Q3 2021 Cameco Corp Earnings Call
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Thank you for standing by this is the conference operator, welcome to the Cameco Corporation's third quarter 2021 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 Rochelle, Gerard VP Investor Relations Treasury and tax. Please go ahead.
Thank you operator, and good morning, everyone. Welcome to Cameco was third quarter conference call I would like to acknowledge that we are on treaty six territory in the homeland at the May Tee.
Today's call will focus on the trends, we're seeing in the market and on our strategy.
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 be happy to follow up with you after the call.
There are a few ways to contact US you can reach out to the contact is provided in our news release you can submit a question through the contact tab on our website.
Or you can use the ask a question form at the bottom of the webcast screen and we will be happy to follow up after this call.
With us today on the call are Tim gets old President and CEO Grant Isaac Senior VP and CFO.
Brian Reilly senior VP and Chief operating officer.
Alice Wong senior VP, and Chief Corporate Officer, and Sean Quinn Senior VP, Chief legal officer, and corporate Secretary.
I'm going to hand, it over to Tim to talk about the long term fundamentals for our industry. The current market dynamics and about chemicals strategy to add long term value.
After we will open it up for your questions.
If you have 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 are part of the Investor Handout is available for download in a PDF file on our website at <unk> Dot com.
Today's conference call is open to all members of the investment community, including the media.
During the QA 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 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 and hope you and your families are doing well.
I want to start today's call with the observation that we are living in interesting and exciting times in the nuclear business.
That's pretty obvious I'd also observe the chemicals uniquely position thanks to our strategy to capitalize on the increasingly undeniable conclusion that nuclear power must be an essential part of the clean energy transition.
Oh, it was motivated by the fundamentals of our strategy.
The operational flexibility market alignment and financial discipline has.
This had a significant impact on the positive market dynamics that have attracted so much investor interest of late.
I can tell you our commitment is unwavering and our resolve remains strong we are.
We'll continue to execute on our strategy and capture the value of the clean energy transition.
Oh.
So first let's look at those fundamentals, which motivate our strategy.
I would say that the fundamentals of our business are as positive as we've seen them in over a decade and maybe ever.
I say ever because there appears to be a durability that I don't think we've seen before.
One of the big drivers for growth and demand for nuclear power today is it's linked to the electrification and decarbonization and the commitments being made by countries and companies to net zero carbon targets.
In the past, we have always been reliant on governments and public policy to take the lead.
Well that aspect remains important there are now more than 1800 companies, who have made net zero commitments.
We will therefore play a critical role in helping to shape, what energy policy will look like.
These clean air and climate change commitments in particular by companies are creating accountability.
Companies will need an energy source that can provide safe clean reliable and affordable electricity 24 hours a day seven days a week 365 days of the year.
This accountability is what we expect will create that durability of demand for nuclear power.
In addition, the important role for nuclear in the clean energy transition is being amplified by concerns about energy security as.
As a result of the current energy crisis in many parts of the world and spiking energy costs.
In the past these types of energy crises of triggered the build out of some of the largest nuclear fleets in the world in places like the United States, France and Japan.
In a world, where 85% of our electricity still comes from fossil fuel sources and with Cop 26, just around the corner.
It is time for climate realist to step forward and acknowledged that there is no clear pathway to sustainably achieve both electrification and decarbonization, while maintaining a secure affordable and stable electricity grid.
Without having nuclear in the toolbox.
Just recently French President Emmanuel Mcewan pledged he would invest 1 billion euros in small modular reactors.
Crediting nuclear power for insulating, France from the current impact of Rocketing energy cost and shortages of natural gas.
In fact for ounces grid, operator says that the most cost effective way for the country to meet its carbon neutral goals by 2050 is to build 14, new large scale nuclear reactors. In addition to building S M ours and extending the lives of the existing fleet.
Across the channel in the U K, we saw the government include about $2 billion in its autumn budget to help advance our large scale nuclear project and another $400 million for small modular reactor development.
The 2020, one nuclear fuel report from the World Nuclear Association showed a two 6% growth rate in nuclear fuel demand.
Up from 2% in his previous report and that just represents traditional demand from large scale commercial nuclear applications.
That doesn't take into account any new build in the form of small modular and advanced reactors.
It's not just long term growth in the form of Newbuild either.
It's also medium term growth in the form of life extensions for example, in France and in Canada.
And its near term growth. There's early reactor retirements are being prevented as was the case with excellence Byron and Dresden plants in Illinois.
Yeah.
We're also seeing momentum building for the non traditional commercial uses of nuclear power here in Canada and around the world.
So it's easy to conclude that demand outlook is durable and very bright.
So let's look at the other side of the fundamentals supply.
When you look at current productive capacity over the next decade, you'd only satisfies about 70% of utilities run rate requirements.
That means to meet the remaining 30% of requirements new production will be needed.
However, well demand for nuclear and uranium is becoming more certain.
Uranium supply is becoming less certain as years of persistently low prices have led to planned supply curtailments of existing productive capacity.
Lack of investment in new productive capacity.
At the end of some reserve life for some mines.
In the past secondary supplies have filled that gap.
But after years of drawing on these one time sources the secondary supply capacity is now declining significantly into the future.
These fundamental facts are being amplified by unplanned supply disruptions caused by the COVID-19 pandemic.
The further thinning of spot uranium due to interest in physical uranium by investors that are purchasing significant volumes of uranium and sequestering it.
And the risk that global supply chain challenges interrupt the flow of goods and services in the uranium market some of which we are already seeing both here in Canada and over in Kazakhstan.
To ensure the availability of reliable and sufficient productive capacity to fuel carbon free baseload electricity.
Uranium prices need to increase to reflect the economics of bringing on new supply.
However, without the right market signals and without line of sight to homes for those pounds under acceptable long term contracts investing in a development project is not what a responsible producer does.
Particularly when there's idle tier one capacity.
Looking at where the market is today and what we're seeing it's easy to conclude that the current uranium market is more constructive than we've seen in a very long time.
Over the last few months theres been significant volatility in the uranium spot price, but if you follow the trend line, it's definitely up into the right.
If you think back to when we began taking strategic actions the extreme curtailment of our supply despite uranium price was under $18 per pound.
Today, the spot price sits at about $47 U S per pound.
After hitting over $50 U S per pound not long ago our.
A significant move up into the right.
And what's driving the spot price increase while.
