Brandon Munro – When the Needle Starts Clickin’ it’s Where I’m Gonna Dig (Transcript)

uranium yellowcake

Interview with Brandon Munro, CEO of Bannerman Resources (ASX: BMN).

Munro gives us a detailed response to the question, ‘Last year was another uranium trainwreck. What is happening?’ Uranium investors are desperate for some good news; it’s been all too long since they heard any. However, Munro explains in this interview that beneath a surface of squalor lie plenty of reasons for investors to feel a little more chirpy. However, there are also some reasons investors need to stay grounded.

If investors buy into the uranium macro story, they simply need to keep their faith. Munro argues all the uranium market requires is a sentiment shift in order for investors to begin seeing results. However, there are a few more substantial pieces of verifiable information; there are signs of things moving behind the scenes, and indications spot price could decide to awake from its prolonged slumber. Industry insiders claim UF6 reserves, held by utility companies, are all but gone. EUP conversion price has risen by 400%, unbeknownst to many investors. The price of uranium enrichment has also risen from US$30 to a more sizable US$50.

The information presented by Munro is positive for investors, but let’s stay calm and pragmatic. Nothing has changed just yet. Additionally, Munro, like many industry experts, explains uranium is very unlikely to reach the US$150/lb peaks of the previous cycle. Instead, a sharp peak of US$90/lb is seen as more feasible, followed by a fall back to a stable and consistent US$50-60/lb. There is no nuclear renaissance hype in the present day to drive prices to their previous highs.

Munro also touches on some issues that have been doing the rounds in the Crux community as of late, specifically the Sahel terror situation and the disastrous impact it is having on some mining companies.

Bannerman Resources itself hasn’t seen a great deal of share price movement this year, but Munro claims it is primed for growth in an imminent bull market, given its strong, experienced management team and solid portfolio of assets in favourable jurisdictions.

Interview highlights:

  • Difficult 2019, What’s to Come in 2020?
  • Uranium Inventories: A Historical Overview & Problems Arising
  • Markers for Investors: When is the Market Going to Recover?
  • Joint Comprehensive Plan of Action: What’s Changing in the Geopolitical World?
  • How will Political Turmoil Affect the Uranium Market?
  • Return of the Peaks: How Quickly Could it Happen and is it Outright Possible?
  • Future for Uranium Juniors
  • A Look into Bannerman: Importance of a Seasoned Team and a Mining-Friendly Jurisdiction

Click here to watch the full interview.

Matthew Gordon: Hi Brandon. We last met at the World Nuclear Association event in London where you sit on a couple of committees.

Brandon Munro: I sit on a working group that is producing the next nuclear fuel report. It was released in September, in 2019, so we have now started kicking off with the 2021 report. So I am involved in three of the working groups and I chair the working group that determines the demand projections for nuclear fuel projections out to 2030.

Matthew Gordon: You have had a few meetings in London this week, a few working group sessions this week, you kindly agreed to come and tell us a little bit about what you are discussing. So, last year – difficult year. Another difficult year for Uranium. I’m not quite sure anyone knows what’s going on. Do you?

Brandon Munro: I can hopefully share a couple of insights with you: what we have got is an extraordinary situation where the visual part of the market, which of course is the spot price and the non-existence of any real term volume.  There is no real price discovery, but the extent to which this exists in the spot market, we’ve got something that just looks dull, boring, disappointing and that’s had a corresponding effect on most equities.  It has been carnage out there for the last year for many, many companies. But what we can see taking place under that visual surface veneer, I think is very positive for the sector.

Matthew Gordon: Let’s look at a few of those moving parts:  behind the curtain, because people talk about the macro story. There is billions and billions of dollars of nuclear reactor infrastructure being built across the world, in multiple jurisdictions and countries. And people focus on Germany, reigning things back, the French did, now they are not. But there is more to it than that in terms of that infrastructure build out, but I don’t want to talk about that today because I think that is well covered. Can we talk about the inventory side of things because I think you have talked in the past about different piles of U308 and UF6 and EUP, what is happening there?

Brandon Munro: What we are seeing is inventory tightening.

Matthew Gordon: What does tightening mean?

Brandon Munro: The sector always exists with a lot of inventory. That’s been the case for the last 30-years. It is not helpful to look at the absolute total amount of inventory that is calculated throughout the sector.  You need to understand where that inventory is held. Inventory that is held by the Russian government or the US government or Chinese stockpiles, that is kind of interesting, but it doesn’t dictate anything in the market, because that material is just locked up for strategic purposes.  The relevant part for investors and the price, is mobile inventory; what inventory is available either to supress demand or to be sold into the bid when price goes up. Because that is what is interesting to an investor; is that going to suppress a price rise?

Matthew Gordon: Absolutely.

Brandon Munro: And what we have seen there is a tightening. In U308, we have seen tightening, largely because if the deficit that we have got at the moment. So even after allowing for secondary supplies, we have run a 20Mlbs deficit for the last couple of years. So that is being drawn down, predominantly by utilities underbuying. But what I find fascinating, as you mentioned, you have got three forms of Uranium in the nuclear fuel cycle. And for the listeners, you have got: U308, which is the mined concentrate. That has been subjected to conversion and conversion is a service that is applied to the U308, that the utility pays for, that turns U308 from a powder, or yellowcake, into a gas; Uranium Hexafluoride. And that is still a homogenous commodity because it is just UF6. From there you get enrichment, again, typically a service paid for by the utility where the Uranium that they have bought off a mine, then goes to enrichment, to the specifications required for their particular type of reactor technology.

In the old days, that’s how it worked. The utilities would buy the Uranium and they would pay for the conversion service, they would pay for the enrichment service. But what’s happened since Fukushima, when we had reactors come down, particularly in Germany and Japan, is inventory started to build up, not only in U308 but also in UF6 and in EUP; the enriched Uranium product. And that has been a problem for our market because you have a substitute ability between those three forms of nuclear power. And not only can the utilities arbitrage between those three forms; if they don’t like the price they are getting in U308, then they can go to UF6 or EUP. But they can also ignore the time criticality of planning before in the old days, they would have to have bought their U308, two years before they needed it, because it takes a lot of time to transport and move through that cycle.

Now, if they sort of mess up on the planning, well that’s okay because there was UF6 available that they could buy one year out from when they needed it, or EUP which they can buy 6 months out from when they need it.

And that has contributed to the utilities being able to hold off on re-starting the contract cycle.

Back to what’s relevant today and why I am saying that the sector in the market is tightening in a very favourable way. First of all, UF6 has tightened almost entirely. So I have just been to a room with people who plan in this sector, and what happened, as you know, a couple of years ago, Covidien put the Metropolis conversion facility into care & maintenance, and cleverly, they bought all of the UF6 they could find. All of the mobile inventory they could find in the form of UF6, they bought up.  And they did that because they had conversion contracts. And when they closed the doors on Metropolis, they would have to continue delivering into those. So UF6 is very tight. Even so much so that a few months ago, we saw Uranium Participation Corp. swap out their UF6 for U308 and take advantage of that arbitrage.

We’ve also seen a tightening in enrichment and that has been exacerbated by geopolitical concerns around Iran sanction waivers, and maybe we can come back to that. Se we are seeing a UP tightening: U308, we are also seeing tightening but not to the same extent, hence why we have got $25 Uranium, or $24.50 Uranium.  But if you look at what happens when those markets tighten, UF6, in the time frame I have described, that has gone up 400%, spot conversions. So conversion is the price of the service, so the difference between what you pay for UF6 and what you pay for U308. 400%. And that has been a wake-up for the utilities because many of them forgot that those sorts of increases are possible.

Matthew Gordon: So that tells us something. What about the enrichment component? Has that gone up?

Brandon Munro: Yes, also. Not to the same extent but it has gone up from mid-thirties, so it is measured as USD per, the SWU price, the Separative Work Unit, gone up from mid-thirties to about USD$50. So, that is also a healthy increase.

Matthew Gordon: This is what you mean by ‘behind the curtains,’ there are things going on which are indicative of a movement, or the need for a movement, relatively soon. So, why weren’t these conversations happening at the beginning of 2019? Because the numbers were starting to move in 2019, but they haven’t had an effect on spot, obviously there aren’t that many contracts being written, so how do you work out where the threshold is? Where is that critical threshold that these numbers need to get to. Where are the markers for investors to actually know when this market is going to go? It feels like not too many people know what’s going on in the Uranium space at the moment.

Brandon Munro: I’ll tell you all that it needs, because, as you know, I’ve been in meetings in London for the last couple of weeks and I get asked the same question: what’s the catalyst?

You only need a sentiment switch for this market to tighten. And that sentiment switch can come from anything, so if we use the examples now of UF6 and enrichment; in UF6, when sentiment was low, Covidien were able to buy all the UF6 that they needed to buy, and they did that. The moment the price started to go up, the mobile inventory disappeared.  And that is a fact in this market; there is an inverse relationship between the mobility of inventory and the price; as the price goes up, inventory disappears. And we even saw that, talking to some of the traders as I have over the last couple of weeks. We even saw that in November, October, November when we started to see a bit of an increase in the Uranium price, it went up by 8% in a couple of weeks, and the inventory, the availability of U308 vanished. It only started to come back when the price softened again and the various parties who had it to sell figured that there was no time value in money at that point.

Matthew Gordon: Sentiment of utility buyers?

Brandon Munro: Correct

Matthew Gordon: Nothing to do with retail, nothing to do with institutional buying?  

Brandon Munro: So let me try to explain that a bit further and put some numbers on it.

