Ur-Energy Inc.
Q4 2018 Earnings Call Transcript

Published: 7 Mar 2019

[Operator:]

Good morning, and welcome to the Ur-Energy presents 2018 Results and Update on the U.S. Trade Action Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Penne Goplerud, Corporate Secretary. Please go ahead.

[Penne Goplerud:]

Thank you. And thank you all for joining us this morning for results conference and webcast. We are required to draw the attention of all of our participants to the legal disclaimers on slide 2, they will apply equally to our oral presentation as well as PowerPoint. We ask that you read and consider these disclaimers carefully before investing in our shares. As well, risk factors inherent in forward-looking statements and projections are set forth and discussed in the Company's Annual Report on Form 10-K, filed March 1, 2019, with U.S. Securities and Exchange on EDGAR and with securities regulatory authorities in Canada on SEDAR. I would now like to introduce and turn the webcast presentation over to our Chairman and CEO, Jeff Klenda.

[Jeffrey Klenda:]

Great. Thank you, Penne. Good morning, everyone. Welcome and thank you for joining us this morning for kind of look back on 2018 a year end review and a bit of a look forward on into 2019 and what the year holds in store for us. I don't think I'm being out of bounds when I say that one way or another, I believe that 2019 is going to be a pivotal year for us. There is much going on, some of it that began last year and continues on into the new year in 2019, others that will take place this year. But as you're looking at the slide before you did, that's entitled Ur-Energy at a glance. This will serve loosely as a format for the webcast this morning and provide you with what we consider to be our areas of emphasis as we move into and as we were entering 2019. During calendar year 2018, we marked five and a half years or five years of production in August of last year. We are now in excess of five and a half years of consistent production. You'll notice that we have produced in excess or captured in excess of 2.7 million pounds through calendar year 2018. But I think the thing that should be emphasized here is that we have controlled our production at market appropriate levels. And, of course, this will fall under the heading of operations. And that will be covered by our Senior Vice President of Operations, Steve Hatten. But one of the things that I think that we're most proud of is that during that five and a half year period of time, we have emerged as the lowest cost producer across all publicly traded companies globally. I don't know of another company that currently trades anywhere in the world that can produce at a lower cost and we can. And while there are projects in various parts of the world, most notably Kazakhstan that produce at a slightly lower cost than we do. And they're very specific reasons for that that are going to be addressed. But in the second section, under the second main bullet point, you'll see that we have been served quite well by long term contracts that were entered into several years ago. We began entering into our first contracts actually in 2010. And with the occurrence of Fukushima, which is very difficult to believe that now come next Tuesday, we will actually celebrate the eight year anniversary of that momentous event that of course, significantly changed our industry. We have been served quite well by our long term contracts. Many people don't realize or forget that immediately after Fukushima, prices in the spot and turn market states stubbornly in the mid-50s to high-50s throughout nearly a year after Fukushima. And we took advantage of that. I guess I'm just old enough to remember Three Mile Island. And as a result of that didn't know how long the after effects of Fukushima would be with us. And so we put contracts in place that then that we extended through the end of the decade. And like everyone else, we are seeing those contracts term out now, as is the rest of the industry. And that after that contracting phase that took place, say between 2009 and 2011 and '12. So - but we have delivered more than 2 million pounds into our contracts. And we've also delivered 1.2 million pounds into contracts that we have purchased in the market. And this is one of the things that I think is important to emphasize is that we have tried to, especially over the last three or four years strike a proper balance between the pounds that we produce and the pounds that we purchased in the marketplace. This has led to consistency in our cash flow, and it has helped us maximize our margins. And this is something that our CFO Roger Smith and Chief Operating - our Chief Administrative Officer will be covering with you. So I'll turn that over to me in time and he will cover off on our results for 2018 and give us also a bit of a look forward into 2019. But maximizing those profits has been essential to navigating these very difficult times in the post-Fukushima era. But in addition to that, as we have continued to produce at that lower and controlled level throughout 2018, we have grown our inventory. We have chosen not to sell these pounds, we've grown this inventory and it represents a significant current asset for the company. And so this is something that we feel very privileged in a very difficult environment to have an inventory that is readily available for sale into the marketplace should we need to do so. But I think many of you are on this call today because it is going to be an update call on Section 232 with this of course is the trade action that we filed at the beginning of 2018 in January of last year. There's a lot to it. There are a lot of details that we are going to cover off on. But I think that they're going to be best covered off on by John Cash, he is our Vice President of Regulatory Affairs. And so what I will do at this point is, I'll leave that to him, but first, up first for us is going to be Steve Hatten. And one of the things that I'd like to say before Steve get started, is that over the course of the last five years, I believe that we have not only as a company elevated our standards, but I believe that we have elevated standards by that - by which the rest of the companies in our industry we're going to - are going to be judged over the years ahead. So having said that, I will turn this over to our Chief Operating Officer, Steve Hatten. Steve, if you would, please.

