Uranium Energy Corp (NYSE: UEC) CEO Amir Adnani on Being Unhedged & Debt Free for the Uranium Bull Run

 

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 an overdue catch up, how are you today, sir?

Amir Adnani: Hey, I'm doing well, Gerardo. Thanks for connecting and let's get caught up.

Gerardo Del Real: Well, let's get right into it. I want to touch on a very, very important piece of news that you just put out here recently, less than a week ago. Before we get into that, I have to, one, commend you on how perfectly you've positioned shareholders for this uranium boom that we're experiencing, and one that I believe continues on. And I just want to get your take on where you think we are in the uranium bull market?

Amir Adnani: Well, thank you, Gerardo. We finally have seen the uranium price get into a range and this $80 a pound kind of level that starts to incentivize certain projects to come into production in the coming years. It's still not high enough for many of the unfunded CapEx projects that will require a higher rate of return, especially in today's high interest rate environment.

But for companies like UEC that have fully built and permitted in situ recovery projects that are always going to be low capital intensity, this is a price that starts to really make a lot of sense. And so as you can appreciate, I think in terms of where we are in the cycle, I think we've been in a bear market for 12 consecutive years, and finally the last 60 days we're starting to see a better uranium market develop.

And considering where supply-demand fundamentals are, demand for this year will be close to 200 million pounds. Supply from mining will be at 145 million pounds. We have a 55 million pound deficit going into 2024 annually. It's going to keep cumulatively growing because there are no significant new uranium mines under construction anywhere in the world.

And we just saw at COP28 in Dubai, the biggest climate event of the year, the biggest pledge ever seen, led by the US, towards tripling of nuclear energy. And Gerardo, that means tripling demand by 2050. And I'm not seeing how the supply side is going to triple. No one made a pledge to triple the supply side. Meanwhile, people are pledging to triple the demand side with nuclear energy.

So this is quite monumental stuff. It's quite unprecedented. Positive in every regards. And like I said, it really turned positive in September when the price really broke out of this $50 a pound range that it was in for most of this year, went past 60, went past 70, and it's now consolidating around 80.

And there's good utility demand around this $80 level. It's not just financial players or speculators or things like that. No. There's real end user demand at these prices. And I think there's a real supply squeeze developing because the larger producers have also announced, the Camecos, the Kazatomproms, that they're having production issues. And so they're in essence short of uranium and they need to buy as well, which just creates a very positive setup. Uranium, as you know, best performing commodity so far this year because of everything we just talked about. But it really feels like things are just getting started.

Gerardo Del Real: I couldn't agree more. I complimented you and the team on how well you positioned shareholders. Not a coincidence the stock is at or near 52-week highs. Let's get into what comes next, Amir. You just had some news. You announced an MOU to collaborate on domestic uranium fuel supply for a big, big player in the space. It is an MOU, it hasn't been consummated yet. But you made a very, very important decision early in this uranium bull market to be unhedged and to make sure that you captured and maximized the run that we're experiencing in the run that I believe continues. And clearly you believe continues. Can you speak to the strategy and how that's paid off thus far?

Amir Adnani: It really speaks to the fact that we've always felt, and still do, that we've been in an oversupplied uranium market for the past decade, and now we have a proper structural supply deficit. And in this context, and given that it's going to take many years for a global production to widely ramp up to meet demand, that we're going to continue to see elevated uranium prices for longer. So higher prices for longer.

And that means you don't want to be in a situation where you commit to any sales or contracts that have fixed pricing or ceilings or any other mechanism that encumbers the upside in the uranium price. And that's exactly what we've done.

Not only is UEC a hundred percent unhedged, but it also is a hundred percent unlevered, meaning it's a debt-free company. And that's also equally important in today's high interest rate environment. Now, the MOU that we signed with Bill Gates' TerraPower, which is one of the fastest growing and leading SMR companies in the United States, small modular reactors, is really to do with the fact that we are recognizing at UEC that there's a whole new segment of demand for uranium emerging from small and advanced modular reactors.

Worldwide demand models, including those by the World Nuclear Association, do not yet reflect any demand from these SMRs, these next generation reactors, which I think is mind-boggling. And these SMRs are certainly moving forward very fast. They're a very exciting arena. It represents significant growth. One of the biggest financial supporters in the context of this arena and with this company, Terra Power, again has been Bill Gates. And it just so happens that their first Natrium reactor is expected to be built in Wyoming in partnership with Warren Buffett and his Pacific Gas & Electric Company. Where they're basically converting an old coal-fired plant site into an SMR site.

And as you know, UEC is not only the largest and leading US uranium company, but we have a very strong presence in Wyoming, and we look to restart our uranium mines in Wyoming. And we really felt it was a beautiful strategic fit to align us as a large US uranium supplier with TerraPower as the up-and-coming SMR company, to really commit to one another in terms of making sure that their future needs are covered.

Of course, this is all in the context of our unhedged strategy, but at the same time it shows that we're willing to ensure supply certainty for what we think is a very exciting growth arena with these SMR companies. And we received very positive feedback from the governor of the state of Wyoming, Governor Gordon, and various members of the delegation in Wyoming. Senator Barrasso spoke of our deal in the senate hearing on national resources.

And so you can see the State is excited about deals like this, Wyoming uranium for a new exciting Wyoming reactor. So we're very delighted about this, Gerardo, to be able to really position the company. Where if you look at UEC in 2023, we started the year and we announced that we were supplying uranium earlier in the year to the United States Government Department of Energy to help establish their strategic uranium reserve. We're ending the year with this deal with TerraPower.

And so it's a great way to bookend the year to really remind the market that there are these unconventional sources of demand emerging. That demand for uranium today isn't just the utility companies with existing large reactors that need uranium, but it's also these emerging new sources of demand that we simply didn't have before. US Government in previous cycles in the past few decades has never been a buyer of uranium. It's a buyer of uranium today. And we expect to see the strategic uranium reserve become, at least according to the government itself, a $1.5 billion holding of physical uranium. They've only purchased $60 million of that so far. And again, this emerging demand from SMRs, which is going to be a total game changer, is another arena that we're very excited about and we want to really support it.

Gerardo Del Real: Well, listen, Amir, subscribers of my paid service, Junior Resource Monthly, are up some 400% on UEC. I suspect this is just the beginning of what's going to be a quadruple digit win for subscribers and myself. Thank you so much for the time. I know you're busy, I know you do a lot behind the scenes to really lobby for the industry and your companies. And so I'll leave it there. Anything that you want to add to that?

Amir Adnani: I think it's great timing, I agree with you. I appreciate you and your subscribers having been there from the get-go, being very early to this very exciting situation in the uranium market. But like you said, things are just getting started here, this is just the beginning. And I look forward to even more excitement and positive news in 2024 for our company and our sector.

Gerardo Del Real: Excellent. Have yourself a great Christmas, holiday, end of year and New Year if we don't chat Amir. Thanks again for your time.

Amir Adnani: You too.

Gerardo Del Real: Cheers. 

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