So, maybe sentiment is a little bit wishy-washy, but what we are really talking about is their view of the medium-term price and what effect that is going to have on their immediate actions, okay. So, some numbers: we are running a 20Mlbs deficit in the U308 sector at the moment, after taking into account secondary suppliers.

So, to put some numbers on that: 2016, the sector was knocking out about 160Mlbs of U308 production. Mined production. That’s now come down 25Mlbs because of care & maintenance in McArthur River, the Kazakhs producing and various other supply disruption that has taken place in the sector. Secondary supplies – all of the various forms: running at about 25Mlbs against a reactor burn up of 180Mlbs. Rough numbers. So, so far, there isn’t enough demand at the U308 level to put pressure on the price. So what we know, is that there is about, instead of 180Mlbs worth of demand, because that’s the amount that’s being burnt up each year, it’s about 160Mlbs of demand. Caused by two things: preferential buying of UF6 and EUP over U308 and utilities wearing down their inventories. So 20Mlbs, if I now translate that into numbers in the US for example, in rough terms, the US nuclear fleet consumes about 50Mlbs of Uranium and they have been underbuying in the last few years by about 20% – so 10Mlbs per annum.  All they need to do is make a decision that they are going to change their policy from under-buying to full coverage, and that’s 10Mlbs. That’s a dramatic effect on that 20Mlbs deficit. Or we could see financial plays into the marker again. In 2018, about 10Mlbs was taken out of the market by Yellowcake and UPC topping up. Again, that’s a 10Mlbs swing. A swing like that, particularly if it goes up to 180Mlbs and starts to expose that supply and demand deficit in U308, that’s enough to generate a very sharp price response which will then have secondary effects in terms of secondary buying.

Matthew Gordon: Do you think that there will be a financial impact from players like Yellowcake in the market? Yellowcake have got their own issues at the moment. I don’t see any generalist funds wanting to back it – another team buying up Uranium at the moment, are you aware of any?

Brandon Munro: Yes. But it’s private. We are aware of Family Offices clubbing together. We are aware of banks and hedge funds. But it is not the same model as Yellowcake. Yellowcake is a buy created market instrument with liquidity and hold into the long term. So the other buying in the financial market that we are starting to see is not a sequestration of that Uranium in the way that UPC and Yellowcake is.

Matthew Gordon: It is such a small market; it’s a USD$10Bn market, it’s nothing so the big institutions – it would surprise me if they were to create teams to take advantage of the Uranium space.

Brandon Munro: Yes. And look; let’s face it; investor sentiment is desolate at the moment in Uranium, so for generalists to get involved in the commodity, we are going to need a movement in price. I don’t think we are going see a change in investor sentiment until we see a change in price. I don’t think there is enough potentiality visible in the market for investor sentiment to change price.

Matthew Gordon: Talk to me about the JCPOA please.

Brandon Munro: So Joint Co-operative Plan of Action.

Matthew Gordon: Who are all of the parties involved in that?

Brandon Munro: So it is Iran on the one hand and then you have the UK, France, Russia, China and the US; so they are the co-operative parties. Put in place in 2015 because as you know, Iran was showing signs of building a military nuclear program. The plan was designed to hold off sanctions on Iran in return for Iran complying with certain obligations. Predominantly they were obligations of maintenance and monitoring, unfettered monitoring of their facilities and obligations designed to go further than non-proliferation obligations that go further than everyone else, to put a big spacer between Iran defaulting on its obligations and having the capacity to produce military grade Uranium.

Matthew Gordon: Before Christmas, things started getting more complicated; the US pulled out, plus the actions of a couple of weeks ago by the US, further complicated relationships with Iran. So, can you talk to us about your view on the US and European, well, generally European and allied with Russia as well and how you see that going forward.

Brandon Munro: It’s good to step back a little bit to try and work your way through the detail in the complications here. So, the JCPOA was set up, one of the first things that the Trump administration did was to withdraw. And they did that in a way that withdrew unilaterally. There was a diplomatic scramble by the other co-operative parties to try and keep the agreement on foot.  And what that enabled the Trump administration to do was to re-establish a whole range of sanctions on Iran that were being held off because of their commitment to the JCPOA: oil sales, access to the US financial markets etc.  But what they didn’t do, they didn’t allow those sanctions to extend to the provision of services and fuel to the US nuclear industry. And there was this thing created called the ‘Sanctions Waiver’. And the sanctions waiver needs to be re-evaluated every 90 days. So every 90 days, the Trump administration sits down and decides if they are going to give another 90 day waiver or, are we going to withdraw the sanctions waiver? Importantly for the sector and for the utilities and for listeners, the next sanctions waiver consideration date is 31st January.

Now, what happened, November 15th, Mike Pompeo announces that the Trump administration is withdrawing the waivers in respect of Fordow enrichment facility that was being used initially under the JCPOA to create medical isotopes but one of the progressive breaches of the agreement, the JCPOA that Iran announced, was enrichment of civilian grade Uranium rather than just for medical isotopes. Now, Fordow is a tailor-made facility for the electorate in the US, built into a mountain, real James Bind stuff. Clearly it was set up to produce military grade enrichment; when you look at the configuration of the cascades and that sort of thing, so it is an ideal target for the Trump administration to show that they are really serious about this.  December 15th coming up, the utilities become very concerned because no-one was particularly clear who was involved in the Fordow facility and when the waiver gets lifted on December 15th, it could have been mayhem. Now, to understand why the utilities are concerned, half of the enrichment services provided to US utilities comes from Russia; some of it directly from TFEL and TENEX and some of it is effectively resold by other enrichment providers. And the excess capacity in the Western world of enrichment, isn’t enough to fill that gap. Not only that, but RosAtom, as the Russian nuclear giant, it is involved in absolutely every aspect of the civilian nuclear power cycle. As it turned out, TFEL withdrew from its involvement in the Fordow plant because it was providing assistance with its medical isotopes and according to them, any civilian enrichment creates contamination which makes that program impossible. So that one sort of washed over: December 15th came and went and all was okay. So now we fast forward to what you were talking about with the huge escalation of tensions in Iran – a month before the next sanctions waiver. So, there is a lot of concern from US utilities, but also European utilities that if that sanctions waiver, or the entire deal falls over, the Russian nuclear providers are going to have to make a decision; do they back Iran and continue to support Iran? And be restricted from providing a whole range of services.

Matthew Gordon: It’s not just the Russians here; you’ve got the Brits, the French, the Germans, there’s a lot of superpowers in the G7 who are involved in this. G7 plus Russia. They don’t agree with the American stance and position – certainly not what happened two weeks ago. And I think there has been a lot of posturing going on, and I don’t want to get this into a political conversation, I want this to be about Uranium, but the reason why Europe hasn’t followed the US is that they think the Iran deal is a good deal.

Brandon Munro: Correct.

Matthew Gordon: It’s working and I think a lot of people in the US think it’s working, but it’s rather unfortunate timing, because again, there is the perception, but the perception is that in an election year, going to war has traditionally been quite a good vote-winner. So, you know, that whole mess has been slightly discredited with the timing, but what impact is that going to have, if any, I’m going to bring it back to investment, okay – is what’s going on in Iran going to have an impact on the ability for equities, Uranium equities to move forward, or is this something that is actually going to be another negative impact, another negative event in the world of Uranium equities? 

Brandon Munro: Let me just clarify one thing before I answer that question, yesterday, so until very recently, all of the other parties, ex-US, were declaring their support for the deal and doing their upmost to keep the deal on.

Matthew Gordon: Thanks for giving me an update, good,

Brandon Munro: Just yesterday, they invoked the dispute clause under the JCPOA.  Article 36.

Matthew Gordon: What does that mean?

Brandon Munro: That basically means that there is a 14-day dispute resolution and what Boris Johnson has said is that he would like to see a new deal which he aptly named the ‘Trump Deal’.  So, I think what they have realised is that they need to try and get Iran to come back to the negotiating table and renegotiate the whole JCPOA.

Matthew Gordon: So that is hot off the press.

Brandon Munro: Hot of the press. Which helps to contain or to eliminate the sanctions exposure of the other countries.

So how that unfolds; we have got absolutely no idea. And what effect that has on the sanctions waiver that is considered on the 31st, if such a thing still exists – so that has created a new layer of uncertainty. Now to go back to your question, it’s a difficult outcome to pick because it depends, let’s just ignore the dispute that has been called for the moment, it depends on Russia’s reaction. I think they are so dominant in the nuclear sector and it is such a profitable, effective business for them that they would throw Iran under the bus, but you can’t put a significant probability on that because it is so wrapped up in Russian foreign policy which has been extremely successful in the Middle East.

Matthew Gordon: It has. Most people don’t understand that.

Brandon Munro: That would then, so if they were sanctioned, if Rosatom as a whole were sanctioned, that would lead to a period of chaos in the nuclear supply chain, because they are so pervasive in everything, particularly what the traders are doing; much of the supply of U308 these days is coming from carry trades and so forth that the traders are involved in, but they often have so many chains of custody with those supply chains that most of the time you have got Uranium 1 in there or Rosatom in there somewhere, and there’s a chance that it could invalidate all of those. As well as the effect on enrichment.

Matthew Gordon: Why is the US taking a risk on this? It is a no-size industry, it is negligible compared to oil. Obviously, Iran is sitting on a lot of oil, again, this is a conversation for another day, 50 million barrels discovered last year, new barrels discovered last year, and this sector, geopolitically is the messiest thing I have ever seen in any investment class because it is a very emotive topic, why? Why are people so wound up about it? Investors get wound up about it. Countries get wound up about it.

Brandon Munro: Gets you and me pretty excited.