[Steven Hatten:]

Sure. Thanks, Jeff. Those you tuned in last fall's webcast, already know that we celebrated our fifth year of operations as Jeff just said. I'd like to take a little bit of time to recap some of those milestones for you. We began operations August 2, 2013, amid a flurry of drilling, outfield installation and plant construction still at that point. And while the beginning was a little difficult, I'm proud to say that we've improved our safety record every year since 2014. This is especially true today and with our current safety record sitting at 572 days without a last time back. So thanks to all you folks out there who've taken care of that for. Another thing we've gotten very consistent at is uranium production. At the end of 2018, we have produced, packaged and shipped more than approximately 2.5 million pounds of U3O8. That consistency has allowed for the building and maintenance of a solid contract built through 2021. A solid book allows for consistent production, operations and maintenance of a great step. The geology group has also outperformed expectations by continuing to grow the available resource base well beyond what has been produced to date. We will specifically talk about that in just a few more slides. Look, water is the basis of everything we do. So if we can be innovative and find other ways to recycle that resource, that's certainly a plus for us. That's exactly what our VP of EHS and Regulatory Affairs, John Cash did when he saw an opportunity to recycle waste water in a different manner. He made sure that last week was the first ISR facility to cut its wastewater disposal by treating portions of it and re-injecting the clean water back into the ground. The result is a significant reduction in the amount of wastewater injected down our deep disposal wells. Great people, great thinking and great contracts are, well they're great, but without a great ore body, they don't mean a thing. The founders of our company were kind enough to provide us with a great project area that continues to give today and hopefully well into the future. Our first Mine Unit of 12 currently planned has produced 92% of it's under pattern resources and continues to produce still today. As a matter of fact, we are currently evaluating the potential for capturing the additional resource in that 1st Mine Unit that was not put under pattern during the first go round. That in conjunction with the remaining resource not currently under pattern in Mine Unit 2 is estimated at four and a half million pounds. We're only talking about the first two of 12 mining. The key is that those resources are already included in two monitoring permitted for not only development and construction but operations as well. They are production ready path. I mentioned earlier that the 1st Mine Units were only two of the 12 plant. So while we have captured over two and a half million pound, we believe that there are many more years of production in the other 10 units. To support that future production, our regulatory group continues to progress the Lost Creek East permit amendment. Next slide, please. So let's talk about preparing for the future, what we've done in the past and what we're going to continue to do. There are three keys to a successful facility, economic production, environmental responsibility, and great people. Without all three of those things, you can't stand. We believe at Lost Creek that we have all those things. While market conditions in the past few years have caused us to pull back on development activity and the number of people associated with that, we have managed to attract and maintain that kind of staff that will be critical to a successful ramp up. So let's talk about production now. We started out in August 2013 with production from Mine Unit 1. Whilst nearing completion from those 13 header houses, it has recovered 92% as we said before. While production from this area to date has been exceptional. Our geologists have also been evaluating additional pattern installations in my Mine Unit 1 to capture the remaining measured resource of approximately 2.1 million pounds that was not originally put under pattern. Mine Unit 2 is really a continuation of the HJ trend in Mine Unit 1. And like Mine Unit 1, we've already seen excellent results from the first three header houses that were installed and operate. However, those results have been amplified by improvement in down hole and surface filtration as well as changes and how fines are dealt with in the plant. We have already recovered approximately 65% of the under pattern resource in the first three header houses with one of those nearing 90% recovery. While we're very happy with those results, you can be assured that we're planning for the potential ramp up. Our group is developing plans for installation of the remainder of the fully permitted Mine Unit 2 as soon as we get the go ahead. The area is definitely drill, construction and production ready. I want to reiterate this is only the second of well-planned mine units on the current Lost Creek property as we know. Our focus this year is the optimization of processes in the well field and in the plant. Our experience plant personnel, control the capture processing of uranium. They will continue to refine those plant processes and work to optimize, minimize wastewater that has to be disposed. As we talked about in the previous slide, this includes the use of classified recycle. The remaining concentrated wastewater is disposed of in deep disposal wells on time. Please also be aware that we have two additional disposal wells approved for installation at the Lost Creek project and have included three more in our Lost Creek East amendment. Turn to next slide, please. So let's finish the Lost Creek operation discussion with some production and cost. The top section of data demonstrates again our ability to maintain a productive presence in a tough market. While we can see increases in our cash cost as development and production rates are curtailed, they are not escalating at a rate equal to the change in production. In other words, excellent recoveries and duration of operations in Mine Units 1 and 2 have allowed for minimal investment per pound on development and operating expenditures. Also, please note that the fall of 2018's production came from the operation of just three new header houses in Mine Unit 2. I've highlighted also that our recent production is going directly into building inventory at the converters, as Jeff has said. Not in the ground and not in potential at the converter as hard yellowcake. We feel that this is critical and preparing for what we hope is a ramp up environment. Now the bottom set of data reflects sales of Lost Creek product, as well as pounds purchased to fill our contractual requirements. And you'll also note there that we have 500,000 pounds under contract in 2019, yielding approximately 11.5 million in gross profit. Thanks. And back to you, Jeff.

