- TSX: URE, NYSE: URG
- Shares Outstanding: 160M
- Share price US$0.62 (29.04.2020)
- Market Cap: US$95M
Conversation with Jeff Klenda, President & CEO of Ur-Energy (TSX: URE, NYSE: URG)
Klenda gives a no holds barred take on the market. We discuss games being played by utilities in the NFWG discussions and what their real intent has been. We has if that has been the real barrier to seeing action by the US govt. And why has the US House Appropriations Committee blocked funding for a US uranium reserve. Do utilities want Russian uranium? Klenda gives us his strong views of what that will do to the markets in the US.
Klenda believes that the Russian Suspension Agreement is critical and share with us his thoughts on the possible outcome. Plus his take on Cameco’s decision to restart Cigar Lake in September. A missed opportunity or exactly the right thing to do?
- 2:47 – US House of Appropriations Decision: What’s Next?
- 10:16 – Frustrating vs Critical: Impact on Business
- 15:10 – History of the RSA: Approaching Deadline
- 26:15 – Utilities Can Buy From Wherever: Fears for the Worst?
- 30:17 – Hypothetical Scenario: Questioning the Survival of Uranium Companies
- 33:01 – Cameco’s Quarterly Call: Opinions and Implications
- 39:15 – Market Perception and the Future for Uranium
CLICK HERE to watch the full interview
Matthew Gordon: Jeff, how you doing, sir?
Jeff Klenda: I’m doing fine. I’m being a good boy. I am isolating in place. I am functioning remotely, and I’m finding that being reckless suits me, I’m thinking about making this permanent condition. I have decided, there seems to be a bit of a petition circle out, so, but we’ll see how that plays out.
Matthew Gordon: I promise I didn’t start it. You’re being a good boy and you’re being effective. I’m glad to hear it, Jeff. We wanted to speak to you because we love your directness and your views on the marketplace. A few things happened since we last spoke. I am going to come to the Cameco call, but I’m going to leave the best to last. The US House Appropriations Committee: they basically blocked the Uranium reserve funding of USD$150M. What’s your take on that?
Jeff Klenda: They did. First of all, we all know that this came about as a result of the Working Group, which released its report on April 23rd. For the uninitiated, let’s give a bit of context here: The Working Group started as a result of our failed 232 action in July of last year – so, 1-year ago today. It was supposed to be done in 90 days. It was delivered to the White House in November; however, it was not released to the public until April 23rd. Now on July 6th, the House Energy and Water Appropriations Committee came out with their appropriations bill, and of course, the USD$150M did not make it into the mill. What they did say was that they were allotting up to, and that’s critical to qualify that, that they were allotting up to 180-days to gather more information, or more specifically for the Department of Energy to provide them with more information, and further, to provide them with justification.
Now, it is important to note here that we have spoken to the personnel who have been directly engaged with the Appropriations Committee from DOE, they were both surprised and they, I don’t think I’m speaking out of turn here: they were perturbed by it. They felt that they had interacted with them and given them everything that they had asked for months, and the 180 days you notice would push us past the first of the year. It was nothing more than a delay tactic. I like to say things as they are, and it was a delay tactic. And I would emphasise one other thing and that is that our House of Representatives is Democrat controlled. This is precisely what we were anticipating. So, no surprises here.
Matthew Gordon: No surprises, but there’s hope also in the fact that the Senate Appropriations Committee hasn’t said no yet.
Jeff Klenda: That’s correct. And so that becomes the question: where do we go from here? How do we get there? So, first course of action would be, of course, is that we get it inserted into the Senate Appropriations Bill. Now, the thing that needs to be noted there is that we are being told that the Senate will not have its Appropriations Bill submitted until the end of September. That sounds like a long way away, but it is 60-days. Unfortunately, it also coincides with the United States government fiscal budget and the end of that budget year. So, that’s fine, but that is one of the issues. It is almost certain that it will be included in the Senate Appropriations Bill. Now, if for whatever reason it fails to make it into the Senate Appropriations Bill, it can also be brought to the floor in the form of a floor amendment, and that can take place, and that can be brought by any one of the members. And of course, if that were to be necessary, we are prepared to take that action. We hope that, we don’t believe that that will be the case. We believe that we will see that in the Senate Appropriations Bill. So, that’s not the only way that this can come about.