Matthew Gordon: I’m excited because I think there are some great opportunities. I think there are some great companies just sitting here waiting for people to just get back to doing business and stuff.  For sure. Again, maybe we should talk about that, it is another big topic that, that’s another geopolitical component that I know we did talk about way back.

Brandon Munro: You asked me what effect this is going to have for equities. So, there is a period of, if it unfolds that way, there is a period of confusion and chaos and hard to know what equities would do. Into the medium term though, it is going to be beneficial for U308 and beneficial for equities. Number one: it is an important reminder to the buyers in the sector, the utilities that geopolitics does matter and geopolitical risk does play a role. So they can’t just hoover up all the material from Kazakhstan that they want, at whatever price they want, they must have a diversity of supply which leads to a stacking in the price that they pay for Uranium.

Matthew Gordon: Because the supply chain may break further down the line, they need to get certainty.

Brandon Munro: Yes.

Number two: if we see a break in the chain of custody amongst all of these trades, then it is going to push the utilities back into dealing directly with producers which in the medium term is a good thing for transparency in the U308 price and it is also going to lead to more price discovery. Whilst the traders argue that they play a very important role in ensuring the efficient operation of the markets and so on, where we are at the moment is that they are playing a role in suppressing price discovery through the various instruments that they have got.

So positive in the medium term, unknown in the short term. But with any unknow, we could see a very sharp price reaction in U308 which would be extremely positive in the short term.

Matthew Gordon: I think people would have argued that at the beginning of 2019 too, wouldn’t they? So what lends you to feel that it is more the case today than it was a year ago?

Brandon Munro: Because we are talking about the scenario where we have sanction waivers lifted and we have chaos in the sector.

Matthew Gordon: We get a lot of commentary from retail investors, family officers, fund managers, CEOs of Uranium Juniors and they are talking about a return to the peaks of $130, $140 Uranium, sitting at $25 today, I’d love your view on that one. But the other thing they talk about is the speed at which that returns, the speed at which the share price returns and it’s a hockey stick, of course. Those are great stories. I don’t believe them. But they are great stories. What’s your position? Do you think we are going to see a repeat of the last cycle? Honestly?

Brandon Munro: Yes. I don’t think it’s realistic to expect a repeat of that degree of volatility.

Matthew Gordon: Why?

Brandon Munro: Well, when you look back at that volatility and I was in the sector at the time but I was working as an M and A lawyer, so we are on the M and A side; take-over defences and so forth and I can remember, there was a lot of commentary about Uranium going to $200. And it was a great unknown. The extent of reactor builds was an unknown. Obviously an up-side unknown; there was a nuclear renaissance, there was a huge amount going on. It was a demand story in those days. And when there’s enough people saying Uranium could go to $200, as it sails through $100, it still feels like a viable buy to keep buying it up.

And we still had some other dynamics in terms of Chinese being very early in their procurement cycle, they had big plans which are now back on track, but back then they were significant. Those dynamics don’t exist at the moment. Instead of being a demand story, what we’ve got today is a supply story. A lack of supply story and a lack of incentivisation. I do believe there will be volatility and I think the opportunity for this market to slowly balance out at the right price, I think that opportunity has slowly been dissipating over the last 12 to 24 months.

We would need price signals today, and really over the last 12 months, to incentivise enough new production to create a balanced market. So an overshoot is certainly likely but I don’t see it being likely that we will see an overshoot $120, $130, $136 that we saw last time. It shouldn’t be part of an investor’s plans.

Matthew Gordon: Lots of companies talking about the need for a $50, $55 spot. Just to be able to break even. Then you have got to incentivise to actually make some money, because that’s the name of the game  

Brandon Munro: Yes.

Matthew Gordon: Whatever that number is: $65, $70. It feels like today, a long way away.

Brandon Munro: It feels like it.

Matthew Gordon: But it may go quickly. So you were saying that it may quickly go up to those sorts of numbers but then the controls in place or moderation in the market, or a little bit more savvy investment strategy now compared to then, will temper that growth point? Or are you saying that this is a slow and steady growth there? Again, because we have seen some numbers from various analysts which suggests that this may hit $40 by the end of next year. Which obviously doesn’t do anything for anyone. So what’s your thoughts?

Brandon Munro: Yes, that’s right; $40 doesn’t do anything for the sector.

Matthew Gordon: It might as well be $25.

Brandon Munro: Correct – but that is exactly the point; in terms of fixing the supply disruption that we have got today but coming down the barrel particularly when Kazakh production starts to taper off, it could be $25, it could be $15, it could be $40. It doesn’t incentivise anybody.

Matthew Gordon: The Kazakhs have just announced that they have over-produced by 4%.

Brandon Munro: The Deputy Minister, are you referring to that announcement?

Matthew Gordon: Yes. They don’t seem to be following their own guidelines, are they?

Brandon Munro: I don’t know.

Matthew Gordon: Okay.

Brandon Munro: There’s a number of statements; I did ask Kazatomprom that question over the last couple of days and they didn’t know either.

Matthew Gordon: So where does that leave the rest of us?

Brandon Munro: What we’ve got, we have this situation where we need a significant escalation in the uranium price to even start to put new projects into the game, and as you say; is it going to be enough for them to get financed and constructed and built? So the ranges that you are talking about – I’ve got no problem with Uranium prices getting there and staying there. And I think there is capacity for an over-shoot. I just don’t see $136.

Matthew Gordon: What do you see?

Brandon Munro: I can see an overshoot to $90.

Matthew Gordon: Okay, sustained?

Brandon Munro: By definition it is an overshoot, so not sustained.

Matthew Gordon: Because at the beginning of this conversation, you talked about some of the controls in place and some of the people who can control the market to a degree. And I have asked this question continuously over time and people say it’s impossible for any big players to control the market. That may or not be the case, personally I think it is in the interests of people like Kazatomprom, like Camaco, not to let the market go too crazy because no one wants 500 entrants in the market place like last time round. At the same time, we have had conversations with CEOs, talking about roll ups and consolidations and so forth, listened to Rick Rule saying there are perhaps 6 to 10 players who will run in the market. There are 50 today. So obviously, people are expecting a lot of change in the structure of Uranium producers. What’s your take on what the horizon will look like? How do you see the junior mining space playing out? Because there are like 5 biggish boys and then there’s a bunch of others.

Brandon Munro: Well, if we talk about capacity of the market, volatility and capacity to overshoot.  I think for an investor, they have to be saying, is there investment in the category of producible pounds in the next   cycle, or is it something that could come on in the cycle afterwards. Because if we do see an overshoot, it’s only the companies that are in a position to benefit from that overshoot that are going to produce a superior result. Sure, there might be a little bit of a bubble amongst all Uranium companies with an equity’s response, but at the end of the day, particularly for institutions and investors who need liquidity, if it is not producible pounds, then in a sense, whatever the price is doing in the next cycle is irrelevant. Perhaps it will help their cost of capital which might mean that they are diluted a little bit less, but you’ve got to be able to produce pounds into the next cycle.  As you know well, there are very few companies in that small universe of Uranium investment that can do that.

Matthew Gordon: To me, that is some big red flags across the market. People need to understand what good looks like and what not so good looks like. Previously we have talked about teams who have produced and sold into market. We think that is really important because it is a lot more complicated than other sectors. We have talked about the need for the asset to be of a scale; scale is really, really important here and to be able to mine economically because again, the basic rules of mining still apply. Companies with a sense of what the economics looks like. This gives you some cues as to whether to invest in them or not.

But, you guys for instance? What’s your team’s structure? Have you got people on board who have been there and done it before, in a cycle?

Brandon Munro: Absolutely.

Matthew Gordon: You have? Okay.

Brandon Munro: And for us, that has been extremely important. So if you look at who we’ve got in the team. So in Namibia, our chairman is Mike Leech. He was the Managing Director of the Rossing mine at a time when it was the largest Uranium mine in the world. But before that, he was for the last 15 years, he was CFO so he was involved in all of the marketing and contracting and knew everything about that, to do with Rossing, which was a dominant player.

Matthew Gordon: Let’s take that; you say that, when you go and have conversations, sorry for swinging it back to Bannerman and I’m putting you on the spot here a bit, but I want people to understand the mindset of the junior miner board, okay. You’ve got an experienced team, when you are talking to – whether it be funds, I know that you have a lot of talks with people in China because the scale of your project would suggest that that is probably where you are leaning but I’m sure you can tell us another time. What are they looking for? Is that an important factor to them? I certainly think that it is, but do they?

Brandon Munro: Absolutely. Because as you say, you say; Uranium mining is a little different and I know there’s a lot of understatement in that.

Matthew Gordon: Yes.

Brandon Munro: It’s critically different. You need two things at a senior level: you need that understanding of Uranium; there’s people who have done it before, but you also need to know the country.

Matthew Gordon: Okay.

Brandon Munro: So we’ve got Mike Leech; so in terms of knowing the country, former President of the Chamber of Mines in Namibia and former Chairman of the Namibian Uranium Association, the list goes in. In my opinion, he is one of the most senior mining executives in the country.

Matthew Gordon: So Namibia is known for mining. What is the main mining output?

Brandon Munro: Uranium and Diamonds. It does have Gold, it does have Copper, Lead, etc. Mining is extremely important to Namibia. It’s a big chunk of its GDP and the majority of its foreign earnings and Uranium is half of that equation.

Matthew Gordon: So it is important that you get into production and generating cash and employing people.

Brandon Munro: And it’s not just Mike, our Manging Director in-country, Verner Evault, he was our manager at Rossing, he was born Namibian, very well known in-country. Very great reputation. Dustin Garrow is our marketing advisor.

Matthew Gordon: We have interviewed him a couple of times.

