Q4 2020 Cameco Corp Earnings Call

Thank you for standing by this is the conference operator, welcome to the Cameco Corporation fourth quarter 2000, and 'twenty 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 to turn the conference over to Rachelle Girard.

Vice President Investor Relations Treasury and tax. Please go ahead.

Thank you operator, and good morning, everyone and welcome to Cameco is annual and fourth quarter Conference call. Today's call will focus on the trends, we were seeing and the market and on our strategy not on the details of our quarterly financial results.

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 our investors as always our goal is to be open and transparent with our communications. Therefore, if you have detailed questions about our quarterly financial results or should your questions not be addressed on this call we will make RC.

Or is available to speak to you. After the call. There are a few ways to contact US you can reach out to the contacts provided in our news release.

You can submit a question through the contact tab on our website or you can use the submit question tab on the webcast and we will be happy to follow up after this call.

With us today on the call are Tim gets low President and CEO Grant Isaac Senior Vice President and CFO, Brian Reilly Senior Vice President and Chief Operating Officer, Sean Quinn Senior Vice President and Chief Legal Officer, and corporate Secretary and Alice Wong Senior Vice President and Chief Corporate Officer.

I'm going to hand, it over to Tim to talk about the growing demand for nuclear power the uranium market fundamentals and about cameco strategy to add long term value.

After we will open it up for your questions.

If you joined the conference call through our website event page there are slides available which will be displayed during the call. In addition for your reference our quarterly investor and is available for download and a PDF file on our website at Cameco Dotcom did.

Today's conference call is open to all members of the investment community, including the media during the Q&A portion. 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 MD&A 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 Rachelle and welcome to everyone on the call today. We appreciate you taking the time to join us.

It's not too late to wish all of you a happy new year.

As we head into 'twenty and 'twenty, one I have to tell you. We're excited about the future for our industry and about our ability to support the transition to a net zero carbon economy through both traditional and non traditional uses of nuclear power.

And we are excited for our company as we execute on our tier one strategy that includes production discipline and marketing discipline and conservative balance sheet management.

So what's driving our optimism.

Well if you remember anything from this call remember this that there are really three main drivers for our optimism.

First demand for nuclear power is becoming more certain and cause the fundamentals improve.

Second uranium supply.

Supply is becoming less certain and there's years of persistently low prices have led to planned production curtailments lack of investment and a reserve life for some mines shrinking secondary supplies and trade policy issues.

And finally remember that our long term strategy positions us very well to sustainably deliver long term value.

Let's dig into each of these factors a bit deeper.

We're on the globe, we're seeing a clear mega trend emerge.

That mega trend is focused on increasing electrification, while phasing out carbon intensive sources of energy.

The increase and focus on electrification is for various reasons.

There are those that are installing baseload power.

Those who are looking for a clean reliable replacement for current sources.

And finally, there is new demand for things like the electrification of transportation.

The drive for increased electrification is occurring precisely while countries and companies around the world are fixated on reducing their carbon footprint.

Many have announced net zero carbon targets and many more expected default.

Country after country recognize that and a world where 80% of our electricity is still comes from fossil fuel sources, 80% <unk>.

Nuclear will be needed and the toolbox to sustainably achieve both electrification and decarbonization.

The country of China for example, which has a goal to have 25 million electric vehicles on the road by 2030 <unk>.

Recently stated that its objective is to become carbon neutral before 2060.

A follow on study from a climate scientist and that country predicted that to achieve this goal will require an estimated 380% increase and nuclear power capacity from 2025.

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

In addition, we expect nuclear will do well under Covid recovery plans.

Increased government infrastructure spending will support broader policy goals to achieve net zero carbon targets.

And then there's the U S, where the new Biden and administration has expressed its support for maintaining its domestic nuclear power fleet and the construction of advanced reactors.

It is first day and office of the President also recommitted to the global Paris agreement and.

And committed the United States to reestablish his position as a global leader and the development of commercial nuclear technologies.

Furthermore, we are seeing momentum building for non traditional commercial uses of nuclear power such as the development of small modular reactors and advanced reactors.

Nuclear is also the only low carbon source that can produce low carbon heat that along with its traditional users can be used to produce clean hydrogen and fresh water.

In addition to countries, we're seeing company after company announce net zero carbon targets.

And they recognize there is increasing scrutiny on their environmental performance.

Investors are beginning to price climate related risks into their capital allocation decisions.

As a result, there is a significant reallocation of capital occurring that will create opportunities for those companies, who can assist with the transition to a low carbon economy.

So this is another very positive development.

Investors will not only look to invest and those companies that can demonstrate improved environmental performance.

We'll look for those companies that are positioned to do it profitably and sustainably.

Unlike countries companies will have to make decisions that are economically sound to attract investment.

And based on a joint report published by the International Energy Agency and the OECD Nuclear Energy agency in 2020.

When you look at level is cost of nuclear compared to other low carbon sources nuclear energy as the most cost effective way to provide low carbon dispatch about $24 seven electricity.

I think Michael Shellenberger illustrates this point well and his book Apocalypse never.

He talks about Germany support for renewables over the last 20 years.

Oh, it's nearly half a trillion dollar investment and wind and solar by 2025, we will provide only about half of German electricity.

And that it will continue to be reliant on natural gas and coal as a backup.

The same investment and nuclear would mean it would be generating a 100% of its electricity from zero emission sources and it would have sufficient zero carbon electricity to power all of its cars and light trucks as well.

So the outlook for nuclear is very bright increase.

Increasing demand for nuclear means increasing demand for uranium.

Which brings us to the second factor that I said is driving our growing optimism.

Demand for uranium is rising at precisely the same time that supply is becoming less certain.

We know that utilities have not been replacing what they consume annually under long term contracts.

Based on <unk> data over the last five years, approximately 815 million pounds of you three lead equivalent have been consumed and reactors.

And only about 390 million pounds had been locked up under long term contracts.

This has led to a growing wedge of uncovered uranium requirements.

UFC estimates show that global cumulative uncovered uranium requirements or about one 4 billion pounds to the end of 2035 with the largest uncovered requirements and the U S and Asia.

Well uncovered requirements are not particularly high in 2021 by 2025, they reached 33% by 2030 about two thirds of the utility requirements are uncovered and that number is 81% and 2035.

In contrast, these growing uncovered requirements are occurring at a time when there are some big question marks.

But where the uranium will come from the fuel the world's expanding nuclear fleet.

Chemicals supply curtailments alone both planned and unplanned of left a lot of pounds and the ground and kept them off the market about 95 million pounds and total.

And our purchasing activities to replace the funds needed to fill our sales commitments.

<unk> taken more than 50 million pounds off the spot market and placed that material into long term contracts.

In total, it's almost 145 million pound swing and the supply fundamentals from just one producer.

