are dipped should be differentiated from others.

Kind of look at us from the market cap perspective, we're trying to in the middle The road.

The next call over the 45 million of cash working capital that reflects after paying down the $8 million what the debt.

The next call them over the eight mean that is our remaining debt that will be gone at the end of this year, we're not going to refinance that will pay it off at the end of year or sooner as we elect.

The next call them over the point slide eight is arvin uranium inventory that is building.

And again, a differentiator on the amount of inventory that we are holding and then when you go across to all his little grain little ticks. We had uranium production is our in conventional in 2009. The only other company had that was cameco no one.

At the needing production.

And then you look at the ultimate Keats, which traditionally has been a five to 15 million dollar a year a recycling business for us and we still are advancing on a number of funds on that area and then lastly.

No one has exposure to the rare Earth element business I can look at a number of companies in the rare Earth element business that have market caps of 100 million up to one or potentially seemed to have market gets up to one and a half being dollars and I can tell you we're right in the game.

I do not believe we have really any significant recognition for the <unk> or space in our stock or the value of our company.

We will first and foremost be a uranium mining minor, but we have several positive possible cash flow generation opportunities most of which we have capitalize on either currently or in the past. So it is proven.

Businesses that we have.

Benefiting from over years next slide.

Now again I think many of you've heard me say this is one of my favorite slide because it shows the uranium production.

In the United States over the last 15 years.

The Gray is production from cameco that blue is production from energy fuels or assets. The yellow line is the price of uranium how it has declined.

Basically since the 2017 in addition, your energy it's in Green.

Uranium one is sort of that kind of pink or rent.

If you look at just energy fuels and cameco. The two companies. It produced 85% of uranium produced over the last 15 years in the United States. If you include.

You are energy in uranium one it's well over 95% just for companies. So I think this slight speaks volumes we have been there we have done it you do it again.

With our production history with our significant project holding including three fully operable production centers.

Next slide.

Okay again, many of you have seen this slide before but again I think it's helpful to highlight how we have.

Properties from Wyoming, all the way down to South Texas. The three production incentives are the the stars.

In Wyoming Nickels ranches on standby automation, Texas is on standby and again as I sit you recovery project White Mason Mill is a bluestar in the four corners region in a number of projects. It's around like me Samil, but we also have was a project surrounding Alta Mesa nickels ramp so we have a very.

That's a footprint in the proven production districts of the United States of America.

Next slide.

Now this is something that is new.

And it's just been though on this call we are valuing the potential to Dubai divest some of our non core assets.

The reason we're planning to do this is we do not think we're getting value for these assets and this is a way to cut costs generate some cash unlocked value.

We haven't decided exactly which projects is going to be will probably be two or three fully permitted conventional mines not on main mines, but our conventional mines with a fully permitted in many of these projects. Several these projects have production histories greater.

Then several existing uranium companies in the United States.

Greater production history, and probably at lower cost structures.

If we divested these mines they will come potentially with a total mainly agreement they will be the only projects outside of our projects that will have a toll milling agreement.

We'll also consider providing permitting in compliance assistance.

Access to the databases databases and again the rationale is holding cost cut compliance.

Retain and this is important repaying the milling in marketing rights that or still has to come to the mill and we'll have the marketing rights and unlock value, we will probably consider it people give us sufficient consideration in our reputable.

Cash share type transaction, we plan to have expressions of interest in August or September.

And so again this is something that no. Other company. If you have one project or two projects you certainly not going to divest two or three and again, we have such a large portfolio. We still have the mill. We can still know this material. We still have the marketing rights I think it is a no brainer, but it's also a substantial off.

Turning to be for somebody else.

You will be the envy of the western US do have the only mainly in agreement potentially.

With white nature that no one else will.

Next slide and I'd, just like to kind of go through what I've already talked about number one unmatched ability to increase LOE costs uranium production from proven assets with long histories of delivery.

More production facility more capacity more experienced in any other temping United States. The rare Earth opportunity is moving quickly. We are building. This for the future and this is extremely exciting for us and 81 that is really interested in critical minerals.

Energy fuels is becoming a one stop shop for a lot of the critical minerals in the United States needs, we're well positioned financially strong balance sheet. Our debt is being retired we will be debt free at the ended the year. We're evaluating this potential divestment opportunity, which again I think can be material for the company.

