Q1 2022 Cameco Corp Earnings Call
Thank you for standing by this is the conference operator, welcome to the Chemical Corporation first quarter 2022 conference call.
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I would now like to turn the conference over to Rachelle, Girard VP Investor Relations Treasury and tax. Please go ahead.
Thank you operator, and good morning, everyone. Welcome to chemicals first quarter conference call I would like to acknowledge that we are on treaty six territory in the homeland of the May T.
Today's call will focus on the trends, we were 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 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 contacts 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'll be happy to follow up after this call.
With us today on the call are Tim Giffels, President and CEO Grant Isaac Senior Vice President and CFO , Brian Reilly Senior Vice President and Chief Operating Officer, Alice Wong Senior Vice President and Chief Corporate Officer, and Sean Quinn Senior Vice President Chief Legal Officer, and corporate Secretary.
I'm going to hand, it over to Tim to talk about the long term fundamentals for industry. The current market dynamics and about chemical 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 core.
Clearly investor Handout is available for download in a PDF file on our website at Cameco dotcom.
Today's conference call is open to all members of the investment community, including the media.
During the Q&A 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 Michelle and good morning, everyone.
We appreciate you joining us on our call today.
I want to start today by expressing our shock and sadness with the events, taking place in Ukraine, and our solidarity and support for the Ukrainian people.
I had the opportunity to have a video conference yesterday with our Ukrainian customers in Q.
At which time I, thank them for the courage and resilience they've shown over the past several months.
We can only hope and pray for a speedy resolution of this unnecessary conflict.
Last quarter, we indicated that we believed we were in the early innings of a security of supply driven market transition demonstrated by our contracting success, a growing pipeline of discussions with our customers and rising uranium prices.
The transition supported by the fundamentals.
Fundamentals characterized by durable full cycle demand.
Against the backdrop of an uncertain supply picture.
Stemming from these fundamentals and our contracting success, we had the confidence to proceed with the next phase of our supply discipline, which is now well underway.
I'll provide some details on that a bit later.
What we didn't know when we made our decision to proceed with the next phase of our supply discipline.
What does the pace of change that would occur in our industry because of geopolitical events that are further amplifying security of supply concerns.
It's still early days, but we are seeing what we believe is an unprecedented geopolitical realignment.
In the nuclear fuel cycle.
Thanks to the strategic and deliberate decisions Cameco has made over the past decade. The company is extraordinarily well positioned in this rapidly changing market.
But as always we will take a balanced and disciplined approach.
Let's look at the changes in our market in more detail starting with demand.
Yeah.
We've talked before about how the benefits of nuclear energy have come clearly into focus with the durability that we believe has not previously been seen.
The durability that is being driven by the accountability for achieving the net zero carbon targets being set by countries and companies around the world.
You know I saw a figure there just the other day that 90% 90% of the world's economy is now covered by net zero targets.
Net zero targets that are turning attention to our triple challenge.
First is to lift one third of the global population out of energy poverty by expanding the availability of clean and reliable baseload electricity.
Second is to replace 85% of the current global electricity grids that run on carbon emitting thermal power with a clean reliable alternative.
And finally, the challenge is to grow global power grids by switching industries to electricity, such as private and commercial transportation home and industrial heating, which today are largely powered with carbon emitting thermal energy.
If that wasn't challenging enough, we can add to the list solving the energy crisis experienced in some parts of the world, while pivoting away from reliance on Russian energy without jeopardizing those net zero commitments.
Therefore, not surprising that concerns about energy security or amplified in at the top of the list for many countries, creating further pressure for governments to reexamine their energy policy decisions.
Policymakers around the world are recognizing that in their drive for a clean energy profile. They have forgotten to balance their other objectives like providing an affordable level lives cost profile, providing a reliable and secure baseload profile.
Too much focus on intermittent weather dependent renewable energy has left some jurisdictions struggling with power shortages and spiking energy prices or a dependence on Russian energy supplies.
The good news for US is that in their quest to restore balance where pivotal way from Russia. Many are turning now to nuclear.
Nuclear power fits nicely at the center of that policy triangle, providing safe affordable carbon free baseload electricity that has a clean emissions profile, while also being reliable and secure.
Which is why in the U S. The Biden administration, just announced a 6 billion dollar effort to secure nuclear power plants at risk of closing.
And something I never thought possible just a few years ago, the governor of California announced that he will seek funding under this plan to prevent the closure of Diablo Canyon.
That's why in the British Energy Security strategy released in early April the United Kingdom outlined its plans to reduce dependence on Russian oil and natural gas by building eight new nuclear plants.
One new client a year as we heard the British Prime Minister say this week.
It's why recently reelected president Emmanuel Matt Hall of France committed to 14, new reactors and life extensions for its existing fleet.
It's also why the European Commission accepted nuclear energy and its green energy taxonomy.
It's why recently elected President Yoon of South Korea plans to reverse the nuclear phaseout policy of the previous government.
The stated that nuclear energy should be the base load electricity source in South Korea for the next 60 years.
And that South Korea should export its technology outside of its borders.
While we've seen Belgium announced plans for a 10 year life extensions for its two newest reactors.
And that Germany, yes, even Germany in fact could reconsider its own nuclear phaseout plans.
Yeah.
The growth in demand is not just long term in the form of new builds it is full cycle demand.
There's near term growth as early reactor retirements or prevented and there's medium term demand in the form of reactor life extensions.
There's also a momentum building for non traditional commercial uses of nuclear power around the world such as development of small modular reactors and advanced reactors with numerous companies and countries pursuing projects.
So things are moving very quickly in our industry and we're seeing countries and companies turn to nuclear with an appetite that I'm not sure I've ever seen in my four decades in this business.
Therefore, it's easy to conclude that the demand outlook is durable and very bright.
But supply is quite a different picture.
For some time now we've said that we believed the uranium market was as vulnerable to a supply shock as it has ever been due to persistently low prices.
Low prices that have led to planned supply curtailments of existing productive capacity.
Development risk due to lack of investment in new productive capacity.
And a reserve life for some mines.
The deepening geopolitical and origin risk driven by the increasing concentration of supply.
And the trend toward regionalization to ensure the availability of critical minerals.
And unlike in the past, we don't have the same stock of secondary supplies to fill the gap.
After years of drawing on these one time sources. The secondary supply capacity is now declining significantly into the future and productive capacity is not poised to respond.
These fundamental facts have been amplified by both unplanned supply disruptions caused by the COVID-19 pandemic.
