Brandon Munro #10 - Uranium Geopolitics Starting To Influence Market Price? (Transcript)

June 22 2020, 14:36 GMT+01:00

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We have interviewed Munro throughout this uranium bear cycle; his insights have been incredibly useful for investors.

Uranium has always been very political. Munro covers some extremely important topics that retail investors can't ignore.

Nuclear Intelligence Weekly interviewed the CEO of Kazatomprom, Galymzhan Pirmatov, in May, but it is only now receiving mainstream coverage. Munro discusses Pirmatov's comments and sees the interview as an in-depth version of the UxC interview we have previously discussed on our platform. Kazatomprom's team has created a complex strategy that looks very smart. It is positioning the company well for a new uranium bull run.

Moving deeper into Kazakhstan related issues, we talk geopolitics. We've previously discussed how much pressure Russia could put on Kazakhstan's uranium production, but this week we touch on the opinions of U.S. uranium producers, who have become increasingly frustrated at Kazakhstan flooding uranium into the market at zero margin to keep the spot price compressed. They are demanding more transparency this time around.

Munro then touches on vanadium: he actually sees a more compelling national security argument under which a section 232 petition could occur than uranium ever had. Predicting the trajectory of the uranium price is far from an easy task; it's likely to be very volatile. Munro isn't forecasting anything. He's still bullish, but he is aware of just how volatile global markets currently are.

What did you make of our interview with Brandon Munro? Did you enjoy his pearls of knowledge? Comment below and we will respond.

We Discuss:

  1. Nuclear Intelligence Weekly interviews Galymzhan Pirmatov: Opinions and Implications
  2. Uranium One Numbers: Our Take and Interpretation
  3. Kazakhstan’s Sovereign Wealth Fund, Samruk Kazyna, Sells Stake: Why and What Will the Impact be?
  4. Kazatomprom's Dividend Policy Challenged
  5. Geopolitical Chess Game: US Rhetoric on Kazakhstan and Russia
  6. Potential Strategies for US to Assure National Security and Save Their Nuclear Industry
  7. Vanadium to Get a 232 Petition? Is it Necessary?
  8. Choppy Spot Price for Uranium: Predictions and Trends
  9. Peninsula Energy to Raise $40M: What's Happening on That Front?

Matthew Gordon: Brandon, how are you doing, Sir?

Brandon Munro: Well, Matt, what about yourself?

Matthew Gordon: All good here. All good here. Desperate to talk to you for our weekly catch up because there's been a lot happening. Again. Geopolitics at work. So, some of the things that I have noted: well, let's start with Kazakhstan first of all, because I think that the geopolitics is the theme for this week, right? So, and the impact it's going to have on utility buying. And the little bit of update with regards to production as well. So, I think it was Nuclear Intelligence Weekly who had an interview, which was, I think, back in the end of May, but it's only sort of come out recently with Mr Pirmatov, who is the CEO of KazAtomProm. Quite a few interesting points came out of there. So, first of all, what was your take on the interview? It seems quite smart to me.

Brandon Munro: It was a good interview. Yes, it was probably the next level of depth after the UXC interview that we talked about a couple of weeks ago. And we should tell everyone that this is normally subscription-only material, but fortunately KazAtomProm are putting it up on the media portal in their website, so good folks like us can go and look at it. So, good depth, good level of questions and indicating I think a very sophisticated, outward facing approach now coming out of that corporate team in KazAtomProm. There were some things that I think are important for the market generally to understand out of that. The first one that I found useful is that there has been a bit of speculation about what happens if KazAtomProm comes on earlier than the three months where they've had their reductions and their suspended well head development.

So, I think as at 22 May, when this interview was first recorded, I think they have well and truly put that to bed. He said that you are right in assuming that it's going to be throughout the second quarter, and he certainly left the door open for it extending beyond that. And the one comment that was made in the context of how they draw down their inventory was, well, if it does go on longer than the three months, we certainly can't rule out needing to buy on spot to meet our deliveries. So, I found that aspect really quite interesting as well.

Matthew Gordon: Well, it's huge. That's a huge statement if it comes to be, obviously, but the fact that he's leaving the door open for it; one, I think to me that it shows responsible governance in terms of staff, employees, etc. It's responsible reporting in that it kind of gives the market a little bit of guidance as to how they are thinking. But the bit that I was quite interested in was where they talked about where they are. They have always been a big, big, big producer, but in the section where they talked about sales into the market, I mean, it goes back to like 2015 to today. I thought that was extraordinary because it wasn't the kind of the well-run oiled machine, they were kind of trying to work out how they actually got product into market. So again, what did you think about the way they described that and what are the implications for it today?

