Uranium is on the edge of a once-in-a-generation supply shock, and prices could spike faster than in 2007.
Ocean Wall CEO Nick Lawson and Director Ben Finegold tell Trey Reik why the market is set up for a parabolic move. From the “Putinization of uranium” (Russia’s stranglehold on enrichment) to AI-hungry data centers that can only run on nuclear baseload, the squeeze is building fast.
What we cover:
- The 500 % surge in enrichment prices, and why oxide hasn’t followed yet
- Hedge funds cornering supply (shades of 2006-07)
- How utilities are panic-buying enrichment first, uranium later
- Critical price thresholds: miners need $90-$120/lb to restart production
- Nick & Ben’s highest-conviction tickers, from UEC to ASPI Isotopes
Energy security, national defence, and the next tech wave all point to one metal: Uranium!
Get Wealthion’s and SCP Resource Finance’s free report on Uranium and investment opportunities in the space, here: https://wealthion.com/uranium-investment-opportunities/
Volatility got you concerned? Get a free portfolio review with Wealthion’s endorsed financial advisors at https://bit.ly/3SjpysG
Hard Assets Alliance – The Best Way to Invest in Gold and Silver: https://www.hardassetsalliance.com/?aff=WTH
Nick Lawson 0:00
We’ve now crossed the Rubicon, the Roman River. We’ve crossed it. It’s too late to go back. Nuclear is here to stay. The trades being de risked. The opportunity for your listeners now is to make a lot of money by from a commodity that has exhibits parabolic behavior when there’s a shortage. I Trey,
Trey Reik 0:24
greetings and welcome to our wealthion show. My name is Trey Reich, Bristol Gold Group, and we’re here today visiting with Nick Lawson and Ben Feingold, who are respectively CEO and director of a very interesting advisory firm named ocean wall. Ocean wall offers services in corporate advisory investment and research with special focus on a few industries, uranium, lithium, geothermal energy in Venezuela. So I’ve been a gold guy for a quarter century, and I’ve watched a few of Nick’s presentations, and I can tell you, I have never met anyone with deeper knowledge and more enthusiasm for the uranium space. So I can’t wait to hear what he has to say today, and the primary reason for our conversation is to get your thoughts on the uranium market, but to give viewers an understanding of where you’re coming from and your expertise. Could you start us with a brief explanation of ocean wall? How do you make money? And how do you seek to make money for your clients?
Nick Lawson 1:37
Great. Thank you, and thank you for the introduction, Trey. It’s an honor to be here. So my journey goes back to I started at Deutsche Bank and quickly took on special situations at a time when there were a lot of distressed assets in the early 2000s and my interest was piqued in the idea of sort of undervalued assets plus catalyst. So everything I do in life has the denominator of finding deep value, but also being able to find either myself or people around me to be in a position to be the catalyst. Which is why, when you read out the list of things we’re involved in, there is no natural pattern. Venezuela was because we were buying Venezuelan sovereign credit at five cents in the dollar at a time when Lebanon was trading at 11 cents. Lithium was because at the start of COVID, lithium assets massively sold off. We understood the demand in lithium ion batteries and for uranium. The journey goes back to 2006 and I was given a stock called nuff core. It was put on my book. We had no understanding of it, but it was 10 million pounds in weight of uranium stored in a caving caucus zone in South France. And it sat on our book for a couple of months, and then in October of 2006 cigar lake, the yet to be opened mine, run by Cameco, the Athabasca basin was flooded, and the price of uranium went up seven times in six months. And for me, what piqued my interest was here was a commodity that had done nothing for a decade and then effectively went up with such violence and showed such convexity that it really piqued my interest, and I always stayed in touch with it, and I began to realize it sold off after, mainly the great financial crisis, but Fukushima, which we can touch on as well, but it’s analogous to this glass of water, and I’ve given this as an example before. What price would you pay for a glass of water now, a pound, 50 p what price would you pay Trey in one week’s time if you haven’t had any your wealth? Because it would be a means of survival. And so it’s exactly the same with uranium. There is no substitutional effect in a nuclear fuel rod than enriched uranium product. And so, as a consequence, nuclear power plants will pay anything they can for it. Now, very much like water, we’ve been in a situation where there has been a surfeit of pounds on the market, really going back to 1993 which is when Yeltsin and Bush signed the megatons to megawatts program, which effectively saw the down blending of Russian weapons grade uranium. But then, obviously we had Fukushima, and that meant an end to the Japanese nuclear fleet. So pounds flooded the market then. And then we had the Germans going volt fast on nuclear roughly the same time. So for a decade, the price of uranium was trading between 16 and $20
Trey Reik 4:41
so the consequence to ask two questions I was going to go to later, but there’s been two. When I look at the 30 year picture, there’s been two big movements in uranium, and the first was 2007 to 2016 where the price went from 150 to 18. 18. And I think you’re talking about what happened immediately after that period. But why did uranium go from 150 to 18?
