Episode Transcript
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0:00
I would say what isn't discussed enough is
0:02
how safely and how well waste is stored
0:04
and how, how less of an issue
0:06
it is than most people believe. I think
0:08
that that's any time I
0:11
even speak with somebody who's pro-nuclear,
0:13
that's like just everyday, you know, conversation
0:16
at a dinner party or something. And they asked me what
0:18
I do. We talked talking about nuclear energy. Like,
0:20
oh, I'm so behind it that it's just, man. What
0:22
about the waste? And then I tell them that all
0:24
of the ways that were produced in the United States, since
0:27
the fifties can be stored on a single
0:29
football field, 30 feet high, and they go really.
0:42
Justin, thank you so much for coming on
0:44
to age of information. You
0:46
know, uranium is this thing that some people may
0:48
or may not have heard of, if you did hear about it you
0:50
probably heard about it through TV shows or the
0:52
general news. I've realized in the last year that
0:55
it's very sophisticated and there's a lot going on.
0:57
And I think a great place to start this conversation is to
0:59
just ask you, how
1:01
did you get into this space? What attracted you
1:03
and what makes it as interesting
1:05
as it is right? Sure. Yeah. Thanks
1:08
so much for having me. Well, what first attracted me honestly,
1:10
is the investing potential in
1:12
the sector. You know, that that was 2016.
1:15
So about five years ago, when the
1:17
thesis first came to me, I primarily
1:20
had been a momentum technical
1:22
trader for the previous, you know,
1:24
five plus. And this thesis came to me about the sector
1:26
that had a commodity, that
1:28
it was, you know, based upon trading
1:31
at, you know, a third or a quarter of the,
1:33
of the price that it should be trading at for the marginal
1:36
cost of production. And it is this hated sector.
1:38
It's been in a long bear market. And, but
1:40
yet it was a growth sector. The,
1:43
the, the outlook for nuclear energy
1:45
out of the future is very positive. Was and is,
1:48
and you know, it was only a matter of time
1:50
before the demand for uranium
1:52
as the, as the fuel for nuclear energy, kind
1:54
of turn that investment around. And so
1:57
that's what got me interested. Obviously, the previous
1:59
bull market for uranium from an investment
2:01
side of things was very very
2:03
lucrative for investors to say the least
2:06
from about the 2003, 2004
2:08
to around 2007. There
2:10
was just a bull market of epic proportions. So
2:13
you know, investors always want lightning to strike twice
2:15
and it usually never does and the exact way, but that's
2:17
what got me into. The more research I did, the more I realized
2:19
I was really fascinated with the sector and,
2:21
you know, come, you know, jump to today
2:24
and I'm a full-blown advocate for
2:26
nuclear energy and, and has
2:28
amazing benefits for the world that we live
2:30
in. And so it's, it's a wonderful investment
2:32
from that standpoint, because that's something that has
2:35
already and will continue likely to
2:37
offer significant returns to patient
2:39
investors while at the same time. It's
2:41
something that I can feel good about investing
2:44
in and knowing that I believe
2:46
that it's part of a solution for, you
2:48
know, clean energy for, for the developed world
2:50
going forward. How confidently
2:52
can we say that lightening is about a strike or
2:54
is it striking twice right now? It's I can say
2:56
pretty confident. So the
2:58
previous bull market went from just such a,
3:01
such an extreme, low to
3:03
an extreme high in such a short period of time.
3:06
And I don't believe that this time around,
3:08
it's going to repeat that timescale.
3:11
So, you know, we bought them out this, in
3:13
this cycle about $18 a pound
3:15
for uranium in 2016. And
3:18
we're up at about $46 a pound now,
3:20
and the equities have done extremely well
3:22
since that point. You know, the worst performers
3:24
are up about 250. And
3:27
the best performers are up about 5,000
3:30
to 10000% since 2016
3:32
already. But the potential
3:35
for the price for uranium to
3:37
go much, much higher is definitely there. It's
3:39
practically guaranteed to go another 50%
3:41
higher because there's a supply
3:44
deficit based on the expected
3:46
demand, going out into the later part
3:48
of this decade, where. Marginal
3:50
cost of production is going to have to come into play to
3:52
fill that deficit. So you have uranium
3:55
mines, like the lowest cost producers right now in
3:57
Kazakhstan they're producing
3:59
for, you know, in some of their minds are less than
4:01
$10, a pound cash costs, but fully
4:04
allocated when you consider the dividend they pay
4:06
and, and interest rates and
4:08
supply chain issues. And all of that they're producing at about
4:11
35 bucks a pound. That's the cheapest in the world.
4:13
Then you have projects. You know, Bannerman's
4:16
tango project in Namibia that has a
4:18
few hundred million pounds of uranium. That's ready to
4:20
be developed, but they need, you know, $80
4:22
a pound. Right. And so
4:24
at $46 a pound, and you can pretty much guarantee
4:27
that we're going to go into that 65, 70 $5
4:30
range, but the likelihood
4:32
that it's going to overshoot is extremely high.
4:34
For reasons we can talk about further
4:36
if you'd like, but basically there's there's financial
4:39
players and hedge fund interest and
4:41
things like that that are actually physically purchasing
4:43
physical uranium and affecting
4:46
the market in that way as well. So,
4:48
yeah, I think, you know, my understanding is that the supply
4:51
side of it has a lot of players and
4:53
it is a very important piece in how we sort of
4:55
forecast the pricing of uranium. Like you said Kazakhstan,
4:58
it needs it at least at $85. But how
5:00
transparent is the amount of supply
5:03
that's available and will be produced? I've
5:05
heard some reports that whether it's China
5:07
or some other sort of foreign entities, they
5:10
could have more supply than what we previously
5:13
considered is that a possibility it's not very
5:15
transparent at all for the most part. I
5:17
mean, you really have to do a lot of research and
5:20
you can, you can gain some insight through
5:22
some like higher price subscription
5:25
memberships that like the utilities, for example, pay
5:27
for with the like UFC and trade tech.
