Thank you for standing by. This is the conference operator. Welcome to the Cameco Corporation’s Third Quarter 2022 Conference Call. [Operator Instructions] And the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Rachelle Girard, VP, Investor Relations, Tax and Treasury. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to Cameco’s third quarter conference call. I would like to acknowledge that we are seeking from our corporate office which is on Treaty 6 Territory, the traditional territory of Cree people and the Homeland of the Métis. With us today on the call are Tim Gitzel, President and CEO; Grant Isaac, Senior Vice President and CFO; Brian Reilly, Senior VP and Chief Operating Officer; Alice Wong, Senior Vice President and Chief Corporate Officer; and Sean Quinn, Senior Vice President, Chief Legal Officer and Corporate Secretary. I’m going to hand it over to Tim in just a moment to discuss how the improving growth outlook for nuclear power is translating into an improving growth outlook for Cameco. And then Grant will discuss our recent announcement to acquire Westinghouse. After we will open it up for your questions. We’ve allocated an hour for this call. However, as always, our goal is to be open and transparent with our communication. Therefore, if you have detailed questions about our quarterly financial results or should your questions not be addressed on this call, we’ll be happy to follow-up with you after the call. There are a few ways to contact us. You can reach out to the contacts provided in our news release, you can submit a question through the contact tab on our website, or you can use the ask a question form at the bottom of the webcast screen and we will be happy to follow-up after this call. If you join the conference call through our website event page, there are slides available which will be displayed during the call. In addition for your reference, our quarterly investor handout is available for download in a PDF file on our website at cameco.com. Today’s conference call is open to all members of the investment community, including the media. During the Q&A Session please limit yourself to two questions and then return to the queue. Please note that this conference call will include forward-looking information, which is based on a number of assumptions, and actual results could differ materially. You should not place undue reliance on forward-looking statements. Actual results may differ materially from these forward-looking statements, and we do not undertake any obligation to update any forward-looking statements we make today except as required by law. Please refer to our most recent annual information form and MD&A for more information about the factors that could cause these different results and the assumptions we have made. With that, I will turn it over to Tim.

Well, thank you Rachelle, and good morning everyone. We appreciate you joining us on our call today. Two weeks ago, I started my call by saying that nuclear energy is back in durable growth mode and that Cameco is back in durable growth mode. Growth that will be sought in the same manner as we approach all aspects of our business, strategic, deliberate, disciplined, and responsible. I’m pleased to say that we’re seeing the growth in our industry translate into improving financial performance as the exposure to increasing prices in our contracts across the fuel cycle flows through to our average realized prices. And even more important, we’re seeing that industry growth translate into growth in our book of business as we responsibly build homes for our valuable Tier 1 assets. Business that maintains significant exposure to rising prices for us. This is exciting because as you know, we’re still operating well below capacity and our continued contracting success is setting us up for further growth as it lays the foundation for our transition back to a Tier 1 run rate. It’s a good reminder of why we believe that Cameco remains the best way to invest in the recovery in uranium market. Thanks to our strategic, and deliberate actions and our conservative financial management, we are well positioned. Well positioned for the nuclear fuel cycle tailwinds, driven by the focus on clean energy, by an energy crisis, and by the geopolitical realignment that’s occurring. We’re also well protected from the current macroeconomic headwinds. We have a growing durable contract portfolio and our customers nuclear plants are part of the critical infrastructure needed to guarantee the availability of 24-hour electricity to run hospitals, care facilities, and other essential services. With $1.3 billion in cash on our balance sheet at the…

Thank you, Tim. Good morning to all who have joined us today. I want to follow Tim’s spotlight on our contracting activity with a spotlight on our recent announcement to acquire Westinghouse. Obviously, since we don’t own it yet, there really are significant limits to what we can disclose about a private company, especially one currently owned by a private equity firm. But what we can do is to outline our expectation for this acquisition after it closes. We have six key expectations. First, we expect Westinghouse like Cameco to benefit, as nuclear power is forecast to double over the coming decades. Growth and demand comes from several sources. Existing reactors save from early shutdown, existing reactors undergoing life extensions to operate for materially more decades; new markets for fuel products and services like Eastern Europe as a result of the unprecedented geopolitical realignment; and of course, new builds of large, of small and of micro reactors, a durable demand outlook that we believe is the best ever. Second, we expect this acquisition to enhance our ability to compete for this improving nuclear demand. As nuclear demand improves, proven suppliers have an enhanced ability to compete for that demand. At Cameco, we believe we are the very best way to invest in the recovery of nuclear fuel demand because we have always been invested in the fuel cycle with valuable, licensed, existing capacity in geopolitically important jurisdictions where participation in the industry is closely regulated. The McArthur River Mine and Key Lake mill, the Cigar Lake mine, the Blind River refinery, the Port Hope conversion facility, Port Hope fuel manufacturing, are all examples of such valuable assets. Assets with brownfield organic inside the fence line growth characteristics, meeting growing demand without the immediate need for greenfield investments, which are particularly…

Great, thanks for that Grant. And with that operator, we’re happy to answer any questions.