Brandon Munro: Dustin sold Namibian Uranium for Paladin, he obviously knows Namibian Uranium because he has been in the industry for more than 40 years. But, he knows Namibian Uranium, he knows exactly what needs to be done to get it out of the country. We are not going to have a mishap in our first shipment and all of that stuff that can go wrong in that sector.

Matthew Gordon: I had forgotten he was involved with you guys. We like him a lot. He just talks common sense. I encourage people to watch the interview with Dustin.

Brandon Munro: And as you know, I lived in Namibia myself for more than five years so I know the set up in Namibia.

Matthew Gordon: There’s a lot of things going on in Namibia like unemployment is quite high. You sort of look at what’s happening in various other countries in Africa, is Namibia a really benign environment or should people be worried about the jurisdiction?

Brandon Munro: From a living their point of view, it’s entirely benign. I lived there with my family, with my four kids for more than five years and I never even had my car broken into. I’d liken it to living in large parts of Australia.  Good infrastructure. Very strong development agenda, as you know, because of unemployment and fiscal reasons, etc, etc. But the other thing is, because the country is largely built off diamonds and then Uranium, there’s a very strong not only acceptance of Uranium but respect for Uranium. You go into Swakopmund, which is the coastal town near our project and half of the infrastructure has been built by Rossing. People remember, appreciate and value that. And that is so different to so many different Uranium mining jurisdictions. Even the little NGOs, the interest groups that we have got there that oppose nuclear power and oppose  and Uranium mining, we let them have their voice, I’ve been in debates with people there; it’s all very respectful but they don’t get any traction with local people because people value and are appreciative of what Uranium mining has done for the whole country.

Matthew Gordon: You are going to come back and tell us the Bannerman story properly.

Brandon Munro: Okay. I’d love to do that.

Matthew Gordon: In the next couple of weeks, probably online when you are back in Oz. It’s good to see you over here. Really is – it’s always good to see you over here. Perhaps you can share some of your WNA conversations with us as well, when we talk.

Brandon Munro: Great. It’s always good to catch up. Thanks for making the time.

Matthew Gordon: I appreciate it. See you soon.

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

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uranium yellowcake

Bannerman Resources (ASX: BMN) – 5 Things You Need to Know About Section 232 (Transcript)

We interviewed Brandon Munro, CEO of Bannerman Resources (ASX: BMN), the Namibian Uranium explorer. He joins us to talk us through his recent article about the implications of Section 232 as well as the WNA Fuel Report and how it is put together.

Click here to watch the interview.

Matthew Gordon: Good morning Brandon, how are you?

Brandon Munro: Very well Matthew. Thanks for having me on again. I really enjoyed chatting.

Matthew Gordon: That was a great conversation I thought, a lot of people got a lot out of it. It’s good to be talking again. So, a few things have happened since we last talked. Why don’t you give us an update on the company? What’s Bannerman been doing?

Brandon Munro: Yeah well as many of your audience would know, Bannerman Resources has the Etango project in Namibia. It’s a very, very large project. 270Mlbs of U3O8. Namibia is a fantastic jurisdiction to be doing business in. Not only is it a great country for getting things done, it’s a lovely part of Africa, and I’ll in fact spend some time there with the family next week which we’re looking forward to. But it’s also a great Uranium mining jurisdiction. We’ve been mining Uranium there for 45 years, all of the infrastructure is in place. Everyone from the society to the government is very comfortable with Uranium. Very grateful for the contribution that Uranium has made to the country and for that reason we’re permitted. And we just don’t have many of the challenges that are particular to the commodity of Uranium, that are experienced in other jurisdictions. And so that’s our project it’s very advanced as you know, we completed the Definitive Feasibility Study (DFS) back in 2012. The main activity that’s going on the ground, is engineering, picking off aspects of that original DFS and some of the optimisation work done since then, that could do with a refresh. There’s a lot of technology that we looked at back in 2012 that existed but wasn’t sufficiently proven that we were prepared to affect what is a low risk profile of a project by introducing new things. Now obviously things have changed and things have happened and some of those technologies have fallen by the wayside and some of them are well and truly proven. And examples would be some of the nano technology that we’ve successfully deployed with our program. So we are working on that and because it’s such a massive project, an average of more than 7Mlbs per annum, even relatively small and incremental improvements do make a big difference. And we’re continuing that process until we get closer to a market that enables us to finance, at which point we will just draw all of those pieces together and update the DFS work that we’ve done.

Matthew Gordon: Well that’s a really nice segue actually. The old phrase would be, your shovel ready, ready to go. There’s some optimisation which you can look at in terms of the technologies. But the big elephant in the room that everyone’s been talking about and getting excited about, coming on the 13th or 14th of July this year is the announcement around the Section 232 petition. You have done a lovely ‘five things you need to know about a section 232’. You’ve kindly of agreed to talk us through that. I read and I love the simplicity of the way that you laid it out, but it was very intelligently laid out. So, can we run through those five things you need to know?

Brandon Munro: Yeah. Love too. And I enjoyed writing it so I’m glad you and a few others enjoyed reading it.

Matthew Gordon: It’s been really well received. But for those people who haven’t read it or perhaps not quite aware. So, UR-Energy and Energy Fuels, with some help from a couple of other people, have submitted this petition to the US government. Why don’t you tell us about that just very quickly, then we’ll get into the five key points?

Brandon Munro: So, they submitted a petition back in January 2018. And it took the whole market by surprise, including the utilities and those of us on the production side. And it came at a time when the market was starting to improve. Cameco had just announced a couple of months earlier that they were putting McArthur River on to temporary care and maintenance, and within weeks we saw Kazatomprom announce supply cuts. What we saw was a market that was already showing good solid green shoots of improvement, that was suddenly surprised by this action. And the petition had the effect that a lot of bids were withdrawn from the spot market. Whilst utilities and others, and traders, started to try and make sense of what the implications would be. And for a lot of people they, although they’d been a little bit of activity in Section 232 for Aluminium and Steel and so forth, for many, many people they really had to get on Google and start figuring out what this was all about. And we’d been obviously talking to utilities a lot. I’d been in the room with a bunch of them through WNA only a week before the announcement was made and they were actively preparing procurement strategies and procurement programs. In other words, that’s the key precursor to reigniting long-term contracting, and all of a sudden, they were all iced. No one was prepared to make a move until they knew what the implications were and what it actually meant. So that was a petition. Now the petition isn’t the investigation. The petition is simply a request or a petition that the Department of Commerce picks up the investigation. And it’s a bit unusual. The ones that are well known, Steel, Aluminium, autos; they’ve all been initiated by the Department of Commerce themselves with a bit of insistence from the White House. This one was a little bit different and what followed was another six months of uncertainty whilst we waited to know if the Department of Commerce was going to pick the thing up, ignore it, or do something totally different. And so that broke in July 2018. And at least at that point we knew, well something’s happening, and the statutory timeframes that exist under that Trade Expansion Act started to kick in. Fast forward almost 12 months as you say, the process is coming to the end because the Trump administration now needs to decide on whether they accept the Department of Commerce’s recommendation, that there are trade actions that threaten to impair national security. And if so, what actions if any will be taken. And as you say that’s 13th of July in the US, 14th of July for most of the rest of us.

Matthew Gordon: Why don’t we look at the five points that you’ve identified that people need to think about here. And the first thing is, what’s the likely outcome? That’s a big question.

Brandon Munro: The point that I’ll make is there is an array of outcomes here. And it’s impossible to say ‘this one’s more likely than that one. And this is the one that I think is going to happen’. And I know that some of my friends will start poking fun at me because I am a lawyer by background. But I promise you I’m not one of those lawyers who is too scared to ever make a prediction as you will remember from the last time I was on, I’m prepared to put myself out there if I believe something. In this case, there are so many outcomes. We’ve got an administration that has benefited in various sorts of negotiations by remaining unpredictable and has a history of approaching these things in a very unconventional way. And also, when you look at the merits of the case, I think you’ve got a very even hand between the utilities who are opposing the investigation and any remedies. And the proposition on which it’s been based, which is the US imports almost all of its Uranium, which opens it up for a potential impairment of national security.

Matthew Gordon: You said something which I think which we haven’t really been discussing with the Uranium companies. You’re saying that the utility companies are opposing the basis of the petition?

Brandon Munro: Yes, very strongly.

Matthew Gordon: And on what basis are they opposing it? What’s the problem that it will cause for them?

Brandon Munro:  The primary argument from the utilities is that any trade action, particularly the quota, and obviously a tariff that will increase their costs. And they obtain some economic analysis that they have on their website and that they’ve filed with the Department of Commerce during the process, which indicates somewhere between a $500M and $800M impost compared with what they can currently buy on the spot. Now there’s a few arguments that you might levy against that. For a start, they aren’t paying what they can currently buy on the spot, they are paying blended prices and that’s quite transparent and significantly above what they can buy on the spot at the moment. But the theories and the concern from them is that a 25% quota would create a marginal cost of at least $70/lbs in order to incentivise enough US production to meet that requirement. Now the argument with the utilities, which I think has been very intelligently and strategically made, is it’s a tipping point argument. So as many of your listeners would know, U3O8 as a component of nuclear fuel, is a very small part of the cost of producing nuclear power. The cost of Uranium is typically about 6% of the cost of producing nuclear power. The vast bulk is capital then followed by things like green tape, compliance; all of the necessary procedural matters that you have to have around it. And then followed by nuclear fuel of which Uranium is, the U3O8, is only a small proportion. So, 6% of the cost of American nuclear power is Uranium, compared with say gas or coal where it’s often up to about 80% of the cost. The cost of nuclear power and this is one of the beauties of it as an energy source, is its relatively price inelastic to the cost of Uranium. The utilities have had to frame up their argument as more of a tipping point argument. They can’t just say ‘oh you increase the cost of Uranium and we’re going to go out of business’. They have to point to vulnerable reactors in the merchant power markets, that are already under pressure largely because of renewable subsidies but also because of cheap gas. Perhaps there are only one or two reactors which make them less economic to run than a large power station with four or six reactors, and they basically said any further pressure might be the straw that breaks the camel’s back here. And President Trump, you will have the responsibility for job losses if we need to close any more plants. So that’s been the strength of the utilities argument and we need to caution Uranium investors that that can be a very strong argument when they are such a big employer.