Brandon Munro: So, people can go right to the end of the interview to see that couple of paragraphs. You are right; it was really interesting and very useful context, particularly for someone who perhaps hasn't followed KazAtomProm, over the last several years like we have.  Essentially, what CEO Pirmatov said was between the three years from 2015, 2016, 2017, KazAtomProm wasn't actually able to sell all of its Uranium. And he said that they only sold about three quarters of it and a lot of that was through traders. So, when you go back and look at the Uranium price during that period, it starts to make a lot of sense; if KazAtomProm was struggling to get rid of their material, no wonder it was sold down to that extent. But what's important then is that he confirms that through THK and I think just becoming a lot more commercial and a lot more sophisticated, they've got a lot better at that and they've been able to, for 2020, actually oversell. And I think that was one of the comments that came out in our discussion when they did release their results a few weeks ago. So what they've seen is a period of a few years of underselling building up producer inventories, obviously being a very motivated seller, if they can only get rid of three quarters of it, to now moving to a point of not only balance, but before the COVID disruptions, they were already overselling to reduce their inventories down to the target level, which he mentioned there.

So apart from just having, you know, good data for people to get hold of and read and understand and contextualize, I found it interesting because you get the impression that there's been this open tap of material that the utilities and the traders and others have just been accustomed to loading, you know, pulling out the bucket and filling it whenever they needed to. And that's really changed now. And I'm not sure that the market at large of Uranium bias fully understands what this means if that tap suddenly slams off. And you can't just blow the bucket up there, you've got to go and start buying your water in small bottles. So it's that type of a movement or change or shifting in market dynamics that I think of when I read that paragraph, and if that's the way it plays out, I think it's very telling about how much this market is going to tighten up.

Matthew Gordon: I think so. I think so. And the other component to this is technical, because this is an ISR operation predominantly, and there's some technical limitations to that. They can't just switch off ISR or, you know, the whole thing effectively, it freezes up, you know, the glue solidifies as it were. So how are they, or are they maintaining, you know, bare minimum run rates to kind of keep this thing going so that when they do switch on, there's not such a huge, again, another delay in getting up to full operational capacity?

Brandon Munro: No doubt there'd be some work being taken place at a desktop level in terms of planning as to how they will recommence wellheads. And there'd be lots of smart people within KazAtomProm gaming through just how they can operate with the logistics and so on to get everything moving. But don't forget, this is a company; they've got something like 22,000 employees in KazAtomProm. So, it's not just about getting started again at one single operation, one mine. They are going to have to do that all over the South part of the country. So the other thing that probably relates to what we were just talking about is that the market hasn't felt these production disruptions out of Kazakhstan yet because where we're at the moment is all of those we're only halfway in or a bit more than halfway into this three month period. And most of those assets would still be producing more or less what they were producing before, because they'd be working off the pregnant liquor or the material that the solution that's got.

The acid in that dissolves the Uranium, that was a result of the wellhead development that was done several months ago. They will only the best quality assets will still be producing. They'll still be pumping that solution out more or less how they have perhaps the more challenged geological assets they'll start to sear a tapering off. So, they'll see it in their solution numbers, they'll see it in the permeability rates and the amount of solution that they're able to actually to draw for a given level of pressure and so forth. But even once they'd started wellhead development, this is a several month lead time process. So if, if they've operating a, let's say a lesser quality asset, that's already tapering now, well, you've got to take the day that they start there and add three months before you'll start seeing that laden solution coming back at the level that they used to. So, you've got this lag effect that will only come into effect a few months after the decision is made to get back into it and to re mobilize the bulk of those 22,000 employees and get them working productively again.

Matthew Gordon: Absolutely. So, it's not binary, it's not on-off. There will be a lag again that impacts the market again, that affects access to U308. And again, that's very telling for that for the marketplace. Now, one of the other companies too, you're sticking with the Kazakhstan theme for a little bit longer, a Uranium one, they put out some numbers. I, again, interesting. I think production is down slightly but profitability up, because you know, they've been able to sell it, sell at higher rates. So, you know, swings and roundabouts though, but I suspect we're going to see a, you know, different sort of set of numbers from them. I have seen the next quarter, but again, what was your take on the Uranium One announcement? What did it tell you?