Nick Lawson 5:09
So you’re absolutely right. It peaked, actually, before Fukushima. It was the idea that fuel buyers will pay anything for the fuel, because the input cost of uranium in a nuclear power plant is between three and 5% so as a variable cost, it’s actually very, very small so, but really Trey, the price is infinite, because if you don’t have the nuclear fuel, you have to shutter your reactor. And that means that your plant could be offline for 12 months to a year. It will cost you a million dollars. But the bigger issue, and we know this now with nuclear as a base load supplier, one in four households on the western seaboard in the US take their power from nuclear. So if you don’t have a nuclear power station running and it’s out for 12 to 18 months, you run a genuine risk of societal unrest. And what you will find is it’s a, it’s it’s a absolute essential utility. And in fact, we have seen the last couple of years the idea of down blending of US nuclear weapons to actually fuel the nuclear energy industry. So the reason the price went as it did, was this fear that there wouldn’t be enough fuel, enough oxide to fill reactors now to take the uranium from the ground as yellowcake, the uranium oxide, u 308, and put it into a fuel rod. Takes two years. Historically, it’s now three years, and we can talk about why the supply chain is broken with the Russian war, but it takes two years, and utilities will try and keep inventory levels in excess of 24 months. Now, what happens is, if you’re buying now, you’re buying in 25 for 27 delivery, then what people were doing was they were thinking, oh my god, we’re not gonna be able to get pounds for the next couple of years. We’ll start bidding up pounds now. And what happened was, the apex predator, the hedge fund, got in front of the fuel buyers and drove the price in even higher, creating this sort of like this of ever increasing vortex of people bidding each other up. But
Trey Reik 7:10
2007 we’re talking about 2006 2007 So
Nick Lawson 7:14
it went from October, oh six to around Mayo seven. Mayo seven. And then, like all banks, we got greedy. We’re at Deutsche Bank at the time. We created a derivative contract on COMEX. Everyone got involved. There was a Constellation Energy bid for nafco. There’s a huge amount of M and A but what really knocked out the uranium price wasn’t Fukushima. It was the leverage that was in the system at the time of the financial crisis. Totally get it. What looks at that chart. There was a 143, 110, and then it really dropped down. And then Fukushima was what really drove the price into the doldrums. But it was the leverage that was taken on in the trade at the time of the GFC that was the real reason. And at the time, the global market cap of uranium equity was big. Is about 100 and $50 billion but there were many stocks the Australians were producing, the US were producing. Now, if one looks at the complexion of uranium, you’ve got very few listed vehicles that would be in Australia and and US producing now, because the price has fallen to a level where mines have shuttered, and we’re still not close to the break even price. So there’s a lot explaining
Trey Reik 8:20
why we spent a decade at these very low levels, because, because the mines had shut correct and also, it’s
Nick Lawson 8:27
such an opaque industry, there’s this concept of in mobile what we call Mobile Inventory. Mobile Inventory is pounds. You can’t account for everything you see in uranium. It’s not like trading copper or oil or wheat or any other commodity where there’s a proper exchange. What you have is you have pockets of of inventory that either creates an overhang or a suspected seller of pounds. The cousins who are the cheapest and the biggest producer of uranium, had no sort of discipline or price discipline up until 2019, whatever they produce, they would sell. And it took the tenghi devaluation around the time of COVID for them to actually start thinking, Well, hold on. Went crazy. We’re the biggest producer. Let’s start holding back some pounds. And they then set up a simple station vehicle that never got off the ground. They started showing price discipline in terms of how they sold. So you have this sort of quadruple effect of Russian down blended uranium on the market, Japanese and German pounds on the market. The concerns of mobile inventory and where it existed. No one failed to understand it, and then you had the issues with no price discipline from the world’s largest producers, the equivalent of the Saudi just say, we’ll sell oil at any price.