In addition to that, one of the things that is not well understood is that the Department of Energy does have the ability to make this appropriation themselves out of current funding. One of the things that you saw in the House Appropriations Bill was either USD$42Bn or USD$43Bn that was allocated for the Department of Energy, which represented, I believe an 8% increase year over year. It can be taken out of one of the other pockets from the DOE. And in fact, I pulled up a quote that I thought was particularly relevant, this is according to consultant TradeTech: industry sources indicated that there was some acknowledgement that the DOE should start preparing for the launch of the US Uranium reserve and storage program based on current funding. So, that from TradeTech. Whether or not that’s going to be the case, I really don’t know. But, as we were talking about earlier, Secretary of State Dan Brouillette has had a lot to say about this since it failed to make it into the Appropriations Bill on July 6th. And some of his comments, he made these comments in front of the House, Energy and Commerce Subcommittee on energy 2-weeks ago. In that note, he stated that the department’s Nuclear Fuel Working Group wants American-owned Uranium and plans to begin processing US Uranium into hybrid fuel at a DOE facility in Portsmouth, Ohio, as early as next year.
What they have been doing is that they have been transferring the centrifuges from other locations to the Portsmouth facility to reactivate it. So, that would actually bring enrichment, domestic enrichment back to the United States on a much faster calendar than even what the Working Group Report called for, since they did not technically call for it until 2025. So that that’s. That’s our 2023. So that’s important to note that Brouillette is making statements on this and he’s talking a lot about it. So, in addition to that, it is also important.
And I want to make one other comment, because the question is, how do we get to the USD$150M? And that is, it can be introduced in the form of legislation. And one of the things that Brouilette announced in this was in a publication called The Utility Dive, I am not really familiar with them, but it was stated, in addition, DOE and Dan Brouillette is working with Representative Robert Locker, an Ohio Republican, and a member of the subcommittee on legislation authorising the creation of the Uranium reserves.
And I will note that we know of at least one other piece of legislation that is in the works right now in draft form although I am not at Liberty to speak about that. We know that there will at least be 2 pieces of legislation that will be introduced to Congress with respect to the Uranium reserve.
Matthew Gordon: This is the problem with dealing with government: there’s a lot of moving parts. And lots of agendas, personal, political party, and otherwise, and you’re never going to be in control of those moving parts. Sometimes it is easier to get a fighter jet through than it is for the national security of the energy of the country. That’s a whole other discussion. But is this frustrating for you, or is this critical for you? You have started a process, you wanted to see it through, but you are not in control of that.
Jeff Klenda: Well, this actually goes back to July of 2017, when we met with Rep. Rick Perry in his offices, and one of the things that Rick Perry said to me, I was able to get a few seconds with him, after the UPA meeting, there’s a lot of people in the room. He’s effectively saying to us, ‘look, bring me something that can be investigated in a determination that would be made by the Department of Commerce, and that can be put on the president’s desk for a final decision’. He noted to everybody in the room, this is the Uranium producers of America do not let his thing go through Congress – how right he was. You get in the middle of this, and in fact, it is so convoluted that it really is beyond frustrating. It can be confusing at times. And we have dealt with this frustration.
How critical is the Working Group? It is vital. We would love to see that USD$150M a year, even though I consider it to be just a good first step, although I consider it to be wholly inadequate for preserving the front end of the fuel cycle. What is actually more important, and that you have to look at this holistically, what is happening with the Russia Suspension Agreement, because this can have impact for many years to come and also what’s happening in terms of our supply-demand fundamentals, because those are evolving and changing very quickly as well.
Matthew Gordon: We’ll come on to RSA in just a second. I just want to address a specific point around frustration versus critical, which is, I know you’ve got inventory, and that has a value on your balance sheet. It is not the value you want because you don’t believe that the price in the market is where it needs to be, and it will go higher. You have also got a bit of cash as well, because you have got contracts. So, critical v frustration: does this affect your ability to do business in the next 6-months?
