Q3 2020 Cameco Corp Earnings Call

Thank you for standing by this is the conference operator welcome to the Cameco Corporation third quarter 2000, <unk> Conference call. As a reminder, all participants are in listen only mode and the conference is being recorded.

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I would now like turn the conference over to Rachelle Girard, Vice President Investor Relations. Please go ahead.

Thank you operator, and good morning, everyone welcome to Camecos third quarter conference call, we will be conducting the call a little differently. This quarter than we have the top two quarter we've.

We've had some very positive feedback on the Q way formats of our previous two calls and we'll continue with that but we also recognize there was benefit in a two way dialogue.

Most of the executive team back in the office and more certainty around our phone lines, we will allow time for investor and analyst questions.

During the listen only portion of the call. We've all address the most common questions weve been hearing jury our outreach with the investment community.

There's been a lot going on both for the company and the industry and we recognize there is significant interest and limited sources of information for investors.

Once we have concluded with his portion of the call. We will open the line up for your questions.

As always our goal is to be open and transparent with our communications. Therefore, we'll make ourselves available to speak to you after the call as well she's your questions not me address on this call there.

There are a few ways to contact you can reach out to the contact provided in our news release, you can submit questions through the contact tab on our web site or you can use that to submit question tab on the webcast and will be happy to follow up after this call with US today on the call are can get <unk>, President and CEO Greg.

<unk> senior Vice President and CFO.

Brian Riley Senior Vice President and Chief Operating Officer, Sean Quinn Senior Vice President Chief Legal Officer, and corporate Secretary and Alice Wong Senior Vice President and Chief Corporate Officer I'm.

I'm going to hand, it over to Tim to kick off the listen only portion of the call. Then we will begin to listen only Q and a portion of the call. After we will open it up for your questions.

If you join the conference call through our website about page there are slides available which will be displayed during the call. Today's conference call is open to all members of the investment community, including the media during.

During the <unk> session. Please limit yourself to two questions and then return to the queue. Please note that this conference call will include forward looking information, which is based on a number of assumptions and actual results could differ materially. Please refer to our annual information form and Mdna for more information about the factors that could cause.

These different results and the assumptions, we have made with that I will turn it over to Tim.

Well, thank you Michelle good morning, everyone.

Thanks for taking the time to join US today after what might have been a long night for many of you.

Hope you and your families are doing well, both physically and mentally.

So here we are we're now over seven months into this call, but 19 pandemic then I'm happy to say the company is in good shape and we're excited about the future of our industry.

In fact, I would say that over the course of this year, our belief and a bright future for our industry has strengthened.

That's why we remain a pure play supplier of the uranium fuel needed to produce clean carbon free baseload electricity.

We also remain very bullish on the uranium market.

Why is that well first around the globe were seeing an increasing focus on electrification for various reasons.

There are those that are installing baseload power.

Then there are those who are looking for a reliable replacement to fossil fuel sources.

Finally, there's new demand for things like the electrification of transportation.

This is occurring precisely at the same time countries around the world are focused on de carbonization and.

And that has led to the recognition from a policy point of view that nuclear will be needed in the toolbox to sustainably achieve both electrification and de carbonization at the same time.

China for example, who has a goal to have 25 million electric vehicles on the road by 2030 recently stated that its objective is to become carbon neutral before 2060.

A follow on study from a climate scientist in that country predicted that to achieve the school will require an estimated quadrupling of nuclear power capacity in that country.

That would be about 200 reactors for China alone double that of the U.S. fleet, which is currently the largest in the world.

So demand for nuclear is increasing however.

However on the supply side. There is some big question marks about where uranium will come from the fuel the world's growing nuclear fleet due to persistently low prices shrinking secondary supplies in the end the reserve life and unplanned disruptions.

These are the fundamentals that get us up in the morning, and why we remain committed to doing what we said we would do.

Let me remind you what it is that we said we would do.

First and foremost this is where it all starts for US we are focused on protecting the health and safety of our employees their families and their communities.

And we're doing that every day, we make decisions about how best to manage our operations and our workforce through this pandemic.

So far we've been successful.

And with what appears to be a second wave of the COVID-19 pandemic. This remains our priority.

Second we have not wavered from the execution of our strategy.

Let me remind you that there are three fronts on which we are executing our strategy operational marketing and financial.

On the operational side, we have implemented plan supply discipline, which includes the suspension of production at Rabbit Lake or U.S. assets and of course at Mcarthur River and key Lake.

The supply discipline to slip a lot of pounds in the ground and kept them off the market almost 87 million pounds in total.

On the marketing side, we've been purchasing material on the spot market to meet our committed deliveries.

Our purchasing activity is pulled more than 50 million pounds off the spot market a place that material into long term contracts.

In total that is almost a 140 million pounds swing in the supply fundamentals.

So we certainly have done a lot of heavy lifting.

In addition, we've shown sales discipline sticking to our value strategy.

We've shown strategic patience not committing our tier one pounds under long term contracts that don't provide an appropriate return or risking having to deliver them into an oversupplied spot market.

And we're seeing our patients pay off.

Well the on market.

Tivity is modest it is gaining some momentum.

However, it's the off market activity that gets us excited.

We continue to see this area growing and historically it has been a leading indicator of a broader market transition.

But remember this is not a subscription based business.

Many of these are big chunky agreements that take time to negotiate.

For example think of our Bruce power contract in 2018 or the contract that we signed in 2010 with the Chinese and our 2015 contract with India.

All of these agreements took time to negotiate but the reward was worth the wait.

Finally on the financial side, we've been very deliberate in shoring up our balance sheet. So we have the financial capacity to self manage risk and maintain our strategic resolve.

And we were active on this front in October.

We took advantage of favorable debt capital markets and further strengthened our balance sheet.

We refinanced 400 million in debt coming due in 2022.

With a record low coupon rate for us of 2.95% and we reset the maturity to 2027.

I'm happy to say that we're performing well on all three fronts.

Obviously, our strategy was thrown a bit off course with the unplanned disruption of production at cigar Lake in March.

That was not part of our plan when we started the year.

Having cigar Lake running was always part of our strategy.

It contributes to our financial capacity by helping to offset the care and maintenance costs of our supply discipline and the impact of our purchasing activity.

So we're pleased to have it safely restarted returning us to our strategy.

It's not without challenges, though there are still risks and we need to be vigilant.

Before we begin the Q and eight I want to highlight a few other items.

First of course is related to our announcement last week.