[music].

No one else hasn't been ATM no one else as the ultimate feed the land cleanup is still a significant opportunity on its own it's been kind of slowed down because of coal with on the Navajo nation, but we are currently receiving material from a private group.

As we speak it sort of an order of a couple of hundred thousand dollars per month of revenue, which is small but material for us and that is it for my presentation of now like to open it up for questions. Thank you very much.

Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone, you'll hear a three tone prop acknowledging a request and your questions will be pulled in the order. They are received a should you wish to decline from the pulling process.

Please press star followed by the too if you are using a speaker phone. Please lift the handset before pressing any keys one moment for your first question.

Okay. So your first question comes from Mark Reichman of Noble capital markets Mark. Please go ahead.

Good morning, and thank you for taking my question with respect to the rare Earth strategy could you elaborate on sources or for the mill and markets for the sale of the concentrates including potential commitments with neo performance to buy and sell a rare earth element concentrates produced at White Mesa.

Yeah, well get firstly, our main focus is on.

The United States.

As far as feet sources. So our first up a protocol is looking at sources of monocyte in United States.

After we kind of covered off on that will branch out.

Maybe to Canada or other sources.

As I said, we're going to kind of do this starting small and kind of you know.

Working away uptick chain.

There are.

A number of sources monocyte material from particularly these.

Mineral sands operations that in many cases is very high grade in total rare earth.

Concentrates.

Mario.

So we're going to try to.

To build on that we may become a minor in time, but not at this point in time when it comes into.

You know what we do with.

The concentrate.

Once we.

Processes.

As I said, we're not exclusive with Neal, but we think that they're an excellent company.

They also have the compete capability to take this thing further down the chain and non Chinese and.

Russian countries.

So there's nothing in place at this point in time, but that could change.

As I said, we've got a very strong relationship with them and we're looking at the possibility where we have full integration.

Of running through the supply chain here through a company like Neil but as I said, we want to maintain our ability to two to service. The U.S. market. There are a few other players that we know or are trying to build up their capabilities.

So we want to make sure that we stay true to.

Getting the United States independent of China.

As quickly as possible.

There are only so many potential buyers of concentrate and one of them is China, So Neil fits really nicely because of what they do.

And there are some others that might but.

It's a very healthy relationship with Neil and I think we complement each other and I look forward to a very long and strong relationship with deal going forward.

What was the fall as a follow up what what additional steps.

Would you would need to be taken to enable.

Our ability to refine separate and recover.

That's versus just producing the concentrate.

Well.

Look at that's that's a work in progress we don't see any reason why we can't go some of these extra steps of separation.

Looking towards.

Magnet material.

You know the modest lights have a very favorable distribution with some of the heavies and it. That's another reason why it's attractive to us plus the fact that as uranium that we cover so.

Our we're going to we're going to keep it simple we're going to take the step and I'd say that forces that were the for use as our trading symbol.

The foresees our concentrate on a concentrated concentrate on a constant three.

And once we've made that step successfully and modestly we will build from there Mark and then go looking at other steps infosys and our value adds.

Thank you Mark that's very helpful.

Your next question comes from Heiko.

ULA of H.C. Wainwright.

Michael Please go ahead.

Hey, Thanks, so much for taking my questions I apologize for the a lousy connection here I'm still over in Europe.

That's okay.

Okay, perfect Hey, more of a common them then the question, but I mean in regards to something you said earlier I agree with you that you don't get enough recognition for even medium rare earth capabilities that you have and my gut feeling is that that's going to change over the next couple of quarters. So again more of a question Doug more of a statement on the question, but I just figured out.

Pointed out.

Off the questions given the recent impact of Cobot 19, and the border closure, so those let too.

And you sort of allude to this in your presentation, a little bit with you know a non partisan support for uranium have you heard or seen any impact on the global uranium market as countries in general the seem to be a little bit more focused on themselves right. Now I mean, clearly you be a huge benefactor of more than once domestically sourced supply you just probably little bit.

Color if you've seen anything please.

You are kind of break and after a bit HEICO, you're saying color kind of on the impacts of Cove. It in various countries in terms of imaging landlords to my name is that correct.