Matthew Gordon: I can see that. But maybe we should discuss that later because I think it comes up in one of your points when you talk about the different scenarios. But to just finish off on this, the likely outcomes – you don’t think there is one because the unpredictability of Trump seems to be the key driver here. There’s not going to be any single outcome. But who can tell. What happens if there is a delay? What’s the impact of that? This 180-day component which the automotive industry took advantage of.

Brandon Munro: Yes, so there is the possibility of a delay. It could be a temporary delay. Under the Act, the administration has to make a decision by the 13th of July but it can take another 15 days to implement the decision, whatever that means. There is also the possibility that you might see the administration taking a liberal view of the way that the act is drafted. Which means their obligation to report back to Congress is only 30 days after that. So, they might interpret it in such a way where they don’t have to announce their decision for as long as 45 days. As long as they’re implementing in the meantime. I think that’s fairly unlikely but we are dealing with an unpredictable administration here. The other possibility is that the administration says that our solution or our decision here is to engage in trade negotiations, which then gives them up to another six months. And that is as you say what happened in autos. And I note that the senior representative of the Kazakh government was at the White House just during the week. So that might be pure coincidence. It might be lobbying, or delivering some bad news on the part of the White House. But regardless of what it does, what it does do is give something of a preface for saying there will be trade negotiations and therefore we’d like to buy another six months. It is a possibility. Now what that means is it will certainly test the patience of Uranium investors. There’s no doubt about that. It’s been a long time for us waiting as investors for this to be resolved. It will put a lot of pressure on any Uranium companies that need to raise capital. It will be fine for a company like Bannerman. We’ve still got more than $6M in the bank and a very low burn, so we will sail through. We will be fine. It will probably even open up opportunities for us if we see other companies and their assets under distress. But it will test the patience.

Matthew Gordon: Well that’s a topic which I’ve discussed recently with quite a few Uranium companies. And we did bring it up when we spoke, in terms of junior companies have got so much cash. This potential delay or whatever the timeframe is, it is going to cause people to need to go and raise capital. And the thing is, for investors, they’re in this. I can’t see how investors get out of it, go play somewhere else and come back and come back in. Because no one knows when this thing is going to pop. And I think people are frightened of missing the party when it does. But at the same time, it is deeply frustrating. I’m being told by funds, I’m told by the companies that their investors are very frustrated by the whole process. I agree with you. But we know a couple of companies who’ve had to go and raise money and it’s expensive at this point. But you’re okay.

Brandon Munro: Oh, we’re fine. And what it will do in the medium-term, will be essentially positive. And the reason I say this is a three to six-month delay won’t be long enough that utilities need to change their strategy in the meantime. They will simply sit it out. That will further consume inventory, it will tighten things up in the market but it will put additional pressure on the spring, that is Uranium supply and demand. What it means is three years from now, there will be greater upside volatility on the Uranium price. And in the context of very significant pressure being there already because of the imminency of the US long term contracts rolling off and their need to re-contract. It certainly wouldn’t be all bad. It would just be a difficult period for some companies for the next six months.

Matthew Gordon: The whole thing about 232, people just want a decision one way or the other. It’s almost irrelevant what the decision is. Just decide – kind of like Brexit here actually. Give us a decision. We know where we are. We know how to make plans on that basis. Because there are stockpiles of Uranium, no one’s able to give me a number of what that what that looks like. But at some point, that’s running down clearly and there’s going to be, as you say, a gap in production if we’re not careful if this thing does keep going on for very much longer. The money, or cheap money, is not there to enable companies to get going.

Brandon Munro: Yeah. That’s right. And I think while we’re talking about all this we should emphasise, I don’t think a delay is a probable outcome. It’s one of the many outcomes and we’re going to have a much better idea about this in just over a week’s time. So it is well worth investors having it in the back of their mind and probably building their strategies around what happens if there is a delay. But as you say, any decision is positive because it enables the market to get on with it and creates certainty that hasn’t been there for 18 months.

Matthew Gordon: Let’s talk about the second thing that you mentioned in your document. Investors must have a balanced perspective. Now there’s a question I ask everyone. And I asked you, you gave us your opinion and it’s this fervour, America first doctrine on the one side and then it seems to be the rest of the world on the other. Whether people believe it’s a security issue or a commercial proposition, it’s divided the room. What’s your take? Remind everyone of what your take is on this.

Brandon Munro: I think there are sufficient grounds for the administration to find that their importation of nuclear fuel, whether it’s Uranium conversion, enrichment or fabrication; does threaten impair national security. However –

Matthew Gordon: What does that mean? What does national security mean?

Brandon Munro: Well it depends on the administration. If you look back over time since 1962 when this part of the Trade Expansion Act was introduced. There’s been three dozen different investigations of this nature and only a small proportion of those have actually found that the relevant trade practice threatens to impair national security. But we’ve had it in Steel, Aluminium and even autos. It seems the interpretation of that view is somewhat more concerned than what it has been in recent times. I mean if Mercedes Benz and Hyundai can impair national security by delivering pretty good motor cars, then I have no difficulty finding that a reliance on Kazakhstan for the world’s cheapest Uranium can impair the electricity source for one in five households. What it means? I’ve got no idea. But as a lawyer we use precedent the whole time, and I’ve got three very strong precedents to suggest that we have a situation to impair national security here. Now my take on it though, is that that’s not really the issue here. The issue here, as we discussed last time, is that the world’s biggest industrial economy is fast becoming a nobody when it comes to a technology driven power source that still powers more than a tenth of the world’s electricity, and is expected to grow with strong climate change fundamental policies behind it. How can the US even be in that situation? It wasn’t that long ago that they absolutely dominated the nuclear power industry. And they find themselves not producing any Uranium, not having any conversion capacity, having very little enrichment capacity that they can control and virtually building no reactors around the world. They’ve given ground not only to their Western arch rivals the French, and Électricité de France (EDF). But they’ve also given huge ground to Rosatom out of Russia, CNNC and CGN out of China and even South Korea. So they’ve been relegated outside the top five because essentially of government policy and stress on their domestic nuclear fleet for the reasons that we’ve described. So that for me is what needs to be solved here.

Matthew Gordon: A couple of quotes from you. You say that AHUG which is the American, what does it stand for again?

Brandon Munro: Ad Hoc Utilities Group.

Matthew Gordon: Okay. They have, as you say, cleverly positioned themselves as being vulnerable to Uranium prices. But the Uranium sector itself employs currently about 500 jobs. If it comes back, it may create 3000 jobs. It’s not on the register. It’s nothing. That’s just a medium sized company in the States. But the nuclear industry, about 100,000 jobs. If you say ‘I can buy Uranium anywhere in the world’, the nuclear industry jobs are safe. It’s not an issue. 500 jobs, you don’t have many lobbyists for 500 jobs. Is that part of the problem?

Brandon Munro: That’s part of the challenge for the petitioners and for US Uranium producers and developers. It’s a challenge in the context of an administration that’s been very jobs focused and prefers solutions that can be expressed succinctly and in relatively simple terms. So jobs, jobs, jobs, is a much easier argument to make than some of the more nuanced and equally valid arguments that are being made by the petitioners.

Matthew Gordon: Okay. Well I guess that’ll be answered in next couple of weeks. But let’s try and hypothesise what the possible outcomes could be. Because you talk in your document about quotas and tariffs, and I think five different scenarios or possible solutions, not necessarily one but maybe a bit of all five. But let’s start with domestic quotas.

Brandon Munro: The petitioners for your audience requested a 25% domestic quota. Now to put that in context, they would need to move from current production, which is a bit less than a million pounds per annum to between 12Mlbs and 14Mlbs per annum. The Uranium resources are there, but they’re certainly aren’t shovel ready projects that can turn that on quickly. It will take time, it will take an adjustment period. And as I pointed out, there was a leak from the Department of Commerce to Bloomberg that suggested a 5% initial tariff that escalates by 5% per year. Bloomberg didn’t go as far as reporting if it escalates all the way to 25% or not, but one might expect that it would. And that’s consistent with the general view which is that 12Mlbs to 14Mlbs couldn’t possibly come on in less than about five years. Now the thing is that these leaks are very rarely done by accident. It’s usually, and I dare say in this case, in order to test the waters a little bit amongst the key stakeholders. The leak gets out there and the Department of Commerce and the White House sits back and waits for the reaction.

Matthew Gordon: Which was?