As you will have heard the CRC is seeking leave to appeal to the Supreme Court of Canada, Despite to clear a decisive rulings in our favor from the tax court of Canada, and the Federal Court of appeal that determined we complied with both the letter and the intent of the law.

It is incredibly disheartening I'm, a fair for our employees and many other stakeholders to be once again thrown into uncertainty.

We have prevailed at every stage of the legal process.

You've heard me say this before if the CR he feels the law aren't accomplishing what they want.

Then the government should change the laws moving forward not pursue the same arguments over and over again before a different court and expect a different outcome.

Cameco has consistently worked hard to be a good corporate citizen.

We have invested billions of dollars in Canada contributed considerably to the well being of our communities.

And I've been recognized as one of Canada's leading partners employers and supporters of indigenous people.

As we manage our way through the extraordinary challenges posed by the COVID-19 pandemic, we've not what laid off any of our employees and continue to provide support to our communities.

At a time when Canadian businesses are facing unprecedented economic upheaval challenging global markets on a worldwide pandemic series actions cast a chill overall companies in Canada, there trying to compete on the world stage.

However, if leave to appeal is granted we remain confident in our position, which has thus far prevailed at every stage of this process and we will be ready.

Oh.

I also want to highlight the leadership role Cameco has played in trade policy and market access disputes, including the section 232 dispute nuclear fuel working group and the Russian suspension agreement renegotiations.

These are important issues for us and we spent a lot of time on them and are quite pleased with the result, particularly the amendment and extension to the Russian suspension agreement.

The amended agreement provides greater certainty for the industry and the nuclear fuel market moving forward and establishes a clear set of rules are on access to the U.S. nuclear energy sector by Russian nuclear fuel suppliers.

We believe it provides us with an opportunity as a commercial supplier to help us utilities de risk the reliance on Russian supply.

Finally, I want to highlight our focus on delivering our products responsibly and addressing the SG risks and opportunities that we believe will make our business sustainable over the long term.

This is super important for us and we believe it is a competitive advantage.

We're very proud of our 30 year commitment to protect engage and support development of our people their communities and to protect the environment.

And I want to remind you that a 100% of our product goes to producing clean carbon free base load electricity.

Our decisions are deliberate.

We are responsible commercially motivated supplier with a diversified portfolio of assets, including a tier one production portfolio that is among the best in the world.

We are well positioned to take advantage of a market, where we believe the risk to supply is greater than the risk to demand.

So with that I'm going to now turn things back over to Rachelle for a few questions and then we will open it up for your questions.

Thanks, Tim.

Cameco has been on a current strategy curtailing production and purchasing material on the spot market for a number of years now how effective would you say its been and when do you expect to realize the benefit.

Well I've said I think it's very effective let me start by saying this that we couldn't continue on the way we're going in the post Fukushima World overall.

Over producing pounds that nobody really wanted or needed we actually started exercise discipline back in 2014 in the conversion market. When we can we curtailed our conversion at our Springfield facility in the UK.

That then started the cascade of.

Other reductions of production and the conversion market leading to a market in conversion that today I would say is quite healthy.

We did the same with uranium then starting in 2016 wasn't a real happy there remember when I flew up to Rabbit Lake and announced that we were taking that facility down same day, we took down our us facilities in Wyoming, Nebraska, and we pulled back on our production at Mcarthur.

River and then of course, we followed up to.

With our 2017 announcement in Mcarthur River key Lake So as I said in my comments, we've taken about 87 million pounds of uranium off the market.

So the supply side, we think we've done a lot of heavy lifting on that side at the same time, we've been purchasing material grant and his team have been out to purchasing material I think weve pulled 50 million pounds or more off the spot market there. So.

140 million pounds.

That could have been produced store that have been purchased by us to put into a long term contracts. We think we've done.

Sure and maybe more on the financial front, you've heard us talk about.

The strength of our balance sheet, we've been very conservative in that and after 10 years of bed highway to be in the shape. We're in right now with our with our balance sheet, we're pretty proud of that.

And we think the markets improving and we think as I said in my comments. This whole electrification de carbonization carbon neutral by 2030 40, 50 is playing in our favor and as you've heard from world leaders were not going to get there without nuclear and so we think we're in.

In the REIT space on that we think nuclear is got a role to play.

I just want to mention a couple pieces on the supply side.

That they're coming coming due really quickly I think of.

Our friends.

DRA in the Ranger mine topping out in a couple of months I mean, they have been in the market for decades, we're not going to see that supply coming any more common akamine, Tunisia that used to have some responsibility for same thing in the March of next year.

To to shutting down their production, we heard from BHP recently that the long anticipated expansion.

The Olympic Dam mine not not going ahead at least not at this time, so some real supply disruptions at a time when I think the.

The demand is growing not rocket speed, but growing nonetheless, so we think we've done the right things. We think we're in a good space and I can tell you we're super optimistic about the future.

Thanks, Tim.

Okay and with the increase in cases of COVID-19 into confirmed cases at around US Mcclean Lake Mill, what is the risk that you will have to suspend production at cigar Lake again.

Well, let me restate it and always stated on every questioning on the health and safety of our employees and their families and our communities is number one, especially through these cobot times and it will be.

Always and so we're watching that very closely.

We were down for five months at cigar Lake. We we moved quickly in this pandemic. We said we don't want to take the risk that that we have a an outbreak at our sites and that it could be spread into the communities are under sites. So we moved very proactively and we think responsibly to to deal with it it was up at the site.

Cigar Lake about a month ago, and I was absolutely shocked at how.

How many safety measures have been put into place. So you can't get on an airplane to load your temperature being taken without masks their spacing on the planes you get checked when you arrive the cafeteria looks like.

Call Center Theres, so much a plexiglass put up in there and so those are the measures weve taken that we will do everything we need to to protect our employees. We certainly hope we don't have an.

An outbreak at our sites or at the at the Mclean site, where the cigar lake ore as milled and they're doing a great job over there as well, but we'll watch it every day, we come every day and we have had a few close calls where someone is not feeling well, we quickly isolate them test them and make sure. They are good and and so we are taking all for.

Cautions, we need that doesn't guarantee we won't have an issue going forward, but for now I think were our people are doing a very good job.

Great. Thanks, Tim.

Back to the market now are you disappointed by the lack of term business, you've been able to secure and what will it take to get utilities interested in term contracting let me turn that over to grant for an update on the grant yeah. Thanks, Tim given the fundamentals.

I think its reasonable that somebody might expect more term activity has been happening in the industry and just let's review those fundamentals I know Tim went through them, but I think it's really important to emphasize on the demand side. The global outlook for nuclear is improving doing during due to increasing electrification with decreasing carbonization.