And by global supply chain and inflationary challenges that are not only interrupting the flow of goods and services in the uranium market, but also increasing costs.
Was that a meeting of business leaders just the other day, where it was said that if you have a feasibility study that is more than a few months old.
You might as well toss it and start over.
Supply challenges have been further intensified by the thinning of the spot market due to the interest in physical uranium by investors.
In particular, I'm, referring to the Sprott uranium trust that are purchasing significant volumes of uranium and sequestering it.
By the increasing ESG scrutiny of utilities.
To ensure their supply genes meet the standards for all three factors.
By the unrest in Kazakhstan in early January that raise concerns about the security of about 45% of global uranium supply.
And then in February the tragic Russian invasion of Ukraine.
Send a shiver down the spines of nuclear fuel buyers around the world.
Currently the global nuclear industry relies on Russia for approximately 14% of its supply of uranium concentrates.
27% of conversion supply and 39% of enrichment capacity.
Many jurisdictions are imposed strict economic sanctions on Russia, including Canada, the United States, The European Union, and the United Kingdom among others.
In addition to economic sanctions many countries, including the U S have sanctioned or are considering sanctioning imports of Russian energy, including oil natural gas and coal.
With the continued conflict. There's also growing uncertainty about the ability to continue to rely on nuclear fuel supplies coming out of Russia, whether as a result of sanctions or because of a conflict with company values.
In fact, we've seen some utilities voluntarily pivot away from Russian fuel supplies as they recognize the income grew and see with their values and ESG principles.
From our perspective, it's not a matter of if western markets will turn their backs on Russian nuclear fuel supply, but rather when and.
And how quickly.
Of course, there's also the risk that Russia, preempt any actions by western markets imposing its own voluntary export restraints and retaliation for economic and other sanctions as we've seen them do with gas in parts of Europe .
And then there's the uncertainty about the ability to ship uranium through Russian ports, or the black sea, which could affect not only Russian supply, but also deliveries from central Asia.
While it is still technically possible to ship through Russia.
Due to insurance and other reasons, we have decided to delay a near term delivery from Inca in Kazakhstan, while we work with our partner to establish an alternate shipping route.
This could take some time, but we have the ability to mitigate the risk with inventory long term purchase commitments in loans if necessary.
It's still early days and utilities are working their way through their fuel supply chains to determine where their vulnerabilities are.
But already we're seeing some utilities begin to pivot toward procurement strategies, but more carefully weigh the origin risk.
Looking at where the market is today and the growing risk to supply an origin of supply it's easy to conclude that the current nuclear fuel market is more positive than we have seen in a very long time.
So let me turn to cameco and our response to the changes in the market.
As a commercial supplier our decisions have uniquely positioned the company to capitalize on the increasingly undeniable conclusion.
The nuclear power must be an essential part of the clean energy transition and even more so in a world where origins matter.
With demonstrated tier one assets strategic tier two assets in vertical integration, we've taken a balanced and disciplined approach to our strategy of full cycle value capture.
On the contracting front, we've been balanced and disciplined in layering in volumes, where it makes sense for us and building a diversified customer base.
But with what we believe are the early innings of a market transition and more demand ahead of US we will continue to be patient.
We're not even close to being sold out and so we will maintain considerable leverage to the further market improvements that we expect to see.
We're also taking a balanced and disciplined approach to our supply decisions.
The next phase of our supply discipline, which involves not only Mcarthur River key lake, but starting in 2020 for cigar Lake.
Is balanced with our contract portfolio and where we think the market transition is currently at.
Even though we've seen considerable pricing pressure, resulting from the geopolitical uncertainty we will not change our production plans, we will not front run demand with supply.
Won't ramp up production to meet spot demand, we will wrap up once we build the homes for those pounds in our long term contract portfolio and we see further improvements in the uranium market.
With all the uncertainty we're not rushing this process.
And I think we've shown we can be trusted when we say we will remain disciplined.
Finally, while we're talking about balance we have shown balanced financial discipline.
We will retain our conservative financial management to support our continued balanced and disciplined contracting and supply decisions.
You take a minute to discuss where we're at with the next phase of our supply discipline.
As we announced last quarter, we're laying claim to our tier one incumbency advantage as we further positioned cameco to capture the value we expect to come from the growing demand for safe clean reliable and affordable nuclear energy.
We started the process to transition the Mcarthur River mine and the key Lake mill from care and maintenance to operational readiness.
We've begun the recruiting and training process.
Current workforce at these sites is now approximately 600, including employees and long term contractors with a view to achieving about 850 <unk> prior to the start up production later this year.
Our maintenance readiness checks are underway and we are completing the critical automation digitization and other projects needed to begin production.
With the work we're undertaking this year, we could produce up to 5 million pounds on a 100% basis.
Our current plan is to achieve production of 15 million pounds per year on 100% basis by 2024.
That is 40% below the annual license capacity.
Once the Mcarthur River key Lake operation reaches its planned production starting in 2024.
It's our intention to pull back on production at cigar Lake.
Our plan is to take production at cigar Lake from 18 million pounds per year down to $13 5 million pounds per year on a 100% basis or 25% below its license capacity.
This year, we continue to expect to produce 15 million pounds at cigar Lake on 100% basis 3 million pounds less than its license capacity.
Our production outlook. This year reflects the expected impact of delays in development work at cigar Lake in 2021.
And the ongoing pandemic and supply chain challenges that are impacting the availability of materials reagents and labor at all of our operations, including labor negotiations that could impact production.
However, we're working to minimize any disruption to our operations.
So what's the result of all this.
We expect that our operational decisions at Mcarthur River key Lake will have a significant and positive impact on our financial performance.
As you know the financial aspect of our strategy is to ensure we have a solid balance sheet and the ability to self manage risk.
At the end of the first quarter, we again, we're in a net negative debt position.
With $1.5 billion in cash about $1 billion in long term debt and a $1 billion Undrawn credit facility.
And this doesn't include the $778 million owed to us by the CRA.
Once production at the Mcarthur River key Lake Operation resumes, we expect to begin to see a significant improvement in our earnings and cash flow.
As production achieves a reasonable level, we will no longer expense operational readiness costs to cost of sales.
And we will be able to source more of our committed sales from lower cost produced pounds.
As we saw this quarter the higher prices in the currently improving market are beginning to flow through our existing contract portfolio.