Exactly in regards to company in regards to countries just focusing more on themselves.

Rather than you know one being one one global marketplace.

Yeah, well look at I think that.

Certainly.

Covance been a wake up call for for for for everyone all countries and how fragile.

All these industries can be.

Particularly in the the cases with his pandemic I think it is also a highlighted this whole issue of critical minerals.

All types and materials not just minerals.

So I think its woke up a lot of people and woke up a lot of politicians.

Including like you said from a bipartisan perspective.

And so even though as I said HEICO were first and foremost uranium focus company with more assets and more history and more cash and.

Cleaner balance sheet and easy to other people.

We think this critical minerals area hub.

You know, adding with the vanadium and the reverse.

It's really become a no brainer and I think it's going to be greater value placed on that in the future because of cobot is helped us, but but other situations as well too so.

It's all dynamic.

But I think that.

No I think people are starting to get it that you cannot be completely dependent on state owned enterprises in going to the cheapest supplier of certain materials whatever they are.

In the world.

Yep.

Fair enough and then just just a clarification can you provide us with a little bit the breadth of what you think your balance sheet might be looking like by the end the year. I mean, you mentioned earlier on the call and on slide 17 of the presentation that you plan to have the remaining 8 million that retired play into the year.

But just you know with and without divestitures just walk us through you know scenarios that you see your balance sheet looking like please. Thank you very much yep well look at <unk>.

I I won't go into details and I've got date Friedland on the call we might have jump in here, but yeah, we plan to have the.

Residual $8 million addressed and we have the ability to to pay that off in cash and shares we made paid off sooner.

Just kind of as a.

Company policy.

So we will have no debt.

At the end of year, we always try to keep ourself in the order of around minimum plus or minus.

$40 million of cash or working capital to make sure that we have plenty of capacity to do not get flag with a going concern.

You know heiko.

So you know you know and so look at week I've learned.

For being in this business for 40 45 years, it's never shell to close the wind.

Particularly with debt.

So you know.

Dave do you want to choking here on your thoughts as CFO.

Yes, Thanks, Mark I I think.

I like what you see that.

We we strive to keep.

And at least for 40 million in working capital at all times and our plans right now have us.

Paying off the.

The debt, but ended the year on me and maintaining that that level I think thats about all these here right now.

Very good. Thank you for taking my questions and apologies for that lousy connection I'm not sure what's going on what that thank you.

Oh you.

Question comes from the Joseph.

Railcar of Roth Capital Partners Joseph Please go ahead.

Hey, guys. Thanks for taking the questions.

A couple of things I guess first.

Little bit more info on the you guys view on the Russian suspension agreement.

What do you see is the most likely outcome.

There hasn't been a lot of reporting on those given other bigger issues in the world.

And then second part if it were to be.

You know cancelled or not.

Continued.

Do you think they'd be like a carve out for pre existing contracts and a lot of the utilities have contracts with suppliers, who use Russia you know is the.

You know the basis of the a the low grade uranium.

Yeah look I think.

And again I don't we can't get into a lot of the details because a number of us are participating in this process, but I think generally speaking people are assuming that the agreement will be extended.

The nuclear to working group said that the quantity should be reduced.

I think the I think they will be reduced overtime.

You know some of this and this was this was brought out and.

This preliminary review that.

There's been a number of.

Groups that have over contracted here how to address that is part of the issues of how that gets address you still no guarantee the Russians will or will sign the new agreement.

Crashes and Burns I think you end up with this issue of tariff potentially going back into place, which is not an outcome that we support a really want but it certainly would.

Turning the Apple cart upside down.

You know all those things are the complexities.

That are being looked at and considered so I don't know Curtis do you have anything you'd like to say in that regard with our say.

Oh, you know that next or turnover rate you know, there's a whole lot of outcomes and let's say you know it's a theirs.

Just going back and forth in Oregon, We can't talk about what will be discussed I mean, the U.S. government is playing hardball with Russian right now they basically said that up you know if you don't come to come to the table and be reasonable we're willing to as the U.S. is willing to just cancel disagreement altogether and impose a 115% tariffs in March.