Thank you. We’ll now begin the question-and-answer session. [Operator Instructions] The first question is from Orest Wowkodaw with Scotiabank. Please go ahead.

Hi, good morning. Wanted to ask about Westinghouse and what your plans are with respect to managing your own debt. You mentioned Grant that you think Westinghouse is going to be self-sustaining and basically paying out cash distributions to the partners. Can we assume that any cash distributions you receive from Westinghouse will go primarily go to reducing your own corporate debt? And I’m curious if you’re putting in place any kind of targeted debt levels or debt reduction levels post-closing?

Grant, do you want to take that?

Yes, happy to. So, Orest thank you for that question. It’s a good one. And when I went through the expectations that we had to think about this at closing, one of the things I did want to dwell on was how we’re looking at financing it includes taking on some temporary debt. But I just want to remind folks of a couple of things. First of all the temporary debt that we’re looking at really is within the confines of navigating by our investment grade rating. So that, that remains an important factor for us. So, you can think about in terms of targets maintaining those debt leverage metrics. And so how do we think about that? We think about that from quite a dynamic perspective. So first of all, we do expect this acquisition to be accretive. So, we do expect it to pay back distributions, but remember we’re at a pretty critical turning point with respect to the uranium and fuel services segment that that’s core to our business. We’ve got McArthur coming back online with production expected here in Q4. And you know better than anybody that, that begins a process of shedding care and maintenance costs and shedding operational readiness costs and actually getting out from under purchasing material that’s more expensive than producing it. All of that to say the financial performance expected going forward is quite a significant improvement for us. So, we put that against navigating by our investment grade rating and we’re very comfortable to make the claim that we’re looking at the additional leverage as being temporary. And so I think that’s probably a fair way to say it. And the other thing I just wanted to remind folks of is we’re not talking about an unprecedented amount of leverage. We were sitting at $1.5 billion in long-term indebtedness when McArthur River was shut down before we retired our 2019 maturities and so all of that factors into a much stronger outlook. So, I think that’s the right way to think about it.

Okay. Just to follow up on that Grant, what about from a, like I say a net debt-to-EBITDA perspective target obviously it’ll be elevated upon closing. Where would you like to get it to?

Yes, when I say we navigate by our investment grade rating, there is some coded language in there, I guess. So let me just kind of back that up. Obviously when you look at the rating, it’s over a period of time. It’s never in a moment in time. And ratings agencies are pretty thorough in their assessment about where you sit today relative to a rating horizon of 18 months to 24 months out. When I say investment grade rating, you think about that BBB flat as being two and a half times net debt-to-EBITDA would be a good navigating point. And so obviously as we have the recovery in our core business plus the distributions for Westinghouse, we feel like that EBITDA performance is recovering really quickly and improving really quickly against what is a modest debt level relative to that level of financial performance. So that would be a good way to target it.

Thanks, Grant.

The next question is from Gordon Johnson with GLJ Research. Please go ahead.

Hello.

Hi, Gordon.

Hey guys, thanks for taking my question. I appreciate it. Sorry about that. Little miscommunication. So congrats on the results. And my first question is, how do you guys think the geopolitical environment where rather Rosatom and PGM perception shifted dramatically changed the strategic value of Westinghouse? And then I have a follow up. Thank you.

Well, I mean, we think it’s very positive for Westinghouse and we’ve seen it already. In fact, we were seeing it months and months ago. I was over in Prague not long ago with Westinghouse. We were there as Cameco, but you could see those Eastern European countries that have relied on the Russian technology, Rosatom, the VVERs, and all their technology and servicing turning away from the Russians and saying, we don’t want to operate with them anymore. We don’t want to work with them and looking for a substitute. And that substitute is Westinghouse. They’re very active in the Ukraine even today. There’s Czech Republic, Slovakia, Poland, and many of those Eastern European countries we think are potential business for Westinghouse and quite frankly for Cameco as well. So we’re very, very saddened by what’s going on in the Ukraine with the Russians. We don’t like that at all, but it is quite positive for our business.