Brandon Munro: So, on the face of it, on the face of it, what we saw was on a seasonally adjusted basis. So, this period versus the same

Matthew Gordon: Year on year, yes.

Brandon Munro: Their production levels were down by 5%. Now, what I think is interesting there is, I don't think that number has taken into account what's happening in Kazakhstan yet because Uranium One has got amongst the best of those Kazak ISR assets. So the ones that I would expect to have the most resilience, the assets that would carry on producing at nameplate for the longest after the wellhead development stops are that portfolio of Uranium one, two together with 1 or 2 others that are in joint ventures with a rhino and also you know, in kinds of fantastic project as well, but chemicals got, so I don't think we're seeing the effect in those numbers. And yet they're already down 5% for either just reasons of those assets depleting. We've talked before about how ISR mines do have a long tail where they start to run off and they start to deplete. They're not as binary as the conventional mind that you know, essentially runs out of all one day and, and grinds to a halt. So presumably what we'll see is continued reduction. And regardless of that, it's just indicative of what we're seeing across the whole market, whether it's the Olympic Dam or whether it's the Namibian giants or whether it's Uranium One, it just seems that there's 5% to 10% being shaved or for everyone's production numbers at the moment, assuming that they're still producing.

Matthew Gordon: Okay. You think that's a case of well head decline v deliberately reducing production, because the price in the market is, you know, if there was access to product and market, why pump it out there and sell it for a low price?

Brandon Munro: I just haven't seen any evidence of Uranium One operating in that way. They've got low production, low cost assets. What I have observed is they're quite willing to sell at the prevailing market price. And they were quite willing to do that even when the spot price was in the low twenties. So maybe there's an element of that, but I it's nothing that I have been able to pick up.

Matthew Gordon: Okay. I'm sort of intrigued to see how these numbers play out in the next quarter because there's, there's again, harking back to conversations we've had previously. And I think something that I want to end on with, you know, the US impression of what, what Russia and its allies are trying to do to Uranium prices. I just, I just would like to understand that at some point right now it's all speculation, but again, I think the final kind of Kazakh focused story for this week as if we haven't had enough already was Samruk-Kazyna they have put up, well are offering up to 5% of KazAtomProm. They're big holders, but I think the number talks about is for it's about $150M for about 4.5%. Again, why, why would they do that now? They are $75Bn fund. So, I guess this is inconsequential to them, but even so it's a, it's a bit, a big, bold move. What does it say to the market?

Brandon Munro: So, there's a couple of things here that are quite interesting. So yes, there are a very big sovereign wealth fund, but this is very important for them. A few years ago, Kazakhstan created a roadmap of privatizations, predominantly assets through Samrat Casona, but you know, also other privatizations as well. And cause that prom was seen as being the flagship. It was the first ship out of the harbour with significant telco airline privatizations backed up behind it, et cetera, et cetera. So, they obtained an, a plan or an approval back then to reduce their holding down to 75%. A as everyone knows, there was the initial IPO where they reduced their holding to about 85%. Then in September last year, they did a secondary sale, which brought their holding down again by a few percent and that four and a half percent that you mentioned that was actually what they were intending to do.

And they ended up upscaling it taking about $206M rather than the $150M and reduced themselves all the way down to the 75% target. There's a small retail component back into Kazakhstan. But if you assume that that's all fully subscribed, and they will be bang on 75%. And that's box ticked. In terms of the timing. I think if you look at the share price graph of KazAtomProm in London, that probably tells the story here that the secondary place in September last year was at $13 per depository receipt and they've traded below now they've popped up above it and it just looks to me like it was their first good, solid opportunity to get the job done without doing it at a lower price and the previous price it was set so well done to the sovereign wealth fund, I'd say, but what it also means for the broader market is quite interesting because there's another $200M worth of stock that's been placed predominantly institutionally generalist investors have picked that up.

So, one of the things that the Uranium market has suffered from is just being so small, very important as we always talk about, you know, it's an incredibly important energy source, but the investible universe is very small. It's hard to get banks interested. It's hard to get analysts at broking firms and, and so on interestingly, to get enough volume going through their desk to them investing in coverage. So, here's another $200M out there. They, they did a switch rule on their advisers. I saw. So, there's another couple of advisors who are incentivized to get out there and talk about the story and all of that just has to be positive for the market. It's just extra eyeballs, extra reason to talk about Uranium and cause Adam prom. So, I think it's a good development and now it's brought that whole cycle to an end.