[Jeffrey Klenda:]

All right. Great. Thank you, Steve. And I'd like to make a couple of other comments just to supplement with Steve covered there. One of them is that of course, as we all know, in this industry, safety is paramount. We have now logged a 572 consecutive days with no last time accidents. That's something that we are particularly proud of. In addition to that, you know, before we begin production, it was stated and it's an old saw in our industry that institute recovery is as much art as it is science. And I would like to suggest to you that here we are, we find ourselves now five and a half years after the inception of production at Mine Unit number 1 still producing Mine Unit number 1. In our own PEA that was done way back when before production began, I think I believe that we modeled that our production was going to be roughly 24 to 30 months there, but certainly nothing along the lines of five and a half years. This doesn't just happen by accident. It's the result of hard work, innovation and creativity by our operational team. And that's something that just doesn't happen by accident that takes very good people to accomplish that. But one of the things that you'll also notice this on that last slide that Steve covered in the lower box, the uranium revenues from sales, you'll notice that we actually began purchasing some of our pounds in 2015, and that we actually did not in '16, but then wrap that up in 2017 and 18, and will do so again in 2019. So we, as I mentioned from the outset, are trying to strike a proper balance between the pounds that we produce and the pounds that we purchase. And this is something that we believe has been critical to our strategy. In fact, a good example of this is that we all know that the industry leader in uranium chemical shutdown their MacArthur River facility in November of 2017. And so throughout 2018, they began selling off their inventory or purchasing pounds that they needed to make their deliveries for that year. And as a result, they just came out with their 2018 end of year results and had a very good year for the first time in four years. And so I think that it really demonstrates that it's critical particularly during times of exceedingly low and unnaturally low, I would say, unnaturally low uranium prices in the market that you have to be adaptive to current market conditions. And in this case, striking that balance between purchase and produce pounds is what has helped us maximize our margins and help us maintain balance as a company. So with that, I'll now move it forward and turn it over to Ur-Energy's CFO, Roger Smith, so that he can begin to - so he can take you through 2018 results. Roger.