Jeff Klenda: No. Quite to the contrary. We have our board meetings today and tomorrow, and we’ve had meetings with our auditors, and we use PWC – best in the world. They’re great guys. And unfortunately, every 5-years you get a new team assigned to you. We got the new team this year, so we’ve had to ramp them up on everything that we do, but we’re in a solid position. We know that we have, 12-months ahead of us. If we did not, and this is important to emphasise to them, we would be required to insert growing concern language in our quarterlies. We have no such requirements. We know that we’ve got solid runway for another year. And, depending on what happens over the course of the next few months, we should be in a position where we are very hopeful that we will see the value of our inventory grow.
Matthew Gordon: I’m going to couple what has been going on with the US House Appropriations Committee’s decision, with what you’re intimating, which is it’s political. They’re putting it off until after the elections. So that’s a big moment. That is clearly a big moment for the industry as a whole, so I won’t make this about the election. Do you have something to say on that?
Jeff Klenda: Let me just make one last comment with respect to the Working Group, and that is with respect to process. Now, the Senate will not come with its Appropriations Bill. They’re saying until the end of September. No decision is going to be made on the budget bill in its entirety until after the election. What you have here is that immediately after the elections, you are going to see the House and the Senate engage in what are called conference negotiations. That is just a very nice term for saying that the port will be flying, my port is better than your port, my port needs to stay in the bill. Your port needs to be removed from the budget. So more than likely they will fight this out until the 23rd of December, when they’re both thoroughly exhausted and angry, and they will come up with a bill or a budget that none of them like, but they want to go home for Christmas so they will live with it, and that’s what we all get to live with it as a society here in the United States. And how is that system? It is broken, but it is what it is. So that’s what the process is, and that’s how it will play out. And we will do everything in our power to make sure that that USD$150M is included in that final budget.
Matthew Gordon: And the RSA, the Russian Suspension Agreement – it is pretty much played by the same sorts of rules. Isn’t it?
Jeff Klenda: It is a little different. The beauty of that is, at least Congress isn’t involved. Congress is hopelessly partisan. They will never agree on anything. that, what’s going on in America right now is just a cluster almost beyond imagination that nobody would have anticipated. I don’t think anybody in the country would have anticipated what we’re seeing playing out, politically on the halls of Congress on Capitol Hill and in the streets of major cities in America right now. This is not about the death of one man at the hands of a police officer in Minneapolis. This is about anarchy. This is about the overthrow of America, as we know it. And if we fail to take decisive action after this election, obviously, I don’t think we are going to see it before the election because it is too politically charged. After the election, it needs to be, in my view, it needs to be put down and it needs to be put down hard. And infer what you will from that statement, but it needs to be put down. And I hope that will be case.
Matthew Gordon: It is tough times in the States. It is not good viewing from outside the States. It is a very divided country at the moment. And I hope there is some way you guys can work out how to get together, at least on the nuclear subject.
Just on the RSA component, you started answering it, but you got distracted by what’s going on in the States, but the RSA, the Russian Suspension Agreement, , since the seventies, you have had to deal with Russian supply. You’ve got the suspension agreement in place. It has got to be resolved by the 31st of December this year. If it is not ‘we call the whole thing off’. So what do you think is going to happen?
Jeff Klenda: Okay, let me give some context there, and we are interested parties so we have status in those negotiations and so we have been intimately involved in them every step of the way since the first quarter. Keep in mind that the Russian Suspension Agreement has been in place for 28-years since 1992. And I will give our government officials in the Department of Commerce credit for entering into this agreement, I believe, for the right reasons. Keep in mind, this was a politically charged time; the wall had come down just three years earlier. There were scientists disappearing. There was Plutonium disappearing. There were bombs that were disappearing. The Russian Suspension Agreement was an attempt to provide much needed cash flow to a government that was shattered, that had been shattered by the wall coming down and let’s face it, one of the best ways that they were raising funds was through the sale of some of the most liquid assets they had: and that was technology that was plutonium, that was nuclear weaponry. We had to put a stop to it. So buying what we had hoped, it started out to be, would be primarily blended down Plutonium, was the intent of the Russian Suspension Agreement, and then that went well through the nineties, and then Vladimir Putin came into power.