And with an inventory of unencumbered pounds in the ground rising prices will also create the opportunity to layer in new long term commitments.
Commitments with appropriate pricing mechanisms that will underpin the long term operation of our productive capacity.
We've also started to bring forward some of our long term purchases.
Remember that when uranium prices started with the two or three we secured almost 13 million pounds of material under long term fixed price purchase arrangements.
We have not taken delivery or paid for the majority of these pounds. So theyre not on our balance sheet, but they are stored at our facility.
The deliveries under these arrangements are heavily weighted to the years 2025 through 2028.
However, we have the ability to bring these pounds forward and earn a good margin on them today.
We put these arrangements in place as a means of risk mitigation.
With the planned production changes at Mcarthur River key Lake and cigar Lake our need for these pumps to mitigate risk has been reduced.
We will continue to balance this activity with our spot market purchases.
As such we expect to continue to have the financial capacity to execute on our strategy and self manage risk <unk>.
Including from the global macroeconomic and geopolitical uncertainty we're seeing today.
Having been in this business for a long time, we have been through every market transition in our industry.
We understand that we'll having great assets is a necessary condition for creating long term value.
It is not sufficient we also know that the spot market in our industry is not the fundamental market in our business. It is not where utilities turned to satisfy their long term run rate requirements.
It's typically where they go for one time discretionary volumes.
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 that generates significant cash flow through the entire commodity cycle, but having leverage to greater returns as prices increase.
And that provides downside protection for the periods of lower prices.
In our business there is no substitute for a full blown utility driven long term contracting cycle.
Contracting cycle motivated by security of supply concerns drives value capture in uranium fuel market.
Just like it did in the conversion market two years ago.
And as it did for us during the worst down cycle in the uranium business when our average realized price outperformed the market and protected our balance sheet when others failed financially.
It had to be recapitalized and restructured destroying value for their owners.
Finally, after more than 10 years in a trough and through the deliberate and disciplined execution of our strategy.
We're seeing increased interest in contracting and not just in uranium but across the fuel cycle.
With geopolitics, complicating and potentially bottlenecking nuclear fuel supplies were.
We're seeing not just utilities, but some of the intermediaries and service providers.
Beginning to shift their attention to securing material for their uncovered requirements.
And to Derisk some of their origin dependencies.
The request for proposals we are seeing are directed at those producers who are proven and reliable productive capacity in the right jurisdictions and who have a track record of honoring commitments.
As an independent commercial supplier, we can provide our customers with access to a proven and reliable productive capacity, both uranium and fuel services, which is exactly what they want.
And with substantial Canadian productive capacity or supply meets both energy security and increasingly stringent ESG requirements that are table Stakes today.
And it can provide diversity from state owned enterprises and helped to Derisk utilities future supply from geopolitical risk and trade policy exposure.
So what does all this mean for cameco well it means we are optimistic.
We're optimistic about the growth and demand for nuclear power, both traditional and non traditional.
We're optimistic about the 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 cycle, including some of the vertical integration investments we've made.
Therefore, we will continue to execute on the next phase of our supply discipline strategy.
And more importantly, we will continue to do what we said we would do.
We have 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 in origin gap, there's a potential pathway for them to add value for us in the future.
But we will continue to be very disciplined in our evaluation on that front.
Thanks to our disciplined contracting strategy, we have a contract portfolio that has protected us well during the worst down cycle in our business.
As the nuclear fuel market improves further our focus is shifting to securing homes for our in ground inventory.
And for our fuel services capacity that has not yet been committed.
We are not going to chase the market down to win business and we won't produce to dump uncommitted supply into a thinly traded spot market as we have seen some of our competitors do.
The primary driver for our contracting activity is always value.
Therefore, as the market improves we expect to continue to layer in volumes, capturing greater upside using market related pricing mechanisms.
That said, we recognize theres cyclicality to our business that is inevitable.
As a responsible producer we will also look to lock in value at higher prices to carry those higher prices through the next cycle just like we locked in significant value for our fuel services business and the recent price transition and conversion.
And just a reminder, we're more than just mining.
We are vertically integrated across the nuclear fuel cycle with refining conversion and fuel fabrication.
As utilities look to secure access to nuclear fuel supplies in jurisdictions that are stable reliable and politically dependable.
We will also look to continue to build our fuel services contract book.
And we're looking to expand our reach through our fuel manufacturing capabilities and investment in global laser enrichment, we're exploring fabrication of new fuels.
Including high assay low enriched uranium or how are you.
In a world where access to Russian enrichment is restricted this investment becomes increasingly valuable to us.
In time, it not only has potential as a U S source of enrichment capacity.
But also to be a significant U S source of conversion.
And to produce how are you.
We're also participating in the development of small modular reactors and have entered a number of non binding arrangements to advance their commercialization and deployment in Canada and around the world.
And we have an interest in the nuclear sustainability service the backend of the fuel cycle, including aiding in the responsible clean up of enrichment facilities.
No longer in operation.
These opportunities align with our commitment to manage our business responsibly and sustainably.
And to increase our contribution to global climate change solutions.
Our decisions at Cameco are deliberate.
We are a responsible commercially motivated supplier with.
With a diversified portfolio of assets, including a tier one production portfolio that is among the best in the world.
We're 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.
Our strategy, which includes <unk>.
Contracting disciplined supply discipline and financial discipline will allow us to achieve our vision.
A vision of energizing, a cleaner world and thereby delivering long term value in a market where demand for safe secure reliable and affordable clean nuclear energy is growing.
So thanks to all of you for your interest today, and we're happy to take any questions you might have.
We will now begin the question and answer session.
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Okay.
The first question is from Ralph <unk> with eight capital. Please go ahead.
Good morning, Tim and team Thanks for taking my questions.
Tim.
Getting to 600 out of 850 employees at Mcarthur River.
It sounds like things are going very well and according to plan.
Just wondering where you're seeing the biggest challenges when it comes to securing some of that skilled labor and what looks to be an extremely competitive market and as you move closer to.
Full operational status and is that $40 million in Q1 sort of how does that compare to plan.
Okay.
Yeah Ralph.
Thanks for the question nice to talk to you. This morning. So yeah. We're we're we're ramping up.
We went from less than 200 people a while ago. We're at we're at 601, our weight age 50 and.
It's not a it's not perfectly easy we all say we have a competitive advantage in northern Saskatchewan in that we have all of the northern people that have worked for us.