And that's a lot of heavy lifting.

It is base case UFC projects annual uranium demand will grow from about 170 million pounds in 2021 to about 210 million pounds by 2035.

In contrast, and estimates annual primary production will.

We will go from about 130 million pounds in 2021, peaking in the late 2000 Twenty's at about 155 million pounds, which will of course be subject to the appropriate price signals.

Before dropping to about 95 million pounds in 2035.

And and the same timeframe and estimates that annual secondary supply will decrease from about 45 million pounds in 2021 to about 17 million pounds for a total supply of about 112 million pounds in 2035.

That's an annual shortfall of almost 100 million pounds by 2035.

That means the world needs to discover develop commission about six Mcarthur River is a cigar lakes and the next 15 years.

Given the timelines it takes we should be investing now but at today's prices that makes zero sense.

In addition, as a highly trade dependent commodity government driven policies can be particularly disruptive for the uranium market.

As I said earlier due to persistently low prices we have seen.

Planned supply curtailments lack of investment.

The end of reserve life for some mines shrinking secondary supplies.

And trade policy issues, which have been amplified more recently by unplanned supply disruptions due to the COVID-19 pandemic.

As a result primary supply has become concentrated.

It is concentrated geographically with about 80% of primary supply coming from countries that consume little to no uranium and.

Nearly 90% of consumption occurring and countries that have little to no primary production.

And it's highly concentrated by producer.

With about 70% of primary production and the hands of the top five producers and about 80% and the hands of state owned entities.

So we believe and we've said this many times before that and the current market the risk to uranium supply are far greater than the risk to uranium demand.

These are the fundamentals that would get us up in the morning, and why we remain a pure play supplier of uranium fuel.

Needed to produce clean carbon free base load electricity.

Which brings me then to the final factor driving our optimism our strategy 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 and this is where it all starts for US we are focused on and the health and safety of our workers their families and their communities.

We're doing that every day, we make decisions about how to best manage our operations and protect and support our workforce through the pandemic.

It is unacceptable to put production targets ahead of health and safety as we have recently watched some companies do.

That's why we took the precautionary measures last spring to suspend production at cigar Lake mine. The Port Hope you have six conversion plant and at the Blind River refinery.

And it's why production at cigar Lake was suspended once again in December and currently remains so.

Although it comes with a significant cost we wanted to prevent the spread of the virus within our workforce and the risk that they could take it home to their families and their communities.

Pandemic or no pandemic, the health and safety of our employees will always be our priority.

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

There are three fronts on which we are executing our strategy operational marketing and financial.

On the operational side, we've implemented planned supply discipline cutting our production well below our delivery commitments.

This includes the curtailment of production at Rabbit Lake Our U S assets and of course at the Mcarthur River key Lake operations.

As I said earlier these actions have left a lot of pounds on the ground and have kept them off the market.

As a consequence, we have been purchasing material on the spot market to meet our committed deliveries.

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

We've been strategically patient not committing our tier one pounds under long term contracts that don't provide and appropriate return and not exhausting them and a low price environment.

And we're seeing our patients pay off.

We successfully added $12 5 million pounds to our long term contract portfolio during the year.

And our pipeline of uranium business under negotiation continues to be larger than we've seen since 2011.

In fact, we continue to see off market interest growing and historically it has been a leading indicator of broader demand for long term contracting.

We're having conversations with our biggest and best customers.

These customers recognize the long term fundamentals.

They want access to long lived tier one productive capacity from commercial suppliers, who have a proven operating track record.

They understand that from a security of supply perspective, today's prices do not reflect production economics.

They recognize the first mover advantage gained from securing their future access to our tier one pounds today as opposed to and the future.

And we have some competitive advantages.

We have significant idle tier one capacity that is fully licensed and fully permitted.

Will be among the first pounds to meet the growing demand and the market.

We are and independent commercial supplier and provide our customers with supply diversity from state owned enterprises.

With substantial Canadian productive capacity, we can help de risk their future supply from trade policy exposure.

And emerging is the focus on ESG matters, which is great news for us.

In 2020, we saw the COVID-19 pandemic as well as a number of other significant issues like racial and justice and inclusion and diversity place a magnifying lens directly on the environmental social and governance performance and commitment of many companies.

And despite all the disruption and the world certainly didn't take its eye off the global threat of climate change.

Tackling these issues requires a concerted and coordinated effort.

As companies, we all have to evaluate our purpose and how we serve the interests of all our stakeholders.

At Cameco, serving the interests of our stakeholders has always been at the heart of what we do long before there was a focus on ESG issues, because it's the right thing to do and we recognize the significant business value. It adds our board and our employees contractors communities suppliers customers.

Governments and shareholders expect us to manage this company and our long term sustainable fashion.

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

And to protect the environment.

The uranium fuel, we supply places, we've enrolled and contributing to greenhouse gas mitigation efforts and Canada and abroad.

And Canada alone. This uranium fuel provides greater than 30% of the province of Ontario, electricity every year, avoiding more than 5 million tons of carbon dioxide from being emitted.

Considering only the Canadian emissions avoided resulting from the use of nuclear power and Ontario, we like to think of ourselves as Canada's first net zero mining company.

So we are well positioned to meet our customers' needs.

However market prices and our business take time to impact contracting decisions.

Historically demand has come in waves, which has led to pass price spikes.

As an industry, we rarely see annual replacement rate contracting we are typically well above annual consumption or well below.

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

Let's look at the conversion business for example.

Conversion prices began to transition in about 2017 after significant supply curtailments due to price is below production economics, and then there were some unplanned disruptions.

It sound familiar and.

In 2020, we successfully replaced the pounds delivered under our U F. Six contracts and we added another $17 1 million kilograms, and you have six to a long term contract portfolio.

We expect these contracts will allow us to continue to operate profitably and consistently support the long term fuel services needs of our customers.

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

And finally on the financial side, we've been very deliberate and shoring up our balance sheet.

You can see the resiliency our strategy affords us and our 2020 balance sheet.

Despite the unprecedented global challenges and the significant costs, we incurred as a result of the disruptions to our business caused by the COVID-19 pandemic. We finished the year with about $940 million and cash and a $1 billion.

Undrawn credit facility.

As such we have the financial capacity to self manage risk and maintain our strategic resolve.

So I'm happy to say, we're performing well on all three strategic fronts.

However, there are costs to our strategic decisions, which are reflected in our 2020 financial results.

But the good news is this does not represent the run rate of our business and it won't go on forever.

We're taking the steps today and incurring the costs, we expect will allow us to restart our tier one assets with more flexibility and the production rate to eliminate the care and maintenance costs incurred while our tier one production is suspended and to benefit from the very favorable life of mine economics they provide.

One of those steps is the project we were working on at our Mcarthur River Key Lake operations.