And one other thing happened, and that was the Kazakhs in 1999 were let out of the Suspension Agreement. They started building up ramping up immediately. Vladimir Putin saw this Suspension Agreement, its potential to be used as the geopolitical weapon that he has certainly used it as ever since then. What has been happening is that there have been a series of, call them administrative reviews, and there was a major one in 2008, but there have been two or three since then. And what the Department of Commerce is engaged in right now is yet another administrative review. It was called for by one of the enrichment players, and the Department of Commerce has been seen that through. We have been engaged in the process roughly since February. Now, since that time in the interim, we saw the Nuclear Fuel Working Group report come out on April 23rd. The Department of Commerce has said, look, since that report came out, we treat that as the law of the land. We all know what was called for in there: the establishment of a Uranium reserve, the diminishment of regulatory constraints, the ability of the NRC to stop the flow of nuclear material coming into the United States anytime they felt it was appropriate for national security purposes. And also to pave the way to facilitate small modular reactors and micro reactors that are coming in the middle of the decade. But they emphasised that we had to rebuild the nuclear fuel cycle, starting with the front end of the fuel cycle: U308 and conversion, and ultimately, in 2023, enrichment. We already talked about how that appears to be taking place more quickly now, which is a good thing, by the way, it is a good thing for our utilities.
It is a good thing for our national security. So the Department of Commerce has been engaged with the Russians in negotiations. And don’t think that I’m being cryptic here, I have to be careful what I say here, because I am under stipulation than I am restricted in what I can say, so if I speak in somewhat cryptic fashion at times, please forgive me, but it is because I am restricted. But the Department of Commerce released on June 17th, their post preliminary analysis memorandum. In that memorandum, they basically came to the conclusion, after a series of administrative reviews, that the Russian Suspension Agreement was leading directly to price suppression over the last several years and that the contracts, the massive and I can’t stress enough the term massive, that the contracts that our domestic utilities have entered into with the Russians and the Kazakhs were leading directly to current price suppression and will lead to further price suppression in the future. It also concluded that the Russian Suspension Agreement in its present form was no longer in the best interests of the United States. And it called for the amendment and extension of that agreement, stipulating, saying straightforwardly in the memorandum that if that could not be accomplished, then we needed to then resume what was the order of the day back in 1992, and that was the in depth investigation and the tariffs of 120% of material coming in from Russia.
And one of the things that I would stress to your viewers is that when you talk about the Russian Suspension Agreement, suspension really refers to the suspension of that investigation and of those tariffs. If nothing is accomplished here by January, by December 31st, then what you have is the suspension then goes away and you get the resumption of the full scale investigation and the tariffs.
So what happened is that we got a note from the Department of Commerce where they indicated, and I want to make sure I have my date correct here, they came out and they announced that they would, that the administrative review would be tolled: T O L L E D for 60-days. The administrative review has been extended to October 5th. During which time we can either amend and extend the Russian Suspension Agreement, or then we get to the end of the year, and it doesn’t even have to wait till the end of the year, if no agreement is reached by October 5th, then presumably, and presumably, it is called for, under the agreement, the full scale investigation will resume as will the tariffs. This is what we know right now.
Matthew Gordon: What’s your bet for January 1st? What’s the state of play?
Jeff Klenda: January 1st. First of all, we will already know the outcome of the Russian Suspension Agreement. We will further know whether or not the Working Group, whether or not we’ve been successful through that morass that is the political process. We’ll know whether or not we’ve been successful in getting the USD$150M into the budget.