Well, it's the thinning of the uncommitted primary supply in the spot market the material that does not have a committed home.
Something we as a responsible producer have taken significant measures to deal with as part of our strategy.
Indeed, I would argue the magnitude of our production cuts to well below our sales commitments.
And the resulting purchase activity to replace those pounds are unrivaled with respect to their impact on the availability of uranium in the spot market today.
In addition to our demand there are several financial vehicles that seem to be trying to address the same problem we see.
Disciplined producers jamming theyre uncommitted material through the spot market.
We believe with the right structure and management the funds can be a good substitute for utility demand in the spot market.
For example, the new financial entrance to our industry. The sprott physical uranium Trust has introduced an aftermarket equity program.
Which allows us to quickly access funds to purchase uranium if its investors collectively believes the current uranium prices low.
Its purchases appear to be targeting spot material material that has already been produced thereby not incentive suppliers to produce into the funds demand.
Additionally, it is non redeemable, which means the material is sequestered.
So far the trust has raised over $730 million U S and purchased over 16 million pounds of uranium.
This activity is driving more liquidity and better price discovery, which is an important and welcome development.
The interest of these types of funds and holding physical uranium is further evidence that investors see the opportunity for significant value capture in our industry.
But it's important to remember that the spot market is not the fundamental market in our business.
It's a very thinly traded market, where small volumes can have an outsized impact on price.
It is not where utilities turned to satisfy their long term run rate requirements.
It is typically where they go for one time discretionary volumes.
It's why we are a critical those who promote a strategy to build productive capacity fully exposed to the spot market.
Having been in this business for now over three decades.
I can tell you that strategy simply doesn't work for those who are trying to create long term sustainable value in.
And it demonstrates a basic lack of understanding of the structure of our market.
Yes, if timed absolutely perfectly the productive capacity may enjoy a brief period of high prices on small volumes, but as the spot exposure itself that sets in motion the price off cycle and becomes value destructive.
In our business there is no substitute for a full blown utility driven long term contracting cycle motivated by security of supply concerns to truly drive value capture in the uranium market.
Just as it did in the conversion market two years ago.
As it did for us during the worst downcycle in the uranium business when our average realized price outperformed the market and protected our balance sheet, when others failed financially and had to be recapitalized and restructured destroying value for their owners.
Finally, after more than 10 years and a drop in through the deliberate and disciplined execution of our strategy. We are now seeing the cycle Forum.
As the spot market continues to thin utility interest in on market long term contracting is emerging.
Utilities are beginning to shift their attention to securing material for their uncovered requirements and not just in off market negotiations.
Request for proposals have come to the market as well.
Based on the improving fundamentals driving term demand the long term price for uranium jumped by 28% to an industry average of $43 U S per pound since last quarter, which is becoming more reflective of production economics.
Clearly, there's a lot happening and as I said earlier it is an interesting and an exciting time to be in the nuclear industry.
So what does all this mean for cameco well it means we are optimistic.
We are optimistic about the growth and demand for nuclear power, both traditional and non traditional.
We are optimistic about growth in demand for uranium and fuel services.
And we're optimistic about the incumbency opportunity for cameco, and capturing long term value across the fuel chain and supporting the transition to a net zero carbon economy.
Therefore, we will stay the course on our strategy.
We will continue to do what we said we would do.
So what is it that we're doing.
But we are aligning our production decisions with the market fundamentals for.
We're being strategically patient in our marketing activities and we are conservatively managing our balance sheet to ensure we can self manage risk.
This strategy has positioned us well to take advantage of the fundamentals I spoke of earlier.
We are operating and idle tier one assets that are licensed permitted long lived and our proven operations that have expansion capacity.
We are fully permitted and proven tier two assets that don't make sense at today's prices, but when you think about them in the context of a looming supply gap, there's a potential pathway for them to add value for us in the future but.
But we will continue to be very disciplined in our evaluation on that front.
The curtailment of our tier one and tier two assets are inventoried more than 80 million pounds of uranium and the ground since 2016 and that just represents our share.
More than 80 million pounds of uranium are worth much more in today's market.
In addition, with our spot and term purchasing we've taken 56 million pounds of uranium out of the market since we began curtailing production.
If you think about that in terms of a uranium fund it would be the biggest and we believe the best uranium fund there is.
So why is it better well the pounds are well and truly sequestered until they have a home inside a reactor core.
All of our tier one to tier two assets are backed up by what we think is the best exploration portfolio that Leverages brownfield infrastructure.
But we're more than just mining.
We are vertically integrated across the nuclear fuel cycle, where for refining conversion and fuel fabrication.
Yes.
As well, we are positioning cameco to respond to the growing need for uranium fuel to generate safe clean reliable and affordable electricity by exploring opportunities to further our reach into the nuclear fuel cycle and an innovative non traditional commercial uses of nuclear power.
In addition to our investment in global laser enrichment and our participation in the centre for next generation nuclear technologies with Bruce power, we have entered into a number of non binding memoranda of understanding to explore several areas of cooperation to advance the commercialization and deployment of S. M ours in Canada.
And around the world.
These opportunities aligned with our commitment to manage our business responsibly and sustainably and.
And to increase our contribution to global climate change solutions.
As an independent commercial supplier, we can 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.
Thanks to our disciplined contracting strategy, we have had a contract portfolio that has protected us well during the worst down cycle in our business we.
We also locked in significant value for our fuel services business and the recent price transition and conversion.
And as the uranium market improves our focus is shifting to securing homes for our ingrown inventory.
Always guided by the fundamentals, we won't chase the market down to win business and we won't produce to dumped uncommitted supply into a thinly traded spot market as we've seen some of our competitors do.
The primary driver for our contracting activity is always value.
We've been through every market transition in our industry.
And while having great assets is a necessary condition for creating long term value. We know that it is not sufficient.
Our experience has taught us that a responsible producer creates real value by building a long term contract portfolio.
Portfolio that supports the operation of productive assets and generate significant cash flow through the entire commodity cycle, we're having leverage to greater returns as prices increase and that provides downside protection for periods of lower prices.
Therefore were appropriate we layer in volumes over time in accordance with market conditions.
As the market improves we expect to continue to layer in volumes, capturing greater upside using market related pricing mechanisms.
However, we recognize there is a cyclicality to our business that is inevitable.
That is why as a responsible producer we will also look to lock in value at higher prices to carry those higher prices through the next cycle.