And of course, the lack of replacement re contracting for uranium over the past number of years as produced substantial uncovered requirements. So thats good news from a demand perspective.

And this is occurring while on the supply side, we've seen short term supply be under pressure due to planned and unplanned supply cuts we've seen the longer term supply under pressure due to a severe lack of investment in future productive capacity thats required and we've actually seen this occurring.

With it within if you will a geopolitical storm that's brewing low prices have created significant esso, we supply concentration.

Low prices have exacerbated the demand supply gap in the global uranium market you know you've heard us say before but 90% of uranium is consumed in countries that have little or no production.

Or 90% of uranium is supplied by countries that have little or no consumption. It's a highly trade dependent commodity but the days of seamless globalization appear to be over replaced by an era of strategic regional I, just read regionalization, where origins matter.

Trade policy market access issues become dominant Tim talked about the critical minerals initiatives between various countries to secure preferential markets in the US alone. The section 232, the nuclear fuel working group the RSC extension.

All contribute to a cloud around the supply that doesn't match the optimism around demand. So it's important to kind of start with those fundamentals and conclude yeah. You would you say.

Sort of expect to see a little bit more contracting just based upon that but there's a couple of really important observations to make when you think about term contracting in our business.

The first point I would make and I know many are familiar with this but I want to emphasize that we're talking about new contracts here not our committed sales portfolio. Our committed sales portfolio are the contracts, we signed in the past and they've proven to be extraordinary resilient through these times, especially during the pandemic. So we're talking about the new business that we bring into the market at this.

Second important point is that this term demand is delayed or deferred but it hasnt disappeared. It will come to the market at some point because simply put there is no substitute for uranium.

It will have to be procured and there's more demand piles up into the same future period, it will be chasing less supply and we've seen that movie before when that happens.

The third point to remember is that historically the transition in our markets have been driven by shocks rather than a rational realized station that prices need to go higher to incent future supply. We only have to think back to the supply shock of 2006 due to cigar lake flooding, where the demand shock of 2010.

Due to substantial Chinese term contracting coming into the market.

And when you think about the current demand supply balance it's vulnerable to a shock as the 2006 and the 2010 markets were simply because of the lack of investment in productive capacity.

The fourth point I want to make and this is really important to there is a difference between the term contracting activity that's happening at the market or industry level and what's happening for cameco, you've heard us talk about that we've been enjoying a level of off market activity that that seems to exceed where others are out in 2019, we did achieve replacement.

Great contracting we booked more new future business than we sold in year as.

As this year began we had a very full pipeline of uranium and conversion services.

Heard us talk before cobot has caused some delays obviously, but the level of activity is actually grow it hasn't diminished in that pipeline.

And as Tim talked about.

We never suggested to anyone that term contracting success should follow a predictable quarterly target.

Term contracting at our industry takes time consider for example that the conversion market price transitioned last year and conversion remains an important to off market for US right now it just it takes time to translate those moves into demand and and as Tim said term contracts are typically chunky.

He mentioned the China contract in 2010, India 2015, Bruce power in 2018 so.

When we step back and look at this market and we look at the fundamentals. We continue to be optimistic we continue to be bullish and we think were positioned right, where we need to be from a term contract and point of view.

Thanks, Grant and while we're on the market and contract.

Can you help us understand why we're seeing a softening in the spot price.

Gradco it sure.

Hey, it's probably important at the outset to just remind everybody that when we when we talk about the spot market. It's not to suggest in any way, it's the fundamental market in our business.

It isn't the fundamental market.

It's supposed to be the market that.

That just reflects a discount to production economics, it's supposed to be a market where the term price is whats telling folks what's required for future production.

Since Fukushima the spot market took on an outsized role.

And this disciplined supply with without a term contract home was dumped into the spot market net put downward pressure on price and this ultimately triggered the term price down.

It brought it down to be essentially the forward carry trade of a surplus spot market.

So largely the term price signal has failed and its failed in the last couple of years. So no surprise the investments that are required today to ensure productive capacity in the future are not occurring because of that failure. So we do have some broken signaling there.

When you think about the spot market remember, we are the largest spot buyer, but it is not our focus from a sales point of view, so maybe I'll make some observations as the largest spot buyer and here's how we think about spot today.

It's important to understand its not a story of oversupply. It really is a story of under demand and I don't I don't mean that to just be acute comment, but we've seen a real discretionary demand fundamental discretionary demand in the spot market, but yet we've seen.

Willing sellers come in so so we've seen.

A little more supply or a mismatch between supply and demand.

In terms of supply where is that coming from.

The main source coming into the spot market is uncommitted primary production.

This is coming from supply centers that don't have a term contract how it's not inventory mobilization that might have been a bigger part of the spot market through 2015, 16, and 17, but it's not the story of the spot market today.

Its important understand this does not include cigar Lake material. For example, cigar Lake has produced for term contracts, it's not sold into the spot market. So what we see is uncommitted primary production that just shows that mismatch for when demand is in the market.

And the uncommitted primary production ends up in the hands of traders, who churn the same material around in around the market, creating what I would call the illusion of ample supply, but in reality I would say about half of the spot market is simply this chart.

But here's the good news.

This is not sustainable.

Some other sources of uncommitted primary production as Tim mentioned, RCC, I think the range or might think the common yet Mike.

For other sources of supply as the term market demand picks up primary production, we will find a term contract homes and not be forced through the spot market.

In addition, some of the expected future production just simply won't be there if those who were counting on Olympic dam expansion or counting on so my air or Paladin to restart they've shown incredible discipline through this or the various and sundry advanced exploration projects that are simply put a long way from reality.

And ultimately the traders the intermediaries are not backed up with productive capacity. So the churn will reduce and ultimately the market will transition back to the term price, reflecting production economics and if history is to be our guide. It will initially dramatically overshoot for a period of time I think uranium.

In 2006, and seven think uranium in 2010, 11 and think conversion in 2018 2019.

Great. Thanks Grant.

Final question for this portion of the call what are the two main improvements coming out of the amended Russia pension agreement and are the changes driving new demand.

Well I'll take the ownership I mean, the biggest value coming out of the Russian suspension agreement.

Is the certainty it provides to the market I mean, we've been talking about this for probably a year or more know how little bit of an overhang on especially the us market not knowing where it was going to land. So.

The the certainty. It brings is welcome I think by everybody and was everybody delighted probably not but I think the hit a good middle ground I have to give credit to film and then Jeff Kessler Who's at the Department of Commerce, who had the.