[Roger Smith:]

Thank you, Jeff. And good morning, everyone. Slide 7 gives us a bit of history in the company in terms of our gross margins and our gross profit margins. I've also given you the average sales price that we've had over the past five years. I've taken this back to 2014 because 2014 was our first full year of production. At that time, we generate a gross profits of about 8.4 million for around a 31% gross profit margin. In 2015 and 2016, we continue to generate respectable margins from our sales from primarily production both in the neighborhood of 30% each. And 2016, all of our sales were from produced pounds, which we intentionally reduced to our contract sales level. In response to difficult market conditions, we deliberately reduced production again in 2017. This time to complement our production with low, cost effective uranium purchases. Together with higher average sales contract prices, we increased our 2017 gross profit margin to 43%. In 2018, we expanded the strategy and purchased all of the pounds sold into our term contract, generating gross profits of 11.3 million from uranium sales were about 48% gross profit margin. After operating expenses and other income, the company ended 2018 with a net income of 4.5 million, or about $0.03 per share. This strategy allowed us to generate cash, while at the same time, building inventory. So Slide 8 shows us a little bit of a recent history of our inventory positions. As you can see, we've increased our inventory substantially over the past six quarters. Currently, we have 400,000 pounds of total inventory. Of this, 376,000 pounds are located at the conversion facility. These finished and ready to sell pounds had a current value of nearly 11 million in recent spot prices. Looking forward, we have 500,000 pounds under contract to sell at $49 per pound in 2019. We already have purchase contracts in place for all 500,000 pounds at an average cost of approximately $26. These sales are expected to generate gross profits of about 11.5 million for margins of between 45% and 50%. We will continue to build our inventory in 2019 with the intention of delivering this material into our 2020 and 2021 contracts. Our expected average 2020 and 2021 contract price is $47, which will generate cash proceeds of 18 million as we deliver this material into contract. As we build our inventory, we will also continue to focus on margins by keeping a watchful eye on our production costs. And Slide 9, I've given you the history of our production costs. In 2014, our first full year of production, we produced about 550,000 pounds. At that time, our production costs totaled about 21 million or approximately $38 per pound. In 2015, we increased our production, while at the same time, decreasing our production cost. After 2015, we deliberately reduced our production in 2016 and 2017, due to market conditions. In 2017, we dropped just 254,000 pounds. With the addition of the first three header houses for Mine Unite 2, we were able to increase our 2018 production to 286,000 pounds drawn. At the same time, we lowered our production costs by 2.8 million. This lowered our production costs to about $38 per pound the same as in 2014 when we were - when production was at a significantly higher rate. Of the $38 per pound, our cash cost per pound produced in 2018 was about $24 per pound. Thanks to the efforts of our team at Lost Creek. We have become more efficient operators. We have maintained our plans and retained our core group of very experienced operators. And just as we deliberately lowered production, we can again increase production quickly and efficiently. And we stand ready to ramp up when market conditions improve. Now let's go back over to Jeff to tell you about those market conditions.

[Jeffrey Klenda:]