5:29
These are the consultants, nuclear fuel
5:31
consultants. They have a pretty good grasp on what's going
5:33
on out there in the nuclear fuel markets.
5:35
Of course speaking with utilities, speaking with traders,
5:38
you can kind of get a better idea. You can
5:40
make very rough estimates based on the
5:43
estimated over-supply
5:46
from the previous day. You know, subtracting
5:48
what China likely took out of that. And that's
5:50
what you have left over in the
5:53
global mobile inventory category.
5:55
Let's say from the mid 20
5:57
teens until now that number
5:59
roughly let's say was 150 to 200
6:02
million pounds of excess supply that
6:04
didn't go to China that was available
6:06
for sale or for trade over
6:08
the past number of years. When
6:10
you consider chemicals shutting
6:12
down McArthur river in 2018, combined
6:14
with their purchasing, they themselves have
6:17
had a hundred million pound influence
6:19
into that deficit. We've had
6:21
something called a carry trade that has been
6:24
prevalent in the uranium market for the past few years.
6:27
Is traders essentially are
6:29
signing contracts with utilities to provide
6:31
uranium 2, 3, 4 years out. And
6:34
they are covering the cost of capital.
6:36
They're taking on a bit of risk for holding that on their books
6:39
and they're going out and purchasing that some
6:41
of that mobile inventory and making it. Easily
6:44
accessible to utilities. This was a
6:46
boon for utilities over the past five plus
6:48
years. Of course it hurt the producers.
6:51
You have the chemicals of the world that are sitting
6:53
on this massive mind, the largest in the world, McArthur
6:55
river, and saying we need 45 to
6:57
$55 a pound. We need those insecure
7:00
long-term contracts or this mine's not coming back on.
7:03
Yeah, the utilities continue to go back to the
7:06
carry traders for this cheap pounds
7:08
for 2, 3, 4 year delivery as
7:10
they should. So that is all sort
7:12
of coming to an end now
7:15
and we're having this very slow turn
7:18
from a oversupplied buyers
7:20
market to an under-supplied sellers. And
7:24
it's yeah, it's quite opaque. It's
7:26
difficult to really drill down. You know,
7:28
it's easier to understand the primary production.
7:31
That's a number that you can kind of wrap your head around.
7:33
As far as Chinese supplies go.
7:36
They don't have a lot of domestic supply
7:38
as far as mined uranium. It's
7:40
not a lot. It's probably, you know,
7:42
less than 10 million pounds a year that they're pulling
7:45
out of China and that stays in. They
7:47
have hundreds of millions of pounds of inventory,
7:50
but that's essentially strategic national
7:53
inventory, especially considering their build-out
7:55
plans, which are significant.
7:57
They're shooting for 200 gigawatts of
7:59
nuclear by 2035. And they currently have
8:01
50. So 150
8:04
gigawatts is about 150 new
8:06
reactors that needed to be built in the next
8:08
15 years. They have 18 under construction
8:10
right now. So they're going to go gangbusters on
8:12
nuclear. So the likelihood that their strategic
8:14
inventory is going to be sold in the market is
8:17
pretty. Right. And it
8:19
seems like one of the biggest I guess price makers
8:21
is the spot trust. So if you could quickly
8:23
describe, what is that trust? I think my understanding is that,
8:25
you know, had a lot of influence when it first launched, but
8:27
that influence that has maybe sort of degraded
8:30
over time. And I don't know how much influence it's still
8:32
holds on the market. You know, we're talking in November.
8:34
So if you could speak to that, Sure.
8:36
Yeah. Their influence is still substantial
8:39
and likely going to only grow. And that
8:41
has to do with the consistently increasing
8:43
liquidity of that. It's going
8:45
to draw more and more investment interest, especially
8:48
if they get a New York stock exchange listing next year, which
8:50
I believe they will they'll have some opposition
8:52
most likely from the utilities in the states. Why
8:55
would the utilities oppose a New York stock
8:57
exchange listing for spot? Well,
8:59
I don't know that they necessarily. They're
9:02
there. So, first of all, when the sec,
9:04
when you file the application for the New York
9:06
stock exchange listing with the sec, there's a,
9:08
like a three-week comment period, public comment
9:10
period. And you
9:12
know, the utilities, us nuclear utilities
9:15
have a lot of lobbying power of the government.
9:17
And so they're likely to push back against
9:20
it because they're going to recognize that this
9:22
listing is going to allow. Orders
9:25
of magnitude more liquidity to come into this
9:27
vehicle, which directly equals
9:30
purchasing a physical pounds of uranium, which is driving
9:32
up the spot price. Even though you utilities,
9:34
at least right now are largely out of the spot market.
9:37
It still affects the term market. They, they have
9:39
term contracts still that are rolling
9:42
off or have expected deliveries out into
9:44
the future that are at least partially referenced to the
9:46
spot price of uranium. So if they
9:48
sign the term, contract that $40
9:50
a pound. 40% and 60% spot
9:52
reference probably with a ceiling, but either way
9:54
at the time of delivery, they have to pay whatever the spot price
9:56
is for that, for that delivering uranium.