Enviable job of trying to broker and arrangement between all of the disparate parties in this and I think did an absolutely outstanding job in that we tried to be helpful.

To to him and the department of Commerce, I know, Sean Quinn and others in our shop, we're trying to provide our views on how we could reach an agreement. So the process ended up with an agreement. So we're happy with that what are the.

Main improvements I think theres theres probably too.

It's number one would be the cap on the E U P. As we call it or translated it's the cap on the amount of uranium and conversion that can come in.

Into the market, that's really important for us it's at levels that we think are acceptable and so thats going to be a huge benefit than the allows us access to a good chunk of the the US market and then there are some rules on return fees. This return feed issue has been an issue that the return feed wasn't actually.

Being returned it was going out in the coming back right away and ending up in the us market them. So there's some pretty tight rules around that now and we think thats going to be a big benefit. So overall as I say is any one extended to both the agreement probably not but as everyone. Let's say, it's a it's a good agreement that.

Going to work for the next 20 years I think so and so we're very happy about that.

And are you seeing any new demand as a result.

Okay.

Well I think it's just.

It's one item in a list that we've been talking a boat thats been holding up demand. The Rs use has caused a bit of confusion. The cove. It obviously is kept to buyers in the background. There has been material in the swap the utilities are covered all of those things that we've talked about but this certainly removes one impediment but to grant.

I'm not sure. If you have any further comments on that well certainly can confirm that with the completion of the.

Amendment to the RF say are the extension we have seen interest in non Russian supply of uranium in conversion. We we expected to see it we are starting to see it and very excited about it because it creates great opportunity for us with our Canadian supply.

Great. Thanks, So that concludes this portion of our call I will turn it back to the operator for the open Q and a session.

Thank you we will now begin the question and answer session in the interest of time, we ask you limit your questions to one went to one supplemental.

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The first question is from Andrew Wong from RBC capital markets. Please go ahead.

Hi, good morning, Thanks for having you on the call. So maybe we'll just start the Rcs and patronage.

Heard about.

So with the amendments I mean, there is a pretty significant GAAP EPS in the quarter between you.

And natural uranium and even in 2021, that's pretty big gap.

How much of that gap do you think has already been accounted for with us utility purchasing non Russian material.

And if the utilities have to close that gap relatively quickly just went on and one is coming up pretty soon.

Stimulate any sort of near term spot demand.

Yes, Andrew Thanks for the question and thanks for joining this morning.

I have heard Sean Quinn your.

Talk about that I think probably the good healthy chunk within quarters already used up.

Negotiations in the early years were to cover existing contracts that were already in place I think so it's probably used up already but Sean do you want to talk about that.

Yes for sure.

I think I'm, just going to ratify your answer our understanding through the negotiation period with that.

The quota.

Both for which went to the for the first two years is heavily subscribed already under the existing contract.

Yes.

Sorry, so so just to be clear so you.

You are saying that there the chileans have already.

Source spot or the.

Non Russian material that they would have to return.

Thanks.

Hi, Andrew its grad I'm, just going to jump in here so.

Part of the the agreement actually included what you'd call grandfathering of some of the contracts that were signed.

In perhaps you could consider it a good faith prior to the expiration of the RSC, but for volumes outside 2020, so theres been some coverage of that some of those contracts have obviously been preserved as part of that grandfathering that really puts the opportunities for supply.

Thank the uranium in the conversion into the enrichment services with the Russians out kind of in the 20 to 23 window and so when I said earlier that we can confirm that there's pent interest for non Russian uranium and conversion, it's really out in that window as opposed to the remainder of 2020 and 21 because of.

Because of that grandfathering effect, but to your question have we seen those shortfalls covered yet no. We havent thats demand that we're actually expecting to see some of it will come off market will get utilities, U.S. utilities coming directly to us looking for uranium in conversion.

We think some of it weve seen on market with some of the spot and shorter term interest that have.

Come out from the U.S. utilities, just in the past I would say couple of weeks, but it is a source of demand in the nearer term that wasn't expected prior to the conclusion of the RF say.

Okay. Thank you for clarifying that.

And then just give us an update on your views on carry trades that happen in the market.

Restaurants are pretty low right now so does that help.

Some of that facilitates a lot activity or maybe does the excess material that maybe isn't on the market as much nowadays is that maybe limit some of the activity I'd just be curious to hear your updated thoughts on that thank you.

Yes, thanks, Andrew its grass again, the carry trade part of our business, we're seeing yet diminish and I'm not going to suggest going away, but we are seeing it diminish. So it really is a function of the oversupply in the spot market that we had seen in the last number of years combined with low interest rates as you say because then you just.

Carry it out into the near or part of a term contract, but what we've seen I think importantly, as is a number of changes to the market structure that limits the amount of material that could be grab today and fed into carry trade. I mean, just just think about some of the sources of supply the deal we barter program, which came to.

I would add that used to be a source of supply for for traders to grab material.

When pre Cove. It you probably would have expected more I'm committed primary production to come into the market, but the Cove itch curtailments. The fact were 20 million pounds and growing in terms of a shortfall. This year alone in the market has that means there is less material to grab to put into a carry trade.

Tim talked about the rules on Russian return feed that was another important source of material that kind of got I use a pejorative term, but laundered through Europe in order to come back into the us market and that was another source of material that could be used for carry trade. So importantly, it's those sources.

If I'm committed supply that are drying up so even with interest rates low yeah.

You are still seeing limits to how much you can grab tuck away into the carry trade I think it's probably one of the reasons that we have seen traders go and strike deals with some of the uranium funds to two oral material or too low or have the funds loan material because.

Thats, reflecting that Theyre just not finding.

Those sources of supply available.

Perhaps had been more apple in the past so it's that combination of ample supply plus low interest rates, while the ample supply part of it is going away that's part of the the underlying fundamentals that.

That make us fairly optimistic.

Okay perfect. Thank you very much.

Thanks, Andrew.

The next question is from Greg Barnes from TD Securities. Please go ahead.

Thanks Grant can you.

Characterize your discussions with the utility them to.

Contracting.

I know you said in the past year activity is the highest it's been in years, where does that stand today.

Alogent, you feel fine utilities and actually getting some some.

Yes, great question, Greg So the distinction that we often make and I just want to be maybe a little bit more clear on it that I've been in the past is this notion of on market versus off market. So when we say on market. What we're talking about is when competitive RFP needs for term supply come into.

To the market and those are the ones, where we still are seeing.

Quite significant competition for them.