Thank you, Roger. And again move the slide forward, please. Candidly, ladies and gentlemen, I am amazed that we've been able to contain costs at the levels that we have. Of course, like everyone else, as you would expect, we have an inverse relationship between the number of pounds that we produce and the cost to produce those pounds. And as we have lowered our overall production level, I frankly would have expected that both our C1 cash cost and are all in cost would have risen much more dramatically than they have. But I think that once again, this is a testament to our operational team being able to contain these costs and maintain them at the lower levels. I think it's just once again a testament to our staff. Now our production will continue to drop in. As you are now looking at your screen, what you're seeing is a slide and titled U.S. uranium market. Honestly over the last 10, 12 years, I think this may be the only slide that is actually survived that entire period of time as we have watched the United States production of uranium and our industry continued to flail along. I was - I can recall, 8 and 10 years ago, saying to people, this is something where not only is it a problem, but I believe that it will continue to be one that is ignored by the regulatory authorities and the Department of Defense until such time as it morphs into a national security issue. Now, there are those who would say that perhaps this is not the time that this is something that's perfectly acceptable, and we should not have any concerns about it, I couldn't disagree more. If you take a look at the top of this slide, their data here that comes out of the EIA, which is a subsidiary of the Department of Energy. And the fact of the matter is, is that we are a consult country that consumes more uranium than any other country in the world. We have the largest fleet currently of 98 or 99 reactors. And over the last 8 years, in seven of those years, we have imported more than 50 million pounds. Think about that for a moment. We are importing more than 50 million pounds a year and consuming just over 50 million pounds or commercial uses. And bear in mind that this does not include military or medical. I can't help but look at this slide and be deeply disturbed. This is I believe graphic evidence of an alarming trend, one that sadly will only get worse and that we've watched continue to get worse over the last few years. As we have been the victims of continued dumping by foreign state owned entities. And I choose the word dumping very carefully because it has met the textbook definition of dumping in my view over those years and this is something that our government and sadly the marketplace has chosen to turn a blind eye to. But the reality is that entities in Kazakhstan, Russia and Uzbekistan, state owned entities that have virtually no environmental standards and have benefited tremendously from currencies that had been devalued by as much as 90% at times have been the beneficiaries as they have continued to produce in their local currencies and then dump their product into the United States into a very highly appreciated U.S. dollar and make money. While, I would suggest to you that just about any company in any commodity can look like an economic miracle under such circumstances and such conditions. But what we're really not seeing here and I will mention to you that there was a book written in 2015 called The Colder War in which the subject matter of that book was the overall strategy by Vladimir Putin since he took power in 2001 to take control of the fuel cycle globally. And at that time, the Russians really controlled less than 10% of primary production of global uranium. Today that number is thought to be in excess of 60, probably closer to 65%. Vladimir Putin controls more than 40% of global conversion and between himself and the Chinese and other actors with him, he has over here - overwhelm, he has direct control at least 50% of enrichment. This is a brilliantly conceived strategy. It's brilliantly structured and it's been brilliantly executed by Vladimir Putin. And it's sadly, today, we find ourselves in a position where the numbers were out at the end of the year, we will - we had - we produce last year 1.4 million pounds at least that's the official number that comes out of the EIA. But actually primary production that was produced in the United States not reprocessed was only about 830,000 pounds. This is the lowest level of production since 1949, going back to a time in history before we add a commercial nuclear power industry in the United States. So our reliance on foreign resources has grown to represent roughly 99% of what we are consuming, and we are approaching 100%. Frankly, this represents to me a level of recklessness and irresponsibility by not only our government that oversees this, but by the utilities that consume this that I frankly find difficult to fathom. This is why we felt it was appropriate that we bring Section 232 and this was done in January of last year. But as our - it's sad, our fuel cycle has continued to deteriorate and our self-reliance ride along with it. We have been fortunate enough to have our Vice President of Regulatory Affairs, John Cash. He has been tasked with spearheading the effort to marshal through the Section 232. And so with that, I'll say no more and turn this over to John Cash, so that he can give you an update on where we are with Section 232. John, if you would, please.

[John Cash:]