9:59
And they obviously don't want to pay
10:01
any more than they have. So there,
10:03
they're going to have something to say about it. I don't
10:05
know that they can stop it. But we'll
10:07
see. I'm, you know, it's not something we're even betting
10:09
on because we've already seen what they've been able to do on
10:11
the TSX alone. Just the New York stock exchange
10:13
is what 13 times the size
10:16
in terms of capital. So,
10:18
but to backtrack briefly, The
10:21
spot is the Sprott physical uranium trust
10:23
they brought, had been working on this
10:25
deal of taking over uranium participation corporation
10:28
for almost three years. Uranium
10:30
participation corporation was founded
10:32
in 2005. It's a physical
10:34
trust or physical. Where they were when they were trading
10:37
at a significant premium to their net asset value.
10:39
So the value of the stock because of buying pressure
10:42
grew faster than the underlying price of uranium,
10:44
that premium would allow them to issue shares
10:47
into the open market, raise cash by
10:49
more physical uranium. They accumulated
10:51
18 million pounds. In those
10:53
16 years. And
10:56
the deal was announced in April. It was sealed
10:58
in July and immediately
11:00
Sprott did a couple of really intelligent things. The
11:03
first thing they did was to do a reverse split. I
11:05
think they did a three to one. It was a two to one or a three
11:07
to one. I forget it doesn't really matter. It had to get
11:09
them to this price where there's a number
11:12
of institutions that, you know, written in their
11:14
perspectives. You know, they cannot invest
11:16
in the stock. That's under X price. So
11:18
you just get it, do a reverse split, bump up the.
11:21
Automatically that opens you up to new investment capital.
11:23
So they did that. Step one, step
11:26
two is they filed for an at the market. Equity financing
11:28
vehicle, which essentially is
11:30
it's a vehicle that allows them to issue
11:32
shares into the open market at will.
11:35
And they are doing this whenever
11:37
they are at greater than a 1% premium
11:39
to nav. So UPC,
11:42
for example, they could go weeks and weeks
11:44
at a 10, 15% premium to nav.
11:47
And it was kind of to their own discretion, whether
11:49
or not they were going to issue shares. It was a very inefficient
11:51
vehicle. Now Sprott
11:54
is doing this. And any time there are greater than 1%
11:56
premium because they get a 1% fee
11:58
when they buy uranium. So if they're trading up
12:00
and there's good volume coming into the market, and they're out
12:03
of more than web Supreme to now, they're issuing shares
12:05
into the market. They're raising cash. They raised
12:07
$90 million in a single day, a
12:09
few weeks ago. And
12:12
that launched in the middle of the middle of August
12:14
of this year, since then, they've raised
12:16
almost a billion dollars through this ATM
12:19
and they purchased almost 22 million pounds a year
12:21
of uranium. So I
12:23
don't think anybody including Sprott knew
12:26
that when that first launched that
12:28
they would have that kind of impact that the, that
12:30
the spot price would move 50%
12:33
on only 10 million pounds of uranium. But
12:35
it did. And so now.
12:40
Now what's happening. This is kind of a complex
12:42
thing to explain. I would, I would definitely
12:44
suggest to you and to your readers or
12:46
your listeners to check out
12:48
Segra capital. They have
12:50
a a commentary tab on their website
12:53
where it's essentially a blog and one
12:55
of the capital partners. His name is art. Very
12:58
very sharp individual has done a lot
13:00
of work in the sector, wrote a recent piece on this, where
13:02
he's describing something called a reverse
13:05
carry trade. And so the carry trade
13:07
I just described what's happening
13:09
at least slightly right now. I'm going
13:11
through this with you because it sort of explains why
13:14
suppose Sprott just purchased 500,000
13:17
pounds in the price. Didn't move. Well, this is why they're
13:19
also buying off. They're
13:21
buying and what is called a block trade in exchange
13:23
for shares. So what
13:26
they're doing is The
13:28
Kerry traders who have let's say
13:30
taken, taken on a contract where
13:32
they're going to deliver out three years into
13:34
the future, for example, and
13:37
the current spot price at the time,
13:39
let's say it was 25. And they
13:41
have an obligation to deliver a
13:43
million pounds of uranium to the utility in 2023,
13:45
at $30. Okay. And so
13:47
they go out and they buy that million pounds at 25
13:49
bucks in the spot market. They hold it,
13:51
they carry it, it's on their books. And
13:54
they carry it. Now what's happening at
13:56
least did happen for a few
13:58
brief moments. There was, we have, what's called
14:00
backwardation in the market where you had the
14:02
present price of the commodity is higher
14:04
than the future price of the. It's
14:07
happened sometimes in commodities markets. So
14:10
what traders were able to do is they
14:12
were able to secure delivery
14:14
of pounds out at the same time
14:16
that they are they're obligated to deliver
14:18
in their, in their carry trade contract. From a producer
14:21
that's currently pending. At
14:23
a lower price than the current spot price.
14:25
So then they take the pounds, the carry and they sell it
14:27
to Sprott and arbitrage.
14:31
Exactly. So they're making a few bucks
14:33
a pound on top of the profits. They would've made on
14:35
their original carry. So that's happening a little
14:37
bit. And that's, that's the
14:40
interesting thing about that. And that's something that art Hyde points
14:42
out in this piece. Is that that's
14:44
taking pounds from the future. And so even
14:46
though it's pounds going into the Sprott
14:49
vehicle without immediately moving the spot
14:51
price, that's not the way to look
14:53
at it. The way to look at it is those pounds out.
14:55
At the point of delivery for that original carry trade
14:57
contract, they are now buying
14:59
from a producer and those pounds would have been
15:01
available to a utility. And now they're not. So.
15:05
It's brought, you know, every pound that they buy
15:07
is a net positive for the uranium thesis,
15:10
but the investment thesis, of course,
15:12
it's brought a whole new element
15:14
for the nuclear fuel market to deal with.