In the past a great workforce represents 50% to 55% of our workforce that will come back to US every time. So there's your advantage right off the bat. There's a few of the trades that are a little trickier to find there is some competition here, obviously, you see the potash business running hard to oil and gas picking up drilling.
So yes, there's competition, but you know we take.
From from others and in down the line and we consider ourselves to be a.
Pretty attractive place to work a good employer and so we'll be able to fill those positions and we're not.
We're not just doing it like that we were also putting a diversity lens on it as well, we're looking to get more gender diversity, which will help us a lot in the long run it's something we've been putting a real focus on it and just under represented groups. So we will get there people will come and it will be okay on the labor side the costs.
In the quarter or about exactly where we thought they would be so that's that's going well.
Okay. That's that's great to hear I want to switch gears, a little bit and talk about.
Committed to versus non committed and I hear you loud and clear on your comments about not being even close to being sold out and I just want to maybe take a look at the short term horizon, maybe five years.
And you know what are you telling us between.
Committed and open non committed on that shorter term horizon are you, where you want to be in that split safe just for the next five years.
So I'll just give you the broad alignment and grant.
I will give a bit of an update on the market and where things are at route but we like where we're at we are I think over the next five years, we have about 20 million pounds per year on average on our books about where we want to be more in the first couple of years and declining that's boy, that's exactly where we want to be we probably could put a lot more.
Just wanted to go for volume and granted we could put a lot more on the books, we're looking for value long term and as we said in the comments just a few minutes ago, there's nothing like a.
A security of supply driven market transition in signing contracts with great customers for a term, whether it's five or 10 years.
We've been through some pretty rough patches and we don't want to be there again, so grant why don't I pass it to you and you can just give a bit of an update on the market as well. So we can cover that off yeah. Good morning, Ralph.
Let me cover a better ground that's already been covered the when we we've been through every one of these cycles that the commercial industry has seen and learned a lot of things along the way.
We're looking at demand fundamental that is very constructive for all the reasons Tim went through that.
That demand fundamental has been leveraged by financial interest, which has been very positive. This year early this year. It was leveraged by quite frankly, the unrest in Kazakhstan, which then created a little more concerned about the concentration of supply in a most recently leveraged by.
The Russian invasion that backdrop looks really constructive to us and it tells us that there is a lot of demand that's still in front of cameco demand. We don't have to chase I characterized the term market in Q4 as being one where we were seeing tenors increase we were seeing long term contracts.
Go from sort of two to five year bites out of the market to two to seven years two to 10 years, that's very constructive, but I said the timeframes were increasing we were seeing demand that was stretching into the 20 <unk> and through the 2030, that's very constructive and we were seeing volumes go up not just because tenders were going up.
Bigger bites were being taken out of the market.
But since February 24th we have seen actually a new move in the term market and that is what we'd call Russian replacement demand.
And what that's done is it's really created a focus on the shorter term.
We've seen customers.
Look very closely at their supply chain vendor abilities, starting with making sure their fabrication contracts are in place well all that fabrication has done in the western world for the western customers. So that's great. So then they turned their attention to enrichment and you can clearly see from the price discovery going on in the enrichment space.
That there is some panic, we saw a 48 dollar job in the <unk> price, we're seeing in Richard's be able to command prices that are required to build new western enrichment capacity. So that has been the focus right now that's kind of taken away.
The trend of looking out longer term, here's the great news Ralph that Russian replacement demand really hasnt hit conversion or uranium yet, which is the feedstock required to meet that new enrichment capacity, that's being called for so.
So we see the fundamentals.
See the characteristics of the term market.
And then we see this new push on what we call Russian replacement demand and that all suggest to us that we have bargaining power that we're not in a rush to put volumes under contract that we can be strategically patient.
Said before there is no clarity of quarter end or Theres no tier.
At year end.
A great contract be to SaaS contract every time.
So we've we've got a lot of negotiations going on a lot of advanced negotiations that when they are executed they will show up as committed sales in future periods, we're right, where we want to be given these fundamentals and leverage to what we think it's a market that is.
It is improving for our sources of supply so lager asset nationwide, Ralph but I just wanted to to create that context right.
Yes, that's a great commentary thanks, Tim Thanks Grant Yep. Thanks, Ralph.
Okay.
Your next question is from Andrew Huang with RBC capital markets. Please go ahead.
Hi, good morning.
Can you just talk about the delay in deliveries from ink.
Is that a chemical specific decision just maybe for every risk mitigation purposes or.
Are there actual hurdles for delivery.
I think your partner because iron prom indicated earlier this week that.
And there is definitely a risk in the region, but the deliveries have been disrupted.
Yeah. Thanks, Andrew obviously, we don't love. The fact that we have to ship material through Russian port. So that's I mean, that's an issue.
In and of itself. So this is a question of risk mitigation really we've seen cancellations of some cargo insurance and so we are we thought we could cover we want to see what the alternate routes are available I know there's work going on on that and we're talking to our partner there in that regard. So we just decided to delay.
Until we can see a little clearer picture over there.
Okay, Great and then just my second question is more around enrichment, we saw enrichment prices dropped quite a lot in April .
I'm guessing that's probably the biggest jump we've ever seen and nurtured prices.
Is that signaling to us about the market.
Are we have we yet entered into a situation, where then Richard on the western side.
May have to go unchecked overfeed situation and if that were to be the case like what's the delta on uranium demand.
Versus what we've seen in a more underfeed scenario. Thanks.
The other signal lenders that 39% of enrichment comes out of Russia, but grant you want to speak too maybe at risk with Intouch conversion because it's the same movie.
We're talking about are unprecedented geopolitical realignment and what Thats code for its just the western markets trying to exclude Russia, and just a reminder, that Tim talked about it earlier, 39% of global enrichment capacity.
Is Russia, and 27% of global conversion capacity as Russian 14% of uranium capacity is Russian but here's an interesting one that a lot of people don't have.
Half of the so called secondary supplies are also Russia and Thats a piece of the story that also needs attention too. So there is an enormous amount of supply that folks have been counting on over the years that steps are being taken to exclude.
When we see these types of security of supply driven moments. It is very typical for the fuel buyers to work their way back upstream to start by asking questions about the in process material. They have at fabricators, and then turn their attention to enrichment and then after that.
Once theyre enrichment services are contracted that make sure they've got the conversion services contracted in advance for their attention to uranium. So what we're seeing with since February 24th is a real focus on this replacement and the main pinch point at the moment is enrichment and so youre seeing the <unk>.