We have assembled a team of internal experts, who have been tasked with assessing designing and implementing opportunities to improve mine and mill efficiency.

Through application of automation and Digitization and optimization.

And there are 43 projects and the works and those that meet our investment criteria will be advanced to implementation in 2021.

We are confident and our ability to transition through this period and capture demand that will provide leverage to higher prices.

And we've concluded that we have the right vision strategy and values to deliver long term sustainable volume.

Our vision, which is to energize a clean air World recognizes that we have an important role to play and enabling the vast reductions in greenhouse gas emissions required to achieve a resilient net zero carbon economy.

As we seek to achieve our vision, we are committed to doing it in a manner that reflects our values.

Those values have not changed they've always guided our actions and they place a priority on safety and the environment.

On building and supporting a flexible skilled stable and diverse workforce.

On behaving with integrity and leading by example.

On promoting equality and acting to eliminate racism wherever it exists.

And on pursuing excellence and all that we do and inspiring others to do the same.

Our decisions are deliberate.

We are a 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 demand for nuclear power both traditional and non traditional is growing where we believe the risk to uranium supply is greater than the risk to uranium demand.

And where we believe our strategic decisions and strategic patients provide us with resiliency and the face of unprecedented challenges.

And will result, and the rewards that will come from having low cost supply to deliver into a strengthening market.

So thanks for joining the call today, and operator with that we would be happy to answer your questions.

Thank you we will now begin the question and answer session.

And the interest of time, and we ask that you limit your questions Tim.

Just one with one supplemental if you have additional questions you are welcome to rejoin the queue.

To join the question queue. You May Press Star then one on your telephone keypad Youll hear tone acknowledging your request. If you are using a speakerphone. Please pick up your handset before pressing any keys to withdraw your question from the queue. Please press Star then two webcast participants are welcome to click.

On the submit question tab near the top of the webcast for him and typed a question. The Cameco Investor Relations team will follow up with you by email after the call. Once again anyone on the conference call who wishes to ask a question press star and one at this time.

Our first question comes from Andrew Wong of RBC capital markets. Please go ahead.

Hey, good morning, and happy New year to you guys too.

And so there's been a lot of focus recently on clean energy and you've mentioned potential non traditional uses of nuclear energy.

Could you just talk about a little bit more about that and then also how does that impact your demand outlook for the next 10 years versus maybe what you had expected previously.

And on the regulatory side have there been any changes that might be more supportive for nuclear growth. Thank you.

Well, thanks, Andrew good morning.

Everybody.

Yes, thanks for thanks for that question.

We're excited as I as I said and my comments.

And we're excited about the future I think and the last and I can't think of how many years certainly the last 10 years.

Since 2011, but even more than that I don't think I've seen more positive indicators for the nuclear industry than we're seeing today I mean, the most recent one came just last month and the U S and change of administration down there the Biden and government comes and what is the first thing he does the signs and executive order.

Saying that we are signing on to the Paris accord and that climate change is going to be.

At the center I think you said at the center of U S. Foreign policy and National Security I mean, so the U S as in China's in and.

And so now we are on this track to to meet the Paris commitments I think.

Resident Biden said and the U S. He wants.

Christy industry to be for.

Fossil fuel free by 2035, we'll think about that I mean today, it's two thirds fossil fuels.

And 2014 years is going to be fossil fuel free I can tell you that.

Signal that all roads are going to have to go by nuclear plants, I think if youre ever going to get there and so we're seeing that.

And in the U S, which is a big driver and the World China continues on its pace and now 50 reactors every time, we have on these meetings and we will.

And we always check the numbers as of <unk> 46 for some of the world's 50, now and I think theres another dozen under construction and we've seen numbers from UX and others that.

They're not stopping at all on their pace to get to a 100 or more reactors there'll be the biggest.

Nuclear country and the world probably within the next decade, our friends and India continue to build their building some of their domestic technology there.

And good friend and customer of ours, and just just to talk note and the <unk> talk.

Accident tolerant fuel the U S. The U S. Even before president and there was bicameral bipartisan support for nuclear they passed last year or two or three bills supporting nuclear and so so we see that as a good sign and the more people talk about it the more people get comfortable with it and.

And see it as absolutely necessary, if you're going to if youre going to get anywhere near reaching those Paris targets and I was just reading an article. This morning on the language has changed from global warming to climate change to climate emergency and now its climate crisis and and so this one.

World is going to have to move for us. So we see that as positive we see I think 52, new reactors being built and a variety of countries around the world now of two new players came on two new country players UAE and Blair's came on last year, that's good news and lots of countries talking about it again.

So all of that and to say really positive vibes, if you like and the nuclear industry, which we think will translate into the rest of your question and demand for uranium already there's already we see the uncovered requirements take your pick for 2000 3700 plus million pounds.

135 billion for I mean, that's on the pace that we've a very conservative pace that we've laid out nevermind DSM ours never mind countries that might want to get in the game to reach their goals. So.

We see that Super positive for nuclear we're enthused here at <unk>.

At Cameco about our role that we're going to play going forward and we say all of this and the context of supply that is shaky I would say.

<unk> and several other sensors.

And the short term, we've got cigar down for Covid reasons, we don't want it to be down, but it is and we will keep it down until further notice we got mcarthur down Kazakhs holding back on on production and then just the pure losses and I can.

Can tell you, we werent thrilled to see our friends at <unk>.

Go down last month, that's a <unk>.

And I know, we've dealt with them for years, great people that mines go on 4 million pounds that used to come every year. We competed with them gone and common <unk> mine that I was responsible for a decade ago and I was looking after Niger for Aruba.

Next month gone, it's gone and theirs.

There is lots of social pieces that go with that but that's another 3 million pounds has just gone from the market BHP, we worried about them for 20 years booked and bringing on new doubling their production out of Olympic dam pull back on that so it doesn't make sense theyre not going our own cigar Lake.

Within that timeframe and I talked about is out if we run it at 18 million pounds.

<unk> makes it to the end of the decade, and so all of that to say that those are just your basic supply demand fundamentals demand I think is good.

And if not and actual boost the moral boost for sure and supply is trending downward. So that was a long answer to your question Andrew but that's what we're seeing today and that's what gets us gets us up and running and every morning.

That's great. Thank you, Tim and maybe just like a more near term question just on the operations.

On the guidance for 'twenty and 'twenty, one calls for eight to 10 million pounds of purchases what does that assume for the startup at cigar Lake.

Yeah, well, we don't know to be honest with you we don't know.

Cook It done well we took it down in 2020 I think we're down from March till kind of end of August September referred it back up again, and then and then we got into the same jackpot with our workers not being able to to come to the site. We had so many restrictions on the flights up north.

Our good GM.

GM up there Lloyd Rosen and it was struggling to find qualified workers for the shifts and.