15:16
And annualized, the amount they've been purchasing
15:18
is, is just insane. You
15:21
know, you're looking at 75, 80 million pounds
15:23
of uranium in the 12 month period. If they keep at this pace,
15:25
I don't think that's going to happen. I think the price will continue
15:27
to rise. They can buy less from the price is
15:29
higher, but still even 50 million
15:31
pounds. That's the entire us nuclear fleet. So
15:34
it's been a huge game changer in
15:36
terms of. It accelerates to the
15:38
thesis. Sure. I'll link the
15:40
art, hide a piece actually did read that excellent
15:43
and very well written you know, earlier you said
15:45
that hedge fund hedge fund people
15:47
and other finance people have been buying physical uranium.
15:50
Does that mean they are buying spot
15:52
or are they buying over-the-counter directly from the
15:54
miners? What, what does that mean? Both, I would
15:56
say directly for the minors is probably
15:58
less because there's, you know, there is some mobile
16:00
inventory sitting in the can at the conversion facilities
16:03
and when you buy uranium and you're not an
16:05
end user, you essentially just change
16:07
hands on paper. And it just sits with that conversion
16:09
facility and changes ownership. So
16:11
there've been hedge funds that have accumulated some uranium
16:13
over the past few years. I don't think it's huge volumes,
16:16
but another thing that's happening currently is some of
16:18
that volume. Some of these
16:20
funds are selling those. To
16:23
Sprott in exchange for trust units
16:26
so that they don't have to carry a physical uranium on
16:28
their books. Now they carry these highly liquid shares
16:30
and they have the exact same exposure to the
16:32
upside of the commodity. So more
16:35
than likely going forward funds
16:37
that would have been purchasing physical uranium are likely to purchase
16:39
shares of spot, but
16:42
that also leads to physical purchases
16:44
since you buy shares in that trust in assuming
16:46
that, you know, you're at a premium to nav and they're issuing.
16:49
Sure. Sure. You know, another sort of
16:51
important piece that I think is like a top of mind
16:53
for a lot of people in uranium is
16:55
the ongoing narrative around CRDN
16:57
the Clearwater river Dene
17:00
nation. I'm not sure if I pronounced that. Right. Could you, could you
17:02
give me your take on that and sort of explain what
17:04
that is and how valid that narrative is
17:06
to the overall context of. Sure.
17:09
It's, it's valid in that, you
17:11
know, the, the lands that uranium
17:13
is being produced from currently, and
17:15
some of these development projects, exploration projects
17:18
in Northern Saskatchewan does
17:20
technically belong to a number of
17:22
different first nations tribes that are, that
17:24
have been there forever or for
17:27
a very long time, let's say. The
17:29
CRDN issue in particular their land
17:31
is where NexGen's arrow deposit
17:33
is visions. Efficiency deposit
17:35
is the PLS deposit. There's a bunch of explorers
17:38
in that area. So if that Southwest part of
17:40
the base and the Patterson lake area, where, where
17:42
there is of their primary concern and
17:44
I think. I gotta
17:46
be careful what I say here, because I don't want to implicate
17:48
anyone that the, they, they
17:51
want the mines to be built. It's a creative
17:53
for them. They have they have multiple
17:55
benefit agreements in place with
17:57
multiple countries. And they're
18:00
fully aware of what's happening
18:02
currently in the uranium market and, and
18:04
they want to be compensated
18:07
for the use of their lands as
18:09
they should. And so what's happening
18:11
currently is I mean, in particular with
18:13
next gen. So they've been in discussions
18:16
for two years now about coming
18:18
to an agreement about the development of the. They
18:21
absolutely want it to happen because it
18:23
employs a lot of their people. It would be a
18:25
huge financial benefit to the community.
18:27
And it would that particular mind as well, that's an underground
18:30
mine. It doesn't deal with a lot of the stuff that
18:32
the law of the mines on the Eastern basin
18:34
deal with, which is major groundwater
18:36
issues. This is mostly there's
18:38
very little surface sand stone before they get to the basement
18:41
hosted rock. And so. Simple mind
18:43
you geologically speaking, it's deep, but it's
18:45
simple. It's not going to be a major environmental
18:47
impact. So they want it to happen.
18:50
They're pro mining and that's the most important thing that
18:52
the investment community needs to know. Now,
18:54
can they throw some sand in the gears and are they
18:56
waving their hands now saying, Hey, you guys
18:58
want to move forward with this stuff. We know this bull market is
19:00
on. We know what's going on. We're not stupid. We're
19:02
going to need to get something that benefits.
19:05
From our lands that you want to mind on
19:08
as they should. So they'll come to
19:10
an agreement. They want it to happen. They don't want to stop
19:12
these projects from happening. They just want to be respected
19:15
and they want to be competent. So
19:17
the notice is almost like an interesting
19:19
leverage in negotiation with these companies
19:22
it's written by lawyers. Yeah. The study that
19:25
was cited in that notice was actually commissioned
19:27
and paid for by next gen. So
19:29
yeah. Got it. Got it. You know,
19:31
another topic on the supply side is
19:34
the us. Infrastructure bill just passed.
19:36
There was some provision for uranium specifically.
19:39
I think the reaction that I've seen is some positive.
19:41
Some, some feel that it's validation
19:43
on their thesis for the U S others
19:45
feel, you know, not so much, a little more pessimistic
19:47
about it. Where do you stand on that? W what's your take on the,
19:49
on the provisions of the infrastructure bill? Well,
19:53
I think that the most important piece of it in
19:55
terms of nuclear in the United States has
19:57
to do with support of the existing reactors. I
19:59
think expecting an all-out a
20:01
Renaissance of nuclear builds in the states is not
20:04
something that's really on the table. And I
20:06
think that while we had discussions
20:08
of supportive measures for domestically
20:10
mined uranium in the past, I think that's still
20:12
on the table. It's just at this point.