We don't support the tariff so we only do that really don't support it because it would be it would be tough on U.S. utilities, but if Russia is not willing to be reasonable yeah. We support that I mean, we need to make sure that we'd have a a fair a level playing field here you know we don't know if Russia is going to sign kind of whats been put in front of them right. Now you know they may.

Or do some brinksmanship and you know and see US you roll the dice with the tariffs if the department of Commerce does have the you know the backbone to actually cancel your agreement, but yeah. We do think that it's going to be extended a I think.

At some level and that should be positive for the U.S. industry.

Okay.

Thanks additional color there guys switching gears a bit.

Looking at spot prices, there and I like 30 to 33 range and have been for awhile.

Two questions on at one what do you guys seeing or hearing as far as long term contract levels compared to spot and then too. It seems you know given that there was so much supply that went off line because of Cove, it and it's still offline because of it.

That the price maybe should have been higher right now and it kinda indicates or may indicate that the the utilities have reduce spot market purchases in order to knock.

Caused a price spike is that anything you guys are seeing out there as well anything you me on those two items would be great.

Yes, Chris I'll, let you continue on I can answer to assure that are in place.

Okay. Yeah, Yeah, we definitely are seeing a little bit of additional interest from utilities and the term market.

You know because that pandemic did quiet things down significantly on the on the buying side. I mean, you know there was also some US you know refueling outages happening at some other utilities that does that also you know they they just had their focus elsewhere, then on procuring materials and Ah.

Lot of people are working from home.

There's not that has many opportunities for us.

Suppliers and buyers to get together and come to come the deals and I think that Neil maybe that's one of the reason that utilities carry a couple of years of inventories is to kind of protect themselves from these sort of situations and so they know that they they don't panic and run out in the spot market start buying material. So I do think that they're going to be coming back to them.

So that they already are right now through the I think through the ended the year I mean, we've heard that statement from a treatment for instance, they think the utilities are going to become not for material through the end of the here.

You know as these Ah refueling outages that.

And it and also a you know as a the you know we start to get some simple to normalcy independently.

Okay, and then one final item just on on spot versus long term historically spot the spot markets been less than 10% of world supply.

At times and you know with companies like you guys in your peers, not signing new long term contracts.

It would seem to me that the indication as you know in the coming years the spot market is going to represent a much bigger piece unless new contracts are signed do you guys have any idea of roughly where we're looking at for the next let's call. It three years as far as percent spot a if they don't sign new deals.

Yeah, I mean, it's yeah, that's a very good point because a lot of long term deals are coming off now I do suspect that theres no long term deals that get done behind the scenes that are not reported.

But with that being the case you know there was a move over the last several years to more than mid term markets with intermediaries and traders and whatnot, where they might do a deal with a utility to supply in for 234 years and then the it's really on the you all know trader or the intermediary to actually go out and procure the materials generally on the spot market, but.

As all the supply comes offline you know that spot market is going to become tighter and tighter for for intermediaries and there's there's even talk about.

Like you know miners like I cannot get well cameco has already been by material, but does that are probably going to buy material. So you know.

So yeah, it's going to be pretty interesting here for the next couple of years with all the supply cuts and a lack of long term contract and you would like to think that utilities would a sign long term contracts to kind of protect themselves against these a potential maybe a trainer can't can't find material to deliver another mid term deal and you know a cost some sort of the supply crunch.

That eventually will fall back on the utilities, but we haven't seen it in a good way, yet, but but again maybe towards the end of year, we'll start seeing a little more long term interest.

Okay. Thanks for the color there I'll turn it over.

Your next question comes from Tim Chris Temple.

From National Investor Chris. Please go ahead.

Hey, Mark.

Yes about the Canyon mine and what any near term plans might be for that I remember the excitement or some time ago, when you're describing mirrors are pretty nice copper resource there potentially and some high grades that you here and I was curious if.

There is a reason why with your decent financial position I've not heard anything about any further exploration there.

Yeah.

Chris look at Canyon is still a very important partner course.

No I think that termed as a momentum project.

Many times because it can come on quickly produce at low cost.

So it's important project to us.

Going to have a.

Well.

Huge long likes it might be for five years or something but again as I said, it's it's one of our lowest cost projects. The copper yeah look at we're still evaluating it and its.