And so we had to go down again in December and we didn't want to but safety and health of our employees will always.

Number one we don't want a yoyo that place like that we don't want to start it up again, and then have to shut it down and we are like everyone else and the world and especially here in Canada waiting to see the vaccine rollout.

Our government rolled out a plan for vaccination, but this is the only catch was we don't have any vaccine, which is a bit of it.

Bit of a stumbling block so we're waiting for that.

All of those things will be in close contact with the public health authorities population health of North.

With the achieves and leaders of the communities and with our site management. So I can't tell you when it's coming back up but we will always protect the health and safety of our workers.

Okay. Thanks. Thank.

Thank you very much.

Our next question comes from our erstwhile CDR of Scotiabank. Please go ahead.

Hi, good morning.

You mentioned earlier that your your pipeline in terms of discussions with utilities on <unk>.

Contracting are at the highest level still since I guess since Fukushima can you give us a bit of color on <unk>.

Why we're not seeing more contracts added for the portfolio like is it still a bid ask spread that's too wide or can you give us some color on what the issue is in terms of why we're just not seeing that kind of contracting starting yet.

Yeah. Thanks for the question.

I, just I'll start and then I'm going to pass it over to grant and maybe Greg you can touch on that and give a little color on the market.

While you're on it but I mean 2020, I mean for all of US everyone. All of you that we know were on the call wasn't a normal year.

From 2020 was Covid, we started battling COVID-19 in March and went through the whole year and I mean.

It was the same for our operations and it was the same for our customers the utilities and focused on Covid focused on keeping their plants going keeping their people safe long term contracting and signing big multiyear deals.

<unk> wasn't at the top of their priority list.

And I would say and we know that because we talk to them, we talk to them right through it and.

On the lapsing the fuel buyer was going to do is go to a CMO chief nuclear officer, and say, what we should really focus on a long term contract with cameco, while theyre trying to keep their planned to open them and people safe so.

And that I think Wade in and I can tell you.

And I just talked to a couple of our customers.

Earlier, this week big ones from other countries and the.

And the discussions are still on and we are still holding.

Holding to our we've got a good pipeline full of full of contracts that we're working on with our customers. So I just see it be a bit patient we are being patient on that so as grant sorry, I'll stop there, but I ask grant to just before the call if you'd give a bit on update on the market or so if you don't mind a syndrome.

Meaning a little bit share whats going on here from.

For our resident expert.

On what we're seeing in the market growth do you want to just give a few words on that yes happy to do that with respect to that specific question on <unk> and then I'll step out a little more broadly, but with respect to the question on the uranium.

Side of our marketing efforts.

Certainly 2020 did not achieve the replacement rate contracting we saw in 2019.

And I think the reason that that Tim identified for the primary reason is we worked with.

Our customers and talked about their future demand, we just discovered that in a COVID-19 world. Many of them are saying I've got to focus on what do I have the fuel bundle ready for the reactor and then I've got a focus on the in process material I have at the fabricator to make sure theres another fueled bundle coming and then maybe maybe some time with.

And Richard maybe some time with the converters and and we just saw the Iranian piece get paused, if you will but here's the good news, it's not demand that has disappeared.

Demand has just been delayed it's just been deferred it's now pushed out and we're seeing more uranium demand and a tighter future window and so that's how the uncovered requirements curve grows as a result of that but I would have to distinguish between uranium and our experience and conversion this year income.

And we had a contracting rates well above replacement rate in fact, our historical amount of contracting volumes and so what it tells you is that utilities are figuring it out.

We see contracting is picking up and enrichment, we've seen it already pickup and a full transition occur and conversion. We are seeing this delay and uranium for share Theres no doubt about it but as I say good news is none of this has dropped out of our pipeline. It's just redouble our efforts and continue to.

And to negotiate with our customers off market.

We've been making a big deal about this kind of off market versus on market distinction for a while and.

And it is important to say that that continues as we start into 2020, what we are seeing.

Our pipeline our exclusive bilateral negotiations with customers and I can.

Tim used to be robust and a lot of volumes under discussion, but we continue to see the on market stops and the competitive rfps.

And where a customer comes out and is asking for competitive bids from a variety of suppliers and that's continuing to underperform that is not hitting the levels, where it needs to be when you look at the uncovered requirements going forward think COVID-19 has something to do with it term volumes in 2020 were only $53 million.

<unk> of uranium contracted.

Tiny amount down from nearly 100 million pounds for the year before in fact, we haven't seen levels. This low since immediately after.

<unk>. So clearly there are some delays there theres going to be some pent up demand.

Come into the market.

Just havent quite seen that trigger yet and a lot of times, we sort of explain that by what's going on and the spot.

Because remember the spot market has taken on a new role since in the last decade since Fukushima.

Bit of a look back our market was always one where the term price was really that production economic price required for future production and the spot price was simply the discount for material available today that had no operating risk attached to it because it didn't have to be produced it was already produced.

And of course.

We went through a period of a day.

Demand collapsing after Fukushima, where uncommitted primary production in particular was coming into the spot market. It didn't have a term haul producers werent, leaving it in the ground like they should have.

And they were trying to find a home for it and it was going through the spot market and enough material went through the spot market and ended up sort of breaking the pricing dynamic term just became the forward carry trade price on the spot market and.

And right now our.

And that Hasnt completely corrected I mean, if you look at the spot market through 2020, it started kind of and that.

It was in the lows of the 'twenty threes and got it into the 30 threes. After some of the Covid shutdowns and then it's kind of fallen back to the 30 ish level with a little bit of.

Downward pressure and it still is uncommitted primary production, they're still our producers out there that have material doesn't have a home and they put it in the market and then what's in the market. It gets and the hands of say the intermediaries or the traders, who then take that 100000 pounds and then churn at three or four times, creating the illusion theirs.

400, or 500000 pounds and the market, which simply isn't the case and I would say it has been.

And having the effect of creating a little bit of complacency for some of the fuel buyers, who just don't think its time to.

To worry yet because they see the volumes or what appear to be the volumes going through the spot market.

But here's the good news about the spot market situation.

And this isn't sustainable obviously about how many pounds of and left and strong because of the planned and unplanned supply discipline.

And the amount of purchasing producers have done to put it into our committed sales portfolio.

Available material to just turnaround the market is getting picked away and as.

And as term market demand picks up and primary production will find term contract homes and it won't be forced through the spot market at some of the expected future production that you might've expected in the spot market is going away common Yak Ranger were good examples.

Olympic Dam expansion.

And then ultimately we have that intermediary group, they're not backed up by productive capacity. So if these sources start to dry up so does so does the churn and ultimately the market will transition back to the term price, reflecting the production economics required to meet that uncovered wedge relative to where the demand is going so.