Alright, well, thank you, Jeff. And I wish I could paint a better picture than what Jeff is just laid out. But the facts are the situation is pretty grand for the front end of the nuclear fuel cycle in the U.S. And on Slide 11, if we can advance to that, we'll talk a little bit about that. But we're losing the entire front end of the field cycle. When you look at primary mining, there are really only two companies left that have production around commercial terms. That's us Ur-Energy and Energy Fuels and we're the two co-petitioners. But we both have in-situ facilities that have been able to remain in operations even in these current market condition. Other than that, all of the other facilities are either in the process of shutting down or have reduced production to insignificant levels. Is not just the mining end, also our conversion facility in the U.S. which is located in Metropolis, Illinois, that [indiscernible] facility, it shut down in 2017. That's left the U.S. with no ability to convert material. So we've completely lost that front end of the cycle. They maintain a skeleton staff there. They're hoping to restart. But the fact of the matter is any facility, the longer it sits there idle, the more difficult it is to bring back into production. The next step in the fuel cycle is enrichment. We also lack any domestic uranium enrichments capability in the U.S. And by domestic uranium enrichment, what I mean by that is domestic technology. We certainly have URENCO facility down in New Mexico, but that is using foreign technology. So it can't be used to process uranium for Defense needs. When it comes to defense needs, we have no existing technology built in place to enrich material for Defense needs. So we are relying on our stockpiles of the Department of Energy has characterize those as finite and diminishing. And we've heard from the Department of Defense that they could be in the market as early as 2025 to purchase uranium for Defense needs. Our response has been not so sure you'll have anybody left at that point, so that's why we filed the Section 232. Right now, we're importing about 40% of our uranium from Russia and Russia satellites and more all the time. China is now beginning to target U.S. utilities to sell and enrich product and we believe that they're going to be taking a bigger bite out of that market as we go forward. Some people say well, we can just rely on our allies to supply that material if there's ever a geopolitical event that disrupt supply. We don't believe that that's true. If you look at our allies around the world, and Canada and Australia, they're dramatically cutting back on their production as well, ensure what time they could bring those mines back online. But as I previously stated, the longer those are offline, the more difficult it is and the more costly it is to bring those back online. We're becoming curiously dependent on Russian satellites for nuclear fuel supply. It's only being worsened by China beginning to target the U.S. But we believe that it can be corrected. We can move to Slide 12, please. This chart I think tells us the story quite well. It shows EIA numbers, as well as industry members for the last several years and we also have a projection for 2019. You can see that we're in a steep decline in the primary U.S. mine production. We're going to see additional pressures on that market, as the Russian Suspension Agreement or the RSA ends at the December of 2020. We're already hearing from Russia that they would like to grab a bigger share of the market. They've been quite public on a number of times in their statements in that regard. China also has been tipping their hand that they would like to grab a larger share of the U.S. market. In addition to that, China has been gobbling up supplies around the world in particular in Africa with the Husab mine rising. Langer Heinrich over in Greenland, they've acquired a large rare earth uranium project there. In Nigeria, they've acquired properties there. In Kazakhstan, even in Canada, they've been on a buying spree, gobbling up large deposits around the world. I think though they really kept their hand because a lot of these deposits are not economic. They're extremely low grade even though they're very large tonnage. If they were working in a free market and the market was their concerned, they would not be acquiring these projects and especially would not be putting them into production because their cost of production that these facilities far, far exceeds today's stock market price. So we firmly believe that these acquisitions and these ramp