And where we are preferring to operate right now is what we call off market and Thats, where we have bilateral exclusive discussions with customers on future supply in and when we were talking about our pipeline earlier in the year. We were really talking about these these off market types of conversations and.

So I would say the common denominator here for these conversations that they tend to be with our bigger customers the ones, who have bigger fleets more predictable fleet.

Probably a greater sense of the need for supply going out into the future.

These are the utilities that that look at the supply disciplined decisions and look at the continuing a risk of the unplanned disruptions to the fact that it Cove. It is not just a 2020 event, but could have an echo into 2021 and they're looking for production they recognize that.

At the spot market is not there to satisfy their run rate requirements out into the future and because they're they're coming to us off market. We have an opportunity I think to reset the EPS the expectations away from just simply where the price is today, but to where it kind of needs to be out into the future.

And you know and we've said this before.

We have a high preference as cameco for market related pricing out into the future. We we don't believe today's prices are going to reflect prices out into the future required to make sure supply is there and so for us those off market conversations or a way to kind of tipped the balance a little bit back into the type of terms and condition.

Ones that we want and in terms of a framework. We're still overall trying to pursue a portfolio that has market related exposure, we recognize that a lot of utilities also need some base escalated pricing. So we're not prepared to say no to all of that.

And often times that where we're successful off market, we can strike kind of a hybrid balance where a portion of the of the contract of majority of the contract is market related. So it gives us that exposure out into the future and a portion of it is base escalated, but for us it's important that the expected value out into the future.

It is considerably more per pound than it is today.

And that for US is far more fruitful then then competing on market, where where we're still seeing some other producers willing to to really.

Dig deep to offer uranium at cheap prices, but but I just want to mention that with without it being an alarming statement because the fact that the RFP is that are coming on market.

Our law.

Largely base escalated is actually a pretty powerful signal and I think it's a positive signal that people need to think about this.

If utilities.

Fundamentally believed the price of uranium wasn't going to go up we would have no problem negotiating market related contracts because their view would be well cameco, you're taking all the market risk. We don't think the market price is going to go up so you're going to be taking a lower price out into the future. So the risk is all on you.

Okay go ahead, let's have a market related contract but of course, that's not the situation. They understand that today's prices do not represent where they need to be to ensure supply is there. So what they're doing is coming to the market in a competitive way and trying to get as much base escalated pricing as they can and so yes, yes.

It would be great. If there was a little bit more disciplined by some of those that are bidding into those base escalated on market RFP.

But there is a pretty powerful signal in there that this as utilities recognizing that these are low prices and they'd better lock him in as much as possible. So so Greg sorry, I wondered between our off market and on market, but I just wanted to be clear the distinction there because sometimes we see it get confused a little bit.

I just wanted to check on that that's all very helpful. That you are still of the view that going forward you will be able to.

Continue to replace your portfolio and continue to grow that going forward.

Yes, so right.

Yes, so we talked about at the beginning of the year, we had a a pipeline of uranium and conversion service discussions from origination to negotiation that was as big as it's been.

I would say.

Since before Fukushima happily none of that demand. If you will has gone away. We haven't had a utility come to us and say you know what this covance situation or for other reasons. We don't want to have a discussion. So we haven't seen anything go away. We have seen some delays I talked about this.

In Q2.

Our fuel buyers are our customers.

Weren't immune to co bid and so we saw a response from them as Cove. It was within their jurisdictions that they operate their focus was really on making sure that the material. They bought in the past for delivery in year was going to show up so they really kind of tree as their activity to making sure they could get the fuel bundles.

The need for running this year in the cobot environment as opposed to thinking what they need in terms of uranium supply in a in a few years out so that that's created a delay but but the good news is it hasn't caused any any demand to disappear and then I would say things like the unplanned supply disruptions that that hit.

It said that hit in Catholic Stat.

More demand to us to discuss and in fact, we just talked about the RF say the restrictions on Russian uranium and Russian conversion and then the need to replace that has brought more demand so that pipeline.

Is very active and we're very happy about that because it's always been a leading indicator that a broader trend that transition in the market is not for us for not too far away, but but Tim did also mentioned in his comments and this idea that.

And we've heard it a little bit in the market and we just we want to be absolutely clear about this we have never suggested that that pipeline should result in predictable quarterly.

Contracting reporting like.

When we negotiate these contracts they take time they can be chunky. The reference I made was to conversion are very active part of our portfolio now is conversion while the conversion market transitioned last year I got the kind of delay it think about so we have never suggested that by Q3 we.

Hit X amount of term contracting or by Q4, because that's not the way it works in our industry I am not trying to set up a disappointment. The pipeline is still there the conversations are still there, but making sure we negotiate a quality contract takes priority over negotiating a fast contract.

Yeah.

Great. Thank you that's it for me.

Thanks, Chris.

The next question is from Alexander appears from BMO. Please go ahead.

Great Good morning, sorry.

Right.

In the market.

A little bit.

Just given because that's the problem reported.

Most of the cases that its operations.

Operationally this week.

Is the situation that.

Having any impact on your purchasing ability from income right at the moment obviously.

If you add up year to date purchases.

Attributable, but just from the operation.

Still running a little bit below where we see production. So can we expect thats when volumes.

Is it still just down the timing or is there anything else, we should be thinking about the matter.

[music].

Well, Alex we're in touch with the with the because Adam from on how things are going there on a daily or weekly basis and of course, they're there.

Taking the same cautious proactive steps as the rest of us have the but taking their production down this summer for some months and now theyre starting it back up and as we've always said in the iOS our world that takes some time, it's all drilling all the time and so to remobilize, the drills and get the get the holes drilled and get the fluids flowing to it some time so.

Theres been a loss of production there I think overall, they've talked about 10 million pounds I think.

Through the summer and through those months and so yes, we're all a bit behind I think it goes extend.

You know what we're watching to see how quickly they can get back up.

Gary as we have said the you know the production shortfalls might continue into 2021, depending on how they can ramp production back up again so.

Nothing Theres nothing secret about what's going on there I think they're just like the rest of us being cautious and now we're all watching for whatever the second or third wave we are seeing some.

Some increased cases here in this discussion again, so we're being super cautious and I know 'cause extends not out of the woods by any stretch so nothing.

Especial I look to Sean.

That that we're aware of and we hope our production will catch up.

In the months to come together.

Yes, they are still on track to produce the kind of reduced level of estimated earlier this year Trysix hundred time, so that's down from the 3200, but.

They are still on track for that yeah Yep.

Okay. Thank you.

Thanks, Alex.

The next question is from Gordon lesson from paradigm capital. Please go ahead.