Or wait longer answer than you wanted but I just kind of wanted to set our activity on the uranium and conversion side.

And in the context of what we're seeing on the broader market on on term and spot.

Thanks, Craig and I appreciate the color and just as a follow up separately can you give us some color on on the Capex guidance for 'twenty one it looks like it's up significantly from what we've seen the last couple of years, what what's driving that.

Yes.

A couple of investments that we just think are really prudent right now Tim talked a little bit about the work we're doing at Mcarthur and key while these.

The best mine mill complex on on the planet sitting idle right now and we just made the determination that now is the time, while we have the qualified workers there and there.

And they're not running the facility to embrace as many of the automate automation and optimization digitization opportunities that we possibly can so so when these extraordinary assets come back they come back even better than they were.

And then they were in 2017, when we brought them down so that's a big investment it's counter cyclical but now it's just it's the right time to do it.

Some other investments and our fuel services group, our vision and motion project, which is kind of a.

Our cleanup Modernisation project going on and in that group, which again makes sense right now, especially with the robustness of the conversion market and the forward look of the conversion business because of how much contracting we've been able to do and and how much. We think we're going to do it makes sense Tim.

And that go on that modernization effort as well and then of course once cigar Lake does restart there'll be some underground development that will have to begin again, which shows up as a capex number. So some counter cyclical investments plus the normal investments that we would make one cigar lake is back up and running and I would just add to or some of that is.

<unk> Capex from 2020 and well.

Okay. Thank you very much.

Thanks <unk>.

Our next question comes from Gordon Lawson of paradigm capital. Please go ahead.

Hello.

Many of inventories in China have been increasing steadily over the past several years. It is now estimated to be we're on a half a billion pounds.

Could you comment on what this means for the spot market availability and utility term contract pressure.

Yes, Thanks, Gordon that's a good question and we've been watching that really.

It really closely.

They have been building their inventory and they started actually 10 years ago or so.

With us.

On June.

June of 2010, when they came to the market and which really kicks the market into gear and they bought $150 million from one.

Monthly low.

50, twos and about 52 from US 50 from Ariva at the time and 50 from the Kazakhs to build and inventory because they play the long game.

I mean, so they said in their 13th five year plan and the data 58 reactors going by now while the only have 50, but they are 12 under construction and they continue to build and and so they consume.

25 million pounds, a year now, but going very quickly to 50 and above and just to keep whatever their inventory policy is 345 year inventory you need to keep adding so the number seems big at the moment, but it's not something.

And I assure you, they're keeping it for themselves they're keeping it.

For their plans going forward, we haven't seen it come back.

Onto the onto the market they have a strategy by uranium produced some they pretty much on Namibia now and so they are producing some phones other namibia and and.

On the produce some domestically, which they have very little over and the use for other reasons. So.

Grant I don't know if you have anything to add on the Chinese inventory, but it's not something we're concerned about yes, and not necessarily because of the strategic view of it and then if you look at the Chinese fleet going forward that inventory number actually is quite small relative to where they could be and Tim referenced earlier the 2016 net.

Zero target requiring essentially 200.

Nuclear reactors.

The rule of thumb on 100 million pounds of uranium consumption and one year, if they achieve that number and now you are talking about kind of about four to five year inventory, which wouldn't be unusual if they had that size of our fleet. So.

We see that it really is tied up in and a strategic objective there. When we look ahead into the middle of the decade, those original contracts that Tim talked about roll off kind of in that 2020 for 2025 window and in that window, I think youre going to have.

Our nation and the Chinese nation, that's going to be consuming.

Somewhere close to.

50 million pounds of uranium a year.

And once those fall off there'll be some Namibia and supply probably 15 million pounds, a year there'll be some kazakh supply probably 20 million pounds a year, but you got 25 to 30 million pounds that will be uncovered in that year alone and then growing after that so when you say what does it mean for term contracting I think.

I think there are those in the market probably reflected in our off market term contracting net are keeping an eye on this dynamic and remembering what happened last time, China stepped into the market as a big new entrant and signed big forward commitments and tied up a lot of future production.

Sales it forced out of the utilities into the market and they kind of all came through the door at the same time, so I think the off market activity as the utility, saying I don't want to be behind at this time I'd better start.

On planning by procurement and advance so so it does take on a role here and what's interesting about today's outlook is it's not just China, along the way India has made a very significant commitment to their nuclear both their heavy water reactor program plus a lightwater reactor program with.

Other vendors and so it's not just China is the big new entrants coming into the space and looking for a material.

You've got to keep an eye on India, as well and and so I think thats shaping up the dynamic a little bit here too and convincing us that remaining strategically patient is the right thing to do at the moment.

Okay. Thank you very much thanks.

Thanks Gordon.

Our next question comes from Greg Barnes of TD Securities. Please go ahead.

Okay, Thanks, and good morning, and grants and.

And just your commentary and the MD&A about year anticipating that contracting in 2021 to remain largely discretionary do you mean.

On the market discussions off market discussions and.

Is that anticipating that contract and will remain slow and 2021 again, just because of the COVID-19 restrictions or there's something else feeding into that commentary.

Thanks for that question Greg.

Yes, obviously that we werent, we werent clear about that.

What we mean is that we are not expecting.

A big Russia bond market Rfps.

And that we've seen triggered by supply shocks in the past for example.

That is not to say, we don't expect our pipeline discussions to continue we do expect them to continue we do expect them to be quite robust, but we're just saying that on market piece, where you see and RFP. Once every couple of weeks and and more for focused on kind of the near term.

That's the part that day.

And our expectation at least for the first half of the year. So we're not going to see a big push on those now of course that comment is absent of.

Further unplanned supply disruption for example, or a demand shock somebody steps into the market and a big way, whether it be India or whether it would be China. That's just not anticipated at the moment that could change the game completely but as it stands right now we're really talking about the on market piece.

And all of our pipeline.

Okay.

And just.

For fundamental question and the guidance you say sales for this year is going to be 23 to 25 million accounts the range.

And when that feed off the charts on page 37, and the MD&A looks more like 27 million pounds.

Just trying to rationalize I'll get to the bottom on the differences.

Yes, Greg I think youre catching on air.

<unk> 23 to 25 is the guidance.

Okay. Thanks.

Great. Thank you for reading and thank you for reading and so closely.

Okay.

Our next question comes from Alex Pearce of BMO. Please go ahead.

Alright, great moving.

So go on you touched on and the conversion market.

And I just wonder if maybe you could provide an update on how you think the recently announced restart and Metropolis is impacted your outlook there and.

Does it have any impact on the wider uranium chain.

All good questions.

I'm not sure that the decision to restart the convert <unk> Metropolis facility was was a huge surprise and fact that as you know there had been talk going around about them successfully landing some contingent contracts with utilities.