Trey Reik 9:37
I hope you’re enjoying my conversation with Nick Lawson and Ben Feingold of ocean wall. But for those who are interested in a little bit more detail on the uranium industry and investment opportunities within I wanted to let you know that wealthion and SCP have produced an extensive white paper on the uranium industry, which you can receive. By clicking on the link in the description below, right? So then we had four years on the bottom at the 20 level, and then in March of 2020 the uranium market was suddenly found by an institutional investors all over the planet, and we went from 1850 to 106 so what happened in that period? I think it was the period you were just about to
Nick Lawson 10:29
talk about. I’m gonna hand over to Ben on that, just so, just so you know tread, I know you know this anyway, but for your for your audience, so I’ve been very fortunate that I’ve had Ben working with you for the next, last four to five years, the way in which ocean will do their research is we do a huge amount of proprietary research. And to understand uranium, one has to understand the geology, obviously the chemistry. One has to understand market forces, and it will talk more about the enrichment side. There’s some very sophisticated physics attached to it. But most importantly, there’s a sort of geopolitical arc that goes across everything, in terms of uranium, and I’ve been very fortunate that Ben joined me four and a half years ago, and we’ve spent a lot of time either in Kazakhstan, sitting in boardrooms like this with maps of trade routes, going out through some Pete’s, or meeting with producers. So here’s the power behind the throne. I’m just going to ask Ben to answer that question, yeah,
Ben Finegold 11:22
thanks Nick and and thanks trade. So I think you know the fundamentally, the uranium market’s been in a state of sustained deficit since 2018 if you look at primary supply versus primary demand, what happened in between 2019 and and, as you mentioned, that moved to 106 Well, the truth is, a lot happened, and I don’t think that we can believe sat here today how much support there has been globally for nuclear and that was the foundational belief for us in in uranium, was we are fundamental believers in nuclear power. But I don’t think that even we as nuclear bulls could appreciate just how unanimous global perspective would become on nuclear energy. So I think that was the first turning point, which was you were seeing the most anti, traditionally anti nuclear jurisdictions in the world pivoting back towards nuclear power. You were seeing China double down on their commitments to build out 150 gigawatts in the next decade to build more nuclear reactors in the next 10 years that had been built globally in the last 35 you had 31 countries in at COP 28 pledging to triple nuclear capacities from today’s levels by 2050 and all of This was happening at a time where primary supply wasn’t really changing. And this is to Nick’s point, it’s very rare, actually, nigh on impossible, to find a commodity story where you’ve seen prices triple or quadruple, and the supply side response has been so muted. And so the fundamental story was, what really, you know, in our opinion, drove uranium prices from 20 to 40. The next sort of, I guess, Black Swan event was the sprock physical uranium trust. I was just
Trey Reik 13:11
ask you about that, whether you thought that was a little aggressive, the amount that they
Ben Finegold 13:17
acquired. I mean, they came into the market and were procuring pounds at a rate that a sovereign would procure pounds. They were buying more pounds that year than the Chinese were. It was, I think, 40 million pounds in a single year. To put that into perspective, your listeners, that’s about a third of global annual primary supply at the time. So it was this 800 pound gorilla that the market didn’t expect. We already had yellow cake listed in London. They had an off take with the Kazakhs for $100 million of uranium per year. But you had, you know, the trust is now a $6 billion now, at today’s prices, five and a half billion dollar now. So that was the second sort of black swan event. Was this, this idea that you had a procurement investment vehicle that was just locking up pounds for the foreseeable future. And then in February 2022 probably the most significant event in the last decade in nuclear occurred, which was Russia’s invasion of Ukraine. And this is Nick’s point around understanding the fuel cycle. You can pull uranium up the ground. You can lick it. You can give it to your kids. They’re not going to turn into the Incredible Hulk. That’s because it’s not very radioactive. To be a bit more scientific about that, it’s enriched in the fissile isotope to the degree of 0.71% not very radioactive. In order for it to become serviceable nuclear fuel, it has to go through a conversion, enrichment and fabrication process, a process which is completely dominated by Russia. So the reason that I mentioned this is because Russia’s invasion of Ukraine was such a significant event in the rising prices, but particularly in conversion and enrichment. And it’s so important to understand this, because while we saw conversion and enrichment prices. Is triple, quadruple, go up as high as five times. The uranium price only doubled. And it’s important to understand this, because you need to think about it from the point perspective of a utility. A utility, normally, they’ll go and buy their uranium out the ground first, then they’ll get their conversion, then they’ll get their enrichment. That’s how things used to work. Now, imagine you’re a utility and you are completely reliant on Russia for conversion enrichment. That process flips around, and you now have to go and procure your enrichment, first your conversion, and then you kind of forget about your uranium, because the near term squeeze is here. And so our thesis is part of our thesis is you have a crystal ball you have seen what has happened to conversion, enrichment, prices and that now has to come downstream and impact the raw material, essentially, uranium out the ground. So so much more has happened beyond that in the last five years. But I think those would be the three most sort of you know, key events
Trey Reik 15:58
interesting. I watched some of your interviews about six months ago, and the Russian situation was clearly, you know, top of the sheet in terms of what you were concerned about. Did, how did that play out? Were your concerns founded?