Always with a view to a preference for a 60 40 split of market related and fixed prices in our contract portfolio.
On the financial side, we've been very deliberate in shoring up our balance sheet.
At the end of the second quarter, we were again in a negative net debt position with $1 4 billion in cash 1 billion in long term debt and $1 billion Undrawn credit facility.
As such we have the financial capacity to self manage risk and maintain our strategic resolve.
Yeah.
Let me talk about risk mitigation for a minute.
When we embarked on our strategy and began the extreme curtailment of our supply we acknowledged that there would be costs associated with our strategic decisions.
To be certain these are the costs you see reflected in our financial results.
The cost of not operating mines is significant and yes in a rising price environment. There is a significant cost that comes with purchasing increasingly expensive pounds.
The good news is they do not represent the run rate of our business.
Just step back for a minute and consider where the market might be today had we not taken these actions at.
That chemical not accurate strategically and decisively almost 170 million pounds would still be above the ground and trying to find a home in the market.
The spot market would still be significantly oversupplied.
Financial and other investors would not have taken notice of uranium.
So when we were asked are we worried if the price runs away and we have to buy really expensive material to satisfy our commitments. Our responses that is exactly the outcome. We wanted to see from our strategic actions.
Let me explain that.
Make no mistake, we will purchase expensive material, because we need it and it allows for price discovery.
But they are a consequence of our very deliberate strategy and we put four layers of risk mitigation in place to deal with them.
First we carry an inventory that's our first line of defense.
Second when uranium prices started with a two or three we secured more than 12 million pounds of material under long term fixed price purchase arrangements.
The deliveries under these arrangements are heavily weighted to the years 2025 through 2028.
However in the event, we are unable to find enough material to meet our committed sales, while Mcarthur river shutdown or if it becomes very expensive we can consider advancing the timing of delivery under these arrangements.
Today's purchase price for these pounds is considerably less than our current market prices and remember.
They have a home in our contract portfolio.
Third we also have the ability to borrow material that is stored at our licensed facilities.
Fourth and finally, if the price is moving that quickly we are likely in a full blown security of supply contracting cycle, and a rising prices leading to better price realization under our existing contract portfolio.
It is also creating the opportunities to layer in new long term commitments with appropriate pricing mechanisms.
These will underpin the long term operation of our productive capacity satisfying the conditions for a restart at the Mcarthur River key Lake operation.
Yes, it will take us some time to get it going as we outlined in our technical report, but those will be among the first assets that we'll be able to respond.
Also remember deliveries under new contracts typically don't start for another couple of years one signed.
We're not there yet, but when the day comes to restart Mcarthur River key Lake It will be undeniably positive news for Cameco, and we believe the market.
It will be the signal that with all of our market experience. We know it is time to prepare our tier one assets because of market transition has taken hold.
It will mean, we see a market that is calling for more supply and we have a line of sight to return to our tier one cost structure delivering our uranium under long term contracts that will create value and will not overhang the market.
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 committed to operating sustainably by protecting engaging and supporting the development of our people and their communities.
And to protecting the environment something we've been doing for over 30 years.
We have determined that our strategy of operational flexibility market alignment and financial discipline.
Will allow us to achieve our vision of energizing a clean air World.
Thereby delivering long term value in a market where demand for safe secure reliable and affordable clean nuclear energy is growing.
Before we start the Q&A I just want to make a few comments on our decision to file a notice of appeal with the tax court of Canada.
We are extremely frustrated that we have to take the step after 13 years of litigation and multiple court decisions in our favor.
However, we have seen little progress in our engagement with the CRA to apply the unequivocal rulings to the reassessment for the 2007 through 2013 tax years and to return to us the $777 million in cash and letters of credit it is holding a security.
It is very disturbing to us that an agency of our government refuses to respect the clear and decisive findings of the courts.
We can't predict how long the process might take but we owe it to our employees shareholders and the many other stakeholders, who count on our company to hold CRA to account.
We will pursue all feasible avenues available to us to get our money back and to bring this matter to a conclusion.
It has gone on wait too long.
So thanks for joining our call today, and operator with that we would be happy to answer any questions.
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Okay.
The first question is from Ralph <unk> from eight capital. Please go ahead.
Yeah.
Oh, Hi, there and good morning, everyone. Thanks for taking my questions.
Two of them, if I may Tim or grant one on the spot market and then one on utility behavior.
First question is Tim you talked about spot sourcing for for Sprott I'm just wondering.
What degree do you consider this source of material finite and are we close to a pinch point, where liquidity becomes more of an issue and end this purchasing desire runs into more and more supply.
Okay.
Yes, thanks, Ralph Thanks for the question you know scrap has been quite an interesting phenomenon over the last couple of months picking up I think they picked up only about.
About 16.
Pounds, but $700 million worth of purchases.
And that comes at a point after we've been about five years and supply discipline and so we watch the supply demand fundamentals are really closely we thought it was getting tight before they showed up in the U S is it finite I think it is.
It is.
At least tightening up for sure.
Yeah, we are reaching a pinch point Ralph I think.
Okay.
Great Thanks and.
When it comes to utility behavior and chemicals contract book Tim.
Specifically on flexing of deliveries in existing contracts how much of this has been a part of chemicals discussion.
How much more before you get maxed out and maybe some industry commentary on what degree do you think up flexing of deliveries is maybe prolonging new contracting from starting in earnest.
And I was wondering you know is it your experience that utilities will sort of exhaust these opportunities before entering into more of a contracting cycle.
Well. Thank you like you know I think they will look at their contracts obviously, they will take the best position. They can if there's flex and contracts and it makes sense for them and it's economic for them to do it they'll do it no question about it but.
Let me pass things over to grant I know a lot of you have questions on the market and I don't know I just to put in a plug for that.
The the interview granted you might've seeded with Trevor and trade Tech.
This week, it's the treatise on on the market and where things are at so grant why don't you. Just go ahead for a minute and I answered <unk> question, Yes, Thanks, Tim Ralph Youre, absolutely right that within our contract portfolio.
It's pretty normal course for utilities to look at the options that they have within our contract structure to take advantage of market moves and so no surprise. If you have a utility that has the ability to flex up and maybe they are flat. They are asking to flex up a contract for example that is base escalated or a contract that was.
Market related but may have had a ceiling that below todays spot price no surprised they'd want to flex that up but I wouldn't I wouldn't say, there's a one size fits all I mean, I think the opposite can also happen where utility might choose to defer market related volumes, because they see backwardation and they think well why would I take.