Contingent upon a restart and of course, the restart plan is out to 'twenty and 'twenty, three and that quite a bit of capital that is required to go and so bit of a road there still to still to go down before that thats productive capacity, but but I think they probably committed a bunch of it already that was.

Likely a condition.

And on having Honeywell agree to a restart so.

And for US anybody looking for spot material will the next two years are going to still be tight because they're on.

It's not going to be a source of it for example.

And then I think.

Conversion will remain a bit of a focus for utilities I think theres still some opportunities for additional term contracting now what that means for uranium for example is a bit of an open question.

I've heard.

One particular perspective to say well now that.

And now that there is a little more certainty about where conversion production is going to be in the future maybe don't have to worry about that as much as a utility and now attention and shift to uranium and so we might see actually more focus on uranium as a result, and less focus on conversion going forward I think it's too early.

To make that call, but I thought it was an interesting perspective that really the push and the last couple of years and the conversion space was really.

Our concern about where capacity with that well.

That concern and got to find its way into the uranium space at some point, so we'll be watching that closely.

Great. Thank you.

Thanks, Alex.

Our next question comes from Ralph <unk> of eight capital. Please go ahead.

Hi, everyone. Good morning.

Two questions from me. Please first one is Tim you talked about supply and demand just wondering.

The rule of hedge funds and seems to have played less of a role in 2020.

Would you agree with that statement and.

And this sort of positive and rising nuclear sentiments on the undermined and do you think sort of the financial players will likely be more buying related or more sort of liquidation related.

In terms of their strategy for let's say the next one to two years.

Yeah. Those are good questions I think.

And I think on the first on the head hedge funds have played less of a role.

<unk> and I'm not sure what will happen and I think it's a little bit early yet we're hearing a lot of good language out of there we want to see some some action and what theyre going to do and one of the first tests I think is going to be there is for units that are scheduled to go down this year and in the U S.

Zinc exelon is good for two of them and there is and <unk>.

Other company and ill.

Hydro thats, good and another two units.

Good go down I mean that would be the biggest mistake. The U S could make it through on any path to get to.

Zero.

Zero fossil fuel and electricity sector. So we will watch those so I don't know grant deal.

Third on the financial sector and hotel.

And I might just make the distinction that the.

The role of fund and the uranium space some financial players some special purpose vehicles.

Right, Ralph 2020 was a rather quiet year.

With a bias towards the negative not a positive and what I mean, there of course is that two of the funds either sold or low and material throughout 2020, and and that was that was a negative because.

You saw the uranium price respond from the.

Unplanned supply disruptions as I talked about earlier kind of go on from the 20 threes for the 30 threes and then suddenly funds were willing to part with material or loan. It set the signal that although that's all they need for return and so.

It fed into the narrative that the funds are holding material that's going to be available for me as a fuel buyer. Some day and this is just proof of it. So obviously, we're going to watch that space carefully hopefully the funds find that the resolve that brought them into the nuclear space and the first place and we see much more of a of a committed hold us.

Opposed to a a cell and loan because that material is just going to end up in the hands of traders, which is this going to churn and the market, which has been probably going to have a price off which is then going to hurt their NAV and it's hard to say well.

And do not see this effect coming and going forward, though the fundamentals the way they shape up. These are the types of times when when we do see interest in physical uranium. So 2020 could look much different and 2021 could look much different than 2020 from a fine point of view.

Yeah, Yeah and.

And Tim you talked about your contracting discussions and for the patients as needed.

Is there a and these discussions is there a congruency and Ah.

Like mindedness with respect to how far out these contracts will go and on say the pricing terms and flexibility terms.

Or is there something more structurally at odds with the nature of contract discussions.

Yeah and Ralph.

He said these off market discussions we have as grant mentioned many times they're not.

Other quick hitters for a small amount of uranium they're big chunky long term contracts with big utilities are countries that have a big fleet and don't fool around to be honest with you with the with uranium and are not going to rely on the spot market and hope every year. They can pick up enough material on the spot market.

And to cover their I mean, Bruce Power's. The example, we always use.

On a deal we signed a couple of years ago, they've got eight units. There. They are refurbishing them theyre going to run them into the 2014, 2015 and signed a 10 year deal with them too.

2030.

They just didn't want to any uncertainty on where their uranium was coming from the lake our ESG metrics. They like the fact that we've never missed a delivery and the history of the company.

And the certainty that that brings and they just said we don't know what the market is going to be in 2022, 345, and especially as you get every year for the wrote more uncertainty and they just said, we're not playing that game and so we were able to.

Negotiate.

A great deal with them that.

It gives us upside but covers the downside and thats, what we really look for and Thats not income ruined with what our customers are looking for I would say if they could they look for more fixed pricing today and look to lock in today's price is out into the rest of the decade, we're looking at more market.

Related because we think.

The price only has to go higher from here and so it's those type of discussions that we're having Ralph and.

I mean, we obviously.

For us back and forth on everything but.

They need uranium we have it.

We have the certainty.

And I think.

They want and perhaps need to have chemical and their portfolio and that's the same for us.

Thank you.

Thanks, Rob.

Our next question comes from Lawson Winder of Bank of America Securities. Please go ahead.

Yeah, great. Thanks, operator, and hi, everyone. Good morning.

Just first maybe on the contracts.

So to what.

First of all for what years do both the $17 million and conversion and the 12 and a half million pounds and uranium contracts cover.

How far out are we looking and what sort of range of years, and then secondly back to something you've spoken to and the path to what extent.

As the $12 5 million pounds of uranium contracting and being the result of leveraging those conversion contracts.

Net loss and I'm going to pass it over to grant, but I'll just say, we read with great interest you report on the U S market and.

Just talking about those.

Units that Exelon and energy Harbor has and what that might mean to the market going forward and found it very very interesting so grants real substitute.

Yes, Thank you Dion.

Uncovered requirements.

Words kind of provides a bit of guidance on <unk>.

Where the interest is so with the both the conversion service as well as the uranium and it goes for the uranium from 2019 as well.

Sort of looking in that kind of 2023 2024 to the end of the decade window that is where we're placing the most amount of our business more heavily weighted to the middle of the decade.

Usually our price transition and the market are stronger price transition pushes the tenor out and you can you get to lock in for for longer periods of time, but thats. The window that we're looking at right now so not completely inconsistent with what we're seeing with some of the competitive on market Rfps its.

Those are largely going on the uranium side on a fixed or base escalated basis and that is not attractive to us. So that's the window, we're looking for where the uncovered requirements.

Really do drive the business our way.

And then the second part of my question was just to what extent.

Were you able to leverage the <unk>.

The contracting and.

And the conversion space and other to add.

The uranium contracts.

Yes, certainly that helps there is no there is no doubt about it when when there is essentially no commercial conversion of available you end up with a little bit of bargaining power in the market.