And now KazAtomProm is the entity that we were waiting for it to become. Now, the other thing that I find quite interesting is just getting back to that interview for a moment, quite a bit of discussion about dividends. And they've got a very generous dividend policy. And I must say the folks that Nuclear Intelligence Weekly are very astute, do you know, I like them a lot and they're, they're good, intelligent journalists as the name would suggest, right? So, they pressed and prodded and it to be on the dividend policy for two, from 2 angles, really, first of all, and the dividend policy is to pay out 75% and KazAtomProm made a commitment to pay out $200M. The first angle is, well, you're going to need a fair bit of capital to get this wellhead development started up again. How are you going to go with that?

Is there enough there? And cause I don't prompt said they would, but you know, I think the fact that those questions were being asked is interesting, but the other element is the Tenge certainly is very helpful for KazAtomProm it's really dropped a lot because they've got Tenge costs and a US dollar selling price. So, in terms of running business, that's fantastic. Except when you've made a commitment in U S dollars to send $200M out the door. So that was the other line of questioning, which is starting to pick apart a little bit at well, if the Tenge continues to fall, how's that going to help your capacity to pay dividends? And when that, the importance of that and the relevance back to the whole market is that's going to create further incentives that are commercial level for cars that impromptu allow this market to continue tightening and to allow the Uranium price to generate better margins for them, just so that they can keep topping up the bank account and to be able to both pay that dividend out as well as have the capital available to get started again.

Matthew Gordon: Yes. I mean, it's a very generous dividend. I mean, I I'm stunned that they were set up at that and if I'm stunned that they would set it cause they, they don't need to. Do you think it's under pressure from back home with the, the sovereign wealth fund?

Brandon Munro: I'm not sure pressure's the right way. That's just how it was set. The sovereign wealth fund is there for generating money out of its sovereign assets and deploying them into other parts of the country. So, it has been a cash cow and they want it to stay that way. Undoubtedly, that's what it's all about creating those expectations to generate a point of difference, I think on the LSE.

Matthew Gordon: Yes. Well I think that's my, my next point is that is the need for their parents of transparency because there's one group of people who are not buying it. And that's, I think the US Uranium producers & juniors who are saying, well, actually you are undermining our markets. You have been constantly selling into the market at zero margin gains because you're trying to undermine what we're doing over here. You're trying to take over our energy business. And there was an article to that effect this week from The Hill. It was okay, a lot of politics involved in the narrative and the wording and the way they crafted that message. But do you, do you think that Kazakhstan is trying extra hard to be seen as a proper company, Western standards? There's now 25% of shares in the open market? Are they concerned about their reputation?

Brandon Munro: Yes, I think they are. I think they are trying hard. I think they're as best as they possibly can. They're adopting quality governance seeing the way that they behave behind closed doors as I get the chance to, I can never fault any of that. Their inner process of commercializing their mentality and their culture in the organization. And that can be a slow ship to turn around. Not only for businesses that have emerged from a Soviet sphere of influence, but the same thing happens in privatizations in countries like the UK and Australia, you know, you take, what's been a government entity and you try and get those that empower organization to think culturally like an entrepreneur and it's, it's hard work. So undoubtedly, there's a bit of that that's going on, but I just, I struggled to buy some of the, some of the accusations that are coming out at KazAtomProm in the US it just doesn't add up for me.

Like they're only selling 10% of their own product into the U S so they're certainly under selling into what is still the world's largest Uranium market. So, this concept that they'd sort of flooding it, it just doesn't the numbers don't support that. And when you look at the report that we talked about last week, the EIA report it wasn't the Kazak material. That was the cheapest, it was the Russian material. So, the material coming from KazAtomProm also from Uranium One. So, and when you put that Kazak material against Australian material it's more or less the same price. So, the numbers don't support the type of rhetoric that you just described that is coming out of some corners of the industry. So, I struggled to believe it, and I struggle to agree with it.