Okay. Actually, that brings up one other quick question on that topic. When the deal was announced, the stock reacted negatively, and I think it was just because of the pricing, but some people were coming out negative on the deal. We didn’t quite understand it. I just want clarify here. Our view is that it looks like you guys are trying to become, and forgive me if this isn’t the right place, but the Western version of Russia’s Tenex or the subsidiary of Rosatom, that’s kind of like a one stop shop where mine converted and reach to fabricated uranium fuel assemblies. And it looks like you guys are trying to grab market share there, as the west pivots potentially permanently away from Tenex as a world supplier. Would you guys agree with that analogy or am I thinking wrongly there? I think, I’m sorry. One more follow up.

Yes, Gordon, thanks for that question. Look, that I won’t quite you can make your own judgments on that. I think, listen, I’ve been we’ve been doing this for decades, four decades, and opportunities like this don’t come around very often. We couldn’t be more excited about this deal than we are. It’s a great deal for Cameco, for our stakeholders, our shareholders, and our employees. It’s very, very rare that you get the right conditions, the right partner and the right opportunity, and we think we got them all here. With this deal, we really like our partner in the clean energy trade renewable energy being – nuclear energy being seen as renewable now. We’ve got the Westinghouse well run company, very good results turned them around over the last four or five years. And so this is their business very complimentary to what we do at Cameo. We’re in the front end. We’ve got world-class uranium resources conversion. We’re into the CANDU fuel business fabrication, and then they take over from there on the light water side. So, we think it’s very complimentary. As I say, these opportunities don’t come around very often. This one hit us at the right time, and we were ready for it through all the discipline, we’ve exercised over the last decade, I would say. And so, I’m just saying we are very pleased with this deal and we think it’s going to make Cameco a stronger company and set this company up for many years to come.

Okay, that’s very helpful. And then the last question is, and I always ask this question, but I just want to get the most recent update. Are you guys starting to see any flow of, I would say, traditional ESG money back into or into rather uranium sector? And then, thanks for the questions guys. Congrats on the results.

Yes, thanks Gordon. Grant’s been pretty much nonstop with Rachelle on the investor line over the last week or 10 days. Do you want to comment on that Grant?

Yes. We – Gordon, it’s a great question. I would say what I would call the clean energy trade really started to pivot into an interest in Cameco, actually about 18 months ago, and maybe on an accelerated basis about 12 months ago. And then we think that it’s just poised to take another step up. We obviously had a lot of interest in our announcement and a lot of new interest in our announcement as well as support from existing page one investors, I’d put it that way. And we think that that translates into a growing awareness that, that as you saw Mark Carney say in the press release, there is no path to net-zero that that doesn’t involve nuclear power. So, we are seeing a pretty powerful awakening there and understanding that this is an industry that provides the e-bonafides and ESG, but it’s an industry that also provides the S and the G bonafides in ESG metrics as well. So, we’re very enthusiastic that, that a broader base of investors is paying attention to this critical clean energy.

Thanks, Gordon.

The next question is from Ralph Profiti with Eight Capital. Please go ahead.

Good morning guys. Thanks for taking my questions, Tim and Grant. Grant, when you talked about your six point sort of conditions for this rationale at Westinghouse, and I want to come back to sort of the first point, and I’m wondering if the benefits that you’re seeing from these market opportunities has actually you thinking about increased the tension on the upstream, right? And so I’m thinking about, does, is there an upstream link to uranium mining and increased exploration and taking a look at some of these greenfield and brownfield opportunities post the Westinghouse coming into the portfolio?

It’s an interesting way to put it. Obviously as, we view this as very complimentary and supportive. We view it as enhancing our physician in the uranium market recovery. And what we simply mean there is, look there are a lot of markets that are growing, growing because reactors that they thought were going be shut down are being saved. Reactors that may have come to a license limit are being extended. And of course, new markets, as Tim talked about markets that are turning away from what have been traditional sources and looking for western solutions, and quite frankly, the full suite of western solutions. All of that means greater opportunities for Cameco contracting. And of course, as we build up that book we then turn to our production plans. We’re in a very favorable position right now as Cameco in that, we can grow into this market recovery from Brownfield leverage. It really is just a matter of turning on the assets that we currently have versus embarking on a greenfield. But you’re asking a longer term question, which is a good one and that is as we have success building that contract book as we resume production and obviously at some point get – shed the last little bit of supply discipline and get to full capacity production at our Tier 1 assets, then it will be time to turn our attention to where that growth comes from. We have an extraordinary portfolio, whether it’s an asset like Millennium adjacent to Brownfield infrastructure on the eastern side of the Athabasca Basin, whether it’s our Tier 2 assets that are already licensed to permitted, whether it’s an asset at the right time in Western Australia. We already have a great base to start from when we look for those growth modalities. But at the moment we’re just – we’re not there. It is about taking advantage of growth and taking advantage from a brownfield perspective. That is our priority right now, and we think that drives the greatest amount of value for our owners.