Brandon Munro: Well from the point of view of the utilities, think about it. They’ve been hard at this for 18 months now. They’re almost at the end. They’re not going to give up now. They came back with what I understand was a very strong response to that, which served as a warning that ‘no you can’t test the waters with us on this because that won’t make us happy’. It’s a little bit like someone training for a marathon for 18 months, it’s race day, they’re out and they’ve been running hard for three or four hours and they’re 100 meters from the finishing line. That’s not the point to sit down and have a cup of tea. You’ve got a grit up and finish it. And that’s where we’re at with the utilities. I’m confident that that’s the message that’s come back to the Department of Commerce on that. And I think the domestic quota, apart from the time aspect and the capacity to adjust which was foreshadowed in that leak, there’s also a question of to whether it should be 25%, whether it should be 15%, perhaps even 10%. And it’s relevant because the marginal cost or incentive price that would be needed to push from say a 10% to a 25% is quite significant. There’s enough mid-cost assets in the US that could probably produce at a price of $55/lbs to satisfy 10%. But once you start going beyond that you’ve really got to offer a lot more than that to incentivise these smaller US projects. And the analysis that I cite in my article is that you need to get $70/lbs to start bringing on those extra projects.

Matthew Gordon: And we’re a long way from that. I can’t imagine too many people unhappy about that. Apart from the Canadians and Kazakhs who are producing a lot cheaper than that, which I guess we’ll talk about when we get into some geopolitics in a bit. People should go and take a look at this document and look at the diagram, the Red Cloud KS estimates which you referenced earlier. Let’s talk about quota with allies as an option.

Brandon Munro: So that could take two forms. It could be a quota. Call it 25%. That’s both domestic US production but also would allow for example Canada. So there has been some pre-emptive trade negotiations between the Trudeau administration and the Trump administration. There is an agreement that if there are trade actions on Uranium that adversely affect Canada, there will be a stall of the implementation of those while they are discussed. Canada would be a logical candidate for inclusion. There is a chance that Australia would lobby to be included as well as they were with Steel. And if the US objective here is to try and maintain open markets amongst nonaligned friendly nations, which you can read as non-CIS, non-Chinese nations, then it would be very logical to open the door to Africa as well. Namibia is the fourth largest producer of Uranium in the world and Niger is the fifth largest producer of Uranium.

Matthew Gordon: It’s an interesting one because it’s the equivalent of picking a team at school. You’ve got to work out who you want to be friends with and who you don’t. Because there’s a very clear divide between China and Russia making friends in Africa, where you are. The French, they’ve been there a long time. You’ve got 14 countries that speak French in Africa. And the US which tries to have some kind of influence. I think we spoke about this last time, it’s a waning influence in Africa for most things because Russia, China, the French have been putting money in there for a long time and it would be interesting to see how that turns out. Who gets picked for the team?

Brandon Munro: Well absolutely. Team Niger is very much dominated by France. The production is dominated by France of course, the mines majority owned by France. But also, as a sovereign nation, France is responsible for providing an enormous amount of bilateral support and security to enable those mines to carry on in Niger. And Uranium is important to a country like Namibia. But it is absolutely vital to a country like Niger. There are some companies that you’ve spoken to who are doing great work in Niger, but it’s not as open as a place like Namibia for example, which has Russian investment and has Chinese investment, it has Indian investment, it has Australian, Canadian, US, South African investment as well. So that’s the team that everyone wants to be on I’d like to say. But it’s certainly the team that you don’t want to pick a fight with in school because you could find yourself being squeezed right out, and that’s the conundrum that the US would face if it does start picking friends. You can either go up to Namibia and say come and play with us or it can punch Namibia in the nose and have them run off to the Chinese and the Russians.

Matthew Gordon: To keep the analogy going, it’s playground politics. There’s a lot more to it than just Uranium. There are other things at play here. So again, maybe one to look at. The next thing you talk about is tariffs. We’ve seen a lot of talk about tariffs in the market, obviously with Trump and China recently, North Korea et cetera. What’s your take on this as a possible option?

Brandon Munro: I think it’s possible. It doesn’t make much sense because the Kazakh production is so competitive compared to US production that it would need to be an enormous tariff to actually try and create some level of economic parity. But it’s easy.

Matthew Gordon: You quote a huge number in here. You say the tariff would need to be somewhere in excess of 200% to make economic sense. And clearly that’s insane.

Brandon Munro: If you look at the cost of Kazakh production compared to the marginal cost of US production, it is in the range of somewhere between 100% and 300% to start Making sense. A 20% tariff is not going to make Kazakh production uncompetitive at all. But it will irritate the utilities and it will irritate the miners as well. But a tariff is simple. It can be implemented quickly, it can be withdrawn quickly. And there’s another variation which is halfway between the quota and the tariff and that is a limitation. Much as what we have with the Russian suspension agreement on Kazakhstan and Uzbekistan and potentially Chinese production. So rather than saying these are the school boys and girls that I want on my team, it would be more saying ‘we can’t allow those people onto the playground’. That or ‘you’re not allowed to pick all of the best players in the one team, you can only have one good player on each team’. And so that would be the alternative which would be more constructive and it has got precedent. As I say, there’s the Russian suspension agreement, but also Youratom has quotas effectively, or has limitations on how much of the Youratom state member, the utilities in Europe, can import from any one supply source. And so that would be a constructive way of resolving the national security limitations although it wouldn’t actually help the petitioners as much as they get from a quota.

Matthew Gordon: I think that’s a particularly complicated solution. Again, let’s see what comes up. You talk next about a no trade action. Is that a reality?

Brandon Munro: I think it is. What I mean by that is no protectionist measures, but the opportunity to improve the health of either the nuclear power industry or the Uranium miners, through exercising the Section 232 powers in other ways. It could be as simple as cutting some of the green tape that exists. It might be creating a subsidies regime for nuclear power beyond the ZEC or Zero Emission Credits that are implemented in a number of states. It could be fixing some of the distortions in the renewable’s subsidy regime that particularly and unfairly hurts nuclear power. There’s a bunch of different things that could be done here and I sometimes wonder if at the heart of the utility’s strategy, it’s about drawing attention to this tipping point argument as a way to get the attention of the administration to some of their other grievances which are entirely appropriate grievances to air. And it would be great to see the administration actually tackle those. It would be very constructive for the industry and also it would be good for the health of the US nuclear power industry.

Matthew Gordon: It would but I guess there’s a lot of other things fighting for share of voice going on out there and no one really wants to get into this level of admin. That’s the difficulty here. Again, one to watch but it seems unlikely given the rhetoric at the moment but we’ll see. You talk about the Department of Defence procurement because clearly the heart of this, the emotional heart of this is the nuclear fleet and is there a bifurcation of the market necessary to deal with that.

Brandon Munro: Well this would be an extremely constructive outcome. It would address the concerns for national security in a very direct way. And if the Department of Defence was to sign a contract, over say 10 years for 4Mlbs, 5Mlbs or 6Mlbs per annum, it would top up its reserves of Uranium in a very appropriate way. It would draw out all of the concerns that the petition has happened at that level there would be enough to go around to the other immediate producers as well. It would keep the utilities happy because there’d be no trade action that levied against them. And most importantly, it would be a great thing for the Uranium sector because not only would we have certainty in a way that doesn’t create admin for other players, but also it creates a new demand source. There’s been a lot of talk that the Department of Defence is well provision for Uranium. But there are a few things that are happening at the moment that would see those stocks drawn down a lot faster. One of the ones that I point to in the article is the demand or request for HALEU (High-Assay Low Enriched Uranium) which is basically 20% Uranium rather than the 3% to 5% Uranium that is put into nuclear power plants. This Uranium is used for some of the new technology. Some of the Generation 4 technologies that Bill Gates is pushing and that has a lot of bipartisan support within the US Congress. I think that’s something we will see. We’ll see it develop, we’ll see the Department of Defence and the US government enabling their technology ventures to produce this new technology through that. And that brings forward quite rapidly the depletion date for these Department of Defence reserves. I’m still hopeful. Again, it’s not probable or likely but I’m hopeful that we would see action from the Department of Defence, and we do know that they’re engaged in the process.

Matthew Gordon: Well that’s interesting and probably one for another day, which is the technological advance in the space with people like Bill Gates putting his money where his mouth is and others. I think people putting a lot of store in that as part of the solution going forward as well. The final component to this is the quota for US controlled Uranium. What do you mean by that? Because again that feels like pick a team but we’re going to have a little bit more control.

Brandon Munro: I said this one’s probably a lot less likely. Partly because it hasn’t been mooted so far and partly because it’s very much in the nuanced range of outcomes here. But if I was President Trump, what I would do here is I would use this opportunity to expand the US influence around the world in direct competition with China, Russia, Middle East and other sovereign nations that have a big appetite for Uranium. And it goes back to the earlier comments that the US is losing its relevance in the nuclear power industry at a time when the playbook that Russia has been very successful with, and China is trying to compete with in the Belt and Road Initiative is to build nuclear power reactors on a build-own operate model. If you look at Turkey or Bangladesh for example, Rosatom goes in there and all that Bangladesh needs to provide is a site and the domestic country approvals. Rosatom finances, they build, they operate, they train the Bangladesh employees over time but very importantly what they do is they provide the nuclear fuel and take the waste away at the end. They just need an off-take and a site to be able to do that. It’s a tremendously valuable and persuasive method of building nuclear reactors, particularly amongst the developing world which is obviously China’s focus on Belt and Road. They’ve got an appetite for Uranium well beyond their own domestic borders and that is where the US could get completely squeezed out. They could become totally dependent on Kazakhstan and a small handful of commercial operators in Australia and Canada, if they don’t address this in some way. And the most powerful way that America addresses these types of things is using capitalism to its advantage. So if the administration was for example to say ‘we will create a quota, we will give privileged access to the world’s biggest nuclear fleet in the US but the way it works is it has to be American controlled Uranium, whether it comes from inside the borders of America or elsewhere’; that would enable public companies to have an additional competitive advantage which means they can go and compete with various Uranium assets versus the Chinese and the Russians, the Middle East and the Indians.