20:14
So many other things have happened for the investment
20:17
thesis. It's not even something
20:19
that, that people are even paying attention to anymore.
20:21
Cause it was they're proposing buying, you know,
20:23
one to 2 million pounds a year from domestic production
20:25
which is currently next to nothing in the states.
20:28
That'll change when the prices rise and some of
20:30
these developers can, can get into some
20:32
contracts with with us utilities and,
20:34
and utilities abroad. But
20:37
most importantly, is that the reactors,
20:39
especially in the deregulated markets where these reactors
20:42
have to compete with natural gas
20:44
power and, and that type of energy
20:46
that can often be produced cheaper, that
20:49
they have some kind of, you know, financial support
20:51
from the government. That's saying, okay, it's important. We keep these
20:53
online. And the government kind of has to do
20:55
it because, you know, if they're waving their arms
20:57
about climate change, but they don't want to support the reactors
21:00
that are by far the biggest
21:03
contributor to clean it up. It kind of doesn't add
21:05
up. And I think that people can start to see
21:07
through that at some point. So it's, I think
21:09
there was 6 billion in the infrastructure
21:11
built to support existing plants and two and a half
21:13
billion for research into advanced
21:15
reactors and small modular reactors, things like that.
21:17
So, you know, it's, you know,
21:20
in the grand scheme of things at the drop in the bucket,
21:22
but at something, so it's nice to see that there's
21:24
at least members of the department
21:26
of energy and members of the Senate of
21:28
Congress that are saying, we got to keep these. And
21:31
then he pushed for that, for that budget
21:33
inclusion. So that's good. I think
21:35
something interesting that you said earlier is
21:38
when the spot first launched,
21:40
they were surprised and everybody was generally surprised by
21:42
the amount of interest and demand. There was,
21:44
you know, the open market in retail and by
21:46
the institutions, et cetera. And I think Twitter plays
21:49
a role in that. And I think social media plays a role in that.
21:51
And when I first entered the space, I was reading some
21:53
theses by many different people. And
21:56
it would always start off with the fundamentals, like you were saying, like the supply
21:58
demand, et cetera, but then it would always end by
22:00
saying, well, there's always a potential for
22:02
wall street bets to jump in there. Or there's a potential
22:04
of a very particular subsection
22:07
of Twitter for them to jump in there and
22:09
they're going to take it from whatever
22:11
highs we've already seen to even crazier highs.
22:13
And that's going to be part of the squeeze. How important
22:16
do you think that aspect of the thesis is
22:18
actually like material to the price of
22:20
Spotify? Affect the spot price.
22:23
I would say as far as the kind of wall street vet
22:25
slash Uranian squeeze kind of thing,
22:27
not at all, that's not at all important.
22:29
It's not something that we would ever
22:32
suggest gambling on or expecting
22:34
to pan out. But that potential for
22:36
it is. In a similar vein.
22:38
I think that social media and the speed
22:40
of communication is hugely important. And
22:43
so in order for them, I mean really
22:45
how that crowd works best is, is
22:47
through squeezing short squeezing. So,
22:49
and they did that a bit with Dennis and mine's
22:51
earlier this year, actually in February,
22:54
they squeezed Dennis and went up, I think
22:56
a hundred percent in just a few days, the
22:58
closest. So it
23:00
it's always possible. It's usually a younger
23:03
crowd. Most of the time they're typically
23:05
trading on apps like Robin hood and
23:07
things like that, that only at this point have access
23:09
to the NYC and the NASDAQ.
23:12
So for them to go after the Sprott
23:14
physical uranium trust, I technically
23:16
they can corner on the OTC mark. But
23:19
you know, it's, it helps it
23:21
can help, but it's not important at
23:23
all for the overall thesis. But
23:25
with all of that said in a comparison with the previous
23:27
book, The speed
23:29
of communication is so drastically
23:32
different than it was even in 2006,
23:34
2007, with the advent of smartphones, just,
23:37
you know, just after that market. And then just the,
23:39
the amount of money that's circulating now compared
23:41
to then is, is way, way more
23:43
as well. So there's so much more money flowing. And
23:46
there is so much faster communication and
23:49
many more people investing in speculating.
23:51
So the appetite for for
23:53
volatile investments has grown,
23:55
let's say. Right. Right. And
23:57
actually the other super interesting thing about uranium
24:00
Twitter specifically is when I first
24:02
got into the space everybody was sort of aligned in
24:05
their mission and what, what they focused on, but
24:07
over time with more and more players
24:10
coming in. It has sort of fractured,
24:12
like there are different groups that believe in different things.
24:14
And now I'm seeing a little bit more, I want to say conflict,
24:16
but at least disagreement on different theses
24:19
and different tickers. And I wonder
24:21
is that ultimately bullish
24:23
for uranium because you know, you have, you have so many differentiated
24:26
opinions that everybody, you know, it's like iron makes
24:28
iron Trumper like steel MC steel sharper. Is
24:30
it, is that, is that how we should be looking at it? Or
24:33
is it bad that, you know, some people might be going
24:35
towards more dogmatic views when it comes to. No,
24:39
I don't think it's bad. I mean, I think
24:41
that people could be more civil generally
24:43
speaking. I mean, the, the uranium Twitter
24:45
community, for the most part, since I've been on, has
24:47
been extremely civil and helpful.