Hi, good morning.

I understand you're hesitant to provide specific numbers to justify restarts.

But is there any relative data with respect to term prices and supply demand balance, but comment on related to production from Mcarthur River Rabbit Lake and others.

Well I think we've been really clear.

On Mcarthur key that we're keeping it down until we can just the conversation ramp to said, Greg refill our contract portfolio at levels that are acceptable to us and our shareholders and we're not there yet we've got some some good leads and we made some great progress last year in Q.

We sold in.

2019 about 36 million pounds under long term contracts, we continue to work on those it's been a bit delayed by covert but we have we.

We have no doubt, we will be able to refill or contracted basket going forward. You know just well grant was talking I was just looking again I think its trade Decker you X numbers 716 million pounds uncovered a 2030 and if you go to another five years, you're talking to over 1 billion pounds, the implied or something like that.

The material is out there to be sold.

Been in a bit of a hiatus here due to covidien and our assays and other other matters, but we expect that to pick up again, and we don't have a firm date it'll depend on the contracting and utilities that want to production from a mine that they can go and visit and see the production coming out of once we have that.

In place then we would make the move to to restart Macarthur of course in consultation with our partners. There and then of course, it's not the flick the switch and that comes on the then Theres a month or two.

To go back and we have been there since it's coming on three years now that we've been down. So we've got some work to do to bring it back on so.

It's going to take us some months.

Two maybe year to even bring it back up and get it going so no. We don't give out specific numbers other than we'd need to the comp contract portfolio not we don't need to sell every last pound out of there, but we certainly want to healthy.

The dose of the pounds that would come out of cart. There we want them to have a home before we restarted.

Okay. Thank you.

Thank you.

The next question is from Brian Macarthur from Raymond James. Please go ahead.

Hi, good morning, So I kind of want to follow up I guess not question Greg question. So.

The whole expected value of contracts, and obviously I'm ever to be able to check thats from the outside but are you actually going to utilities and saying.

Whatever you thought the base case would be for a restart at Mcarthur and our EBITDA going forward say 12 months ago, because the longer that stays down there is an additional costs that keeping it down the cameco bears are you actually pricing that in going forward the longer it takes to get everything back into the market.

Because there is a cost to keep everything shutdown as a shareholder I kind of want to rate of return. So you actually say so you could have got it contracted 45 base a year ago, you'll go to them and say because it's taken longer because you wait a little longer I now want to base of 48 I get all the part about the market related thing, but what I'm trying to do is figure out whether you're trying to capture.

That additional cost for this strategy as time goes by.

Yes, Thanks, Brian Grant want to take that one on yes, well absolutely right. We're trying to we're trying to.

Make sure that we're capturing as much value for the production that that comes out of our assets as we possibly can.

So what.

What was has been an important development and you will have noticed it.

One of the trade reporters in our business Tradetech came out with what they call their production cost indicator and this was an important and I think I attempt to correct. The signal failure that I talked about earlier, whereby the term price no longer has any link to production.

Opex the term price its been dragged down to be nothing more than the carry trade on on the spot price and what has been an oversupplied spot price and so a very positive development are in our industry is a is a trait reporter coming out in recognizing this broken signal and then doing their part to help.

To help change it and suggest that if you want idled capacity, that's already licensed and already permitted to restart there's a cost to it and that cost is according to them. It's in the it's in the mid Fortys and that kind of reset the expectations and that's on the heels of.

I would say our reset in the spot market as well right. I mean, this time last year pre covidien all of that if you add the incredible market participant what they thought a cheap price for uranium would be they'd probably say 20 Bucks a pound and that same person today's probably same 30 Bucks a path. So it's a very significant change from where that.

Price expectations are on spot and the shift over to production economics. So absolutely we're trying to capture as much of that value as we can.

And.

And do that obviously before theres any signaling about bringing supply back.

But conceptually we you try and capture that like I mean, you can capture rate or a guarantee more guaranteed rate of return depending on how much based function. There is versus how much you said market related in the future is because that's just not the option value on or you want to retain that you're thinking your balance of that change is it.

Go forward as you.

Effectively incur more costs as you wait to see what I'm, saying.

If youre, suggesting that we're looking at essentially to base load at fixed prices I would say.

No we're actually looking to maintain that portfolio balance because remember we fit on the other side of the trade before when when we fixed in a lot of prices.

The late the late Ninetys early two thousands and missed a lot of uranium price upside because of that and that work, where I think criticized mightily in the market by probably you and others and we look at the fundamentals today, and we say boy they have an eerie similarity to that.

Period of time in terms of our very complacent period, where prices got so low they started destroying supply kind of feels very similar to today. So we want to maintain that upside.

To the extent that those off market conversations do.

Contain a utility that really wants a base escalated portion well that would be our opportunity to lock in some of that value, but but yeah. We don't want to just simply based escalate to restart Mcarthur and then have no leverage to the upside with that wonderful asset that we've seen that movie before and that Wasnt pretty.

Equally attractive to us either so it's trying to strike that balance Brian.

Great. Thanks very much.

Thank you Brian.

The next question is from Lawson Winder B of a securities. Please go ahead.

Hi, Thanks for taking the question guys just.

Your commentary on churn.

David.

You take 50% of the market that you've seen this year is coming from chart and.

Curious to get some context on that in terms of where that comes from.

How high is that being.

In the past and.

Have you have you seen any deterioration in the amount of the spot market that if that is true.

Grant.

So overall I think the spot market has always had a fairly significant amount of churn and in fact, I don't know that saying 50% of the market is just traders to traders back and forth that thats, probably roughly where it's always a bit when we had our.

Standalone trading arm, new cat, we lived in that space and saw it everyday and came to recognize just how much of it was actually the same pound or cagey. You have you have six going around and around and around and keep being counted separately. Each time, which is why I say it creates this illusion of ample supply so I don't think.

The the proportion of the market Thats churn. This change it's the size of the market that's changed and of course, the reason that the spot market got so big it's because.

And you know this very well, but let me just kind of go through a bit of history again, Fukushima with the demand off event and demand came down in our industry.

Precisely at a time when supply was still coming on it was coming on as a result of higher prices discovered and no seven and discovered in 2010, which led to investment decisions, which led to supply and that supply was coming on while demand was falling away.

In reaction to the Fukushima event, and we ended up with the supply that had no hall and rather than those who control that supply, making smart commercial decisions. They just kept producing and so the spot market became the only option for that there was no robust term market for them.

They had no other place to sell it and it hit the spot market. So it's the size of the spot market.