Material today, if the spot prices out in front of the tariff price maybe that means the market is going to come down a little bit. So there is no one size fits all it's just normal course optimization.
Within that contract portfolio, and we just say time and time again, that's really what you have to focus on when you think about capturing value in the uranium market, but I would then make a distinction between those kind of moves.
And really what's been going on in the term market. So you asked the question.
There's a utility taking advantage of say flex in our contract delay the contracting cycle and I would say it doesn't what is delayed the contracting cycle is what Tim referred to a number of times in his comments and you've heard us say this over and over again it was uncommitted primary production.
Coming from Iron discipline disciplined suppliers that didn't have a whole getting put into the spot market in a low interest rate environment created the carry trade it created the opportunity for utilities to come into the market to to not just turned to producers for term material, but to turn to financial entities as well who are willing to buy it in that.
What market and carry it for a couple of years into the early part of term business.
That's what capped utilities from sort of looking at the broader run rate requirements.
So what we've seen is that the work that cameco has done to pave the way to 56 million pounds of purchasing we've done since our supply disciplined strategy started plus the material we've kept in the ground.
That paved the way for what we've now seen that spot purchasing thats had a very dramatic impact, especially from this product line.
And in a world where interest rates are going up so that recipe for carry trade has kind of reversed on itself and it's that drawing up of that spot material not being able to be carried into the term market.
What makes the difference for the term contracting mentality and sentiment as opposed to just optimizing within a contract. So I hope that makes sense Ralph yeah. Yeah. It does thanks very much I appreciate that.
Thanks Ralph.
The next question is from Andrew Wong from RBC capital markets. Please go ahead.
Hey, good morning, Thanks for taking my call.
Just going back on the contracting cycle I guess, that's what you're talking about.
Where would you say we are in the contracting cycle given that we have seen some volumes being signed.
And it does vary across different regions, maybe it's different across different regions.
And just how does that contracting cycle look like in terms of how it will evolve over the next few years relative to what we've seen in the past.
Grant you want to take that.
Would say here's the good news Andrew this is early innings.
What we've seen in the uranium space is first of all interest from clean energy interests from the Decarbonization and then we've seen the spot interest as the spot market has gone up but but we haven't yet seen the next leg, which is when that term contracting cycle starts. So what we mean by a term contracting cycle. The cameco is wind cod.
Tracking is at or above replacement rate level. So utilities are consuming roughly 180 million pounds, a year of uranium and then on the annual basis layered out over time, thereby 180 million pads that would be replacement rate contracting what we've lived through of course is way way below replacement rate Contra.
<unk> one of the data points, we often refer to is that since Fukushima utilities have consumed over one 6 billion pounds off of term contracts signed in the past, but they've only come into the market to replace about $800 million of that Thats whats given rise to this big wedge of uncovered requirements and so.
The early Rfps, we've seen even the off market stuff that cameco is that this is early innings to use a baseball metaphor being here in the World series time. These are early innings. There's a lot of contracting that has to occur in order to meet the uncovered requirements wedge that we see and remember that uncovered requirements wedge that you look at it is usually quite traditional.
And conservative it doesn't layer in sort of the new demand from the things that Tim was talking about like <unk>. So early innings from a timing point of view when.
When we look ahead I would say, we don't see a whole lot that makes us think the next term contracting cycle is going to be different we've seen a lot of demand get piled up.
We know that contracting begets contracting at our business. We expect these rfps rollout and utility start tying up future supply that hasn't yet been pulled out of the ground or even worse future supply that might be a definitive feasibility study.
But that's at a lot of work has to happen before theres any pads above the graph when that period of contracting starts to happen then we see others follow through the door and we haven't seen anything at the front end of this cycle to make us think its going to be different this time.
And you've heard me say before what we just went through with conversion I think is very illustrative. After after believing conversion was going to be available at low prices forever that service became constrained.
That constraint brought contracting that contracting was beyond replacement rate and it was really strong price formation and for a producer who remain de leveraged to that we were able to capture a great deal of value. So I think there are some lessons to be learned there.
So early innings pretty exciting.
Okay. That's helpful.
And just.
Is there any difference between the different regions that we should be watching for.
Well.
Okay.
We've seen.
No difference in terms of.
Even the new entrants the regions that are kind of new to commercial term contracting and our China from 2010.
India.
We've seen no difference in terms of commitment to term contracts. So so every now and then youll hear people out there, saying Oh this market is going to break the spot we.
We don't see that actually we don't see really any utility.
With any size and scale, saying that theyre going to take their chances in the spot market they tie up their annual run rate requirements.
Through term contracts, what we are seeing perhaps is a little bit of difference in weather market related or base escalated pricing is the focus and with I would say the new entrants and the sovereign buyers, we tend to see a little bit more.
Willingness for more more market related and we think that probably just has to do with.
If you are a fuel buyer buying for a big program.
And it's not your full time job you buy other things as well.
Maybe just taking the market prices the easiest thing to do rather than fixing our price and going through a period, where maybe you are paying a price that's above the market that seems like a pretty risky thing for you to do so there seems to be more of a tolerance for a market related versus base escalated that we've seen in the past with some other programs, which by the way is great.
For us.
Obviously love that because we think the fundamentals suggest that market related exposure is a good place for us to be but but no difference on the term contracting and in fact, if we truly are heading into a term contracting cycle.
And we go to above replacement rate term contracting for a period.
Then then the dominance of the term contract is restored vis vis the spot. So so for us that's probably the only difference that we're really seeing on the front end of a cycle here.
Okay. Thanks for all your insight. Thank you thanks Andrew.
The next question is from Orange <unk> from Scotiabank. Please go ahead.
Hi, Good morning, all I can say is what a difference a quarter makes.
In terms of the market side of it.
But my question revolves around your thinking right now on Mcarthur River.
Most of US probably have been assuming for some time that the potential timeline for mcarthur to come back would be sometime around mid decade.
But with the market.
Recovery accelerating apparently felt quickly.
Given given the inventory purchasing activities by by several players.
Can you give us sort of your current thoughts on what would be the requirements to consider bringing back mcarthur and whether you're potentially thinking that it could come back maybe in a partial form rather than just the full production.
Just given the amount of pain youre, taking with respect to holding cost right now.
Yeah.