Great answer. Thank you, Grant. Tim, if I have one for you the collective bargaining agreement at McArthur River expires December of this year. Can you talk a little bit about the ability for the workforce to operate under the expired CBA? And are there incremental steps that Cameco needs to take or in preparedness because it doesn’t look like building up inventories is part of the narrative going forward for Cameco and has it been for the last little while and how well is that contract book going to be protected against potential strike risk?

Yes. Thanks Ralph. Yes, we do – our collective agreement is coming due at the end of the year and we were just talking about it yesterday. Brian and Alice and others are preparing our team here to sit down with our colleagues in the United Steelworkers at the sites and I think we’ll start those negotiations pretty soon. You know what, we have a world class workforce and we’ve had great relations with them. I think people are delighted to be back. Those that came back to McArthur River and Key Lake are happy to be back. We’ve got a lot of new employees. I think we’ve hired 500 or 600 people in the last 12 months. So yes, we’ll get into those Ralph and we’ve seen, I think round of disciplined just went through some negotiations, so we’ve seen them. I think there’s others in the province going through negotiations, it’s normal course and we hope we’ll be able to come to a satisfactory solution to both sides very quickly and get on with life. And we obviously watch our inventories and Grant will tell you we’ve got all different sources. We’ve got long-term agreements, we’ve got inventory, we’ve got borrowing agreements. So we’re well looked after Ralph, and we’re not concerned about that.

Excellent. Thanks for that. Good luck.

Thanks Ralph.

The next question is from Greg Barnes with TD Security. Please go ahead.

Can I have a number of questions about the business opportunity for [indiscernible].

Greg. Greg, it’s Tim. Greg, we can’t hear you. It’s really muffled Greg.

Sorry. Hang on. Can you hear now?

Go ahead. We’ll see what we can do.

I’ve got a number of questions from investors about the business opportunity in Eastern Europe and what that means for Westinghouse and for you? Can you quantify that in any way?

Yes. I think it would be a little early to try to, to quantify the business opportunities there other than to say they’re quite extensive and we know that Westinghouse is there in spades now, there’s a big meeting going on in Washington D.C. yesterday and today. Most of those European countries are there, we know there’s a bunch of meetings going on with them, so I’m not sure we can quantify it to any great extent at the moment. But maybe Grant you want to add something?

Yes. We can provide a bit of a regional context. That is a market that has historically as you know, been served by the Russians, 34-ish reactors of varying sizes. That market consumes close to 15 million pounds of uranium per year, about 6,000 tons of conversion. Very significant opportunities for [indiscernible]. Switching costs are really high in our industry. It’s not easy to switch fuel fabricator, it’s not easy to switch those suppliers, but when an event like the invasion of Ukraine prompts those switching costs, obviously there’s a great opportunity. Westinghouse enjoys the pole position its having the certified and verified ability to produce the VVER fuel. And obviously what we want to do is help them provide those western solutions to those markets looking to turn away. And so for us it’s about a greater proportion of uranium and conversion contracting than, than say rule of thumb, what would we normally get in a market on a competitive basis. We just think it enhances our competitive position to be able to offer on a solutions basis for the full assemblies. So it is a pretty substantial new market. It is kind of the way to think about it.

Right. Thanks Grant. And just secondarily, just on the capital structure for this transaction you’ve got a $1 billion in cash, $600 million term alone, you’ve got the billion bridge and then you’ve raised $750 million inequity. Judging from all light, you will not have to really draw on that bridge to any great extent is my understanding?

Yes. It would certainly be our intention to put the permanent capital structure in place at the time of closing. And obviously there’s a bit of uncertainty on that closing time because of the regulatory approvals required. But ultimately we’re very comfortable with the equity that we raised, commensurate with the net asset value pickup that we just got. I talked about the debt leverage being we’re looking at it as temporary, all against the recovery of the uranium and fuel services segment. We’re at a turning point and that’s well underway now as McArthur’s coming back online. So we just think we’re in a good position at time of closing to maintain the permanent capital structure and actually close it out with cash.