That is unique right now and I went through a bit earlier, a bunch of reasons why I don't think thats sustainable the first being that some of those uncommitted primary production centers are going away and I talked about ranger and common yet.

We also.

Talking about the the fact that.

When you look ahead some of the uncommitted primary production that you thought might have actually grown like BHP supply for example is not going to.

And of course, the those who might have thought that there would be a whole bunch of new production Greenfield production from from Juniors, who have said well, we don't even need a term home for that material that would have raised an expectation that there would be lots of material in the spot, but that's not a reality that thats not going to happen. So.

The good news for US is the size of the spot market in the face of the fundamentals is not sustainable but the churn part of it I would say, it's always kind of been about 50% churn.

Okay, that's great and then that you actually.

Based on.

The Uh huh.

Potential future supply unbuilt projects.

Pat you mentioned that.

You see.

Please.

Supplied dating on contracts in the term market and I just wanted to ask a question I've asked it before but.

Have you started to see the adult projects when Eddie term contracting, which you know.

A lot of them said once again build that of course start up and not before thanks.

Yes, absolutely not.

We use the term and.

And we actually are really strong on this point this will be an incumbent's recovery.

If youre a utility and you turn your mind to future supply of uranium.

You have a choice you can either go to somebody who has a licensed permitted facility with an operating history.

Or you could take your chats with something Thats unlicensed Unpermitted has no operating history.

And you are going to go for the former that's exactly why we're seeing the off market activity that we're seeing at cameco. So.

It's an incumbent's recovery it will go to cameco and cause Adam problem and our Rono before it goes to these other.

I'm proven sources of supply and that's just a.

A normal I think rational transition in the market that will occur.

And so we don't sit everyday and live in fear of these projects because we know what the reality is like the comment we have made in the past is.

To the extent that there's hyper promotion on some of these projects.

That is hurt by utilities, and so maybe the ones who are worried about future supply yet and are a little more complacent.

Might hear something like these extraordinarily low operating costs and they might say well I'm going to wait for that material because that's going to be in the market well again, we've seen that movie before we've seen the OWS six so seven period when there were hundreds.

Of uranium companies that were promising supply and I think only for emerged out of the 400 that were all around the planet at the time. So we've seen that movie before it's a improving fundamentals that has us very optimistic because it's going to be an incumbent's recovery.

Okay.

Thanks.

Thank you lost.

The next question is from Stanley from Adam Brown. Please.

Please go ahead.

Hi.

Well, that's not right on that.

No we just wait for that every Doug.

Yeah.

Just a couple of quick questions first on the inventories.

Looks like you are going to be moving into a phase of drawing them down over the next quarter.

Quarters do you have a sense of.

What I'm.

You may talk about that from a cash management perspective of managing inventories.

Yes, we can correct, yes, thanks Fai that's a great question.

And im good sorry about this today folks, but I'm going to provide a bit of context again, so that that's very clear how to think about this site.

When you look at Q3, we've made a lot of purchases. So far this year 26 million, Pat and and we have an inventory of 14.8 million pounds.

And so.

With with the view that folks are going to say well that might mean, there's there's less purchasing required by cameco or camecos building, an inventory I want to set the record straight.

Mcarthur key are down and there remain down and as long as Mcarthur key or down purchasing will remain a significant part of Camecos life. So anybody who thinks that purchasing is coming to an end for cameco would be wrong that would be the wrong conclusion to draw.

As you know our inflows between production and purchases and our outflows being sales.

They always ebb and flow and we build inventory ahead of a higher delivery period. For example, so you've seen that on a quarterly basis and and I would say that general principle is still at play here and the example, I'll point to is that at year end 2019, our inventory was below target and so.

So we talked about at the outset of this year, we would have to buy to meet our committed sales portfolio, but also to rebuild a bit of an inventory.

So we certainly have fourth quarter deliveries to make under a very resilient contract portfolio.

And we have a 2021 contract portfolio that we already have to start thinking about delivering into and so we'll we'll probably have purchases and inventory to to supply into those so that takes me to just kind of clarifying some of the points on on when we purchase because I don't want any.

Nobody to think that this is an inventory built when we purchased we target the spot market only.

We purchased to meet our committed sales portfolio after accounting for our production and inventory.

Because were purchasing for our committed sales portfolio.

We have very specific origin location product form and timing requirements that were targeting because we know exactly what its going into its feeding fundamental demand.

And when we see those criteria met in the market we buy.

So we do not buy to speculate.

We do not buy to build in excess inventory.

And the other point, that's really important when you think about the balance of our inventory is.

We buy in the spot market in a disciplined opportunistic manner as cheaply as possible. So you've heard us say before that we spend a lot of time looking at the market sentiment when the spot market is tight we actually buy more as what we saw with the Cove.

Curtailments this year the market retreated we needed material for our committed sales we bought it we bought a lot of material, we still have a lot of material to buy but we bought it built up our inventory for a period of time, but that inventory has a home in our committed sales portfolio and so that working capital will be turned into cash.

When the market loosens.

We stepped back to buy it as cheaply as possible. So we've got we've said we would do that and we've proved this year thats exactly what we do with the cobot curtailments came in the market tightened we bought we bought in front of the market, but what we needed for our committed sales portfolio and bought an eye to securing that material.

It built up our inventory a bit as the spot market started to loose and as some of the discretionary demand stepped back but supplies kept coming.

We step back too because then we're going to buy it cheaper. So it was it you need to think about it that cash management, all as part of that overall marketing purchasing strategy. So way more background than you wanted but I just wanted to be clear of how it all fits together.

All right I appreciate Thats Super helpful.

Just a quick follow up.

Jim I believe you alluded to the importance of origin of supply for uranium that becoming a bit more of a factor these days.

Risks see kind of shift reactor builds more to to Asia and China can you just maybe talk about how.

Being Canadian.

Well might help or hinder that.

Yes, well you know as the Canadian passport is still good despite some.

Some trade issues that Canada might be having with China right now our relations on a b to B business with China have not changed at all we continue to make deliveries in there our relations with India are very strong.

So Korea, so we have customers in all of those countries and will continue to you know I think grant mentioned you know the the production versus consumption and the availability of trade routes, becoming more important we are watching that very closely to to say where should our production come from we've got some coming out of Asia and we've.

Got some coming out of Canada.

And so we're very conscious of that right now it hasn't affected our business, but there is just something we watch it's a great question and we watch it very closely and we work with all of the government's a cat Canadian American and others to ensure that we can keep our material flowing into our markets.