24:50
I've met unbelievably intelligent people
24:52
that have taught me a lot of I've had
24:54
some incredible conversations and connection
24:56
through Twitter. So it's still an unbillable. Beneficial
24:59
place to be when it comes to investing in communities,
25:02
especially for uranium. Yeah, I think that there's always
25:04
going to be viewpoints that are opposing
25:06
and I think it's good for those to be hashed out.
25:09
I'm not part of that is what kind of spurred
25:11
this piece that was written by, by Mr.
25:13
Hyde. So it's like it's it's so
25:16
it's good to see it makes a market right.
25:18
To have opposing views. And ultimately
25:20
when it comes down to. I think that the social media
25:23
communities on Twitter or Reddit or whatever, they have an impact,
25:26
but you know, when it comes down to it, it's going
25:28
to be the really big institutions
25:31
that have so much more power to move
25:33
markets. You know, you can have 50,000
25:36
people on uranium, Twitter, and you can have just
25:38
a couple of institutions come in, heavy handed,
25:40
buy, buy into the ETFs and buy
25:42
into the Sprott physically Rainium trust with a couple of hundred
25:44
million pounds. And the liquidity is there or
25:46
a dollar. All of a sudden
25:49
you get a massive move in the, in the sector.
25:51
So it affects things. I
25:53
think that discourse is healthy and
25:55
it's important to try to poke holes in each
25:57
other's discourses and, and see
25:59
where we might be wrong, where we might be. Right.
26:01
There's always something to be learned from somebody else. So
26:04
it's, it's nice to see. Sure.
26:07
So going back to the demand side of things, I
26:09
think there is a lot of differentiated opinion on
26:11
how much demand there really is. And I think you pointed
26:13
out some fundamentals, but what piece
26:15
on the demand side are people missing that
26:17
you feel is maybe not more widely
26:20
talked about or widely realized? I
26:23
think the piece of demand side that people are missing
26:25
is difficult to quantify
26:27
and estimate, and that would be a restocking
26:30
of. So it's,
26:33
it's goes against what, what
26:35
makes sense for most people to consider, which
26:38
is uranium, you buy a lot of utilities
26:40
load up on uranium when the price is low and
26:42
they, and they, they let it go and
26:44
the price is high and it's not really something utilities
26:46
really trade. So I think that
26:48
a restocking of inventory, even though the inventory
26:50
is. Roughly,
26:53
you know, around the average where they are generally
26:55
speaking, right? The us has right around two
26:57
years, maybe a little bit under two years of
27:00
inventory, average per, per utility
27:02
or per reactor. The the EU
27:04
utilities usually have to keep at least three years,
27:07
but when things start to get scarce
27:10
is when the restocking really happens.
27:12
And I think that that's. That's something
27:14
that's difficult to bake into any sort
27:16
of supply and demand model, but it's something
27:18
that can be expected if, and
27:20
when we see a point where the
27:22
utilities actually are concerned about keeping
27:25
their reactor up and running, if they're uncovered
27:27
out into the future, they pay what they need to pay to
27:30
make sure their inventory are both. And
27:32
another demand piece, I think is really interesting
27:34
that is kind of newer news that I think most
27:36
people are not necessarily giving enough weight to,
27:38
is this this establishment of this ANU
27:41
energy, which is this physical uranium fund
27:43
that was just established in Kazakhstan.
27:46
And it was seed funded partially
27:48
by cause Adam prom partially by the national
27:50
bank of Kazakh, Stan with initial 50 million
27:53
combined. But they're going to do a follow on round the 500.
27:56
And I think that there, the potential
27:58
for there to be huge, huge
28:01
investor appetite for
28:03
a fund like this in the east is.
28:06
Understated. So if,
28:08
if they can continue to raise a lot of money and purchase
28:10
physical uranium, that's coming out of cause Adam prom
28:13
primarily, or some of their JVs, I should
28:15
say Kazakh, Stan, or it
28:17
was Becca, Stan. This is supply that, you
28:19
know, cause I had a problem. Half of their supply goes to
28:21
China, just straight up, like full stop.
28:24
The rest of it. They've got a bunch of JVs with uranium,
28:26
one with Orono, with Chinese. So
28:29
whatever's left over. They've been the most. Consistent
28:32
reliable supplier of uranium for many, many years.
28:34
So now. A physical, financially
28:36
driven fund in the east that
28:38
has an appetite for uranium produced
28:41
in the east. That just, that
28:43
could be a big game changer. Then it's just one more
28:45
piece to that demand, puzzle that again,
28:48
it's hard. You, how do you justify how to,
28:50
how to table the amount of demand
28:52
is going to come from that? I have no idea. How do you put
28:54
that into a model? You can't really, but.
28:57
500 million. What is that going to be another 10
28:59
million pounds next year? What if they do that? Every year? That's
29:02
10 million pounds of demand out of 185
29:05
million for the entire world over the course
29:07
of the year. It's significant. So
29:09
that's something that has big potential to,
29:12
to, to shake things up. Got
29:14
it, got it. I think the word squeeze
29:16
is super interesting because it suggests that
29:18
we have this rapid rise and
29:20
then. At least some sort of fall,
29:22
if not rapid, but a fall to some average
29:25
or some mean let's say that this thesis does play out
29:27
and over the course of a year or the next 18
29:29
months, what signal
29:32
are you looking at to tell you that? This is the top.
29:34
To signal the top of the, of the overall
29:36
bull market? Yes. Well, there's a few pieces.
29:40
Interestingly enough with Sprott. One of the
29:42
pieces that we would consider that
29:45
we would have considered would be hedge funds,
29:47
selling their uranium back into the market. Now
29:49
that it's likely that a number of the hedge funds had already
29:52
purchased uranium have, or
29:54
will sell their uranium distraught in exchange
29:56
for trust units. It's unlikely
29:58
that that's going to be a major signal and
30:01
Sprott is not going to be a seller. So they're, they're
30:03
a buy and hold fund. So that's a signal that kind
30:05
of, that we've lost. Unfortunately. If
30:07
we see a hard spike
30:10
of the spot price above the term price, that's
30:12
something that you have to watch
30:14
out for because it typically doesn't last.