ups by China are simply motivated by geopolitics and not market driven. We also believe the U.S. utilities have been brought into this plan and are engaging in purchases of additional uranium going beyond the Russian Suspension Agreement and trying to fill their books with that material and they're buying into those plans that are being put forward by Russia and China. So when it comes to this - I'm sorry - if we can advance to Slide 13, please. When it comes to the Section 232, if you read the statute, it deals with national security and how the President can alter trade in the interest of national security. In the petition that we filed with Commerce, we laid out three aspects of national security that we think are quite relevant here. The first and probably the most obvious is that we need uranium for our military needs. The uranium that we supply to the Department of Defense for those military needs, it has to be sourced in the U.S. and it has to be processed using U.S. technology. And as I recounted two slides ago, the mining capacity, the conversion capacity, the enrichment capacity, all of that is nearly gone. So we are losing our ability to satisfy our military needs. The second angle on national security is energy security. Our U.S. utilities are becoming increasingly reliant on supplies of material from geopolitical rivals around the world. Countries who certainly don't have our interests at heart it don't share our democratic and free world values. There is nothing to prevent Russia and those countries from cutting off that supply. And in fact, they've indicated that they would be willing to do so as part of counter sanctions against the U.S. If that happens, the free world could be short of uranium very, very quickly. By my calculations, about 88 million pounds a year short on supply worldwide. Finally, the last aspect of national security, which is a little bit more out in the ether, but it is incredibly important, is we're losing our seat at the non-proliferation table. For many decades, the U.S. has been the leader in non-proliferation of nuclear supplies, nuclear weapons around the world. In large that that's because we had the engineers, we have the scientists, we have the production capability in that realm. So that when we sold those to another country, we would put proliferation or obligation on that, so those countries couldn't use it to develop weapons. We are losing that ability. But that vacuum that we're creating by leaving that market is being filled by Russia and China. And Russia and China don't have the same concerns in mind. And I think that's one of the reasons we're beginning to see a proliferation of those materials around the world is because we've lost our seat at the table. We can regain that seat but we've largely lost it. So the remedies that we proposed in the petition that is twofold. First of all, to reserve essentially 25% of the U.S. market by applying a quota on imports that it would essentially set up two markets. One would be a worldwide market where we would continue to get 75% of the material for our utilities. The other remaining 25% would have to be supplied by domestic mines. The second remedy we've proposed is a by American policy where government agencies including the Department of Defense, and also government utilities and other agencies, anytime they buy uranium it would have to be U.S. source. Slide 14 please. So the schedule for the 232 petition, we filed January 16 of 2018, Commerce initiated the investigation by sending a letter to the Department of Defense on July 18, 2018. Since then, they've had a public comment period that ended on September 10, 2018. And they have also sent out questionnaires to both utilities and miners to provide information that will assist with their investigation. Going forward, Commerce must complete its investigation within 270 days and make a recommendation to the President. So you do the math that takes us out to April 14 of this year, so not very far away that Commerce must make their investigation and conclude their investigation. The President then has up to 90 days to either accept Commerce's recommendations or to substitute his own judgment. That 90 days is a maximum, it can actually be shorter than that. But that takes us out to July 15 of this year that a decision will be made by. If you read the Section 232 statute, it lays out that remedies should take place immediately. So any remedies that are taken up by the President and applied, we would expect to see them within a very short term. So with that, Jeff, I'll turn it back over to you.