Great. Thanks Grant.

The next question is from Lawson Winder with Bank of America Securities. Please go ahead.

Hello. Good morning gentlemen, and thank you for the update. Just looking at the delivery schedule and the fact that, I mean, your production is not able to directly meet that schedule. Thank you for highlighting some of the options you have. So you mentioned inventory, long-term purchase agreements, loan arrangements, so I guess the question is at some point will there be a need for Cameco to go directly into the spot market and purchase, particularly if the in guide deliveries are not realized on sort of a longer-term view. So maybe extending well into 2023, and then just with any of those existing options for filling the gap between production and deliveries; is there any indirect spot market purchases?

Grant, why don’t you talk about the market a bit and answer it.

Yes. We have been the major purchaser in the market since we began our extreme supply discipline as you know, Lawson. And if I go back to McArthur coming down Cameco bought roughly 56 million pounds of uranium a lot of it for immediate delivery, some of it under long-term purchase arrangements that were priced in a much lower uranium environment under fixed contracts. We’re able to access some of those today, but we do occasionally stick our nose in the spot market. Part of it is just to figure out who’s selling and what’s available. What I’ll tell you is that whenever Cameco sticks its nose in the spot market to buy, suddenly offers move up. They move away from us, which just indicates what we’ve been saying all along, which is – this is an incredibly thinly traded market. Looking ahead, we meet our committed sales through a combination of inventories, maybe accessing these long-term purchase arrangements and spot market purchases when it makes sense for us, when we have the right product form in the right location. All of that, of course supportive of the price discovery in the market, supportive of this notion that it is a thinly traded market. So, yes, don’t expect us to leave that spot space occasionally. But look, what’s never changed is our desire to manage risk. We never said we would be only a spot market buyer. We said when we went into extreme supply discipline, we would always manage our sources so that we could meet our committed sales. So don’t be surprised if we buy a bit of spot material. But just remember we’ve got lots of tools in the toolbox to do what the most important thing is to do which is to meet our committed sales.

Okay. And then I guess the other question I’d like to ask is, as my supplementary is for the Inkai deliveries, can you just elaborate on the latest in terms of what’s happening with that? So have you managed to arrange for insurance coverage for your shipments from Inkai? Is there still reluctance to ensure those shipments on some degree? And then with the material now sort of being stuck in transit, could you just explain sort of the details of how that situation has risen and then how it might resolve itself?

Yes. Thanks for that question, Lawson. We were kind of anticipating that one and Sean Quinn is here and looks after our Kazak operations is on top of our transportation issues on a daily basis. So Sean, why don’t you give the latest on how that’s working?

Sure. And it is working with the delays is how I would characterize it overall at this time. We are obviously as disclosed looking at having JV Inkai who is responsible for shipping to Cameco, we take title when the material is delivered by JV Inkai at Blind River. We’ve had JVI work on the – using the what we call the Trans-Caspian route. And they are doing that in conjunction with [indiscernible] shipment, which is already made it partway through and we are looking at that material coming through. And there are some delays in Azarbijan permits that we are waiting for updates on. And we’re still optimistic that it will get to, but it has been delayed due to regulatory requirements that JV Inkai is working on in Azarbijan.

So more to come Lawson?

If I might, so Azarbijan is just one step along the way. Do you anticipate any further problems in like Georgia? And then what about transferring to the Block C?

There are no guarantees there. We anticipate it will go smoothly once it’s through Azarbijan, but we will see it is a delivery route that has been used before. So we’re quite optimistic that we’ll work in do chorus, but we will see once it gets to Blind River.

Okay, great. Thanks. And congratulations on a great result.

Yes, thanks Lawson.

The next question is from Brian MacArthur with Raymond James. Please go ahead.

Good morning. My first question has to do with Westinghouse, and I see you’ve kindly put some financials in your MD&A, which is helpful. And it sort of shows capital expenditures are pretty flat over the last number of years and you talk about how it’s going to be self-funding going forward. Is there any reason why I should believe that those sustaining capital expenditures should change significantly going forward without any other acquisitions or investments to grow?

I don’t think so, Brian, but, and thanks for the question, but Grant has studied the CapEx previous and outlook in depth. So Grant, why don’t you comment on that.

One of the points I made earlier, Brian, was that Westinghouse enjoys some asset characteristics, the Cameco enjoys, which is the ability to take advantage of growth in the nuclear industry from Brownfield leverage inside the fence line opportunities to grow. And so we do have an expectation that that capital line stays pretty flat. It really is just attracting maintenance and replacement capital for the normal manufacturing and fabrication operation. So very similar to Cameco, it’s not – these aren’t assets that require a significant greenfield investment in order to benefit from the growth. So i.e., that’s the right way to think about it, Brian.