Matthew Gordon: So how does the US deal with this? Because that whole PPP model has been used by the Chinese, now by Russians and now French, for a long time. I’ve worked in Africa for a long time and you saw huge infrastructure projects being paid by these countries, in exchange for mineral rights, obviously, and now with Uranium being highly topical at the moment and say a very emotive topic at that. How did the US use their financial might, their financial control; the U.S. dollar, to affect that decision making because if they can’t supply alternative energy solutions, why shouldn’t Bangladesh, why shouldn’t the UAE, why shouldn’t these countries take up the offer of this zero-carbon energy source paid for, built by, run by competitors of the of the US?

Brandon Munro: Well clearly from their perspective they should and they are. Rosatom, the Russians are building in almost a dozen jurisdictions around the world at the moment and they’re in advanced negotiations with another 10 countries. Everywhere from Bangladesh and Turkey through to Egypt and Kenya for example. It has been a very successful model particularly given the capital costs involved in nuclear. And it’s very attractive to Russia and China because it creates a bilateral umbilical cord that lasts over many, many decades. From the US point of view, my personal opinion is that the horse is well and truly bolted here, and it’s probably bolted for all of the West. Maybe with the exception of South Korea if they can sort out their own domestic quandary on nuclear power. But the US still has an opportunity with Gen 4 reactors and new technologies, small modular reactors for example, and that’s where the Bill Gates push with various reactor designs such as new scale. There’s still an opportunity there and also the US still has to protect a large nuclear fleet. The issue here is maintaining relevance on the one hand but also ensuring it doesn’t get totally squeezed out from the success of the Russian and Chinese reactor programs.

Matthew Gordon: But what are the levers that the US can pull here? Because typically it’s been using the US dollar. That that’s been a big lever, I’ve seen it work in South Sudan and other places across Africa where it’s a hard-hearted approach to it, but they get what they want as a result, the implied threat et cetera. But that’s not working anymore. Do they need to just say that’s a battle we can’t win? Security issue at home, that’s another topic but how do we remain relevant in Africa, the Middle East, the West with regards to energy? Do they need to go and own renewables or other forms of renewable? What do they need to do? What do you think these levers are?

Brandon Munro: Well there’s no easy answer at the moment for the US and as you know, we both really enjoy a good geopolitical discussion and your point about the US dollar is quite right. Whether it’s influence from crypto-currencies eroding their monopoly that the US dollar has had on cross-border financing. Or whether it’s the resilience that countries like Iran are needing to show, in order to get on with life when they’re deprived of US dollars and all of the financial centre around them. So over time we do see that mechanism decrease. The US still has a defence capability, the dominant defence capability in the world. At a time, whilst we are seeing China implement more assertive measures in South China Sea and so on, China doesn’t appear to be trying to challenge particularly the Navy but also the other defence capability of the US in a direct way.  One would expect that that is the US’ main avenue for trying to deploy energy influence. In which case it needs to do it amongst its direct allies. And that’s quite contradictory to a lot of the policy that we’re seeing from the Trump administration.

Matthew Gordon: But that’s tantamount to gunboat policy which the British employed in Hong Kong. Surely that is not a reasonable form of commercial economic expansion any more.

Brandon Munro: I would agree. So then where do they go and I guess that’s the point that you’re raising. One of the potential answers there is through technology ascendancy. As you know there’s a lot of commentators who believe that that’s really what’s behind the Trump position on the trade war with China, that they need to arrest the erosion of technology ascendancy. And that then does bring us back to the next generation nuclear power technologies, and the US still has a competitive advantage on the technology front although it’s losing a lot of that competitive advantage to Russia and China because of a regulatory perspective. They are bogged down and they need to accelerate that regulatory approval process and commercialisation before they lose that technology ascendancy.

Matthew Gordon: I agree with that. And for anyone listening to this has got some views on that one. Post them to the YouTube channel or on Twitter. We’re delighted to hear what people think about that. Fourth point, you’re talking about all outcomes strengthening the Uranium market. Now I think you and I are going to disagree here. Tell me your view.

Brandon Munro: My view, simply and then please challenge me on it, my view in simple terms is I’ve had a deep dive on all of the potential outcomes here and I can’t find one that doesn’t lead to a strengthening of the Uranium market. Even the outcomes that are neutral, possibly even negative on the face of it for the Uranium price, they’re totally overwhelmed by the resumption of certainty and the resumption of market activity as the nuclear power cycle. The nuclear fuel cycle can just get on with life after 18 months of uncertainty. So that’s the premise.

Matthew Gordon: The bit I agree about is I think it’s good for the market, clearly, as a whole. But you say in here that it’s a common perception that there will be winners and losers. You say well, actually there’s going to be no bad outcome for Uranium investors. At the end of the day, mining is mining. The market is the market. Things go wrong and people still need…that quote that People throw out you know ‘high tide raises all boats’. It’s true to a point but there are going to be companies who are better equipped than others. Investors still need to remember the basics or the fundamentals of investing. You’ve got to trust the team. You’ve got to believe that the asset is fundamentally a good one. Can it be economically mined and does it have a route to market and the people to know how to get into the market, because Uranium is a more complex commodity than Gold, than Copper, than Nickel because of the predominant buying cycles of contract. I think, Uranium more than others, people need to think who they put their money with. We’ve talked with some companies and I go ‘Oh we’re in the right postcode, it’s all fine’ for ‘we’ve done this before. It’ll be fine. And it’s never fine, there’s a lot of hard work you know mining is a tough business. I think my point is, investors please remember the fundamentals here and don’t get swept away by the euphoria of this this huge wave of enthusiasm for the Uranium space. So that’s why my answer slightly differs from you.

Brandon Munro: And I don’t think we’re disagreeing with each other here. My point is that from a Uranium market point of view the commodity market, it’s all positive. Now from an equities point of view, there’ll be differing effects on some of the players. Some of the players are already trading at a premium pricing in some of the expectation from 232. There are disappointing outcomes for those companies. Even as the Uranium price goes up, some companies will outperform others and they’ll see a flow of capital towards that performance which will impact other companies. And as you say, in any industry including Uranium they are pretenders out there and those pretenders will be found out as more people start to analyse the sector and as sentiment improves. I agree with everything that you just said. Perhaps I should have been a bit clearer that I’m talking about the commodity market. I can’t see a scenario where the commodity market doesn’t benefit. So if you are already positioned as an investor in a quality Uranium story and I would certainly advocate Bannerman as being one of those, if you position in a quality Uranium story, well things are about to get better as long as we see a decision and as long as it’s a clear decision that can be interpreted and understood.

Matthew Gordon: I had an interesting conversation with someone yesterday, a Uranium company and they were talking about ‘we’re in the right post code’ but they’ve just started, they’ve started exploration drilling and I think they will probably do quite well. But as happened in the last cycle, a lot of new companies and a lot of new entrants into the marketplace who didn’t make it. Some had good assets and some didn’t. But it’s a question of timing. You guys have got your DFS. You are shovel ready, ready to go. Just waiting on this uncertainty in the market. Let’s talk about your last point, which is the enduring legacy of the 232 petition. What do you think people will have learnt from this process and how can we use this positively going forward?

Brandon Munro: The first thing that’s happened on the positive front is it has created a lot of attention for the Uranium sector particularly in the US. It’s had people thinking about Uranium that probably haven’t given it any thought since the heady days of 2007. And we’re seeing that at a time when there is a lot more commentary on the sector. We’ve had people who are in a public sense quite new to it, yourself being a great example, putting a lot of effort and a lot of intellect and a lot of thought and analysis into the sector. And that’s been largely helped along by 232. In terms of a more enduring legacy, I think we’re seeing far more attention being put on geopolitical risk and geopolitical issues. I’ve said for a long time and I used to start some of my presentations with a Venn diagram that had supply demand and geopolitics, and that is a very particular and important aspect of the Uranium sector. You can’t just simply look at supply and demand. You have to look at geopolitics to be able to interpret not only the sector at a macro level, but also different stocks and different opportunities and different assets. You always need to pass a geopolitical filter over a Uranium asset and a Uranium company, to be able to value their prospects going forward. It’s been a helpful reminder for investors of that fact. I think it’s likely to ramp up the geopolitical stakes even further. And I’m of the view that we have a greater level of geopolitical tension in the world than we’ve had since the collapse of the Soviet Union. The difference back then was the major geopolitical event had a dampening effect on Uranium because it led to a flood of downed-blended Soviet era warheads through the Megatons to Megawatts program. Here we’ve got the opposite happening. We’ve got very high levels of geopolitical tension across a number of world stages, that will have the effect of ramping up supply uncertainties in supply risk to the nuclear power industry. And we’re only at the very beginning of understanding the implications of that. One of the points that I make in my article is it’s very easy to simply ignore those risks when prices are cheap. You can look past them, you can figure well this is perhaps just for the next few years, we just won’t worry about who are buying our Uranium for or how concentrated our book has become because ‘well at sub $30 this is just such a bargain’, in the same way that our suppose some shoppers will overlook quality if they’re buying something at a third of the price that they normally do, that’ll change. And as it changes, not only the utilities will become more focused on that but the sovereigns will become more focused on that. Uranium investors will become more focused on that. And all of those things that some of us in the sector have been saying for a number of years in terms of geopolitical positioning, will come to be. Investors with anything more than the very shortest of timeframes with an investment decision, really need to be looking at that because it will create winners and losers as this geopolitical risk plays out.

Matthew Gordon: Absolutely. You finish off with a line which says ‘will the US be a catalyst or a bystander in the next two weeks’. What’s your bet?