Nick Lawson 16:13
Yeah. I mean, it has done. I mean, there’s been said, yeah, the crystal ball effect is the price of enriched uranium products got up 500% since the start of the war. Now what we’re saying on the analogy of the glass of water is I’m showing you what next Friday’s price is like with no water. And you can buy as much water as you want today, because the oxide price has not had the same move. So we often give ourselves the next analogous to Cassandra on the walls of Troy. We can see the Greek ships, but no one’s listening. Now, the issue Russia is one that, you know, a lot of people felt that could be ended if Trump and Putin have a detour. But remember now, a lot of people now are self sanctioning away from Russia regardless. Because Russia developed gasses to Fusion back in the 1960s they have stolen a march on the ability to, as Ben said, take the uranium as a gas, run it through the centrifuges and to enrich it, to go into the fuel rods. This is hasn’t been done by any other country, into the kind of scale that’s required. So America only has one enrichment plant, which is in New Mexico, and it’s run by URENCO. So we are genuinely, I’m not going to use the F word, but we are fed in terms of our ability to secure enriched uranium products. And Putin has played a very long game, and it’s a game that President Xi is able to play as well in China, that when you have, you know, 10, 2050, year state planning around things, you understand that you can get stuff through quite cheaply. I mean, we have a nuclear power plant in the UK size. Well, see that, you know, it’s meant to be 10 billion. It’s now 20 billion to build. It probably be 30 billion. You know, the Chinese are in a position now where they can build scale one gigawatt reactors, the absolute fraction of the cost through a command economy. But also, what they’ve understood is it needs to be fueled by uranium, and so we call it the putinization of uranium. And it’s not our word, it’s that of a guy called Marin Katusa.
Trey Reik 18:08
Could you repeat that which
Nick Lawson 18:12
the putinization of uranium? Isolation? Got it okay, putinization. And it actually comes from a book story 2015 called the Cold War by Marin Katusa, which actually said that then, back in 2015 buying Uranium One, Putin understood the the ability to use energy as a weapon, and we’ve seen it with what he’s done with the Nord Stream gas pipeline in Germany, and he’s done exactly the same with Rosatom was at home, is building nuclear power plants in every poor country on their near and beyond strategy, the Chinese have done exactly the same with Namibia. And if you look at the world’s biggest producers of uranium, 42% is Kazakhstan. Well, that’s completely aligned to Russia. Now the next one is Canada at 12% and then you’ve got Namibia, Uzbekistan, Australia, you know, then they’re all in the percents. Now, Niger is under coup d’etat, and that’s aligned itself to Russia. Uzbekistan is an apparatchik of Russia, so, you know, and Namibia is controlled by China. So we now have this situation. And we saw this recently that Macron, you know, took all the nuclear executives over to see President tokayev of Kazakhstan last November, you know, the head of framaton, the head of verano, because they have to secure pounds from Kazakhstan, who turned up the following week, Putin, you know, we study trade data that comes out of Kazakhstan. We don’t have the data for q1 this year, but q4 last year saw almost 80% of all uranium exports go to China and Russia, and that’s the inverse of where it was four years ago. So we are seeing a bifurcation of uranium from east to west. The Chinese have built a warehouse on their border, China and Kazakhstan. Uncle ala shanku, which will buy and store as much uranium as the Kazakhs can ship to them. Now, when the war started, the issue was, is shipping uranium? Ships normally through Russia. It goes up through Kazakhstan, through Russia, to St Petersburg, then it goes out to the ports of Port Hope, of Ontario and Illinois. Now that uranium cannot go up through St Petersburg, so it has to go through a circuitous route that takes the Caspian, the black the boss for a seat. It doesn’t work. It doesn’t work. And everything that happens in uranium is glacial, because it’s a class seven transit material. It’s radioactive, so you can’t just rock up on Azerbaijan’s train line and start moving it through. It takes a long time, and it’s exactly the same with the mines. You know, we were brokers of vision uranium before they got bought by Paladin. They discovered uranium in the Athabasca basin in 2011 when can they get it out? 2032
Trey Reik 20:58
So you’ve talked about, I have about 10 lines of questions that what you’ve said has brought to light which, of course, we’re not going to be able to get to everything. But just backing up a little, the folk, my colleagues at SCP resource finance have tried to compress the uranium story to a gold guy in the sentence that you get enormous amounts of energy from moving around a very small amount of stuff. In other words, with oil and tankers and gas and all of these other forms of energy, you have to move so much stuff around that it’s very expensive and it has limitations. And the true promise of nuclear energy is it’s a small amount of stuff that gets an enormous amount of energy. That may sound facile, but what? How would you try to reduce the long term investment thesis for uranium? To me, is it nuclear energy, like 90%
Nick Lawson 21:55