But that one of the things that is worth noting right now, and I’m not going to go into any details on this, but what emerged is that the United States utilities, they are interested parties just as we are, and they have status and so they are engaged in these negotiations. But one of the things that I want to emphasise is that they have become the third leg of the stool. I would say that they have gotten to the point where they are exercising outsized influence, and absolutely inappropriate control of this process. And it is, so much so that you wonder who the Department of Commerce is really negotiating with. I just asked that question, and that it is noteworthy that these utilities have been, they have orchestrated this scheme to put massive contracts in place over a three-year period of time. This is nothing new. This has been going on since 2017, with the taking the calculated risk that they would be able to bull rush their way through commerce and make sure that these massive inventories secure their needs through to the middle of this decade. And it is also important to understand that under normal circumstances, we would have been engaged in 2018 and 2019, in a contracting period that would have continued on into this year, but it didn’t take place. And the reason it didn’t take place is because unbeknownst to us, our Russian, our domestic, excuse me, that was a Freudian slip there – our domestic utilities have been engaged in this ongoing collusion and massive contracting with the Russians and Kazakhs, that have made sure that they don’t need anything, if there are allowed to keep those contracts in place, if they are grandfathered, then it is going to be very negative for our space for the next five years. And that’s the harsh reality.
Matthew Gordon: So utilities, not unsurprisingly, are looking at their bottom line and thinking of this as a commercial transaction. The US Uranium producers are seeing this or positioning this as a security issue to the government. Utilities are big, the lobbyists are paid well, you guys are small. You can punch above your weight, but it is still not enough to compete with these guys. Do you fear the worst come January the first?
Jeff Klenda: I don’t. And I’ll tell you why: because that the good thing about the Department of Commerce, and I will say, this is, the team that is negotiating this is their enforcement division, these guys are big. I want to credit them. They’re tough. They are not going to be bullied. They are not going to be pushed around. And that while the utilities have a small, an army of lobbyists out there and spending millions of dollars per year advocating for the Russians and for the Chinese and for other foreign governments, , as a matter of fact, the joke inside of the industry is they have more lobbyists than we actually full-time employees left in the industry. So that’s a lot to overcome, but I don’t think that the Department of Commerce is going to be bullied on this. At the end of the day, they will do what’s in the best interest of the country. And I believe that they will act in a manner that is consistent with the outcome of the Working Group report.
Matthew Gordon: But do you honestly believe that if the utilities can get supply from wherever, that the government is going to have a problem with that, I mean the energy will be there for your population, and the US. The energy is there short term. Do you think that’s the problem of government, that they’re thinking too short term?
Jeff Klenda: In the past that they have, and that until we brought Section 232, that was absolutely the case and nobody was going to contest it. If Section 232 did nothing else, that led us to the Working Group, and the Working Group with that high-profile group of participants, and the report that was released on April 23rd has led us to a high level of awareness of our dependency. And let’s face it: Coronavirus has contributed to this. We are now acutely aware of how dependent we are on critical drugs that come exclusively from China. More than half of our critical minerals come from outside of the United States, and our Rare Earths – we are 80% dependent on the Chinese.
So now you’re talking now we have managed to work that into that same dialogue; when we’re getting our nuclear fuel, that constitutes 20% of our base load energy in this country, and we’re getting it predominantly from the Russians, we’ve got a major problem here. We cannot let this go on. And we put it on the national stage. That that’s a good thing. And that, first of all, one other thing I would emphasise is that the United States government cannot afford to think too short term on this. They have to have the front end of the fuel cycle, because if you do not have domestically produced Uranium and conversion and enrichment, you do not have unobligated material that can be used for military purposes, we’ve to fuel the nuclear Navy. So that while they were thinking short term, and perhaps they didn’t put the emphasis on this that they should have in maybe over the last several years, that is no longer the case. this is, not only that, but one of the things with the Working Group that I would emphasise, we not only have the support of this administration, we have the bipartisan support of Congress. And most importantly, short term, we have Dan Brouillette as a very strong advocate for the fuel cycle. And that we’ve got the support that we simply did not have even a year ago.
Matthew Gordon: Hypothesis: if the government doesn’t help you, what can you do commercially to survive? Do you think you can survive in an environment where the government has done you no favours with regards to clarity over Russian suspension agreement? Is that possible?