Matthew Gordon: So, but aren't, they are falling under the umbrella of Russia. They, they are being positioned as a puppet for Russia. They are, will do exactly what they're told by Russia. And there's this very aggressive national security stance on, on multiple fronts in the US at the moment. And I think we'll need to stay up, stay away, maybe from what's been happening on the streets of America this week. That's a, that's a very hot topic, deliberately deservedly, slow, hot topic, but for today on Capitol Hill in lobbyist groups, we're seeing this very aggressive language. We've got another Section 232 coming up for Vanadium, which we'll talk about in a second. But this whole national security issue as a justification for a lot of these industries. Cause they're seeing it as a route to maintain the you know, the America's position in the world and be self sufficiency. And, you know, for lots of reasons, people are using that as the headline banner for their argument, national security don't you think that the US is justified in taking that position? Why, why should it be beholden to Russia? Why should they let Russia come in and take over there that energy or nuclear energy requirements, because this is the, it's the game of political chess, isn't it?

Brandon Munro: Yes. I think there's 2 parts to the question that you've just asked. The 1st one is the concept of lumping Kazakhstan and Russia together. It's a convenient thing to do. And I think for let's say a readership or an audience who maybe haven't spent much time thinking too carefully about a lot of this stuff or haven't followed the history or haven't been to those parts of the world. It's an easy thing just to lump more together. They were of course, very close they're all in the Soviet Union together. Still a lot of Kazakh commerce and spoken is done in Russian, et cetera, et cetera, but it's a sovereign nation. It is its own country. And whilst, possibly Russia still got a lot of influence there. And we've talked before about what would happen if really, if push came to shove, push isn't coming to shove at the moment, and I think they are operating fairly independently.

They certainly regard Uranium One and Atom (inaudible) as competitors and certainly behave as competitors. And until something happens where the geopolitical deck chairs get moved around a little bit, I think it'll continue that. So that's the first part of the question.

The 2nd part of the question is I think what you're asking about is it is the US enabling itself or making itself too vulnerable to Russian dominance in the energy sector, which is nuclear. So, and this, it goes to the whole Russian suspension agreement and discussions to a lesser extent, Section 232, the answer is, in my opinion, the US does need to be careful of that. They need to be very careful and their solution needs to be, to get their own industry to the point where it can compete as a viable alternative, and not only for the Russian suppliers, but also the European suppliers.

And that came through in the nuclear fuel working group report. There's an understanding that that is the case. The article that you're referring to that was published in The Hill, and they talk about it, some of the more extreme views in the industry about what levels of enrichment and contracts and so on might be expected should the Russian suspension agreement not be renewed. And they're probably realistic. I think there was a number there are 40% of US demand after the end of this year. And when you look at how well the Russians compete well, that's probably about right. They probably would be able to fill that amount in, just on producing a very good product reliably at a very good price. Now, where does that leave the US well, yes, it does leave them quite vulnerable and the best way out is for them to have their own domestic alternative that's viable and competitive.

Matthew Gordon: Yes. I think if you look back to how Russia has used gas or weaponized gas in Europe and with their NordStream 1 and NordStream 2, I think that seems to be what the Americans are fearing. That if he, if you let the Russians come in and control 40% of the nuclear energy supply in the US they take the lead, they start dictating, and the utilities will be at the behest of what the Russians decide. So, it, I think the fear seems to be Russians producing at a not-for-profit basis. And in, in a way where it's a lost leader effectively, they're saying we don't mind losing money here, but we'll, we'll play the long game. We don't mind we'll subsidize it from elsewhere because it's not a lot of money in the scheme of things or cripple the US ability to produce because companies are independent that there's nothing nationalized in the US although they're having some calls of the past couple of weeks to nationalize a number of commodities, Vanadium being one of them, which like, I guess we should talk about.

So I think that's the fear from that, but I'm not quite sure from what you said, whether you, whether you believe that those fears are valid or you think that the strategy is that the Russians are employing is misunderstood, or indeed, maybe, maybe they are valid. It's just commerce, it's not geopolitics, it's commerce.

Brandon Munro: Look, I think those fears are valid and you see them expressed in rather shrill terms from time to time. So if I'm being a bit cagey here, I'm just being very careful what fears I'm agreeing to, because there is a fair bit of console out there, but in the way that you've just described it, I'm quite happy to, to agree with you there, that there is a legitimate risk here that needs to be fundamentally mitigated, and it can be mitigated in a couple of ways. The first one is what I talked about in terms of establishing the American industry as announcing quite determined to do, but it also needs to be mitigated at a utility level or at a reactor by reactor level. And that exists amongst many of the US utilities. Many of them have their own risk mitigation policies where they can't be more exposed to X percent from Kazak / Russian material.