that’s probably 100% is that apart from weapons as well? I mean, it’s trying to explain it. Your point is absolutely right about energy density. The energy density of uranium through the fissile process is, obviously, is vastly superior to the jewels emitted from crude or Cora, Cora, or anything else. Let me give you an analogy. The world’s global demand for uranium is 200 million pounds of uranium. Now that would be the equivalent, if I had to give a description of that of in size, a six story building, probably about two and a half 1000 square feet, so a large office building. Now to find uranium is incredibly hard, so you have to go back to the the alien material, so you have these radioactive seams that run through, example, the Athabasca basin. And to find it, you have to start by having geologists that can find boulders that have traces of radioactivity, and they’re normally found by very simply strapping a guided counter to a plane that flies over tree level. Once you find it, you have to triangulate it back to the thorn of the last last ice age, 10,000 years ago, as to where the boulders came from. Then you have to drill down 150 meters. So it’s above oil, but it’s still 150 meters down. You can get it in two ways, in situ recovery, which is where you pour sulfuric acid, dissolve the rock and suck it back up. And hard rock mining, but this is not fine like finding a sump of oil or a big seam of gold. Uranium exhibits non conformity, which is a bit like a pearl necklace with lots of different size pearls on it. Some are small, some are big, and it’s almost impossible to be able to vector in. But once you do, it takes a huge amounts of time to get it out of the ground. So it’s not like, oh my god, we found a way to mine uranium any cheaper. It’s really about the geology and being able to get it from the rock. But then, because it is a radioactive material, and you have to deal with so many different vested interest groups, indigenous people, local people, etc, it takes a very long time. Now people say, Well, if a price goes up, surely you can bring back existing mines. You can’t now in Wyoming and Utah and other areas in the US, there was a history of uranium mining. Big Oil companies had uranium miners. All the rigs have moved on. The geologists have moved on and retired. The scientists have gone but also you can’t just undo the wooden slats and start saying, we’re mining here. You want to go through the W and a. There’s a huge amount of commissioning that takes place. But the most important thing trend all of this is the break even cost of extractions $90 and we currently trade at 70. So you’ve got to imagine that a producer’s got to have line of sight on 110, 120, long term prices before they’ll look to commit to reopening a mine. So we’ve got a long way to go. So even if you just played the next $50 the 80% in upselling the share price, you’ve still got a long time until you can start bringing supply back again. And then the next thing is, there’s no market, as I talked about, you know, you’ve got a spot market, which is very, very opaque, and then you’ve got a contract market. Market, which is mainly between utilities and producers. And we’re currently in a huge there’s a huge contango. So term trades are 8283 spots at 70. So you’ve got contango in that market as well, and it doesn’t get armed away because the markets are impossible to trade between. Now I was we, I was speaking at the commodities, the FT commodities conference in Los Angeles, and we spent to spoke to a lot of trading firms that want to fill in the gap of the curve and start trading. And I think that will happen, and that will be hugely additive to the industry. But the biggest driver you’re going to have trade in the space is not going to be the utilities. It’s going to be the apex predators. Again, it’s going to be the funds waking up to this, and already the incoming we get for people sitting at either nuclear fuel funds or wanting to buy nuclear fuel or have a speak, no, not just some high. I mean, when we started this journey, you know, no one was interested. I mean, you could have got everyone in London interested into a phone box. There was no interest. Now everyone wants to talk about nuclear because, as Ben said, Something’s happened, the electronification of everything, the bypass and support for nuclear. You know the Microsoft Stargate five gigawatt reactor that will draw down the power of five New York boroughs, 24/7, right? Five New York boroughs and one five gigawatt data center. So the demand for AI now is going to be the only way in which you get the latencies via nuclear as a base load supplier. So we’ve now crossed the Rubicon, the Roman River. We’ve crossed it. It’s too late to go back. Nuclear is here to stay. The trades being de risk. The opportunity for your listeners now is to make a lot of money by from a commodity that has exhibits parabolic behavior when there’s a shortage, and that is incredibly exciting, because, you know, for your audience, you know, the trade has now been de risked.
Trey Reik 26:48
So in ocean wall materials, I see the phrase in uranium, everything takes time. So I think that’s sort of your credo for how to approach this investment. Perhaps maybe for Ben, could you just give us a couple of sentences on the components of uranium production? I read from your materials. We have oxide extraction, milling, fluorination, enrichment and fabrication. Can Can you just give our viewers an understanding of how complicated the process is how long it takes and how many people are involved. Does is it vertically integrated? Or are there specialists in each one of these processes that investors can assess on their own merits? Sure.