But remember that in our industry, it's not uncommon to kind of see utilities working their way back.

Backwards.

Through the through the chain so.

We've got enrichment contracting that seems to be picking GAAP and conversion contracting has already hit replacement rate in fact above.

And it's almost as though once you've lined up your conversion service and year and Regiment service you now have homes for uranium when you go and contract for it so we're seeing a bit of that too and and.

Thats the argument that that I mentioned a bit earlier to another question that says, okay, well and.

Now if convert is coming back up and Youre not concerned as much about conversion capacity out into the future. Maybe you can take that final step and start finding the uranium and then have the homes to plug into so certainly some leverage for us obviously and.

And whenever we have and we take it.

But we just have not seen that replacement rate uranium contracting yet and that erodes, a little bit of our leverage of course on the uranium side.

And then so my second question I, just wanted to ask about the silex deal.

First of all what are sort of the.

Ongoing expenses associated with that and then.

Where do you see that business going.

Specifically in terms of like timeline.

Yes.

Yes, well, we're pretty excited about our <unk> project, we just picked up.

As you will have seen in January.

And additional share were persons with with <unk>, we really think its growth potential.

Technology has been.

It has been studied now for decades, and I remember 20 years ago they are different.

Different countries and companies working on that but we've we've been able to move it along and it's at a good spot look we're going to pace it along with the market obviously, it's not a big expense for us.

At the moment.

And we'll pick it up as we see the market start to evolve, but the potential for US. We think is enormous I mean, the big driver of course is those details that we have access to and through our agreement with the Doe to re enrich depleted tails in the U S. That's a big deal and and.

And so as I say the market doesn't need it now but that could be next year in your mind and we'll see we'll see how that goes with all the talk about SM Mars.

You will know of course at SMS use a special type of fuel are called <unk> or <unk>.

Low enriched uranium.

<unk>.

This <unk> technology and technology could make that.

Combined with our fuel services facilities and knowledge and technology, we could play in that game and then just making simple <unk> for for Dws is another possibility so lots of possibilities there.

We've been in the game now for over 10 years, I think we've been involved watching the technology grow and develop and advance so we're pretty excited about it.

Maybe not for Tomorrow morning, it's not it's not a quick move, but and our industry and nothing moves, particularly quick but we think we're well positioned we're happy to be in jewelry.

Excellent. Thank you.

Thank you.

Our next question comes from Philip Treacy of Energy Intelligence. Please go ahead.

Hi, Thanks for taking my question and I just had a really quick question. If you have any reaction to the announcement yesterday from Honeywell or that restarting and a travelers you have six plant and the next two years and.

And what sort of impact you you envision from this on boots and you have to.

Conversion and.

And markets.

Thanks, Phil I'd say, we weren't surprised by it I mean, there has been rumors of it for for many years I think they've been down for about six years and I saw a presentation.

One of their people made about two weeks ago that was strongly hinting towards that I think the slide on ISR said that.

Production could be and 2023, so a couple of years from now and I think the other $100 million plus.

Use of capital and put into to get things Rolling So yes.

And certainly wish them well with that grant spoke a little bit about what he thought the effects could be on the market. There's certainly not much in the near term but.

But overtime.

And with the.

Conversion price of moving the way it did it didn't surprise.

For Us I think.

<unk> up a few contracts I think their restart was contingent on having some business and they have that Phil. So yeah, we look forward to having them back and need.

Conversion business.

Thanks, so much.

Thank you.

Our next question comes from Gordon Johnson of G. L. J research. Please go ahead.

Hey, guys. Thanks for letting me ask the question.

And I guess two questions I have number one have.

Have you guys started to hear from the ESG investors.

Of the world have they started to poke around about the prospects of nuclear and I.

I guess seeing nuclear as more renewable based energy source.

And.

Gordon we start almost every meeting with every investor or analyst day, we talked to with ESG.

And I haven't seen anything income.

Like with such a tidal wave like we've seen with ESG and and it's here for the for the long run.

It's here to stay and I can tell you that we are only too happy to talk about it because we think is a real competitive advantage for us.

We said a little earlier I said and my comments sustainability has always been at the heart of our business. Our vision is to energize a clean air World. So on the E part.

Our product does not produce and <unk> and we always use the Ontario example, which is close to home that our uranium avoids about 5 million tons per year of cotwo going up and into the year. So so we think that's a real advantage, but it is not only that and it's.

We don't take the S and the G lately either.

On the social side, we have been a leader for 40 years on hiring and indigenous people at our operations, our northern operations, 50% our employees are indigenous people from northern Saskatchewan here.

Huge majority of our spending in the North goes to these northern contractors, which are indigenous owned.

We've got people policies, you hear me and you'll hear all of us and the year talk about the health and safety of our employees being top shelf and finally on the governance side I'd say, we stack up very well and we just came out of board meetings. This week.

And the chair of our governance committees and Mcclellan former Deputy Prime Minister of Canada, and I can tell you you might as senior comments and the Goldman mill and of this weekend, but.

She is driving chemical forward on.

On governance matters and so we're very proud of our record there. So we think we stack up well and you hit the nail on the head that is the topic and now that we talk about and every meeting Hasnt ESG expert.

And the audience that we go to.

Okay. That's very helpful. And then separately I mean, you guys are probably aware of there's clearly are aware of this but there's this kind of a dark cloud around nuclear and <unk>.

Fears.

Have you guys talk to governments government officials local and global et cetera.

And the prospects for nuclear.

And I say that because.

There was a report out on Germany today that theirs is associated with the snowfall and.

And the solar panels, not producing the power they need and then having and exporting or importing and rather energy for natural gas and nuclear and that's pushing up the cost of energy, but it seems like this isn't widely known and it's dynamic.

Do you guys believe that government officials are increasingly starting to think about this dynamic with respect to nuclear have you heard about that and any comments there would be helpful.

Yes, yes, absolutely.

And sit on the World Nuclear Association Board of directors, we sit on and.

CNA all of the year and.

And very clearly governments are recognizing today the rule at nuclear will play and.

Mimic the.

Repeat the words of our own energy Minister Shinzo Regan, who said there is no power no path to carbon neutrality in Canada or anywhere else that doesn't drive by a nuclear plant like we're not going to get there without nuclear and and so you can you can you know people apparently don't like <unk>.

Oil and gas anymore fossil fuels. So you can you can put that out thats like 60, some percent of the 80% I think and the world that 60% and 66% and North America of the energy that comes for you got to replace that with something hydro try damning Upper River. These day. So that works out for you I mean that is fraught with.

The controversy when Theres some physics realities that you have to deal with on wins, it's 45% efficient physics reality on silver 26%.

The Japanese asked them, how they made out this winter when temperatures went down and and the wind mills.