They group them together and, and so on, but it's not uniform. And the risk mitigation, what we would regard as sensible risk mitigation when prices are really low. Number one, it's pretty tempting to look past some of those risks when you can mock-up really cheap pounds. And secondly, when prices are low, that risk just doesn't seem so real. It doesn't seem so acute. You know, when there's 2015, 2016, when there was so much material around, as we talked about is it really realistic that Russia could turn off the taps? You know, there's all of this around fast forward to 2025. When we do know that there's going to be a real crunch here, that's when they're at their most vulnerable. And that's when the mitigation needs to be both at an industry level, at a government level and at a reactor level.

Matthew Gordon: And I think that's what people were certainly Section 232 was about you had these companies begging their government to help them fight against what they saw as you know, a state competing against a company, which, you know, has, it has a balance sheet, which, which looks like it. They, whatever it was for, for those 2 companies at the time, they couldn't possibly hope to win. What they needed to do is kind of create this recognition that this was a potential problem and what the rhetoric we're starting to see off the back of a nuclear fuel working group. And even prior to that, and certainly some of the press was coming out now. And, and I appreciate these are possibly pay for a lobbyist type articles, which is a little bit, you know, sensationalist. But the point, the point is there's a mood in America.

Now Trump has created a mood on several fronts, but businesses, I think, want him there, he, he is pro business. He's telling people what the success rate for some of those industries is another matter. And the fights he chooses to fight is another matter, but Uranium and nuclear have got the attention of, of the hell. We still haven't seen any announcements around. We've seen lots of announcement, non no announcements around the commercial component. What is the government going to step in and do, how much money are they going to put forward? We talked last week; it's going to take billions of dollars. We're still not hearing that kind of conversation. It's just all competent without any substance. So, do you think it's coming down the line or again, a key convert? This question, is this just a lateral rhetoric?

Brandon Munro: So, two things there, the first one is America's vulnerability to Russia. If we can just lump the whole concept of Russia together, when it comes to Uranium is very different to their vulnerability, to Russia when it comes to enrichment. And Section 232 was about Uranium. So, I'm not so willing to take what is a genuine vulnerability when it comes to enrichment services and extrapolate that to Uranium. You know, they're still Canada, they're still Australia, they're still Namibia. For it, for at least the foreseeable future there's Kazak material that will be reliably available there. So, it's just a really different proposition. But the second point that I'd make is that the strategy adopted that was articulated in that in that report, I think is very sound. They're saying we we've got a fairly limited strategic reserve at the moment. It's what they've got at the moment is only enough for about 7 reloads.

So, if they did find themselves becoming too vulnerable, say to Russian enrichment, and there was a spat, and that was withheld well, they don't, you know, and there's 90 reactors there, right? So, seven reloads doesn't really buy them very much time. So, the strategy then a building up that reserve from seven to what really needs to be more like 22. It needs to buy them in a good solid year, if not to have buffer time, that's a solid strategy. And that's something that I can really get behind and agree with. And the idea is they want to take that Uranium that's talked about, then they want to make sure that they've got conversion that is re-established in the US so they can then that Uranium push it through the conversion cycle to create the demand, to get convert on up and running again at metropolis works facility. And then they're talking about, we need to enrich that material so that their stockpile for strategic reasons, as a primary form of mitigation against this vulnerability that we're talking about is sitting there in AUP. And then it's just fabrication. And the US exposure to geopolitical interference in fabrication is actually very small.

Matthew Gordon: Okay. I buy that argument. You mentioned that something that you said, US needs friends. You've still got Canada, you've still got Australia, still getting them. Maybe they need friends. It's very combative environment at the moment. Doesn't seem to be a lot of French friend making going on at the moment, because it was bringing on a topic. Again, we talked about last week, which was the Iranian sanctions, right there has, at the time, there hadn't been a response. I think there was a response by Russians Senator, but that was it. But now we've got the French, the Germans and the UK of command said, we regret the US has position on the Iranian sanctions. China has come out and effectively said, forget it. If anyone wants to, we're cracking on us normal, and if anyone wants to join us, we would welcome them.

The Russians, I think there's no official statement from them, but I can imagine that's going to be something along the lines of the Chinese. So, if the America American is to deal with this. We talked last week said it's not a big enough deal commercially for countries to go to go to economic war with the US and we've, and we've seen Trump's temper tantrums in effect that China, even the Chinese wobbled a bit there. So, Europe's not going to do too much about it, but it's pretty strong language that they’re… well for Europe… they're using there about their belief that the US has called this wrong. So, is the US going to back down or is, or is it going to encourage you it's convictions and carry on as normal?