Ben Finegold 27:35
So uranium mining is highly concentrated, as Nick mentioned, over 40% comes out of Kazakhstan. There are two ways that you can extract uranium, traditionally, just think about an open pit mine. And then the second way is something called in situ recovery. In situ recovery is you locate an underground deposit of uranium, and you essentially inject boreholes into that deposit, and you put sulfuric acid down those boreholes, and you collect uranium via a central repository. That’s what the likes of Kazakhstan do. It’s what the likes of UEC do in the United States as well. The balance is pretty much done by traditional mining methods. So that’s the first stage of the fuel cycle. You put it out, and you have uranium ore. It then has to go through a milling process, which is essentially just crushing it down into this material called yellow cake, which is kind of a yellow sort of powder. Then it has to become, has to become, something called uranium hexafluoride, or us six. This is where the yellow cake is converted into a gas that’s pretty much dominated by by Russia as well. But I think an important point to make here Trey is that the fuel cycle, conversion, enrichment and fabrication, these are only really done by six countries globally, China, the US, a sort of coalition of of the UK, Netherlands and Germany, at URENCO, and then also in Canada via via Cameco, and France via Ronaldo. So there’s very, very few companies that do this. There’s a huge moat around this, around these businesses now that that comes down to the fact that you’re dealing with a radioactive material, it’s incredibly highly regulated safety protocols, etc. So conversion, as I mentioned, is converting that yellow cake into a gas. And then you go from a converted gas into EU key, which stands for enriched uranium product. The way that you get to enriched uranium product is you now have a gas that’s slightly more enriched in that isotope that I spoke about. So it’s point 7% when you get it in there, and then it’s slightly more enriched when you get it into UF six. You then essentially put this gas into something called a centrifuge. Think about a centrifuge being a 30 foot tall cylinder. There that spins around incredibly quickly. And what it does is it separates the heavier isotope from the lighter isotope. So the U 235, from the YouTube three eight, or the U 234, and you basically cascade these isotope these centrifuges. So you get a slightly more enriched product as you go down the cascade, and then at the end, what you get is a three to 5% enriched product that then has to be fabricated into nuclear fuel pellets by a fabrication facility. Again, there’s very, very few of those in the world. They get fabricated into these fuel rods. Fuel rods are about the size of your pinky finger in terms of width, and there are a few meters tall, and when you look at a nuclear reactors fuel core, you’ll see kind of like a square with lots of little holes in it. Those are filled with fuel rods. That’s the entire nuclear fuel cycle, back to front. As Nick mentioned, that used to be a two year process. It’s now a three year process, but that’s really dominated by state owned enterprises first of all. And so an important point to make is, when Russia invaded Ukraine, our clients called us and said, Ben Nick, how do I get exposure to enrichment? Because that’s where the squeeze is. There’s very, very few ways you can get exposure to that. We’ve identified a business in South Africa called ASP isotopes, which is our highest conviction idea, or at least in the enrichment space, we’ve identified a company called Light Bridge, which has very unique fabrication technology as well. But it’s very, very hard to get listed exposure to the fuel cycle, and especially that sort of the latest stages of fuel cycle. Interesting.
Trey Reik 31:36
So as a gold guy for quarter century, I’ve probably answered 1000 times to individual and institutional investors, how do you start acquiring gold exposure? What are the various options? And unlike uranium, I actually have a little bit of a shtick about gold coins, because they’re portable, they’re identifiable, they’re recognizable. Other than 1933 they’re uncomplicated all and there’s a lot of global importance in having something that is accessible and recognizable. Obviously, with uranium, that’s not going to work. So when you look at the average individual or institutional investor who wants to get exposure through uranium. What are the options and how would you suggest their relative importance are? I’ve always told if you’re going to have gold exposure, buy your gold. First you get 40, 50% of your exposure, then you can start moving on to gold, equities and that type of thing. So how does one approach the uranium sector in that regard? So,
Nick Lawson 32:47
I mean, I’ll let Ben talk about the ETFs. There’s a way to play the ETFs. The ETFs on uranium are probably the biggest one being Sprott that we’ve talked about, the physical uranium trust and obviously yellow cake, that would be your delta one, ie, that would track the oxide price directly. And it hasn’t done. They have a bit of a discount to NAV. No one really ABS it. But the really exciting bit for us is, and we’ve, we’ve done this journey. I mean, we like Cameco. I mean, Cameco Western house, so it’s a slightly less of a pure plan. Uranium. The most exciting stock, and this is stocks that we’re advisors to, and we own shares in, is UEC Uranium Energy core, which is based in the US three and a half billion. It’s the best play on the Buy America, patriotic US nuclear strategic reserve, superb management in I mean, Adami and Scott Melby pounds for sale if they need to. But that’s the purest because one of