Categories: Energy
Topics: General Energy

Uranium Energy Corp. (NYSE: UEC) CEO Amir Adnani on Achieving Key Milestone at the Burke Hollow ISR Project with Installation of 106 Monitor Wells in the First Production Area

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President and CEO of Uranium Energy Corp., Mr. Amir Adnani. Amir, it's great to have you back on. How are you today?

Amir Adnani: Hey, Gerardo. Thanks for having me. It's great to be on. I'm doing really well today. This is a strong uranium day. Uranium stocks are all up and UEC is leading the way, and we had exciting and important news out on the tape this morning, so it's a good morning, Gerardo.

Gerardo Del Real: Well, that's great to hear. You did have some important news. The last time you and I chatted, we talked about the uranium space and the bullish fundamentals, and we talked about the bipartisan support that uranium domestic supply and supply chain is receiving. You described that as historic support and a historic announcement. And I'm talking, of course, about the Biden announcement a few months back that really kind of put the fire underneath the uranium fundamentals. The news you had today positions UEC beautifully to capitalize on them, so I'll let you sum it up. You installed 106 monitor wells. Can you tell us why that's important and significant as you describe it in the news release?

Amir Adnani: Well, and maybe I can just actually build for a minute on our last interview and just the comments you made right now about how the White House really came out big once they requested Congress to consider additional funding of over $4 billion to go towards procurement of US-mined uranium and then additionally, enrichment and conversion. And since that news and since that interview, within the Department of Energy, you have the US National Nuclear Security Administration, the NNSA, who's doing the actual purchasing of uranium, and they've actually come out with an RFP, basically a tender process looking to buy up to a million pounds of physical uranium. This is just the beginning of this historic movement development that you and I talked about last time, this development where the US government is now starting to build a strategic uranium reserve and the more complications we have with Russia, with geopolitics, with Russia's invasion or Ukraine, the greater the imperative becomes to build domestic capabilities of uranium of which we have very little right now. And that's why this is of such great national and energy security importance.

So with that backdrop, with the fact that you now have the US government in the market, officially, looking to buy physical uranium for the first time since the 1950s, it's quite exciting to have achieved this milestone that we announced this morning with our Burke Hollow project, which is in South Texas, and Burke Hollow was an initial discovery that our team made in this past bear market cycle. When no one was paying attention to uranium, we were out there drilling, and we discovered this deposit, permitted the project, and today, announced that we've completed the installation of 106 monitor wells for the initial production area of the project.

This is an important production-oriented milestone. It means we're that much more close to being able to restart uranium recovery here and, of course, at the right uranium price, and that uranium price isn't $47 or $48, which is the current price on the market, but what this project allows us to do, and we stated this in the press release, this is, right now, the newest and In-Situ Recovery well field at Burke Hollow being developed in the United States.

And that's just not only exciting for our company, but I think it really demonstrates the sector leadership that UEC has in the United States and as a truly North American-focused uranium developer producer.

Gerardo Del Real: Describe for those that may not be familiar with UEC your hub and spoke strategy in South Texas and if you can kind of expand a bit on the fully licensed Hobson Processing Plant because I think, again, you've done a brilliant job positioning the company and shareholders to really capitalize on what I see as a uranium bull market that's going to get really, really exciting really, really soon. The fundamentals are already very exciting, but I think the recent consolidation in the uranium equities is close to over, and I think the next leg up is going to be extremely profitable. Can you speak to that hub and spoke strategy a little bit and why that positions UEC really well moving forward?

Amir Adnani: The hub and spoke strategy is really a vision that we've had towards mine development to reduce cost and create scale. Since the early days in 2004, early 2005, I was doing my homework, driving around South Texas and realized that this is one of the most uranium rich areas in the world that's under-explored. And we decided to stand up Uranium Energy in Texas and set up the company there. And as you know, for the longest time, we've been a Texas-only focused company and believing in the same thesis that the US Geological Survey laid out. Many years after, we kind of stood up our company, and the US Geological Survey has come out numerous times saying, "Look, one of the least explored areas in the United States with the greatest potential for uranium deposits and discoveries is the South Texas Uranium Belt," basically south of Houston, down to the border with Mexico.