Jeff Klenda: Yes, that we can. Look, let’s assume a zero scenario where let’s the Russians prevail, or I should say the utilities prevail in the Russian Suspension Agreement negotiations, and there is no love there and there is massive quantities being allowed to come into the United States from Russia for the next 20 years – that’s a bad thing. The Working Group, we don’t get the $150M in the budget, and we’re left on our own. Once again, that’s a bad thing. But that, first of all, we’re in a position where we’re in solid position for the next couple of years. That’s not really an issue. When you consider that most of the Uranium space has been living equity raise to equity raise for the last 10-years anyway, we are simply a year, a year and a half from now join their ranks. We, as a company, feel like we’re uniquely well-positioned to withstand that. I’m not terribly concerned about that. And I do think that there that the supply-demand fundamentals are beginning to assert themselves.
And I know that in the past you have had guys like Mike Alkin on the show. I know Mike very well. that he’s doing some very, very good analysis right now. And of course, we all are familiar with the analysis of UX and Jonathan Hinsey over there, so you have a couple of different schools of thought. Now, if you listen to Mike, Mike will say, listen, things are much more dire than is being indicated by the industry experts. Okay. Who is right? Well, we don’t know for sure, but one of the things that we do know is that Cameco has been shut down to the tune of 36Mlbs per year, this morning’s announcement, notwithstanding, and we know that the Kazakhs have been shut down and the Kazakhs have some unique issues of their own. Coronavirus has meant particularly plaguing them and their production facilities and winter is looming. So how long do the Kazakhs stay shut down? That’s a question that nobody, I don’t think anybody can answer. I don’t even think the Kazakhs could give you a firm answer to that right now. We are in a position where the supply-demand fundamentals could reassert themselves in a very big way, by the end of the year.
Matthew Gordon: This morning in the Cameco quarterly, Tim Gitzel, came out and said…the big thing that people were talking about is the reopening of Cigar Lake in September, or restarting of Cigar Lake in September. And, it will take a while to ramp up, but the general reaction so far, it has only been a few hours, but it has been quite negative. people would like KazAtomProm to continue to remain shut down. They would like Cameco, who shut down for the right reasons and said that they would reopen for the right reasons, different reasons, but the right ones, ie. we need to either sweep up spare inventory in the marketplace, and we need the price to get back to where it should be for us, be able to mine and produce economically. So why would they not take this opportunity to reinforce that message? Why open up so quickly?
Jeff Klenda: Let me say here, I have a lot of respect for Cameco as company, and they are the bellwether in our industry. They, as we used to say about IBM, they’re not the market, they’re the environment. In some ways, while that really is Kazakhstan, Cameco is in the commercial markets, so what they do matters. And that this morning’s announcement took the market by surprise, because it is absolutely inconsistent with market pronouncements that they have made over the last 2-years.
Since they shut down McArthur River, they stated very straight forward, they were a basically taking a page out of the ConverDyn playbook, where we’re going to go out there. We’re going to soak up as much material as we possibly can, out in the marketplace, that we’re going to announce appropriate shutdowns. So that was more than two years ago with McArthur River, and with Cigar Lake that was earlier in the year, and they attributed it at the time to coronavirus – COVID, and said that they felt that it was a good opportunity to do exactly what ConverDyn had done, and that is really to soak up excess inventory and secondary supply in the marketplace and to bring the market back into equilibrium. And everybody applauded those comments. And we were really starting to see some movements, seeing some strength in the space over the course of the last couple of weeks, particularly as the, let’s just say uncertainty, regarding KazAtomProm and probably what their actions would be in the months ahead has arisen. And, I thought that Riaz spoke to those quite eloquently when he was when he was on your program.
This is something that really is a bit confounding from the standpoint that, wait a minute, you said that you were going to do these very good things. Now you come out and you’re telling me you’re going to ramp up. They had some very light contingency language in there saying, well, this could be coronavirus contingent, but why they would make a comment that would knock on their own stock by 15%, that baffles any commercial marketplace.
Matthew Gordon: But that is the arbitrage between the ethics, because there are people involved here. People’s salaries are fully covered, but they’re trying to run a commercial business. We don’t know what conversations they have been having with utilities from around the world. Tim skirted around who and where they might be. There are obviously conversations going on in the terms of those contracts. It might be good news for the industry?