Western and <unk> being able to command a price that actually is required to grow western enrichment capacity. So what that suggests is that we're probably close or at capacity limits already among western and ratios. The fact that they can command prices that <unk>.
That are required for new capacity to come online in the future and suggest to me that shows capacity limits are probably hit.
That means is that excess capacity that had been used for under fee is probably now gone.
And as a result.
That's completely full and the only way to get more enrichment out of it is to move to what you call.
Overfeed and Overfeed is just code for you need more feedstock you need more they need more uranium that's converted into U F six coming into the enrichment space and the Great News is this Russian at replacement demand we've seen the push now an enrichment we haven't.
Yet seen it fully and conversion let alone uranium. So I think it's a very very positive signal. It's a very positive signal that contributes to why we can step back and take a bit more strategic patience and our contracting for our conversion services and importantly, our uranium and can.
The terms and conditions.
We won.
Given the fundamentals in the backdrop, so I think youre right and focusing on it and I think it is an important signal in a very positive one.
That's great. Thank you thanks, Andrew.
The next question is from Gordon Johnson with G. L. J research. Please go ahead.
Hey, guys. Thanks for taking the question.
I guess the first question is you guys used to target, a 40% fixed price and 60% spot ratio.
And I just wanted to know if that's still kind of the reference point you guys are looking at and the new contracts you're signing.
Grant.
We've had that disclosure in the past and we've absolutely kind of stepped back a little bit because we discovered it was being interpreted as every contract. We sign we wanted to have a 60 40 balance or in any one year. We want to have a 60 40 balance to think about it as a full <unk>.
Over over the highs and lows of a full uranium cycle.
We've discovered that we can add and sustained very significant value by having a portion that's market related and a portion that's fixed but.
In any moment in any cycle, that's not necessarily our governing parameters. So right now where are we sitting we're sitting in a market where the demand outlook is strengthening and is durable and the supply outlook is uncertain and that supply outlook is leveraged by.
Challenges with the concentration of supply with this geopolitical realignment with with the inability of primary production to respond quickly or the inability of Greenfield would come on fast in a world where supply chains are broken and inflation is a very important factor that all suggest to us.
Right now we have a very strong bias towards market related as opposed to the 40%. That's fixed so think about that balance full cycle, but it may not be representative of where we are at any moment in the cycle, where we're sitting right now we have a very high preference for market related we see a suite of factors there.
Suggests to us that that.
Prices are improving.
Don't want to lock in those prices today, because we want we want leverage to an improving price environment, but overall full cycle at some point, we will see prices that are we think we are prepare for some fixed pricing our base escalated and that will lock us and win the market.
Response, I mean, we know in commodities hyper prices bring hyper supply and we want it we'd want to be protected from that side of the cycle. So where we are in any one cycle really determines what our interest is at the moment, we're highly market related focused.
Okay. That's helpful. One last one for me.
About what we're looking at in this market I mean, we've seen record spikes in youth related prices. We've seen you know bite and launched the $6 billion Civil nuclear program Gavin here.
Yep, the avenues, some saying he's.
He's going to reconsider the closure of Diablo Canyon, there's just been a lot of positive data points out there have you guys ever calculated if you were more spot versus fixed contract what the impact or maybe the sensitivity to your cash flows and Eric thanks for the questions guys.
Thanks Gordon.
A big difference between what we would think of as sort of spot exposure and term exposure the reality for the uranium market weather.
Global demand for 180 million pounds, a year or 300 million pounds, a year the spot market will still not be the fundamental market. It will be a discretionary market used by fuel buyers for things like reloads or our inventory adjustments, but it won't be where they cover their run rate requirements, which means.
The spot market will never be capable of absorbing the kind of volumes that we produce and.
When cameco or 'cause Adam problem or a big producer shows up with primary production in the spot market. That's the data spot market starts to go down and we don't we don't have to look any further than two weeks ago to see a $10 drop in the spot price to see actually how thinly traded it is you don't want a primary.
<unk> are targeting the spot market. What you want is a primary producer who built homes for their production plans their production according to those homes.
But then has the right combination of market related and base escalated terms to drive multi year value. So not capturing the short term spike of a spot market, but locking that spot market price pressure into multi year contracts that capture that value and create those cash flow.
And earnings for a sustained period of time, so on balance we want enough market related exposure to capture the upside and we want value to be locked in to protect from the downside for windows moments where.
Disciplined supply is hitting the spot market.
So very very different way of thinking about it then spot exposure being the spot market. I mean, you want market related exposure, but not through the spot market you want it through term contracts that are market related.
Thanks again for the questions. Thanks Gordon.
Sure.
The next question is from or swap it out with Scotia Bank. Please go ahead.
Hi, good morning.
Great just wanted to clarify something you said earlier with respect to the state of your negotiations I guess for new contracts I think we're all a bit surprised that.
Company can add any more to the 40 million pounds that were announced I guess in mid February .
And it sounds like your comments are more related to the fact that utilities are focusing on the enrichment side.
First with respect to the recent developments on the geopolitical risk fraud, but I'm. Just wondering is part of the issue also I mean, given your strength and bargaining power.
Is it also an issue where the bid ask spread has changed in the sense of.
You are now in a much stronger position. So you can be commanding much higher pricing than you could have a few months ago.
Your characterization is absolutely spot on or so it's a combination of.
The Russia and replacement demand as a result of the February 24th invasion has really taken attention.
<unk> enrichment space away from uranium in conversion at the moment.
So that that's actually slowed down probably some of the origination that we would've seen on on uranium and conversion.
But the stuff that was already under negotiation.
Yes, we do feel like we can be strategically patient that we have the asset mix that we.
We have the services with our conversion facility. The only one operating in North America that that now is the time to be strategically patient within negotiations.
<unk> that maximum value for our owners.
It is exactly the combination of those two things, which is exactly what you want us to be doing because the goal is to capture full cycle maximum value.
Not just volume.
Yeah totally agree.
I think we've got a pretty good picture on your call it uranium.
Capacity, but can you maybe give us some insight on the conversion side, specifically like I don't really have a good sense of how much.
Additional volume you still have to sell there over the medium term.
Yeah, well I can tell you conversion is about as hard as we've seen it ever I don't think we've ever seen it.
Started a couple of years ago, and a lot of the supply was taken off and then this convergence of events over a couple of years.
All of a sudden conversion from $5 a kg you use <unk> to 'twenty and it's in the Twenty's today now you take off.
The 27%.