Brandon Munro: I do think catalyst. We’ve got an administration that has proved to be fearless on these issues. Happy to be unconventional. Happier to be unconventional you might say. And certainly, willing to enable chaos. Either deliberately or accidentally as an outcome from its decisions. And chaos is an outcome that we could well see from this. Chaos in itself will become a catalyst. The outcomes that might relegate the US to being a bystander are less likely than the ones that will either show leadership from the US and some of the reasons we’ve described or be some other form catalyst because the market gets thrown into relative chaos.

Matthew Gordon: Well it will be interesting to see who the winners are. Whether the US is a leader or whether they’re going to have to come up with an alternative plan. Let’s wait and see. Just to finish off, you’re involved with the WNA. You’re on one of the groups there. I think you are co-chair of the fuel report. Is that right?

Brandon Munro: Yeah that’s right. I’m co-chair of the demand group. I also sit on the Uranium supply group and I also sit on the secondary supply group. I’m involved in three committees, but my involvement is much greater in the nuclear demand group. For your listeners that’s a working group established in the WNA consisting of a bunch of utilities, some Uranium producers and other market participants including traders and so on, that is responsible for forecasting in articulating three demand scenarios for nuclear power and therefore Uranium. Between now and 2040.

Matthew Gordon: The WNA have got a symposium in London in September, they’re going to release the Biannual Fuel Report. Some people are seeing that, or I guess, hoping that that is yet another catalyst on top of the 232 announcement. So just gives us the outline of what is contained in the fuel report.

Brandon Munro: Yeah so last year’s report looks like this, it’s quite a thick document.

Matthew Gordon: Sorry does it come out annually or biannually?

Brandon Munro: Every second year. And it has chapters that deal with demand of course and various aspects of that. Secondary supply, primary Uranium supply, conversion, enrichment, fabrication and of course conclusions. It’s a very rigorous process. There’s a detailed model behind all of this. If there’s been a criticism that’s levied against the process, it’s because the restrictions on cartels and so forth mean that when a bunch of Uranium producers get in the same room and a bunch of utilities get in the same room, they can’t talk price. And in past years I think the industry is falling into the trap of stepping back too far from that line. And the whole concept of economics has fallen out of this report. So last year the conclusion was there’s plenty of Uranium. Sure, there is plenty of Uranium at $100/lbs but there is bugger all at $20/lbs as the price was when the report was released and I think that affected the credibility of it, particularly for the audiences that were more financially literate. This has been my first report that I’m sharing that committee and I think what we will see in the next report is a lot more focus on economics. It still won’t talk about price and it can’t talk about price. But there will be a lot more focus on economic paradigms. We’ve introduced for example, different supply scenarios. So not only demand scenarios but supply scenarios, so investors and others can look at it and say well, ‘if we don’t see a new economic paradigm with a recovering price, this is what we’re going to see’. And I think it’s just become a lot more relevant particularly to financial investors. It tended to be a bit more for policymakers and a bit more for industry participants and so on. But someone like yourself and your colleagues will be able to look at the next version and get a good sense of some of the burning issues such as secondary supply, where the demand is coming from. And I think it’ll be an enabler and it will be a slow burn catalyst for that reason.

Matthew Gordon: It sounds like it’s evolving. For someone like me, putting the price in there would be… I can understand why you haven’t, but putting the price in there or at least having a flexible model where you can look at the effects would be much more useful and that’s something that we would have to put in using your assumptions. You’re painting a picture of this Uranium arena in which we play. The demand side I kind of get, that information I imagine is very, very robust in the sense of how many reactors are there, how many are coming on, how many are being built, how many are going to come online, and all of the associated components there. It’s the supply side which makes me wonder about the detail here because you’re getting that from producers, developers, explorers and you’re forecasting these numbers. Certainly, for the public companies, they have to paint a rosy picture. Are the numbers accurate? How do you ensure the numbers are accurate? And clearly for them it does matter what the price is, so how do they give you those numbers without talking about price?

Brandon Munro: Well it will always require additional interpretation and you’re quite right, the demand numbers are fairly robust. Obviously as we get out plus $20 – $30, more judgment needs to be exercised and there is a natural conservatism in anybody but particularly amongst the types of players that we’ve got here. So even the upper scenario, I think it’s got a lot of room for out-performance. If we see policy changes and if we see China continuing in the way that I think it has to. But essentially, they’re reliable numbers, they’re robust. The methodology is very robust and very detailed behind it. You’re quite right when it comes to Uranium supply. The requirement for the report is to rely on either public information or to rely on the response from questionnaires that are sent to the different asset finders.

Matthew Gordon: That’s a good point you make. The reliance on public information, the age of that information and well quite frankly the efficacy of that information. Where has it come from? Are the sources robust? Who’s done it? Are they reliable? Do they know what they’re talking about? Etc. etc. So how do you validate all of this? There’s a lot of moving parts.

Brandon Munro: Essentially you can’t validate that when you’re in the position of the WNA because you can’t go out there and say we think that that asset is run by a bunch of scallywag promoters and we’re just not going to take their numbers. You and I know that that is the case with some companies, but it’s not the WNA’s position to do that. And equally there’s a lot of reasons why companies would fail to update certain information. It might not be in their interests to let the world know that they’ve got a technical challenge with something. There is a baseline robustness because most of the Uranium producers are publicly listed companies. If we take some of the outliers out, there is that credibility there are, the rigour of the JORC process and the NI 43-101 and so forth. You get a pretty good level of information. But when it comes to timing, when it comes to ability to produce in certain economic outcomes and prospects of getting approvals and so on, that’s where you’d certainly as the audience need to use your own judgment. The way that the report has quite appropriately considered all of this is they have basically said, ‘right we’re going to take all of this public information and put it into the one bucket. So here is the theoretical amount of production that could possibly come on. And then we’re going to make some assumptions about how much of that will realistically come on’. And they have concepts like reserve projects and concepts like unidentified supply. And I think given the constraints, that’s as well as you could possibly do and then it’ll be in a number of these debates where we sit around and we argue whether 65% is realistic in an upper-supply scenario, or whether it should be 45%, and what sort of delay should be allocated. There’s been a lot, and this is a new model and it’s a new way of doing things and a new methodology, that I think creates some level of realism to the whole picture. And then it’s also disclosed quite well so you could read it and you could say well ‘I’m looking at this array of different projects and I think 65% is still too optimistic’ or whatever your approach might be.

Matthew Gordon: It sounds like it’s evolved. A lot of moving parts and we’re going to have to say ‘well thanks for making us aware of all of these components, treat each one individually and make your own assumptions on each of those variables’ to come up with your own number. I suppose fund managers are going to find that a lot easier than a retail investor because they’ve got the necessary skills and ability to do that. And retail may not necessarily. It would be interesting to see what comes out. We should we shouldn’t prejudge. There was another report but UXC Forecast. Have you seen that?

Brandon Munro: I don’t subscribe to UXC but people tell me about their stuff quite often.

Matthew Gordon: Do they? What’s your take on what they’re producing versus what you’re producing.

Brandon Munro: As Bannerman or as WNA?

Matthew Gordon: Sorry, with your WNA hat on.

It’s different. So UXC is designed to provide price forecasts, which we don’t go near as WNA. They provide trade information. They have an agenda over time which is to represent the interests of utilities and that has become more generalised in recent years. But I believe that it’s still there, whereas the World Nuclear Association is designed to represent the entire fuel industry – the nuclear industry including the fuel industry, so buyers, producers, developers et cetera, et cetera. You get a very different type of information. The WNA information tends to be a lot more global and a lot more macro because it’s often drawn upon by policymakers. Whereas UXC information tends to be a lot more micro, because its individual utilities make decisions on their procurement processes for example.

Matthew Gordon: For utilities, they’re going to look at UXC for guidance. Do you think they’re going to find your report useful?

Brandon Munro: Most definitely. And I think the other point is even for investors, you might know everything that’s in the fuel report. I actually don’t think that will be common because it’s still very interesting. But you might know the bulk if you’re very well-informed and have your own views. But what you can do is you can read it and get an idea of what the industry thinks, and that’s so important with Uranium because sentiment still plays such a big role. It plays such a big role in the timing and intensity of utilities procurement decisions, it plays such big role in the downstream part of the industry. And you mentioned the symposium in September. I’m going to be there with a lot of interest following exactly that point. What does the industry think? What I think is relevant for our internal strategy, but it’s not so relevant for the development of the next 6 to 12 months. I want to see what everyone else is talking about, what they’ve been told. There’s been a huge amount of positive news in the nuclear industry, the nuclear power industry. And in many cases the people in the downstream part of the nuclear power industry. They’ve got very complicated jobs, they’re very clever people. They’ve got to concentrate really hard on that and they only pop their head up and talk to the broader industry once or twice a year. I think that will be a crucial point for everyone to start getting bombarded with all of these very positive news and be able to take stock and say, ‘gee, it’s been pretty hard since 2011 but we finally turned a corner’. That will be relevant because for the utilities, they won’t be so accepting of the UXC view of the world, which is this low price is just going to continue forever and demand curves will be flat and nuclear is a dying industry and all of these things that might be quite helpful in a price negotiation with the producer, but actually doesn’t help the overall health of the industry.

Matthew Gordon: That’s a great answer. Well let’s wrap it up there. I appreciate your time. Insightful as ever. For those watching, do have a look at Bannerman. It’s one of the better utility stories out there. Brandon, thanks again for your time. I look forward to seeing you in September hopefully, if we don’t speak before and go grab that beer, hopefully in the sunshine.

Brandon Munro: Yeah, yeah. September tends to be good. I enjoy the Indian Summers that you can manage to put on most years in London. Always great to chat. And always great to get such probing questions.

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