Jeff Klenda: Well, that it might be as well. Once again, it depends on who you believe. You and I have talked about this. I mean, is it the very small deficit that UX believes that it is? Is it the 30+M, 35+M lbs that Mike Alkin believes it is with his analysis? Now that there’s a big disparity there; who is correct? Well, we don’t, that’s hard to say because most of us don’t do the deep dive those guys do in terms of analysing the industry. You guys certainly do a very good job of it. You get everybody on there that’s relevant. And then you get a lot of different viewpoints. These guys really tear apart the numbers. Frankly, I hate to confess it, but I don’t do that. I run a Uranium company. I always want it to be a primary supplier to the domestic industry here in the United States, and that’s the business model. I didn’t want to be anything beyond that. These guys really dive much deeper. Who is correct? How deep is the deficit this year?
What we do know, that right now, at least 46Mlbs will come out of the market in 2020, we do know that the targets or primary supply in the market are somewhere in the 110Mlbs, 120Mlbs range, down from 138Mlbs last year. Some of that maybe gets made up some of it doesn’t. If you’re down around those numbers and we do know the consumption’s going to be upwards of 180Mlbs, that’s a very large delta there. There’s a very large differential there. So how has it made up? We know that you can’t make up the entire amount of the secondary supply in under feeding so there is going to be a deficit in the market. How large the deficit is, we simply don’t know? We will have to wait to see some of these things play out. I personally would have liked to have seen Cameco simply do what they said they were going to do, and that is really be a force for good and help this market regain its equilibrium once again. I can’t explain this to you.
Matthew Gordon: There’s some very clever guys out there, but they are only as good as the data that they’re given access to. The problem with this opaque market is that there is a lot of data, which is unknown, so it has been guesswork for the last couple of years, in a very meaningful way. Cameco’s move has changed the perception of the market. What the market said today with all of these industry companies seeing red, is that investors would like to have seen Cameco stay out of the market for a little bit longer, possibly until the new year. That would definitely give us a view of the number of lost pounds in the market. It would definitely give advance of the supply-demand metrics that we’ve been looking at, from even whatever you think the numbers are, UxC or TradeTech or some of the funds. It is a bit more obvious. And it would seemingly show a bit more control over the ability to bring the price discovery back to the market. Overall, it has been quite disappointing news this morning, but we don’t know what other conversations Cameco has had.
Jeff Klenda: Well, let’s take a look at it this way: if it takes some months to ramp up, then perhaps those scenarios are still intact, where we were really envisioning with both the Cameco primary properties being shut down and the Kazakh properties remaining offline, at least for the time being, for an unknown duration. We didn’t know that. But our market strategists felt that we would see +USD$40/lbs pricing by the end of the year. And that despite the fact that we have experienced a bit of weakness, we can attribute that to what we know has been some short selling in the marketplace and the guys that are trying to gain that delta between ConverDyn and Port Hope. That’s an issue. There are guys that are trying to gain that, so we know that there have been short sellers in the marketplace. And that is what has led to the short-term market weakness, but we didn’t feel that that would last very long, and we felt that especially once we got past September 1st, August is a throwaway month, as we all know, once we got past September 1st, we felt that we would see this perhaps slow, but inexorable rise up to that USD$40/lbs mark and beyond, by the end of the year. I still think that that is a distinct possibility, depending on what Cameco’s actions are here. And as soon the analyst projections are correct, Cigar Lake will not be enough to halt that. It will not be enough to prevent $40/lbs from happening by the end of the year. Some of those more aggressive projections are, in fact, going to be the ones we see play out.
Matthew Gordon: We are going to have to wait and see what the impact is going to be. Timing of term contracts being done in any meaningful way – anyone’s guess at the moment. Thanks so much for your time. As ever, frank, to the point, love it. We will hopefully get some more news soon.
Jeff Klenda: Let me just say thanks for what you guys are doing, because you are keeping it out there. And not only that you’re doing it in a very even-handed way, you’re putting the right guys in front of the screen that know what they’re talking about and tell the story. And it allows investors to at least weigh the information for themselves and make educated decisions based on our industry. And for that, I really, I thank you. I appreciate it.
Matthew Gordon: I am getting a warm, tingly feeling, Jeff. That was very, very sweet of you. Thank you so much.
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