And turning and the solar panels, and Snowpack and I mean, they had to import LNG at 20 or $30 a M and Btu I mean.

Yes, Yes, you got to look at everything you got to look at all your options and we're getting a lot more lot more notice from from governments, we talk to them all the time.

Other directly through a course through those agencies and they are getting.

And theyre getting warmed up on the nuclear flow. So grant do you have.

Yeah, I just wanted to add Gordon this is absolutely.

And important topic and one that we need to emphasize because when we get asked what's different this time when we look at nuclear going forward. What's different. This time is exactly what you're talking about is that there is a greater sense of the accountability of where the electrons are coming from these days and Tim talked about at the outset, it's no longer.

Just the countries that have net zero targets and that are are going to be held accountable for whether they achieve them or not it's this company involvement to big companies, having net zero targets that used to just be energy takers. They used to just be able to take whatever the energy wise that was coming down the line and now now there.

Being driven to be accountable for where that power is coming from and so it's that a very important voice being added to it that we think makes the demand dynamic different. This time. So yes, we're involved and the traditional conversations with those who look at nuclear and and maybe.

Have a little more fiction and fact built into their nuclear perspective, but it's also working on the company side as well and saying you know when you buy and clean carbon credits and yet the Sun is shining for a couple of hours of the Windows Boeing for a couple of hours and it's a 24 hour clean credit and it's probably being backed up.

By fossil fuels not emissions for power. So you should really think about.

Were those electrons are coming from so youll see us do more and more and this area, even though it's kind of not part of our business where data power producer, but we have to be and important voice there and have to join the voices of others like the environmentalist like Michael Schallenberger for example, who are making this point loudly and frequently but youre on.

Absolutely right that it is a different dynamic shaping up on the demand side. This time.

Okay, and then one last one for me if I can.

The Chinese contracts, maybe you guys have answered this I didn't catch it but those contracts are pretty long and the two typically those contracts are 10 to 15 years I think.

And they were signed up roughly 10 years ago, some expectations that they were going to be renewed this year. Some expectations that we're going to be renewed last year do you guys have any insights with respect to when the Chinese nuclear.

Players may look to renew those contracts. Thanks for the questions guys. Congrats on the quarter. Thank you.

Correct, Yeah, we talked about this and a little bit earlier, but I'll just go through it again.

Those initial contracts.

And were obviously quite out in front of what their requirements were in China. So they contributed to the strategic inventory build that we saw happen and and so we earlier, we wanted to set that strategic inventory build in the context of where we think that Chinese fleet is going and when you look out over the longer term with their country net zero targets.

And it ends up being quite a modest strategic reserve. If you will so then it raises the question what do they do when 2025 comes around and those initial contracts have rolled off while theyre going to have some foreign sources of uranium Tim talked earlier about Namibia and production all being in the hands of the Chinese right now and that goes back to <unk>.

China.

And they'll they'll probably develop.

Set of assets and Kazakhstan, just a recent announcements about involvement there.

That might give line of sight to about 20 million pounds of foreign production coming into China, but but it's going to be against 45 to 50 million pounds of consumption and that one year of low in 2025, and then growing every year after that so.

The term dynamic that we're watching and others are watching is.

And some of these big players with big programs and big buying needs.

When theyre going to step into the market, you'll have those utilities, who will just be happy to follow but youll have those utilities that want to be in front of that because youll remember the Chinese triggered a a bit of a price rise last time, they stepped into the market. So it is an important thing our sense right now is probably that 2021.

Could be a constructive year for conversations about renewing those contracts that's not to suggest they will be completed but but we think when you kind of back up from 2025 to today and we're within that window of when you would normally see contracting for big volumes like that.

Thanks again guys.

Thank you.

Our next question is a follow up from Rs <unk> with Scotiabank. Please go ahead.

Okay.

And you're on mute doors.

Okay.

Sorry about that yes, I was on mute.

Thanks for taking the follow up.

And the in your MD&A. It speaks to the issue that there is risk to your cigar Lake production and 2022.

Based on the current suspension and delays and deferrals can you give us a sense of like what's.

With cigar Lake temporarily suspend it now.

And at what point does that start to trigger some of that reduced production and 22 like if it stays down to mid year will that have an impact for next year or or does it need to stay down longer than that I'm, just trying to get a sense of when do we have to start worrying about 'twenty two.

That's a good question or I guess, it will depend on how long were down and it will also depend on.

And whether we can come back kind of in stages up there and maybe you can't go back to full production right away, but you could bring accrue up to work on some development to prepare that.

Prepare the mine for when you can bring and the whole crew up and start getting again and doing all of that so lots of question marks there.

Right now, we're pretty much down and it's that care and maintenance crew looking after the place we'll watch.

And I don't think its and all or nothing and we're just going to restart in two weeks or a month. Later, we started I think youll see more of a phased approach as we can do some as I see some development work underground and the mine and just prepare it so when we do bring the whole team back that we can ramp up will be smoothed, so not a real.

Specific answer for you and worst but thats the best we have today.

Okay, maybe I could ask it another way then have we already reached the point, where you would anticipate that cigar lake will produce below nameplate and extra or is it two I can't say that worst I wouldn't say that no I can't say that yet we're off and we want cigar lake to run <unk>.

We have it on the books, we need those pounds to put into our portfolio and we wanted to run and so every day, we come in and we way.

The.

The likelihood we can restart the risks around restart the risks around having enough qualified workers to run all the circuits and so as I said, we don't want a yoyo the thing back. So we'll make sure. We're in good shape and we have good certainty and clarity when we bring it up but it's too early to.

Say that there would be and effect in 2022.

Thank you and then just separately can you give us your latest timing expectation for when we could hear whether the Supreme Court will hear the appeal on the share rate case.

Yes, absolutely.

We know there is a.

<unk> trio I think of just looking at it now and so we're hoping to hear sometime here in the first quarter as to whether they will.

Give leave to appeal, but that's about the and best information we have now and so we have another piece, we get up and watch for every day and as I say.

First quarter is still our best estimate.

Great. Thank you.

Yes. Thank you.

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

Yes, thanks, very much operator, and with that I just want to say thanks to everybody that's stuck with us today on the call low we certainly as always appreciate your interest and support.

And I'd, just say that as we head into two.

For 2021 were excited as I said earlier, we're excited about the future site.

Excited about nuclear power generation going forward and we're excited about the fundamentals of uranium supply and demand and the role our company is going to play and we always end by saying, we're responsible commercial supplier with a strong balance sheet long lived tier one assets and a proven operating track record.

And so we're going to continue to do what we said we will do we will execute on our strategy and we think 2021 is going to be a good year for us and we will always always put the health and safety of our workers their families and.

And their communities at the top of our list so with that I'll, just say, thanks, everybody stays safe and healthy and have a great day. Thank you.

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

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