From Russia, and its really its really tight so I can just what I can say about our plant in port hope as we're running it pretty hard.
We're looking at whether we can.
Increased capacity over time of course, we won't do that just on spec.
We would have to have some good reason to do that.
We don't have that at the moment.
We know a lot of countries and companies are scrambling.
For conversion to lockup conversion going forward, so our book looks really good.
I'd say for the next number of years.
And we're looking to see if we can just squeeze a little bit more juice out of the orange there.
Can you give us a bit more color, though like are you effectively locked in or sold out for the next couple of years or do you still have the capacity to add conversion.
Hum.
With higher pricing in the near term I'm just wondering if we should think about for this opportunity more medium to long term or whether there's actually upside short term.
I'd say, we're pretty heavily committed for the next number of years for sure we've got.
It's like are kind of like our uranium portfolio, where we're heavily committed in the next few years and things start to open up so we're talking conversion with lots of customers, but out a few years.
Okay. Thank you thanks.
The next question is from Lawson Winder with Bank of America Securities. Please go ahead.
Hi, Good morning, nice to hear from you all and thank you for the year.
I also like to ask about conversion and.
Get a sense for the discussions youre, having right now so obviously the I mean, the price indicator there has jumped quite a bit.
And my understanding is that utilities are willing to pay in the $27 per pound plus range.
Is that what Youre seeing and then can you.
Idea.
What your current capacity utilization is on.
On the conversion and then what would it take in terms of both cost and time to get to a 100% utilization.
Thank you.
Oh, just to see what our license capacity is and that's about 12500 ton.
At the plant and as I say, we're pushing it as hard as we can expanding that that's a whole different movie. We would we would have to really think hard about that and how to do that so we just wanted to try and get as close as we can do the.
Capacity that we have and then we'll see after that but grant do you want to talk about the contracting and conversion and just give as much detail as you can on that.
The pressure that we're seeing building in Richmond, it's only a matter of time before you see it flow through more visibly into conversion.
Because that's what's required in order to feed data enrichment capacity.
Let's just think about it in broad global terms, Tim referenced 27% of the global conversion capacity is Russia.
That basically means the world the western World, that's missing conversion capacity and the size of another.
12500 tons of conversion capacity, that's a pretty big hole to fill.
Along the way, we're going to see a plant come back in the U S. The conradine plant.
Obviously, a new plant in France, Serrano said Phil.
Philip cost plant going from 7500 tons to maybe 15000 tons of conversion so western capacity will respond, but but the key to making it response is the power of utility procurement.
That's what's going to create.
The conditions to make the decisions to plan for higher levels of conversion at Utah.
Utility start to contract so where are we seeing it well.
Being those who have been.
Very dependent on Russian <unk>. So that's material that shows up thats already enriched already converted we're seeing those first come to the market and that's kind of near term demand filling up that book like Tim talked about Youre seeing conversion pricing in the mid twenty's, even even term pricing.
That really is reflecting the fact that.
Additional capacity has to come online, but but here's the good news, we haven't yet seen the replacement rate type of demand in the conversion let alone the uranium space that's still before us. So conversion is the next pitch point after enrichment, we saw the pressure building enrichment very visibly with this.
<unk> price going up we do expect more strengthening in the conversion market as a result.
Okay.
Thanks.
Also the current collective bargaining agreement with the Union employees at Port Hope conversion facility that expires. This year is there.
Any risks.
To your production that we should be maybe thinking about there any comment you are able to make on that at this point.
Well I'd never say, there's no risk, but we certainly have a good relationship with our employees and hopefully will both sides will be able to sit down and and iron something out.
Give us some clarity for the next couple of years, So we'll see.
Sure Thanks for the comments.
Thanks, Laura.
The next question is from Greg Barnes with TD Securities. Please go ahead.
Thank you operator grants and Tim are you seeing your customer base broaden out of this global realignment because it may be early days yet.
Getting to talk to people that you might be able to talk to people in the past.
Certainly we are.
Greg, it's actually quite exciting because it looks like <expletive>.
The lines are being redrawn that eastern European market is actually breaking west and that eastern European market. As a perfect example has been a captive market of Russia.
Since the beginning those are Russian reactors.
And typically the Russians were just provide fabricated fuel bundles to those utilities over the last couple of years Predating. The Russian invasion of Ukraine, We began to make in roads into some of those important eastern European markets from Ukraine, All all the way down to Slovenia.
And everybody in between and then of course. This invasion has just accelerated and now we're in full blown conversations with with customers. There who were looking for all of the components. They are looking to do.
Pivot to western suppliers that are secure and reliable and really break that that control that the Russian fuel cycle had over there very important electricity infrastructure, so that the absolute broadening of.
The base of our customer and then it's a deepening.
As you look at our markets, where we already have good market penetration, we just expect our market share to go up in those markets as as they struggle with the origins and look to exclude Russia. So we're not only going to grow our market share in existing markets, we're going to broaden that customer base and customer base in <unk>.
Markets that have historically been captive.
Yet another reason why we're we're pretty constructive on this right now.
Just a follow up question Grant just a little curious on the Iran. Loan extension given you are restarting mcarthur I'm surprised that that needed to be extended.
Okay.
Yes, well remember, we're still technically in supply discipline.
We are bringing mcarthur back, but we're not planning on running it at capacity and at the same time in 2024, we're planning with our joint venture partner to bring cigar Lake down to 13 five.
That's our that's our stated goal at the moment, we haven't seen.
We've seen some good contracting, but we haven't seen that kind of replacement rate contracting that power procurement that would call for a different decision at the moment and so as we as we structured.
What that appropriate production is.
Our interests combined with their interest we just said look we don't need the inflow of material in that window, we're still in supply discipline mode. They werent eager to pay it back in that window. They are still in supply disciplined mode, not just in northern Saskatchewan, but but also in Kazakhstan and also in niche areas. They will talk about.
So just mutually it made sense for both of us to not worry about it until later out in the cycle of course added to that is the fact that through 2021 and into early 2022, we layered in another 70 million pounds of contracts built the bulk out into the longer term as.
We are more appropriate homes for those inflows probably out in the future than we do at the moment and so it just made sense for both of US. So shouldnt come as a surprise just kind of the normal chewing and froing within a joint venture relationship.
Okay. Thanks, Craig.
Thanks, Greg.
The next question is from Paul Rubenstein with a private Investor. Please go ahead.
Hi, Tim Hi, Grant happy Cinco de Mayo.