You know in its but it's a very high grade very small.

You know pod of copper we have been looking at other sources of copper with some or other projects one of the things I guess in in hindsight different 20 years ago.

We probably should have had a copper circuit at white nisa because there is been a quite a lot of copper recovered from some of these uranium mines overtime. So look at we're still maintaining the project in good work in order, we're still doing engineering on it.

So looking at the copper you know and as we said it is a very important project to us.

So.

But yeah. It right now it's it's it's it's the capital costs are putting in copper recovery versus that one.

Very high grade, but you know isolated zone that we have but there is expansion when we when we go underground we will be doing.

A lot more drilling.

Because of the high grade you can stuff a lot of uranium in copper in very small areas and we will do more drilling when we got a ground, it's really hard to drilling out from surface. Because you know it's it's you know over thousand C. diff source expensive, so but yeah no we're very much committed.

Canyon and I think some of you may know that I actually originally was constructed the canyon project in the eighties.

So I plan to mine it.

The benchmark.

Your next question comes from a Mark Reichman of Noble capital markets Mark. Please go ahead.

Thank you just a couple of follow ups with respect to the Russian suspension agreement.

I think Curtis mentioned that the there's a proposal on the does come from the Russians currently but.

Looking at kind of your range of outcomes are reasonable range of outcomes are you able to quantify or kind of put some numbers around the supply impacts to the U.S. market, whether that be in pounds or percentage of the market.

I don't think so Mark you know as is.

Yeah, Yeah. Yeah. This is parents yet I mean, its yes were subject to confidentiality and so we really can't can't say say too much about because right now.

Okay and the positive market.

Okay, and I think you'd already addressed the Canyon mine. So is there anything more to say about the non <unk> the noncore asset divestment.

In terms of kinda, how you're thinking.

Thinking about that and which you know kind of whats your criteria for for for non core I guess, we can kind of take a pretty good stab at it but.

But like for example, with whirlwind meet that threshold or just kind of how your how.

What was kind of the criteria you used to evaluate your portfolio and come to this this decision.

Well I again, Mark I think when you when do you.

Looking at our you know our market cap and compared to our peers and then all these these these these things we do and I know, we're accomplishing company.

For the right reasons, but were complicated we just don't think we get value for some of these properties and and the things that.

We're considering and we're not going I'm, not going to come out and say, which ones at at this moment that will become clear in the next month or two.

But the good properties I mean are proven properties, you know and and but they're they're they're not our core properties I mean, our core properties I think people understand it's Nicolas ranches Alta Mesa Lasalle complex, it's it's canyon.

You know its roca Honda, it's cheap you know there's other properties, we have that they cost us money to maintain them, there's substantial infrastructure as I said they have a have production histories.

You know and analog these projects if if the market recovers like we expect it to.

We probably wouldn't mind them ourselves anyway, so we probably would add them.

Contracted out Okay, we would have probably contract with them out and if we contract and now we would still received the or and you know I'm seeing so so yeah. We basically says it's very very unique and again. It's another example of were energy fields and do something to others can't.

Monetize these things if we get a responsible operator, we can get a cashing share deal.

If they get a re rating because they have a producing asset or a.

Production visibility, we can share in some of them. So.

So look at its its its a new concept for us at least at this point in time, we think that there will be a lot of people, saying I want a milling agreement because I'm. The only one that has one of the synergy fuels, we think that will be a differentiator.

And.

So, we'll see where it goes but as I said, we have to get sufficient considerations. If we don't we'll keep them for now.

That makes a lot of sensible. Thank you very much that's very helpful.

All right. So there are no further questions at this time you May proceed.

Okay, well look at everyone.

Thank you for joining the call.

I think you can tell I'm very excited about where we are as a company.

I've been doing this for a lot of years and I know I can't believe that we have this this is this significant optionality all the funds that we discussed I understand it's a little bit complicated if any of you have any other questions that you want to talk to me directly feel free.

To call me or call Curtis.

We're happy to talk to you and all I can say is watches space and stay safe and you know, we really want to see our shareholders.

Do very well out of our company in how we're placing it for the future. So thank you very much.

Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and asset you. Please disconnect your lines.

The conference is no longer being recorded.

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