So let me start with your first comment it isn't very often in the last 10, usually prefer to use the word exciting in the nuclear market in the same breath, but I would say it.
And it's not just a difference a quarter makes words I think it is that we've been building on this for years like for five years at least if not more with.
The strategic decisions.
Taken with the supply we've taken off the market and so now we're starting to see the results of that and supply demand fundamentals and so yeah, we are pretty bullish pretty optimistic.
About our business going forward.
<unk> I think we've been consistent over the last years and quarters, and saying, we're not bringing them back until we find a good home for those pounds and acceptable.
Term contracts.
But we have to put those pounds and though we don't have to have every last pound put into a contract, but we want to make sure its base loaded with good long term contracts and so we're working on that we're making progress as you see every quarter I think we've announced more more long term sales.
Over the last.
Three years, we've I think in 2019, we had 36 million pounds, we added probably 12 announced last year in 2000. So far this year. So we're we're building on that we're not moving too quickly because we think the price is still forming long term. So we will we will look at returning those assets when we have the as I see a good home a good home for.
For the ponds that are coming out of there.
Grant.
<unk> I would just add one thing and you said most people are sort of imagining a mid decade restart well, let's face. It we put out a technical report that said it basically takes 18 to 24 months to restart it. So if we did it today. We are started to talking mid decade. So that assumption is the right one our supply discipline continues.
Okay, and just Tim on your comment about not having to sell every large pound.
How should we think about that is that an issue of you'd like to lock up the majority of pounds from future production on a kind of seven to 10 year view where or.
Any kind of framework you can give us.
Well, it's going to flex a bit ores to as I say, we'd like to have the majority of the pounds.
Tied up if we can we also know that we're able to flex production, if we need to on that asset and maybe others and so we'll we'll gear our production to our sales Youll see I think I'm looking at Rachelle that are in the five year period. We are from today forward. We have sold an average of 20 million pounds.
Not too bad and so were working on that and we've got lots in the pipeline that can tell you that we're busy a grant and his team. The marketing team are busy we are starting to get out on the road again, there, which is really productive and so yes, we're getting there and.
It's pretty it's we're making good progress and it's pretty exciting.
Okay.
Just quickly if I may just with the pricing terms in the market having moved up so much I assume it's fair to say that the bid ask spread on the long term contracting discussion.
As I would've shown them closed.
From what it was over the last couple of years.
Should we anticipate that the level of contracts.
The level of recapturing activity now is likely to ramp up from here.
Just given where current pricing dynamics or or or if not what what is holding utilities back at this point.
Grant what he's seen in <unk>.
I think that's the right way to think about it the spot is because it's thinly traded and rather a liquid it can move quickly and it does move quicker than the term market, having said that.
Very good news the term market took a pretty big jump in September.
Trade tack at UFC and of course, UFC price went up again as well at the end of.
At the end of the month here in October.
And so we are seeing that that term response and.
I think for those who may have been sitting on the sidelines from a contracting point of view and saying well.
If I wait a bit longer can I get better priced uranium.
There'll be a lot of people sitting around on the fuel buying team, saying well, we probably missed the era of uranium that starts with a two and we may have missed the era of uranium that starts with a three and now it actually seems to be well into the fours of course, that's the inflationary psychology that you want to see in the market in the past that has always brought.
More contracting and and Youre right contracting begets contracting because remember.
Any one actor who steps in and ties up their run rate requirements theyre laying claim to future supply future supply that somebody else can have and so it does create that momentum of saying well I better get in line and add better tie up some of that supply and so we can go through periods, where there isn't a lot of contracting and it doesn't drive urgencies and we go through periods where it.
There's a lot of contracting and it drives a lot of urgency so watching that term price move up the way it has and expecting it to continue.
Push up and recognize that really the carry trade has gone from a substitute point of view and your future lives by turning to producers, who have who have seemed to demonstrate a bit of willingness to step back.
With their pricing aggression.
It seems to be the.
The cycle is taking hold.
Thank you for the color.
Thanks.
The next question is from Greg Barnes from TD Securities. Please go ahead.
Thank you, Tim and prior MD&A as you've talked about giving some color around how active term contracting.
Discussions you are having has been.
I didn't see any of it while it's quick with me of the MD&A.
But I didn't see any ambition DNA just some color around that would be helpful and I think you've touched on it a little bit.
More color.
To give you some clarity.
Thanks, Greg.
So one of the distinctions we have been making for some time is that our term market.
Really has.
For a lot of our customers two dimensions to it one is the on market, where they come out with a very public RFP and we spend a lot of time talking about those and there have been a few in the market and thats great. But we've also as cameco gone through a period and we have in past cycles with what we call off market and Thats, where we are in.
Typically exclusive bilateral discussions with utilities and Youre right, Greg we had been talking about that quite a bit we've been talking about it because it's the way to sort of signal where demand is starting to four if you can't see it in on market RFP. So the vast majority of the material that we.
<unk> booked since our supply discipline has started is actually in those off market conversations and if I were to reflect on where that pipeline is.
No surprise with the moves in the uranium price that the pipeline strengthens and what we can confirm is that on an off market basis. We're talking about term volumes that are quite near bigger.
Beginning.
In the next couple of years to turn volumes that are actually up to 20 years out Greg. So it's it's.
It's quite a range and and no surprise that those conversations strengthen in a market where the price moves so.
For us obviously, the prospective of being in a position to announce some of those is going to really send the signal that.
That future supply is being tied up in some cases in windows beyond say, the current life of cigar Lake, which ought to be a shock to the market to think that material is already being tied up in that window and the obvious substitutes.
Not in place yet on the supply side so.
I think that goes back to my earlier comment early innings on a term cycle.
Okay. Okay.
Switching to the CRA appeal.
I know Tim you said you could talk about what are the next steps.
In terms of its appeal.
I believe you have to obviously set.
Set a court date and all the rest of it when is that going down.
Yeah, Greg you're absolutely right, we just prepared the notice of appeal and Sean Quinn here with Us our chief legal officer, and I'll get him to give you a little more color but.
Just to say, we've you know we've got our decision from the Supreme Court, who said seen enough of this movie move on those back in February February 18th of this year and since then we've made.
Efforts to try and talk to the CRA and get them to move things along and apply the same logic. The GOR deployed two years or three to six to the rest of them in.
There is still thinking about it and we're tired of waiting around so Sean what are the what are the next steps sure. Thanks, Tim.
Procedurally, what will happen next is that.