30:18
And so, and it might cause a speculative,
30:20
you know, fury in
30:22
the, in the equities markets and
30:25
that's something really to look for. If we see
30:27
that hard spike on the spot over term During
30:29
euphoric moves and the equities along
30:32
with euphoric moves in the spot price,
30:34
then you start to look for technical signals of
30:36
that breaking down for us. And that's just
30:38
basic technical analysis in
30:40
in the Sprott physical uranium trust will be one of them because
30:44
they stay so close to their net asset
30:46
value. That they really will
30:49
be a good marker for tracking the
30:51
price of the commodity. So if you see
30:53
that ticker start to roll over you know, if
30:55
you see, if you see that fall
30:57
down below the 50 day, moving
30:59
average, after a euphoric move
31:01
up, that feels and looks
31:04
unsustainable. And, you know, as, as
31:06
being driven by financial interests, that
31:08
would be a moment to take some off the table. And
31:10
yeah, it's, it's, it's supposedly charts breaking down.
31:12
Of course we always recommend that treat individual
31:14
patient positions individually because they, they
31:17
do act differently. Let's see what else.
31:19
Those are kind of the main signals that we're looking for. Primarily,
31:22
we're looking for an overshoot of the spot price
31:24
of the term price and have a, have
31:26
a technical breakdown after
31:28
a euphoric move that is
31:30
not driven by, let's say classic.
31:33
Market fundamentals, more
31:36
of speculations. Sure, sure. And
31:38
you know, the sentiment that I've got from you so far is that
31:40
you're still heavily bullish. In the last week we've
31:42
seen somewhat of a. Decent
31:44
selloff, I would say. So considering that, and I, you know,
31:47
I kept reading about seasonality, seasonality,
31:49
seasonality, I guess, what impact
31:51
is seasonality having? It sounds like there is no seasonality.
31:54
And as of right now, are you waiting for
31:56
the knife to keep falling? Is there a knife that's
31:58
falling or are you a heavy buyer? Oh,
32:00
I've been buying, I've been heavily buying the past
32:03
week and a half. Yeah. No, I mean, there still is
32:05
an aspect of seasonality. The interesting part
32:07
about seasonality this year. Usually the drivers
32:09
of that seasonality are, you
32:11
know, twofold one it's
32:14
the U S utilities have a renewed budget
32:16
October 1st. And
32:18
there's a number of nuclear fuel conferences
32:21
that happen in the autumn. You
32:23
have the WNA that happened in September. Then you have
32:25
the NTI that happens in October. And then there was
32:27
just another one. So there's a lot of the utilities
32:30
they meet with other industry players with other
32:32
utilities, they kind of discuss their plans, but
32:34
what's happening right now is that utilities are recognizing
32:37
what's going on with this broad vehicle. And they're sort of like sitting
32:39
out with the spot market. And so
32:41
I still think that we see a
32:43
strong end to the seasonality move. And
32:47
as far as is it happening or not? I mean, the ETFs
32:49
are up 20% since October one.
32:52
So even with this sell off. That's
32:54
a good move, you know, over the course
32:56
of six weeks. So as far as I'm,
32:59
when I look at the charts and zoom out a little bit, it's like seasonal
33:01
is absolutely happening. This looks to me like
33:03
a higher, low that we're making in the markets.
33:05
Of course, there's always a chance that it sells off
33:08
more. My opinion it's sold off more than
33:10
I was expecting, but it's not really a concern.
33:12
It's a buying opportunity for anybody.
33:14
That's kind of late to the game are still adding their positions
33:16
in my opinion. So yeah, I think that,
33:18
I think I've been sick since
33:21
brought, came on the scene. I've expected
33:23
a I
33:26
I've I've changed my vision of the market
33:28
of being a two to four year
33:31
healthier, slower bull market to
33:33
being more of a one to two year faster
33:35
split speculation followed
33:37
by a long grinding bull
33:39
market. Now,
33:44
now what I'm thinking, as
33:46
far as. Hedge funds
33:48
selling some of their uranium distraught in exchange
33:51
for, for trust units and potentially
33:53
some carry traders doing that reverse
33:55
trade. It's likely that we'll see some
33:58
more material come in for Sprott, and
34:00
it might not be as violent to the upside,
34:02
which would mean a longer, more drawn out
34:04
bull market, which in my opinion is way healthier.
34:07
It's less exciting from a speculative
34:10
state standpoint as less volatile. But
34:12
it's healthier for the, for the uranium market.
34:15
It's healthier for the nuclear market. The last
34:17
spike that happened in 22,607,
34:19
it happened so fast that all of
34:21
these developers were just desperately trying
34:23
to get their projects financed and built so they
34:25
could sell into it. And, and almost
34:27
none of them did. I think one mine got built
34:30
to the point where I could actually come into production in time
34:33
only to have the price just turning drop back
34:35
down from 134 bucks a pound back
34:37
down into the sixties and seventies. So
34:40
Yeah, I think I mean the short term is always
34:42
difficult to predict for the uranium market. So we
34:44
try not to do that too much. But
34:46
what we generally recommend what I've been
34:48
recommending since August,
34:51
or really since the beginning of this year, especially
34:53
since the announcement of Sprott is if the
34:55
market gives you sell offs, hang on.
34:58
If you're fully positioned and if you're not take
35:00
advantage of it. So that's what I've been doing
35:02
personally. Nice. Yeah. I mean,
35:04
stay away from the short dated call offs.