Great, thanks. So maybe switching to another topic, you do mention GLE made progress doing eight months of testing, and now it’s been moved to the us. Can you give us any update on, well, first of all what does that actually mean in moving the process forward, and b, whether that has any implications on timelines for GLE?

Yes. We’re excited about the future for GLE and fits nicely in the larger package that we’re talking about today, but our good friend Sean Quinn, in addition to Kazakhstan is responsible for GLE. So why don’t you give an update on that, Sean?

Sure. I will answer it kind of in two parts. We are on the commercial side very interested in watching very closely developments in the U.S. on the political front in regards to funding opportunities. And there do seem to be some coming into existence, particularly under the IRA. And in conjunction with that we are looking at next year’s program and budget for GLE and the continued development of the technology. And the two – the two will be twin to some extent. So continued work on technology development towards [indiscernible] continued and that rate of progress will be tied to how we do an obtaining some funding support in the U.S. and discussions of course with that partner SILEX.

So you wouldn’t expect major capital going at the door on this next year?

No major capital going out the door next year.

Great. Thank you very much for answering my questions. I appreciate it.

Yes. Nice to talk to you, Brian. Thanks. Operator, can I just interrupt for a moment? I see we still have a few people in the queue and we certainly don’t want to cut anybody off. I know we said an hour, but we’re prepared to stay longer to finish the lineup that’s on the screen in the queue. So please let those folks ask their questions and we’re happy to stay on.

Understood. The next question is from Justin Huhn with Uranium Empire. Please go ahead.

Hi, good morning guys. Thanks so much for taking my question. First of all, I wanted to just say congratulations to you guys and the team for many years of supply discipline seemingly finally paying off. I know that’s a really big deal for the company, so congrats on that. I wanted to ask a question about some historical context. In terms of long-term contracting. There’s plenty of speculation amongst the investing community let’s say that perhaps 2023 could be the first-year in a decade of replacement rate contracting on behalf of the utilities. For example, we saw the jump in 2004 to 2005 from about 80 million pounds contracted 2004 to 250 million pounds contracted 2005. What are you seeing in historical context in terms of utility demand going forward? And what are your expectations for this contracting cycle that appears to be just now starting to kick-off for the years going forward?

So Justin let me open and just say thank you for your kind comments and because we don’t take them lightly and we appreciate them. We didn’t have a whole lot of fun here. I look around the table as team’s been shoulder to shoulder for 10 years through some pretty tough times. We left pounds in the ground at $17, and we’re hoping to bring them out to now at in a better market, but that we had to take some tough medicine along the way. And so we appreciate you recognizing that and certainly pass that on to our team. So on the historical demand and returning to run rates of purchasing, Grant why don’t you give an overview?

Yes. Justin, it’s a great question and there are some lessons to be learned, obviously from looking back and the main lesson is something you’ve heard me say before, which is contracting begets contracting. Utilities, I think they watch the decisions of producers very carefully, but they watch each other very carefully as well. And when big utilities aren’t contracting, I think it creates maybe a complacency for others. And then when contracting starts to pick up and you’re seeing that us at 77 million pounds year-to-date between accepted and executed, that’s an extraordinary amount of contracting. And if you look at it against what some of the trade reporters are saying, what Cameco is doing 91% of the term contracting in the market, obviously it means there’s more contracting going on than, than what’s being picked up by the trade press, which is good, which is going to be, I think, quite eye opening for those who have maybe been waiting in the contracting queue and thinking that they have a bit more time. So historically you look back and you see that contracting begets contracting, but looking ahead, there’s actually some characteristics that are different than what we’ve seen in the past, and I think more supportive. Number one is, when you think about that 2004, 2005 window and the contracting cycle and the volumes that came, there was a heck of a lot more inventory and a heck of a lot more secondary supply available around the world than there is today. In 2004, 2005, there would’ve still been hundreds of millions of pounds yet to come to the market in the HEU Agreement alone, which was an enormous amount of secondary supply. And of course, you had much larger inventories than you have around the world. Secondly, when you look back, then you had a lot more production being invested in, you had the Kazak ramp up underway in that window, which of course, then went on to become an extraordinary asset base of supply. You had investments in Cigar Lake underway, obviously a really important Tier 1 asset being built. Flip forward to today, secondary supplies falling dramatically, inventories drawn down to really low levels. It’s not an inventory story. And where are the investments in supply? After years of really low uranium prices, there isn’t that queue of production that’s already being invested in and already being developed. And so it takes me back to the point that I made in Q2, which is we’re in the early innings. We’re not even at replacement rates, and we’ve never started a cycle at this high of a uranium price before. So historically contracting begets contracting, looking ahead, there are some features that are just far more supportive of the uranium price recovery than we would’ve seen in that window.