the issues could we talk about is provenance. You don’t want to be owning Russia or Kazakh pounds if something goes wrong or Trump decides to mandate it, but that’s your sleep at night. Producer, the next one we’d look to over be we’ll talk about the fuel chain. Ben articulated about the fuel chain. We’re very excited about enrichment, and a lot of that comes down to the growth of small modular reactors and also data centers. There’s a real demand now to be able to produce a kind of fuel that goes into small modular reactors, and that’s a slightly more enriched fuel called high assay, low enriched uranium Halo, and that’s the stuff that Bill Gates, Tera pound, Sam Altman at opclo really wants. And we have a company in South Africa again, we own the shares in it, called ASP isotopes, public companies listed on NASDAQ $600 million market cap. We think that would be, could be the most important company for humanity in the future. They can enrich from tails, and they can enrich to the level of of Halo that these these companies need. And one of the big things about small modular reactors is when Bill Gates. Modeling what a small, modular director would look like. He was modeling a price for this enriching rate of about $6,000 a kilogram. That price is now $32,000 a kilogram. So his IRR has gone from 14 down to zero, so he needs to secure cheap enrichment. And this company in South Africa is the most exciting company. There’s the company another US company listed on NASDAQ, called Light bridge core. Light bridge effectively can improve the thermal efficiency, the ability to extract and extend the life of the uranium pellet within the fuel rod, which were absolutely crucial as the world begins to start losing Uranium reserves, extending the life of the fuel rod. That’s a NASDAQ stock. And then there’s a company which is listed on the London Stock Exchange called Geiger counter. It’s an amazing collection and an investment trust format of the most exciting uranium companies, producers. It has some UEC in
Ben Finegold 35:59
next gen. Next year, next gen. They really own the North American jurisdiction miners, where we think there has to be a premium for those pounds, but just because of provenance, as Nick mentioned,
Nick Lawson 36:09
so we wouldn’t own anything to do with Kazakhstan. So kazatomprom is one of the biggest companies in the space, but we wouldn’t own kazatomprom. So it really wouldn’t be if we had to probably do it, and it listed an order, it would be ASPI, UEC light bridge and Geiger counter, but all of them offer different things. Yeah, and there’s another one,
Ben Finegold 36:31
and and also Sky Harbor resources. So given our conviction in the underlying uranium thesis, we didn’t really want to take exploration risk. But, um, Sky Harbor resources. They’ve got what we would describe as 36 shots on goal. They own 36 they have the third largest land package in the aftermaster Basin, the highest grade uranium jurisdiction in the world. You basically get ETF style exposure, but you get single stock upside. So we think that’s a really that would be the exploration pick that we would own for sure.
Nick Lawson 37:03
So amongst those five names, you’re covered, you’re properly covered, upside and sleep at night. So
Trey Reik 37:10
in the gold mining industry, I’ve always told people that there’s a unique situation which I refer to as a negative survivorship bias. So in most, most industries, your biggest and oldest competitors are generally the safest place to be. But in gold, it’s very difficult for those top four or five miners like Anglo and Dumont and gold fields to replace their reserves, and so they have a tendency to have a lot of pressure to make acquisitions and develop properties to not becoming a depleting asset. So I don’t know if this transfers, but is, is that true in the uranium industry as well? Yeah,
Nick Lawson 37:54
I think you I think it’s gonna be more interesting. I think it’s gonna be much more vertical than the the comparison to gold, I think you’re going to start seeing the utilities buying the uranium sequesters. I think you’re going to start seeing downstream, upstream. I think we’ll see a raft of M and A but it will be the unlikely suspects. Will be the acquirers. I think it will be the utilities. I think I have to start thinking of ways in which they can secure pounds. I think it’s a very good analogy. I think it’s but is Canada
Trey Reik 38:24
subject to be that sort of negative survivorship bias?
Nick Lawson 38:30
I think it’s really difficult. I mean gold, obviously. I mean, what I know about is there’s a much bigger space. I mean, the total global market cap of uranium is only 60 billion. So to put that in context, it’s less than 1/10 of the enterprise value of ExxonMobil. The orders multiple times big. As you said, there’s different ways you can play either physical coins, etc. I think here you’re limited. I mean, hedge funds have been in the last two years. Have set up their own deposit accounts to own and buy physical uranium. We have
Ben Finegold 39:02
36 Yeah, well, we estimate just over 40.
Nick Lawson 39:05
Over 40 now have their own storage accounts and and then the rest of them. It’s difficult for an institution to affect the price of gold, but you know, it wouldn’t take much for a couple of hedge funds to come in and do what they did, oh 607, and begin, start, you know, moving in front of the utilities and buying pounds, and they have much more pricing power than one would have with an Anglos or with any other stock as well. So, so, yeah, it’s, it’s, we’re sort of baby version of gold, but I think it’s going to be more of a panic. Obviously, store of value. It’s a means of exchange for this. It’s a means of survival.