35:07
Yes. Yes, absolutely. Absolutely
35:10
long dated call options. We've been doing these
35:12
bullish vertical call spreads that have worked extremely
35:15
well, but they have much less risk
35:17
than the short dated call option. Justin, this has been great.
35:19
I like to end every interview
35:22
by asking a pretty open-ended question, which is what
35:25
is a topic in this particular field
35:27
you feel isn't discussed enough is discussed
35:30
incorrectly or hasn't gotten enough exposure.
35:32
And this is sort of in line with the demand question I asked earlier,
35:34
but more open-ended from the investing
35:37
side or from the nuclear, like nuclear
35:39
Martin energy side. Nuclear
35:42
energy side. I would say what isn't discussed
35:45
enough is how safely and how well
35:47
waste is stored and how, how less
35:49
of an issue it is than most people believe. I
35:52
think that that's any time
35:54
I even speak with somebody who's pro-nuclear,
35:57
that's like just everyday, you know, conversation
35:59
at a dinner party or something. And they asked me what
36:02
I do. We talked talking about nuclear energy. Like,
36:04
oh, I'm so behind it that it's just, man. What
36:06
about the waste? And then I tell them that all
36:08
of the ways that were produced in the United States, since
36:10
the fifties can be stored on a single
36:13
football field, 30 feet high, and they go really.
36:16
And there's never been an accident with nuclear waste in the states.
36:18
Really? Yeah. It's stored extremely
36:20
safely, highly, highly, regularly. What
36:23
is in the news is that the United States
36:25
hasn't come to an agreement on a central storage
36:28
facility, which they've been pushing,
36:30
you know, to put an in Nevada in Nevada is like, yeah,
36:32
we don't want to hear. So I think that
36:34
that, that issue is largely
36:37
under-discussed in terms of nuclear market. The other
36:39
thing is that in terms of renewables, that
36:41
most people don't understand. Renewables. If
36:43
they make up more than a certain percentage of the grid essentially
36:46
require more fossil fuels they,
36:48
they require a backup energy
36:50
source to be able to cycle up
36:52
and down when the sun's not shining, the wind's not
36:54
blowing. So the renewables have their
36:56
place. I'm not anti. But
36:58
I'm definitely anti making renewables 50%
37:01
of the grid because you have to have
37:03
a backup source of energy. And
37:05
so and some of the new nuclear technologies
37:08
and some of these SMRs have technology
37:10
built in or where they can, they can cycle up and down
37:13
far easier than the larger traditional
37:15
reactors. So that's really cool. But
37:17
yeah, the nuclear thing, if you close a nuclear
37:19
plant, fossil fuels got to pick up the pieces.
37:21
So, and most people don't understand that from
37:24
the investing side. I would say that people need to do
37:26
more work when it comes to what to buy.
37:29
I think that you really need to look at the share structure
37:32
of a company and that's something that most investors,
37:34
most retail investors never do. They,
37:36
they read the, you know, the online presentation
37:39
and they see that it's you know, maybe
37:41
it hasn't performed as well as the others. So it's got to make
37:43
up for lost time, you know, it's it's,
37:45
it has a smaller market cap, or I've got
37:47
this guy that I've got that guy on the team they're right next
37:49
to this other. And those sorts of things
37:51
are kind of like the cute things to
37:53
look for on the presentation, but you really
37:56
have to look at the Sheriff's structure, how the company is structured
37:58
in terms of the free float, in terms of the
38:00
insider ownership institutional. How many
38:02
outstanding Morrison options there are and how
38:04
that might affect the stock going forward. And
38:07
yeah, and then the ETF flows, it's
38:09
all about flows. Valuations don't matter anymore.
38:11
They just don't look at Tesla. Look
38:13
at ribbon that doesn't matter. You
38:16
know, you look at the AMC, some of these wall
38:18
street bet, squeezes, valuations
38:20
don't matter anymore. It's, it's a fun flow
38:22
of funds story, and that's likely
38:25
going to have these pullbacks. We're
38:27
going to have these pullbacks, but it's going to continue to
38:29
increase. Got
38:31
it. Got it. Actually, I just, I just remembered something. I
38:33
don't know if you've heard about Dorian I'm luxury. You've heard of 3m.
38:36
Is that a legitimate, I guess over 15
38:38
year period, as many, is that a legitimate competitor
38:40
to nuclear energy? Is that something that can be
38:42
an actual substitute to nuclear, a better substitute
38:44
to nuclear? You know, that's, that's a tough one
38:46
and I don't necessarily have the best answer for that.
38:48
I think it's still something that's being worked on.
38:51
I think that it has a lot of. I believe
38:53
that there is technology that involves using both
38:55
3m and uranium in the same reactor.
38:57
I don't know if Dorian can replace
39:00
uranium and the reactors that are already constructed.
39:02
I don't believe it can, without some
39:04
modifications, I could be wrong on
39:06
that, but I'm not a nuclear engineer. But I do know that it
39:08
holds promise and it's still, there's definitely
39:10
still research and work being done into it. I think that
39:12
there's a future for Florian. So
39:14
I think that, for example, like the Chinese
39:17
that are having these build-out plans for
39:19
having 200 gigawatts of nuclear in
39:21
my, from my understanding, that's all,
39:23
it's all uranium with their builds that
39:25
they're planning. So I don't see it as
39:27
a disruptor necessarily
39:30
to be investing thesis. But
39:32
I think that there's great promise for throwing them in the future
39:34
for sure. Great, great, Justin,
39:37
thanks again for coming on. You can find [email protected].
39:40
Sounds good. Thank you..
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