Brandon Munro: Well, that language has been used consistently, right? That to May 2018, when president Trump unilaterally with, during the first place. And it doesn't seem to have swayed the decision making too much. In the meantime, we've seen a willingness, I think, from the administration to rub up against its allies and its friends as it suits them. So, I don't think that's going to be particularly persuasive. It is strong language but there was a huge diplomatic effort back in 2018 to try and dissuade the administration from leaving the JCPO way. And that ultimately was ineffective. We don't know just how much they manage to slow the process down. And perhaps they did, perhaps there was enough discussions behind closed doors, but it ultimately didn't succeed in trying to pull that deal back together. And we haven't seen it succeed in any way in terms of renegotiating or bringing your new deal to the party.

The other thing to bear in mind with China is they can't really do anything in the US in the nuclear sphere at the moment, either because they're largely unable through either the trade dispute or through direct sanctions in, on some of those Chinese nuclear entities. So, they don't have much to lose in the way that Russia does. So, it doesn't surprise me that China's basically saying, well, you know, around sits at the, towards the end of our belt and road initiative, a large part of our export strategy is about rolling it out through there. So, if the US is going to make open up those pathways for us, but we'll jump into them.

Matthew Gordon: There has been this week by the US Department, of Commerce they said it was going to open an investigation into whether inputs of vanadium, which are the metals used in aerospace and defence and energy applications. They're looking at a potential section two, three to probe. Another one as we alluded to earlier is, did we, did they need this? Is this just another move by the vanadium lobbyists to try and get noticed? Cause they've seen what's happened with Uranium?

Brandon Munro: Well, I think you could probably argue that in vanadium there's a bigger cause for concern than Uranium in many respects. Not only does it have those technology related applications that are used in directly in national defence and national security, but vital in steel production and becoming a lot more important in storage as well. And certainly, my opinion that vanadium redox flow batteries are the only currently viable commercialized technology and storage, if you don't have access to pumped hydro. So, this, the supply of vanadium is very choppy. An awful lot of it comes from pork quality magnetite. A lot of that is in China. And so there's a geopolitical aspect where China and Southern Africa dominate the supply and Russia dominate the supply of the Vanadium, but there's also a commercial choppiness as well because in many respects, the supply of the Vanadium operates not according to the vanadium price, but according to the iron ore price and how much of that lower grade magnetite is being pushed into the market. So, you've got compounding geopolitical and commercial vulnerabilities there. What makes it interesting for us in this conversation is an awful lot of the vanadium that's been mined in the States has been mined together with Uranium and as we've seen with energy fuels, for example, and so anything that benefits or helps along the Vanadium is presumably going to help along a number of different traditional Uranium deposits as well, conventional mined Uranium deposits as well.

Matthew Gordon: Yes. And I can imagine that Energy Fuels be feeling a little bit perky about this one, given that they've got the White Mesa Mill. They need to feed… it's a beast. They need to feed the beast.

Brandon Munro: I think I might've given the template for the petition, huh?

Matthew Gordon: Yes. Well, it, it, it feels, it feels the same as there have been lots of conversations. We've had this conversation around rare earths as well. So, I wonder if you sometimes wonder if these guys have energy fuels in particular, just as you say, here's a template and off you go again, but it's, it's certainly an interesting conversation. Vanadium has been very volatile in the marketplace. There are some very big producers out there all over the world, you know, not just, just the U S you know, so I'm not sure supply as a big issue, a big issue really it's 90% of the steel market at the moment, but there are say these other applications, which are very niche and, you know, you know, aerospace, air engineering, et cetera, et cetera. Also, VRFB the, the that looks huge to me in terms of long-term storage capability.

So, but we shall move on. And talk about that another day. I want to ask you one last question, and then I'm going to want you to sum up what it means to the market, which is obviously spot price at the moment. This is the thing that people look for. I know there's a lot of other moving parts as we've talked about multiple conversations last 10-weeks. But spot price is a thing that people look at. So, it it's been an interesting week. What's your take on the movement of the spot price at the moment, and, you know, can you, can you sort of forecast what you think is coming up on the basis of what you've seen over the last couple of weeks?