Trey Reik 39:43
So that’s an interesting lead in which to what will be my last question, and I appreciate the time you’ve taken today. But you know, take rare earths. Rare earths were on the front page of The New York Times, I think, four or five days in a row a few weeks ago, when every. Looking at rare earths. But just because rare earths are getting a lot of attention and they’re on the front page does not necessarily mean that we’re in a part of the rare earth cycle. That makes sense for commitment. For example, the International Energy Association released its 2025 report yesterday, and even though rare earths are there is this perception of a constriction of supply and demand. Rare earth prices were down, and in fact, a lot of them are fairly soft right now. So you guys know more about uranium and what’s going on behind the scenes than most human beings, is this a good time to get involved in the uranium cycle?
Nick Lawson 40:45
I mean, we, we’ve just, we’ve spent the last month working on a helium project. And the issue, again, a lot of it comes down to Russia, is for a lot of critical materials, the process is controlled by a few countries, and those countries are now being to be bad actors. And what the the Western world has to understand is there has been a drive to accumulate those materials. But also, to give you an example somewhere Helium, Helium has what’s called purge, as in, it loses a lot of its when it’s shipped as a liquid at minus 260 degrees C, it loses, after 45 days, half its liquid into gas and becomes useless. Now, helium is used in rocketry. It’s used in semi production. You know, I feel at the moment, because of the very specific attributes that these critical materials, critical minerals, have, and the fact that other actors are now knowing this, there is this drive to own them. So if it doesn’t manifest itself in the stock market price, it ultimately will do and it will do it with the same kind of violence that we’ve seen in other other critical missiles and minerals, such as uranium in oh six, uranium in 2023 or moved with that kind of violence. So I always say this to people. You know, it’s very difficult when one invests in a sector one doesn’t quite know about. But if you do it, and you do it on a funded basis, where you’re not using leather, you’re not spending money you can’t afford to lose, you can wear the vicissitudes of the market. You can wear a Trump tariff tantrum. You can wear a war or whatever interest rate rise. But I think what I would advise at the moment is, I think we’re going into probably one of the most exciting times in world history, where you’re having this confluence of technology and demand for energy at the same time as a fragmented global picture and this trades will play out. They will play out what it requires, like anything in life. And you know, Buffett will attest to this is you do need to have patience. You have to be able to sit in the trade. And I know my hair is a lot whiter than Ben’s, but you know, we haven’t been that nervous the last five years, because we’ve been utterly convicted in our thesis, and we’ve never been too heavily positioned where we can’t sleep at night. And I think that is the most important thing for any investor. I think you know Trey, you know that probably better than anyone else. So even
Trey Reik 43:11
though part of the credo of ocean wall is everything with uranium is long term, I’m getting the impression that you think there’s a hockey stick potential, say, in the next two or three years, because of the confluence of these people,
Nick Lawson 43:24
have us back on. If you have us back on in a year’s time, you it would. I think, I think, I think it’s very likely the the move could happen in the near term and medium term and the long term, because it all comes down to this fact there isn’t a supply response, but it isn’t a supply response. You can’t, you know, I think, you know, I always laugh with Ben. I don’t laugh. I worry that, you know, we don’t wanna be on the front page of business week looking like the villains of, you know, sequestered all the uranium. But there may be an issue where the governments have to invoke force majeure around uranium and seize it, because it will be, you know, it has such a critical need. I mean, Ben and I both sit on the European ambition Institute, which is a government an NGO, which looks at the idea of power and AI and on it, a government, officials, politicians, but also the grid. And the grid said, we can’t even have an AI policy because we can’t supply our households with power. In the UK, in January, we had a spike to 6000 pounds per megawatt hour. We are utterly dependent on import. So the idea of being able to have a five gigawatt data center is just lunacy, you know. So I feel that, you know, you’re going to find that this, this, this will play out at every level. But you know, as I say, it would be, it’s a generational trade. This is about, you know, for your investors, being able to be in something which could be as seismic as the oh seven ABS tray or or silver in the 70s, or the tech rally in 9798 you know, I think it has that, that capacity. Well. Without the bubble consequences.
Trey Reik 45:01
Excellent. Well, I don’t think we could end on a more positive note than being excited in the short term, medium term and long term, so let’s leave it there, and thank you
Unknown Speaker 45:13
guys longer than my long term,
Trey Reik 45:17
and we’ll check back in with you in six months or so. Thank
Nick Lawson 45:20
you very much. Thank you for having us on Trey. You’re a great interviewer. Thank you.