Thank you. That’s a great answer. And if I could follow up with maybe you can add a little color as far as the spot market goes. So, I think it’s relatively understood amongst investors that the spot market is quite thin. You mentioned just sticking your nose into the market, offers start to move up. The real market is the term contracting market and we know that however, the spot market is, what is most visible to investors. So in a private conversation we had last month Grant, you mentioned that traders are essentially the connective tissue between the two markets. Can you add a little bit of color to that as far as what investors can expect from spot market reporting when it comes to the expected move in long-term contracting and pricing?

Yes, good question. So the spot market I always characterize it as being just a very discretionary market. It has changed significantly in the last number of years. It is no longer an inventory market. What we’re still seeing though, is a bit of uncommitted primary production. So there remains some producers around the world, they’re either primary uranium producers or maybe they have uranium as an offtake. Maybe it’s a copper/gold operation that has uranium as a byproduct, for example. That just haven’t done the work of building homes for their production. And so it shows up when it’s available the traders are there to buy it, and then the traders are there to churn that material around the market for some period of time. And of course, it’s not supportive of production economic price discovery in the market. But what we’ve seen is a spot market that, that has actually started to develop a real fundamental floor. I mean, even when the financial players for example, aren’t in their buying for quite a period of time, the Sprott vehicle, the Sprott Physical Uranium Trust was at a discount to its NAV and it wasn’t able to buy, prices didn’t fall through the $40 and down into $30. I mean, the floor is being set by the fundamentals and the need for production to be incented to come to the market. The ceiling in the spot market tends to be set a little bit by equity interest. And so when Sprott does have opportunities to motivate, it’s at the market feature, we are seeing quite a bit of pricing elasticity and it is pushing the price. So the callers are different. The floor is really the fundamentals, which is great, sort of suggestive that the days of buying uranium…

Thank you so much for answering both those questions. And again, congratulations again on the [indiscernible] deal. Very exciting time for nuclear. Take care guys.

Thanks a lot, Justin.

The next question is from John Tumazos with Very Independent Research. Please go ahead.

Good morning. Should we interpret from the $3.9 billion capital allocation to processing that over the next five years, possibly longer Cameco doesn’t expect to have a, for example $4 billion greenfield new mine project or discovery that the processing is the better opportunity. The expiration queue maybe is a little thin, and you’ve got mines to restart.

Yes, we’ve got all those options, John to be honest with you. We’ve got some nice projects as you know we’re just bringing McArthur Key back on, and so that’s our number one priority, but not at full speed. We are going to continue to exercise supply discipline going forward on that. So, we still have some room there. We’ve got some other brownfield projects that are on care and maintenance, Rabbit Lake the United States, Grant mentioned, we’ve got other greenfield in Australia. So, we think we’re looking pretty good. And I can tell you that this deal with Westinghouse doesn’t tie our hands forever on other projects. We, as Grant explained right from the outset, we have the financial capability to do other things. And as we return to a Tier 1 run rate in our business we should be very well positioned to decide what we’re going to do going forward. So, Grant?

And John, I may be reading too much into your question, but just to make sure that it’s not a question saying, is this uranium or downstream in fuel? This is an enhanced transaction. This enhances our ability to put more uranium in conversion under contract. As we put more uranium in contract and build out that business book, it enhances our ability to turn on all of our existing assets, as Tim said, and it enhances our ability to grow the uranium and the conversion platform accordingly. So, I don’t want you to think about it as, and maybe I’m reading too much into it, but I don’t want you to think about it as, we’re unhappy with our exploration portfolio or unhappy with our base of existing uranium assets and therefore chose to invest downstream. This is an enhanced transaction. This transaction enhances our ability to grow our uranium and our fuel services segment.

You seem to imply that $3.25 billion [ph] net of the equity offering of debt or indirect debt doesn’t count. So, you’re in effect viewing Westinghouse as a riskless annuity in terms of cash flow and that you’ll never have to support that debt.