The notice of appeal, we just filed will be related to TRA, who will.
Engage with the department of Justice Daily.
Daily eventually.
While our reply to our notice of appeal.
Don't expect to see it until January of 'twenty, two and that will kick off the litigation process in tax court for the years that we've appeal.
And that process will start with the collection in exchange of documents move onto examinations for discovery and if there isn't a resolution at some point along the way will eventually be back in front of attacks quite judge, but I don't expect that at scale.
Late 'twenty three at the earliest more likely into 'twenty, four and its litigation, which means that it will.
Twist and turn along the way.
And Greg Let me add that's the legal road.
We're looking at other avenues to we're going to turn up the heat on.
Whoever we can governments.
Especially one.
And just again explain how unfair this is and I know, it's not a popular story.
To tell its a hard story to tell but this is a bit of abusive behavior by the CRE and we're just about done with it. So we will take whatever measures we have due to to help justice.
Just as done in this case.
Just some color you're filing an appeal just to get the money deposited with alright back you know this is not re trying the entire.
Thanks again, you got it yep, you're right you're up to.
Is the Supreme.
Sorry, I get a little frustrated or this one.
After over many years 13 years of litigation.
On this so we win hands down at the trial Division tax Court, we win hands down three judge Court of appeal and then the Supreme courts, as we don't want to hear about it that normally.
When I went to law school. Many many years ago that meant something that you had a decision and is enforceable and then here it appears that.
Whatever it is happening.
Some decisions get enforced and others that they don't like so much don't and we don't think that's fair and so we're going to keep fighting on this one and we'll eventually prevail, but it's going to take us a little bit more time.
Okay. Thank you thanks, Greg.
The next question is from Gordon Johnson from G. L. J research. Please go ahead.
Hey, guys. Thanks for taking the question.
So a lot of the questions. We haven't been asked but I guess one thing I wanted to hear from you guys is there has been an about face if you will in France as you guys mentioned in the prepared comments.
It also seems that the UK is cook nuclear as a big part of their C. O two reduction policy as well as Finland, which.
Which recently did an about face.
So it looks like theres going to be some problems in Europe. This year with respect to energy heating et cetera.
Have you guys seen or are you seeing a shift if you will in mentality from uranium slash nuclear being a four letter word if you will could be something more tuned to climate and reducing C. O. Two emissions and then I have a follow up.
Yeah. Thanks, Gordon I think nuke is a four letter word.
So yeah. The answer to your question is yes, we have I mean, this it's been becoming painfully obvious as Youll look through Europe and.
If you look in the U S grew all across Europe, you look at natural gas prices going through the roof of energy prices you get no wind your windmills don't turn new Sun doesn't shine you don't get the renewable energy and so.
People are starting to see now what are we going to do going forward. So we're seeing a you mentioned, France I mean, France has always been super strong on nuclear I think they rethought it a bit to what their position should be in those years in the last decade, but now come out super strong and across almost across the political.
Vectren, where the president today isn't being seen as even strong enough on nuclear so that's great news, France remains a strong nuclear powerhouse.
I think Boris Johnson, and the U K government just put their money where their mouth. This and we saw them put about $2 billion up yesterday I think for a large new nuclear plant and they are talking about a number of <unk>. There are we in fact are talking to Poland with some partners.
I mean, if you look across Romania, Turkey, Czech Republic.
Below Rus, if you like Hungary, all of them talking nuclear and adding to their fleets. So and of course, everybody is watching cop 26, So we'll be watching with our eyes wide open on that wanted to see how that turns out and whether whether the tailwind for nuclear continues there there's a differing opinions.
But I still say, our former minister of natural resources in Kansas said it best when he said there is no path. There is no path to net zero carbon free world that doesn't drive by a nuclear plant.
There has to be nuclear in the portfolio and I think people are coming to realize that youre hearing a lot of.
Hope and hypocrisy and Theres a gap between the rhetoric and reality on this whole climate change thing the real answer runs for us of nuclear plants, So that's really giving us.
That's really putting some wind in our sails.
Okay, that's very helpful.
You know as you guys highlighted look spot prices have went up a lot but.
The real kind of lift off will be when flash. If you know a lot of these are nuclear plants start to renegotiate and lock in contracted prices I know a lot of questions have been asked around that but have you guys seen any movements last development.
Particularly in the Chinese area from.
Some of those utilities in China, seeing where prices are and looking to move or.
The I guess that the nuclear bears would say.
These guys are just going to sit it out and they're not going to do anything can you comment on that and thanks for the question Yeah. Thank you. It's a great question.
So yeah, we are seeing some some urgency now in the market, we're seeing utilities around the world starting to have another look we know there is a I think the numbers like $1 4 billion pounds that need to be procured between now and 2035.
Like an average of 100 million pounds, a year that has to be procured and I can tell you that's not all going to be on the spot market and so sure. The big countries. We know India's out we know the Chinese in 2010 made their big move we were there we signed a deal with them in Ottawa for 52 million pounds and they sign for $50.
With the Kazakhs at <unk> with the French.
And so those contracts run into the kind of the mid 2000, Twenty's, which we're approaching now and so we know there'll be back on the market. There 50, I think there are 51 units.
Running today are another.
I think 15 or so under construction 14 or 15 under construction. So they hope to have it and they will have 70 units running by 2025. If you can believe that with another 30 or 40 under construction I can tell you there'll be back in the market.
Even though they've got they've got in inventory. So, yes, we're expecting everybody to be coming back and that's where we say you know at some point.
Down the road here in the end of this decade and the next decade, there is going to have to be some new production coming on because nuclear is growing two 6%.
A year, we hear from the WNBA and at the same time supply is going down. So those are pretty good fundamentals for us.
Hey, Thanks again guys, yes, thank you Gordon.
The next question is from Lawson Winder from Bofa Securities.
Correct.
Hi, good morning, and thank you for the update I just wanted to.
Ask about Mcarthur River <unk>.
<unk> tried to understand.
What kind of flexibility you have with potentially running Mcarthur river at a sub optimal capacity utilization. So for example.
Can you still make money running Macarthur at like 50% capacity utilization if that's what it is.
Contract book dictates. Thank you.
Yeah.
Yeah, Yeah. Thanks Lawson.
We'll have flexibility that's some of the work we're doing now with the what we call our amped up <unk>.
Project, which is digitization a bit of a.