Brandon Munro: And the only thing that I'll forecast is it's going to continue to be choppy. I think that's, that's fairly clear. We just, aren't seeing a lot of volume in the spot market. So, whenever we don't have much volume, it's vulnerable to impact of traders and we're coming up to a significant milestone at the end of June. So, there's, there will be parties who are motivated to impact that number. And if there isn't enough buying that might happen, and we've got a swing buyer in the market, Cameco who can sort of make this dynamic work for them either way, in terms of allowing the price to come down or pushing it up, or just doing it, being happy to participate with whatever it does. And we've got a number of players who are sitting on the side-lines just to see what happens particularly in Kazakhstan.

No doubt that response in that interview was directed at utilities and others to say, look, we're not going to come on early, so don't try and wait out this market. Don't game it to see that if we come July one, are we, are we back in action? Are those pounds just pouring out again? So, what does all that mean? Well, it means that until we've got a greater level of buying in the spot market there will be parties who are sitting on very healthy paper profits at the moment. Just to remind everyone, the spot market is not an immediate delivery market. So, there will be parties that financial players, traders who bought Uranium in the $24 to $25 range back in March. They won't have taken delivery on that material yet. They won't have paid for it yet. And now they've got the chance to take a $24 pound and sell it at a $30, $32 $33, $34/lbs.

And if they're under a little bit of a squeeze in, for other reasons related to covert and the various financial ramifications of this pandemic, that's going to be tempting for them to tip that out. And if there isn't a lot of buying that way, we might we'll see the price, come back a bit. So happy to predict a little bit of volatility around the edges. But I think what we do have here is a broader trend, which is moving up and for all of the things that we've talked about, all of those reasons that the market isn't feeling the disruption yet, that disruption is going to be felt in the latter half of this year. At the time when the genuine buyers will be coming into the market, particularly as the utilities are able to come out of the direct distractions and difficulties that they are facing with covert.

Matthew Gordon: Okay. I guess we shall see what happens in the next week or so. With regards to that choppiness. Final thing is we note that Peninsula Energy an Aussie company with assets in the USA. They have really gone for it. They're raising A$40M. That's a chunk of change. That's one of the biggest raises that we've seen recently. So, I wonder what they know.

Brandon Munro: Ah, look, I don't want to get too involved in commenting on other company's balance sheets and that type of thing, but it is a little bit like what we've seen with the KazAtomProm raising. It's good to have a broker drawing feeds out of this type of thing. Good to have advisors drawing fees. It's paying for the wheels to go around in the sector. I think we both agree that the folks at peninsula are really good people there they're very competent and good operators. You know, I respect Wayne a lot and I also know what it's like to have a big dominant player on the register. When I took over this, the helm of Bannerman, RCF was a 38% shareholder. And whilst I have only ever had very good dealings with them and, and it's been a very positive relationship it is something that can be a turnoff to a lot of investors to see a private equity fund having a dominant position. And we didn't have to deal with debt, not by then anyway, not by the time I came in. So, without commenting specifically on what peninsula has done I think it's, it's positive for the sector. And, you know, I think they've put themselves in a really strong position to go forward now.

Matthew Gordon: Yes, I think, I think it's a, it's good for the market that they believe they can get that over the line given, given that their starting point today. I think it projects a lot of faith in the financial market, where I have come from that they think they can get a deal that size over the line for the company of the size. Cause it's, you know, it's a really big percentage of the, as a percentage of, of the company, so good luck to them. And I'll be speaking to them later to find out, get the, get it from the horse's mouth from Wayne. So, I'll say hi for you. Brandon, thanks very much. I think it's these, these little movements in the, in the market, they all kind of add up, and I think the it's moving, moving the market and the positive market sentiment forward. I think generalists are now paying attention to this. We're seeing a lot more coverage of Uranium with articles, with interviews. It's exciting times for you guys.

Brandon Munro: You know, also Matt, in terms of what we're doing with these weekly chats, I'm getting really great feedback. I think more and more people are seeing this as a regular opportunity to learn about the sector, the intricacies of it in real time. So, while some of the topics that we talk about aren't dramatic catalysts, the fact that we're following threads on some big issues is a great opportunity for a lot of investors and others who are interested in the sector just to develop a solid understanding. And I know that you're passionate about educating investors, and that's certainly where I'm coming from. So really gratifying to get all of that feedback and long night continue.

Matthew Gordon: Well that continued Brandon go have yourself a fantastic weekend. I have still got a few hours to go here. I'll be finished in six hours. I think, I hope. But we'll catch up with you next week.

Brandon Munro: Great. Okay. Thanks again for having me on

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