The way I look at it as an equity investee is that that is debt that stays at the joint venture level. And so it really comes down to the questions that I outlined earlier, which is over the period where that debt matures, which is out to 2026, does it impair Westinghouse’s ability to grow? And my view is, and my expectation is it doesn’t. And then secondly, are there markets around where Westinghouse could perhaps get more market share, where a customer might go. Well, I’d like to go with their fuel assembly, or I’d like to go with their reactor new build, but I’m just not comfortable with their debt level. The answer is no there too. I mean, ours is an industry where there actually aren’t a lot of players in the nuclear fuel cycle who enjoy an investment grade rating like Cameco does. And so if that were the barrier for utilities, they only do business with people who are investment grade, we’d have all the business as Cameco. So, I don’t see that causing a problem. So really it’s a watching file. It’s not a flashing red file for either us or Brookfield Renewable. And as Westinghouse grows with the market, it’s financial metrics will improve organically, as the business risk of nuclear improves from a ratings point of view, its metrics will grow organically. And then as we look ahead to other growth opportunities for Westinghouse, that will trigger conversations about what the optimal capital structure is for Westinghouse. But at the moment, it’s not going to constrain the incredible opportunities that Westinghouse has before it.

So if one of your uranium GOs was a little nervous and got a good salary offer from Rio and Rio pitched them that if he discovers uranium at Rio, they can write the check for a $1 billion mine, how would you reply to the geo who might not understand this private capital, that doesn’t count arguments? Do you just offer him better stock options or NSR on his discovery to keep him?

John, the folks that work in our amazing folks, that work in our exploration and our mining unit understand that the model for creating full cycle value in uranium is one where you build the homes for the production before you build the production. So actually, it’s the contracting performance that we’re enjoying, which is the glue that keeps those people attached to the, to Cameco as being the absolutely best way to invest in the uranium market recovery.

Thank you.

Thank you, John.

The next question is from Fai Lee with Odlum Brown. Please go ahead.

Hi, great. Thank you for taking my question. I just was wondering, regarding Westinghouse, if we do see eastern utility, Eastern European utilities switch and Westinghouse is able to capture some of the business from Rosatom. I’m just wondering what that means for enrichment capacity and more specifically, whether that’s going to drive more over feeding and perhaps a step change in the range demand from that region? Thanks.

Well, certainly there’s a shortage of enrichment supply. I mean, it’s a huge issue. You heard us talk about the Russian supplying 40% of the enrichment market. I think it was 27% of conversion, 14 of uranium. So if they’re pulling back that, that’s leaving a huge gap and we’re seeing it spending a lot of time in DC with utilities everywhere or wondering where their future supply’s going to come from. So it is leaving a big hole. Grant?

Fai, it’s a great question there. There’s no way to replace Russian enrichment today without doing two things. One is drawing down inventory on a temporary stop gap basis. And number two is moving to very significant over feeding of enrichment plants. And over feeding is just simply code for more uranium demand. So to the extent that the existing western customers look for more western enrichment capacity, and then you add to that Eastern European customers looking for that same western capacity it will require, absolutely require more overfeeding and more overfeeding is uranium demand. And so, it’s yet another point of demand that’s not really reflected in any of the industry forecasts. You think about overfeeding, it’s not there yet in the forecast. You think about the demand for SMRs and the fact that some of the advanced nuclear reactors are not just more demand for uranium, but it tends to be lumpier demand because you’ll fuel some of those advanced reactors up front to run on perhaps a 10-year basis. That demand isn’t factored in yet. So all of the reasons why we’re pretty optimistic about the west, these western assets in the nuclear fuel cycle.

Great. Thank you.

This concludes the question-and-answer session. I’d like to turn the conference back over to Tim Gitzel for closing remarks.

Well, thank you very much, operator. And with that, I just want to say thank you to everybody who has joined us on the call today. We as always, appreciate your interest and your support. We see a lot of opportunity ahead of us with the demand for safe, reliable, affordable, and carbon free base load electricity coming from across the globe as a strategic commercial supplier with a strong balance sheet, investments in long-lived Tier 1 assets across the fuel cycle, a proven operating track record, and line of sight to return to our Tier 1 cost structure. We at Cameco believe we are extraordinarily well positioned to respond to changing market dynamics. We’re excited about the future, we’re seeing for nuclear power generation. We’re excited about the fundamentals for nuclear fuel supplies, and we’re excited about the prospects for our company. We’ll continue to do what we said we would do, executing on our strategy and consistent with our values. We’ll do so in a manner we believe will make our business sustainable over the long term, and we’ll continue to make the health and safety of our workers, their families, and their communities our priority. So thank you everybody. Stay safe and stay healthy.

This concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.