And so we felt, “You know what? The best way to capture the potential of such a large area, such a large district is to employ a hub and spoke,” And we had the benefit back in 2010 to acquire and then expand and build a processing plant at Hobson, which ideally is situated right in the heart of the South Texas Uranium Belt. That's your hub and the ability then to go out and acquire brownfield projects like what we have at Palangana, which was previously owned by Chevron. We produced uranium there. We have it on care and maintenance now, but then to also tap into greenfield projects. That exploration potential the US Geological Survey was talking about is demonstrated in Burke Hollow.

This is a project that we went out there, followed that thesis that, "Hey, this is a region with potential for new discoveries," discovered uranium at Burke Hollow. It's a big 20,000-acre ranch. And here, we are fully permitted, and this is just one of many production areas we expect to have at the Burke Hollow project. This is just the initial one, but it's only 50 miles away from the Hobson Plant. That's the hub. And so between Burke Hollow, Palangana, and three or four other projects in South Texas, we create this hub and spoke strategy.

And Gerardo, that's what really appealed to me when I looked at what the Russian government had done in Wyoming over the last 12 years with creating a company your listeners might be familiar with called Uranium One, and Uranium One was really that same concept, the same concept of a hub and spoke, but in Wyoming, the same thing we were doing in Texas that the Russians were doing in Wyoming. And they had invested over $400 million in developing a hub and spoke model in that state. And that's why last year, when we had an opportunity to acquire Uranium One from the Russian government and luckily, we were able to do that right before Russia's invasion of Ukraine. We managed to basically double up the size of our business, right, where we now have two production platforms, two hub and spoke strategies within the US, one in south Texas and one in Wyoming's Powder River Basin and Great Divide Basins.

Gerardo Del Real: A lot to like. I suspect the end of Q3 and the beginning of Q4 is going to be one of the more exciting ones in the uranium space. Amir, always appreciate your insights and your thoughts. Anything to add to that?

Amir Adnani: Just very excited, Gerardo, because since you and I last spoke, the fundamentals of the sector just continue to go from strength to strength. I've just never seen the setup for nuclear power and uranium fundamentals this strong, and you and I talked, before we started recording this interview, about the current economic climate in the world, fears of whether we're in a recession, going into one, depending on who you're listening to. The bottom line is uranium is a completely defensive sector at a moment in time where there's so many questions and uncertainty in the world. This is a commodity whose demand profile has not changed at all, irrespective of whether we have 1% economic growth or 5% economic growth. Nuclear reactors, of which there's 440 operable in the world, continue to use uranium at the exact same rate, irrespective of rate of economic growth and activity.

So this is a completely defensive, countercyclical commodity that actually, after a 12-year bear market, is finally coming into the bull market of a lifetime for itself. And I think the news around not only what is happening in Washington and what the White House and what the US on a bipartisan basis wants to do to support US uranium mining is complemented with what's happening in Europe. You've had the European taxonomy, the European member states voted in favor of including nuclear power in the European taxonomy. You've had the Japanese prime minister calling for the restart of reactors in that country to meet with energy shortage and issues with a very hot summer and the heat waves that they have in that country in Japan.

And let's not forget for the whole world. At least the Northern Hemisphere, winter is still coming. And with winter coming, we have, again, the issues around shortage of energy and the need to have reliable energy to keep ourselves either cold or keep ourselves warm, and nuclear is the backbone of reliability when it comes to energy.

And that's why I think it's in so much demand, and that's why we're seeing this unprecedented growth, and that's why I think even in an environment, irrespective of what the Fed does, irrespective of what the economic rate of growth is, this is a commodity that should do really well as it enters this new, very exciting bull market phase moving forward.

Those are my closing thoughts and comments and look forward to connecting with you again soon.

Gerardo Del Real: Thank you so much, Amir. Interesting times for sure. Appreciate the time, as always. We'll chat soon.

Amir Adnani: Talk to you soon.

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