Oh, that's great.
Yeah. Some people are calling at cameco to mile I'm very happy to hear this conference call today.
I'm just kidding.
We're just getting some services center in Poland.
Yeah.
What I'd like to ask you about is global laser enrichment if.
It can go into some detail about that and about.
Sure.
Whether that's being.
Ramped up to.
Increased production.
All of this new demand that's going on.
Yeah, that's a great question Paul.
It's something I'm going to pass it over to Sean and I mean, just to give an update on where we're at but it's super exciting for us it's something that we see now.
Kind of a triple threat for us with the discussion we're having this morning, where you you take 40% of the worlds enrichment are kind of tuck it away and say, it's not available to the western markets. All of a sudden everybody is looking for for enrichment and.
So as we said in our comments.
People are looking for just pure smooth for Liu they're also looking for Holly you the high assay low enriched uranium that's going to feed the <unk> going forward everybody thought the Russians were going to supply that for the first.
First the 10 years or so until somebody could build a hell of a new plant so and all that's on the front front burner and then.
Of course, just to those tails the retails we.
We see as a potential new mining United States, you're re enrich those deals not only do you get the uranium component, but you've got dormant.
Conversion it feel like sitting in there and so when you re enrich you get you have six and switches hot demand today. So it's we're really boy our excitement level has gone up a few octaves on that one but let me turn it to Shawn just to give you an update as to where we're at and we've stood up the company and just some of the progress we've made in the last.
Months sure. Thanks, Tim.
I will add to what you said.
The underpinning of our GLA remains the disposition agreement that we have with the Doe.
But we are.
Actively considering.
Considering.
Whether there is a plan to accelerate development.
Development.
To take advantage of the opening we see in the market, particularly for enrichment and conversion and whether there is some way to get some assistance from that and the various initiatives that are being undertaken by the U S government, mostly led by the Doe.
To see if we can advance deployment.
And perhaps change the focus of the.
The first facility that were considering at Paducah, so that it would provide.
More commercial through how are you and tap the conversion opportunity even.
So more to come on that over the next.
Two months.
Okay great.
Wondering.
I understand that you guys have an option to increase your share.
Thank to 70 or 75% from the current 49% is that something that you're considering.
We do and we are yes, absolutely.
Great. Thank you Yep. Thank you Paul.
Yes.
The next question is from Brian Macarthur with Raymond James. Please go ahead.
Hi, good morning.
First question, just going back to conversion and a little more detail if you were to expand.
Port Hope do you actually helped expand blind river as well and the second question just related on conversion just the 12500 capacity. When you have you owe two they're not one time he could flip things back and forth. So you just sold out on you owe two as well or is there any.
Capability to flex that at all.
Well, let me back up a little bit so expanding from the 12 five we'd like to get to 12 five.
We havent run at that level as you know, it's just we've been running half speed for decades, and so now Brian we're ramping it up and trying to get up as high as we can to expand it further into the future. That's a that's a big question Mark that's a that's a plant that would need a lot of work than if we did we would have to.
Increase.
That blind river at the refinery as well we'd have to move up our production there as well so.
On the <unk> side I think were good were supplying the contracts that we've got we've got some great relationships with the can do owners to supply them fuel for a long time to come so yeah. I don't know if this is all pretty new for US and you don't even talk about expanding production that.
Affordable.
We didn't even talk about that 65 days ago and now it's on the radar screen. So I was just looking at Brian Reilly, our new who is looking after it right.
Right now it's <unk>.
<unk> is to get production up to two.
<unk> capacity as high as we can so Brian do you have any comments on that look at the U F. Six plant is running well that's the good news but.
But it's in all plants, we have a number of capital projects underway to to keep running at current rates.
Looking at the opportunity for expansion, but as Tim stated clearly.
12500 tonnes, we've not achieved that rate before and.
That would be a significant milestone to do so but the plant is running well and we want to keep it running well and we will look at opportunities and achieving at 12500 tonnes.
So can I, just ask and I know you report combined but you're sort of shown 4000 kg over the quarter. That's at a higher rate I guess, you're just heavily weighted on certain quarters on U O two or whatever which is why that doesn't look like you're running at 12, 5% is that right because I mean, if I look at some quarters you do report production that's at a higher run rate then.
And that I would say, even if you put them together or is that not right.
Yeah.
You're right. It's a combined number but I can say, we're right on right on budget and in fact in the U S. Six production a little bit over budget at the moment, but.
They disclosed.
Production is a combined number right across the field services Division and Brian Sorry, It's grant I'll just jump in here that 12500 tonnes of license capacity that Tim referenced is the conversion plant only it's not conversion plus UO too so that might be white, where the confusion is coming from.
Right.
I think it's just as you said, it's consolidated because we've put them together you are sort of 15, whatever you're running a little higher than that so I'm just trying to figure you are obviously right in the U S to U S fixed plant pretty hard right now which makes sense.
Yes.
The second question back to Greg's just on that Iran. All thing you talk about I think if I remember the original deal was $5 4 million pounds and now you can do an additional one point to you three O eight.
But just sort of say, there's four six on it.
Now did I get that the five four plus the 102, a $6 six minus four six so they have capacity to draw to more is that kind of the way. It works at the moment, yes that is kind of the way it works at the moment.
The other thing with the other characterization Brian that.
That theyre looking for <unk>. So they are looking for that conversion component. So so let's call that what what it is that's another pretty important signal because let's face. It our partner is one of the major conversion suppliers in the world looking for conversion.
In other places so that's a pretty strong signal about.
About the pinch point in the conversion market.
We're just going to be sorry. My next question, then I'll get up could you sort of have drawn 300 of the one point to where how did you come up with the numbers are based on your book I mean, they probably want it more I would guess so <unk>.
Jackson determined that yet.
How these negotiations go they probably wanted more and we wanted to give them. This was.
That the sort of the middle ground that was a mutual interest to both of us in terms of.
Product flow and timing and when we needed it and when they needed it so.
Like any negotiation that landed probably exactly in the middle where they werent happy and we weren't happy probably the perfect negotiation.
Right.
Okay, great. Thanks, I'll get off thank you very much.
I would say by questions, yes, thanks, Brian .
Okay.
The next question is from Patrick to Jackie a private Investor. Please go ahead.
Hi, good morning, guys.
So you guys seem to have the.
The business under control.
With the with the cash balance now.
Ballooning.
And perhaps with some inspiration from the oil and gas sector.