The digital Revolution up there, we're putting in a lot more sensors and new equipment. So that we will have the flexibility to flex our production up and down to meet our market requirements and so yes, we will be able to do that and you say at suboptimal levels. I think we will run it at an optimal level whatever that is.
Is it doesn't need to be 18, or you know, we can flex up to 25 million pounds, you've got approval to do that so we'll see where the market is and we will flex our production to meet the demand we have.
Okay.
That's fantastic color.
And then.
Excuse me just on the.
You spoke a lot about your risk management in <unk>.
How it has to do with your need to go into the market and purchase and how you have the ability to potentially advance some of your purchase arrangements and also.
Borrow materials from license from your license facility can you, maybe just give us an idea on the license facility materially how much flexibility do you have that like how much potential material is available or for how long can can you borrow that that material like for example could you offset your total 2021 expected.
<unk> with <unk>.
Was that borrowed material.
Yeah listen that's a great question and one in which we're not at Liberty to answer that one.
Those are confidential matters with our customers. So we can't we can't really speak to that but we can say loss in that in the in the context of all four levers ranging from our inventory through our ability to advance long term purchases into this window plus the borrowing plus if you're talking about that kind of <unk>.
Environment, where you are talking about the one where you'd be restarting Mcarthur River.
That kind of gives you a <unk>.
Two year window to bridge through and as a tool in the toolbox launch could play an important role, but in terms of exactly where we're at with those those are confidential account information.
Okay, I thought I'd try thanks, guys.
I think you've tried that one before.
Sure.
The next question is from Gordon Lawson from paradigm capital. Please go ahead.
Hello, Thank you for taking my question.
You've spoken on this from a few angles already but I just wanted to hear more of your opinion on the growing number of inventory holding companies now.
Now, even including because item problem and if chemical has considered joining this strategy as a as a means of further reducing spot availability.
Yes, a couple of ways to think about that.
We were in 2017, the world's largest uranium flight.
We had built up an inventory of about 33 million pounds.
Because we were refusing to sell material that actually was the initial impetus for shutting down Mcarthur River, because we realize that as a producer holding material actually an inventory becomes an overhang we'd get into conversations with our with our customers and we'd say we're looking at your end.
Covered requirements, we think you need to buy uranium and they would say what we're looking at your inventory and we think you need to sell uranium. So we said look let's take this dynamic off the table and let's remove that inventory overhang so for us.
As a producer looking to place material profitably actually the first best option is to leave it in the ground. That's the best place to inventory material. Because then it's clear to everybody. There is an economic decision a price trigger required to get it out above ground thats why we have not been particularly <unk>.
A part of <unk>.
Building inventories.
That are sitting there because they are an overhang in the market, but as Tim said, it's a little bit different it's actually quite a bit different with with the spot vehicle and I would say other funds should pay really close attention and should align their management and market approach if they want to maximize value.
And just what are the three things that we're seeing different with wet spots doing number one.
They tend to just buy on the market. They are sitting on the broker platforms and their lifting offers that are available on the market and that is driving transparency.
It's driving liquidity in the market, it's taking judgment out of it.
Price reporters are aren't having to figure out well it is that a trader to trader transaction and is it going to get reversed next week and so is it a real transaction should it really be forming price is a real transaction. So that's number one versus what I would say financials have done in the past, which is to sneak around off market and try to draw.
Inventories off the shelf that werent going to go anywhere. So you Shouldnt just left them there for going going and buying them that doesn't make a whole lot of sense to us. It just transfer of inventory from one source to another so being on market like that is pretty important we would encourage others to do it the second the aftermarket feature is fantastic because it's in there.
Immediate translation of what a group of investors believe the production price of uranium should be and clearly the investors in that spot vehicle said uranium that starts with a two is too cheap and uranium that starts with a three is too cheap and they continue to have success raising money at the market.
With uranium that starts with a four and so you say well where is that point at which those investors believe that uranium is fairly priced.
I don't know I can't speak for them, but it is important to note that brought themselves have raised their long term price forecast from 50 to $60. So that's a pretty good signal that the sprott folks think.
Quite a lot of room to run and if thats. The case, they should have success raising money at the market raising money at the market creates proceeds, which then go and buy uranium at thinner market with increasing elasticity and a virtuous cycle sets in so there should continue to be a high appetite for a vehicle that fits on the market by.
And that that has this aftermarket feature to translate.
Trust units into purchases right away, but the third is the sequestered nature of the fund the fact that its non redeemable. This is pretty important in the past the financials have been the demand surge that spiked to price and then they have immediately been a supply surge that's tank the price and what.
You see with this new vehicle as you see.
Sequestered material, that's not coming back to the market and I would encourage every other fund to come up with a really strong statement about what their lock up periods are because if theyre simply.
Our buy and then dump back into the market at a certain return.
We're actually better off not even have them in the space, where we're better off to let real demand take that material out of the market. So something fundamentally is different with this brought vehicle to the extent it creates followership from the other financial funds. It is a transformative change to the market.
Sure.
Okay. Thank you very much would you care to weigh your opinion on cause that I'm problems move them well.
Well I think I think we just have to learn a lot more about it.
On one hand on the surface it looks like a pretty interesting announcement.
In that it's a producer.
Feeding a fund which is then going to raise money from from other investors who may not currently have access to say the <unk> or the <unk> funds. So that's interesting because it could bring in a brand new investor base, but if I map it back to the comments I made earlier, let's just hope it's not a fund to Park X.
First production from Kazakhstan, if Kazakhstan has excess production leave it in the graph that's what a responsible commercial producer would do and if it is just an excuse to overproduce and park at some place that's not a good idea that should be avoided and anybody willing to invest in that should say absolutely bad idea I'm not supportive of it.
And then secondly, there should be really strong clarification about what the lockup period is it's nothing more than an off balance sheet inventory, where a producer can go and grab material to dump it back into the spot market because they see at a high price investors should say no I'm not interested in that either so to the extent that it is this.
Thing is getting form if the investors say hey look there is a model here that we're seeing is on spot at the market with sequestered pounds. That's the model I like if thats. The model you want to go with and it is going to make a lot of sense, but if it's just an excuse to inventory material you should have left in the ground.
It won't be supportive.
Okay. That's great. Thank you very much for the color. Thanks Gordon.
The next question is from Brian Macarthur from Raymond James. Please go ahead.
Hi, good morning, and thanks for taking my question.