All right great. Thank you yeah. Thanks, a lot.

The next question is from the Nesson Sandler a private investor. Please go ahead.

Hi, Good morning, do you have any new big picture visibility on major shift in demand strength and weakness which might include.

Particularly Japanese restart or Germany, showing signs of learning there less than our maybe acceleration Russian FMR rollout or how the U.S. fleet is aging.

Thanks, Matt was and Thats a big question, that's a that's kind of the world demand picture and it's a good one and were bullish were positive today 442 reactors running in the world. There is a 54 under construction.

Chinese are building I think we've got 49 or 50 running now with another 10 under construction you know.

Watch the the trade press them and some of them, saying well you know they said they'd have 58 running by 2020, and there's only 51, while its okay with you.

Building a nuclear reactors is not a simple feet, but we're certainly watching China very closely for that I think is the 14th five year plan.

And if they're going to get anywhere near this net zero carbon by 2016. The grant mentioned that they are going up the quadruple learn their nuclear and the.

So we think Thats positive you mentioned, Japan, Japan like because nine units that have been approved and have started and I think they are up and down noser, putting some some more safety features into comply with the new laws, but I think I saw for Japan that they have another 18 that are in the hopper, So nine and 18 being.

27 that they're working on their trying to bring them back on the Prime Minister soup.

Is is bullish on nuclear realizes the highest they've got all these assets there and it has to be part of the picture going forward. So I think Asia is the story for sure.

Leased in the near term, what we're really watching closely and and watching to see where cameco complete is on the Somar front that you mentioned that boy I'll tell you. There's a lot of excitement in that area I know in Canada alone. There's 12 different models of SM are sitting in front of the regulator right now we're looking for.

For approval, which is a lot theres funding coming from the Canadian government. We've got some provincial governments excited we know the U.S. government to whatever that looks like going forward.

Has put some money in backing behind us a Mars and so you know the.

I still come back to the fundamentals of.

This cove it has put to put our attention elsewhere for the last seven or eight months, but the day before that we were talking carbon reduction Seo to reduction climate change keeping the temperature downgraded soon bird that has not gone away and it's still out there and you know everybody committing now to too low.

We see net net zero carbon by whatever 2030, 40 or 50, there has to be a role for nuclear and so that's that's the field. We're playing in so thank you for the questions a good one.

Thank you.

Thank you.

The next question is from Kerry Ticino retail investor.

Please go ahead.

Thank you for taking my question.

Last year.

I think it was Q3.

Announced that you had added pounds to your term.

Contracting book and during this conference call Youve mentioned, a few times that you had off market discussions with utilities and customers can you explain to us does that mean that you.

Pounds to your contracting off market that you can't report.

And just give us a bit of information regarding that please.

I want to talk about our book Yeah sure. So the.

It was our Q4 disclosure our 2019 year end, where we talked about.

Our success in 2019 36 million pounds of uranium.

A couple of thousand tons of conversion.

Entered into a new long term contracts.

When we say off market, what we're talking about there is that the business that we're pursuing on an exclusive bilateral basis its not generated through competitive RFP. So.

Customers come directly to us for a variety of reasons, they could be coming to us because there they see the Macarthur shutdown and they say okay. This is serious I need to know what it's going to take to get mcarthur production in the future or or maybe they're coming to us reluctantly because in their own portfolio maybe.

Maybe they've already filled up with kazakh material or spec or or material from state owned enterprises and they want more commercial material or maybe maybe their procurement requirements require them to have more ESG criteria, Matt in their supply. So theres a variety of reasons why they come to us off market, but these are these.

Bilateral exclusive negotiations.

We don't book them until the negotiations are complete and the contracts are executed but that can be a long wait as we said earlier. So what we've been doing is just also reflecting that we have this pipeline between origination and when we actually book it and add it to our contract portfolio for dish.

Disclosure to give you a sense that there is demand there that that even though you are not seeing yet on the market level, you're not seeing competitive RFP fees.

That are at replacement rate, we just want to assure folks that there are utilities out there that see the long term fundamentals that Tim is talking about that are concerned about where supply is going to be that recognize that today's prices are not incenting the production decisions out into the future and they recognize.

I think thats some of the solutions they might have been counting on him like some of the new developments just simply won't be there in the timeframe and they find their way to us off market. In these bilateral discussions. The fact that we haven't announced any in Q3 here doesn't mean, they're not going on its just means they're not at the point is.

Being executed or signed so thats the distinction that we're trying to draw the reference to the pipeline is just to to kind of give you an insight into there's there's lots of activity out there.

Thanks, and just as a follow up I'd like you've talked about this already but I'd like to press you a little more on on your.

Statements in different conference calls that.

You were looking for prices in the mid fortys to be able to sign new contracts.

And as a gentleman asked already looking for a specific answer here a year later as retail investor.

With with conditions, having in my in my mind improve toward uranium sector are you looking for higher prices than in the mid Fortys.

Well.

Always looking for higher prices there is absolutely no doubt about that I would just make two observations one is.

On balance, it's still a buyers market not a sellers market and obviously the the data point areas Mcarthur key are still down.

As Adam problem is still operating at less than 20% of its subsoil use limit. So so clearly we're not at the point, yet where the market has recognized the need to price at term the average term price between the two price reporter sitting about $35 a pound spot sitting at about.

Already so it is moved it has not moved enough not moved enough to generate the the type of price discovery, where it needs to be to have mcarthur up and running at full capacity or to have kids Adam prop running at their subsoil use so its still up by.

Hires market more than a sellers market and Thats why we find our most fruitful place to occupy right now is off market when utilities find their way into an exclusive bilateral discussion in those discussions.

We squeeze for every penny that we can get on pricing our future production within the reality that.

There still is more power in the hands of the buyers at the moment than there is in the hands of the sellers because we just haven't seen that replacement rate demand level. The fundamentals tell us we're not too far away from it but its transitioning to that space that.

In which we're negotiating off market.

Thank you and keep up the good work thank.

Thank you Kerry Thanks for your question and thanks for calling in.

This concludes the question and answer session I would like to turn the conference back over to Tim gets sold for any closing remarks.

Well, thanks, operator, and I want to just say thanks to everybody that joined US today, we as always appreciate your interest and support.

These aren't easy times are challenging and unprecedented but I can just assure you that during this period, we're going to continue to execute on our strategy and we will do so in a manner that we believe will make our business sustainable over the long term and I also promise you that we'll look after people. So thanks, everybody stay safe and healthy have a great day. Thanks.

This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.

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Yeah.

Okay.

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Uh huh.

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