Are there any discussions beyond raising the dividend to manage the share price went directly such as buybacks.
And then my second unrelated question is.
On the Canada tax or website. Your your docket says ready to be scheduled.
Because we've heard hearing so I'm just wondering if there's any timelines.
So Patrick Thanks for the question I would say, we hopefully we've had things under control at all times here.
Here, but I'm going to turn it to grant to talk about capital allocation just our principles around capital allocation, then I'll say a word about the CRE and for us to Shawn for an update on that so yeah in terms of capital allocation. We are still in the mode of matching risk with reward.
Ours is a market where youre hearing us I think talk very optimistically about the demand thats ahead of us, but but keep in mind. It still ahead of US there is still a lot of value we need to capture through our contracting.
We haven't done as much as we'd want to yet that's why we're still technically in a supply discipline mode and as brain of supply discipline mode, where we.
We're technically over contracted we have more commitments than we have production coming in the door, which means we're going to make some purchases along the way or access some of the long term purchases that we've done all of that suggests to me that we're still in that self manage risk mode as the market evolves pretty.
Pretty optimistic about how it evolves of course.
And at the same time, we're seeing opportunities.
As Tim mentioned with respect to global laser enrichment opportunities that just really have been thrust to the forefront just in the last 60 days as a result of this effort to exclude Russia.
So from a capital allocation point of view.
Between balancing the risk and looking at their reward opportunities, we're right, where we want to be in terms of the balance sheet. The trigger for us thinking about different moves of course is is shoring up building those homes for that production getting our plant production.
Back to capacity getting out from under care and maintenance costs matching our commitments with tier one production, which when you look at our financials as they are starting to improve already. This is just the beginning I mean, we still have care and maintenance costs in there that are going to go away as mcarthur ramps up.
And so we're just.
In that mode, where we still think it's prudent.
<unk> be cautious and let this market evolve and and that's what gives us the ability to be strategically patient and not have to chase contracts in this market, but but let them evolves. So we can capture that terms and contracts that we won.
We achieved those kind of principles.
Then it will be time to review that the cash balance versus the run rate cash flow coming in from that contract portfolio. As it is rebuilt and then we will be examining all of those questions do we have an opportunity to create the kind of returns our investors would would expect by investing in and if we don't have anything we can point to.
<unk>.
And what's the best way to return that money to our owners because they're far better off with it then than we are in and under that analysis all options would be on the table.
So those principles haven't changed they really are rooted in the rebuilding of our contract portfolio and shoring up that run rate business, we're well on our way there, but I would just say cautiously we're not there yet still and supply discipline mode.
Patrick to your second question of course, it wouldn't be.
Cameco quarterly conference call. They were talking about the CRE at some point, we thought we were done with that in February of 2021, when we go to the Supreme Court decision in our favor but.
We're still talking about it just to be clear the sweetheart deal that was made with somebody it wasn't us. This week. So just to be clear on that we spent about 15 years going through multiple levels of court to get unequivocal rulings in our favor and so the CRE is holding about $778 million of our.
Our cash and balance sheet space, which we'd like to add to the to the cash deposit we have now, but so we're still working on it to Sean do you want to give an update on where we're at with the CRA litigation, Yes, sure every place too.
Tim has already mentioned.
The initial carrier dispute of his or her into effect fully resolved in our favor.
There is nothing left there we took the decision ultimately ratified by the Supreme Court of Canada.
Back on that based on this all subsequent year should be similarly treated and resolved and our cash and letters of credit releases.
The acquisition wasn't.
The theory.
So we put the year or <unk> 13.
Back into the litigation process.
That litigation process is still I would say in the early inning, we filed what's called a notice of appeal.
The.
CRE for the Doj The department of Justice has.
Provided us with their supply.
So there is a long way to go.
So.
Gary in the meantime in terms of.
And that ramping up some of our tax quite yet.
Great. Thank you.
Thanks, Patrick.
We have a follow up question from Greg Barnes with TD Securities. Please go ahead.
Yeah. Thanks can you talk a little bit about the ultimate routes.
Material out of Kazakhstan as they go through China is it true that Caspian Sea route.
Let's see we're looking at.
Yes, Greg that's a great question that is the route across the Caspian.
Over into the Black Sea and then down.
The into into the Mediterranean at some point, so and we understand the tested that wrote and so we're working with them on that that would be I think the other alternative I don't think going east is an option through China at least for our material and so that you've got it right Greg that is the option.
And how much volume can you put down that was it.
Like a one off thing or kind of could kind of extend get all that you're writing them out so that you know yeah.
I guess, Greg I don't know, we don't know that yet I think they are still using.
St. Petersburg to to some extent so we'll have to figure that out and this is pretty recent for us Greg.
So we'll have to figure that out over the next couple of weeks and months.
Okay. Okay. Thank you.
Yes.
This concludes the question and answer session I would like to turn the conference back over to Tim get sold for closing remarks.
Well, thank you operator, and with that I just wanted to say, thank you to everybody who joined us on the call today, we as always appreciate your interest and your support.
Just a couple of words, our world today is facing some pretty significant challenges, including decarbonization electrification, while ensuring energy affordability and security without jeopardizing the ambitious net zero targets that have been set around the world. There's a lot of uncertainty in the world energy landscape and a lot of countries are having to take a hard look and we're there.
You should get their fuel.
More than ever the world is looking for a stable reliable and politically dependable fuel supply.
I believe we are witnessing a fundamental change that will alter the way countries approach their energy needs going forward.
Anyone who look seriously at the global issues, we're facing would see that there is no solution without nuclear.
So we see a lot of opportunity ahead of us with demand for safe reliable affordable and carbon free baseload electricity coming from across the globe.
As a responsible commercial supplier with a strong balance sheet long lived tier one assets and a proven operating track record and line of sight to return to our tier one cost structure. We at Cameco believe we are extraordinarily well positioned to respond to changing market dynamics.
We're excited about the future we're seeing for nuclear power generation. We're excited about the fundamentals for nuclear fuel supplies and we're excited about the prospects for our company.
We'll continue to do what we said we would do executing on our strategy.
And consistent with our values, we will do so in a manner, we believe will make our business sustainable over the long term.
And we will continue to make the health and safety of our workers their families and their communities our priority.
So thanks, again, everybody stays safe and healthy and talk to you again soon thank you.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
Yes.
Yeah.
Yeah.
Yes.
Yes.
Sure.
Okay.