It has to do with potential wall stress potential secondary supplies going forward can you maybe comment a little bit how you see the enrichment market going and if prices start to go higher do you think there's a risk.
Under feeding again and maybe secondarily.
Comment on you know there's been talk historically, a Japanese inventories do you think there is a level at which they may come out into the market.
Obviously, it's probably higher prices, but any comments there would be useful. Thank you yeah. Thanks, Ron Brian Nice to hear from you.
The church that <unk> me on the secondary supply are all going down to the right we see it.
Quite a significant diminishment in secondary supplies.
And over the next 10 years, partially due to what you said the enrichment prices going up and so Greg why don't you comment on some of the other pieces is yes.
Yes, Brian Thanks for that question.
A good reminder, that when folks say Oh, you know we've seen this story before yes spot stand right now, but secondary supplies are coming to the rescue.
That's not the case anymore. If we just go back to the fundamentals.
By by virtue of the fact that over $1 6 billion pounds have been consumed off existing contract portfolios.
And only 800 million pounds has been replaced through new contracting that gap has been filled by something and what is that something its been the further exhaustion of secondary supplies. So secondary suppliers are only perpetual and they only work going forward if actually productive capacity is.
Greater than consumption right like you would actually need global primary production to be higher than current consumption. So that you had excess production, which is then going into inventories, which can then come back a secondary supply, but that's not what's been happening private primary production because of Covid last year was down to about 100.
Third 20 million pounds in a market that consumes 180, so the consumption of secondary supplies has been a really important part of the story because it's not just primary capacitance falling down into the right. It's the secondary capacity, that's falling down into the right. So that the classic problem solver in the market just isn't there anymore and when you are.
Look at the enrichment space, it's pretty interesting what's going on in that is.
All the <unk> and advanced nuclear reactors and Thats stuff, that's going to kind of create the new demand for uranium is actually going to tie up further enrichment capacity. So the excess enrichment capacity that was being used for underfeed.
Actually got a pretty bright future to be used for enriching into the new nuclear fuels and so we just don't see that as as a factor in the market going forward. The way we saw say five years ago. So when you combine the primary story with the secondary story on the enrichment side.
It's just part of the fundamentals that get us very excited on the Japan question.
Would I would just point out that.
Japan is also suffering an energy crisis, right and not only that.
At the same time, Texas was going through its energy crisis, Japan was going through one as well where.
When people try to sit on a one legged stool they find out its not very stable your energy policy has to balance.
Low cost of energy with a low emissions profile and a secure and reliable supply and what we've seen is country after country plow into the emissions profile and they've lost the security and the reliability and they've lost the cost piece.
And as a result, we see nuclear coming back into the toolbox because it's the one that locates right in the middle of that balance right.
Low cost, it's low emissions and it's very secure and reliable and so no surprise, you've got a new Japanese prime minister come out and say.
In a world where we're the we're the largest importer of coal and where security and reliability are concerned and now cost is an issue and we're in the midst of an energy crisis.
Let's have a look at the assets that we already have that provide baseload carbon free power and those assets need to be fueled and by the way. We've got a few offsetting here. So why would we get rid of it in a market like this win win win later and we have to go back and get it where it is going to cost us a lot more so we actually just continue to take.
Japan and move it to the sidelines and say, it's not the central story in the market anymore.
And maybe just a follow up on that so I guess until we get new enrichment capacity you don't worry about it too much and only then if the older Overbuild that you may be comment then on you.
Yeah.
And.
Do you think that'll be the next.
Enrichment.
Felt in the world.
Well, Brian we're working on GLA as you know, we just stood up the company and populated with some super talent. So we're pretty excited about that.
Debt outstanding.
Agreement with the Doe to re enrich tails, there which is.
Really exciting for the future could be a mine of the future. There and then you know the rule GLA.
Densely and helping you in some of the fuel for the <unk>. So we're getting it gone Sean Quinn is leading it here from from our side and.
We think it could be a real player going forward, it's going to be the next technology.
In the enrichment space.
Yeah.
Great. Thank you very much for all your comments I appreciate it thanks, Brian.
Okay.
The next question is from Katie Alicia Powell from Canaccord Genuity. Please go ahead.
Hi, guys. Thanks for taking my question I just have one.
Wanted to touch on something you mentioned in your prepared comments. The fact that there are risks to uranium supply chain I think we're already seeing this happen in Kazakhstan, and and I think the potential impact on production going forward as Navy been slightly overlooked I just love to hear your thoughts on that and what impact you're seeing in your supply chain specifically.
Thanks, Katie and I know you talked to us.
Not long ago, I think you were talking to grant but.
You know I think we are suffering the same fate I say, we the uranium industry nuclear industry as everybody else on the supply chain side, we're seeing it here in Canada, where some of the <unk>.
Reagents that we normally use are taking longer to arrive.
We're seeing it in Kazakhstan, where some of the piping, we need drilling equipment sulfur.
So fear Gus it is harder to get and so yeah. It's a drag on everybody transports tougher do you never want to lose your spot on the transport ship.
Getting your stuff over because it's a first youll pay about five times more if you can even find a burst on ownership. So yeah. We're affected by all of those things so far we're still able to produce and deliver but it's putting stress on the corporate jinan on the industry, we know that.
Awesome that's it for me thanks, guys.
Thanks Keith.
The next question is from Philip Chaffee from Energy Intelligence. Please go ahead.
And just a quick question are you in talks to participate in and maybe even store material at this.
Trading how that Alan Chengdu in Western China, GNC is putting together.
So I feel no we're not.
Okay.
<unk>.
Okay.
Yeah.
There are no more questions at this time.
This concludes the question and answer session I would like to turn the conference back over to Tim gift for any closing remarks.
Thank you operator, and thanks to all of you called in today, we appreciate as always your interest and support as I said, we don't often use the word excited in our business and haven't for a long time, but we are indeed excited about what we're seeing.
In the area of nuclear power generation in SME, <unk> and other things and I just wanted to reaffirm and confirm with everybody that we will remain a responsible commercial supplier with a strong balance sheet.
Long lived tier one assets and a proven operating record and we're well prepared and well positioned to respond to the.
The dynamics of the market that we're seeing now and.
We will always be.
Driven by.
Our commitment to ESG and safety.
And the environment so.
Thanks, again for calling in and let me assure you will make the health and safety of our workers their families and their communities. Our priority. Thank you everybody stay safe and healthy things.
This.
Today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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