[Jeffrey Klenda:]

Great. Thank you, John. And I would like to just augment with John's comments on Section 232 with just a couple of comments of my own. You know back in June of 2018, own nuclear fuel market held a conference in Monterey, California. In that conference, I had the opportunity to sit in on a presentation being given by TENAM, which is a subsidiary of the Russian giant, Rosatom and they are responsible for the distribution and marketing of nuclear fuels to the United States, specifically under another subsidiary TENEX. And it was interesting as they laid out their game plan for their markets over the next 7 to 10 years. In fact what they were pitching was basically to our utilities who were all in attendance that, look you don't need to engage in the production of uranium and you throw it away, you no need to dirty your hands or tie up capital in that, you don't need to concern yourself with UF6 and conversion. All you need are your good friends, the Russians and the Chinese. We will provide all the things - all the EUP, the enriched uranium product that you need, and we will have this in place by 2025. I sat there in shock and somewhat disbelief as I watched our utility friends, nor their heads both in approval and agreement, it would appear that the Russians have a very strong game plan. Our utilities have bought into it hook line and sinker. And as I watched them, not an approval and agreement as the Russians laid out their plans to become a one stop shop for all things EUP. I think that it was a very sad display that took place on American soil. But this is nonetheless the direction that we seem to be heading unless Section 232 is successful. I don't believe that our Department of Commerce, Energy, Defense or interior or the powers that be in this country are frankly going to allow that to happen. And we are very optimistic that Section 232 will prevail. As a result of that we have been preparing to ramp up as Steve mentioned. We have been maintaining operational readiness, we think that this is critical. We are optimistic that there will be a positive outcome to Section 232, because the outcome, the alternative quite candidly is almost unthinkable. You'll see the next slide, it says URG's plans for pounds in the drum. And the reasons that I put that in quotes is because one of our directors appropriately noted in our last board meeting last week that utilities don't buy pounds in the ground, they buy pounds in the drum. And as unfortunate as it's been, our analysts in our industry don't usually don't have a way by which they can measure the value of uranium companies except by their pounds in the ground because there really are no fundamentals in our industry. In fact, one of them said to me that if I were to use fundamental analysis to analyze the industry, I would be down to three companies. So in order to cover the industry, they have to use a pounds in the ground metric which is deeply flawed and many of those pounds of course will never see the like the day in any of our lifetimes. We are focused on our Lost Creek property followed by our Shirley Basin and property and then four to five years down the road by our Lost Soldier property. Each one of these had lengthy life of mine. We feel that this is something that is going to fundamentally change of Section 232 is successful, I should change that and say when Section 232 is successful, we believe that there will be a very significant change into our - in our marketplace overnight. We will go from being a fiction and fantasy pounds in the ground market to a facts and figures market very fundamentally fit based overnight. And what we're going to do is that we will see that there are basically two types of companies. As it is our industry has been decimated to the point where there are very few companies remaining. And what you can do is that you can effectively divide them up into two types of companies. I'm now I'm going to exclude the explorers in this but when I say companies, I'm talking about those that would purport to be able to ramp up, provide production and provide product to the United States commercial market. And I think you can divide those into two categories. There are those like ourselves and Energy Fuels and Cameco that are the ramp up companies. And then there are other companies that are the, what I call the build out companies. And so as Steve talked about all of our operational readiness and the things that we are doing creatively to prepare ourselves for the next for what we believe will be a successful outcome on Section 232. It's going to be critically important to focus on whether the companies that you're participating with or invested in are a ramp up company or a build out company. And so what we have done is that we have tried to model and we're representing to the Department of Commerce as have a number of other producers or potential producers what our ramp up capability is. This is one of the things that is going to be critical important to a successful 232 outcome is that we have to perform. We have to be able to ramp up our production and we have to do it in a timely manner. What you see in front of you here is what we envision as our ramp up. Now, it could potentially be a bit higher than this or could potentially be a bit lower than this. But what I'm attempting to demonstrate here is that let's assume that there are half a dozen companies that have the potential to ramp up to a 2 million pound per year benchmark. I think it's critically important to analyze how realistic that is for each and every company, how quickly you can ramp up, what the cost is going to be, and how long you can maintain that because we're going to be expected to maintain it for many years into the future. Next slide, please. And I think so what we have done and I think this is the most important slide in the deck, is that we have attempted to model and evaluate what our ramp up costs would be. And the way we see things is that we think that we will be able to ramp up Lost Creek in a very short period of time in a year to a year and a half, we should be able to ramp up to a million to a million and a quarter pounds per year and do it at a cost of about $15 million. Now that will - there will be other costs associated with the ramp up, but this will effectively covered the CapEx associated with it. At Shirley Basin, we will be building out a satellite plant. And so that will entail additional cost plus mine unit development that will come in at a higher cost of about 25 million. So what we are looking at is about 40 million initially as CapEx to ramp up to 2 million pounds per year run rate. And we believe that that is going to be very competitive. I think that it puts us in a position where we should be able to ramp up in a very cost effective and time effective manner. And at this point, I won't comment on what the capabilities of other companies are, we only know for certain what our capabilities are. We find ourselves in a position at the present time, when you take a look at our current share capital and cash position where we just came out with our financials on Friday of last week, at the end of the last quarter, or at the end of March or February rather, we find ourselves in a position where we have a little under $6.5 million in cash. We have inventories now just under 400,000 pounds that at current market prices have a value of about 11 million if we choose to use those pounds to deliver into our 2020 contracts and they have a greater value of closer to 18 million. But in addition to that we will be delivering as we move forward here in the 2019, 500,000 pounds into our existing contracts which will generate very solid revenues for us. So we don't know exactly what our outcome will be for the year and a lot of that will depend on whether or not we choose to sell inventories during 2019. So but we're in a solid position and I think that we find ourselves in an enviable position as we move forward where we believe that we are better positioned than virtually any other player in the industry. There are catalysts, I believe, this year that are manifesting themselves in 2019 that I want to point out to the marketplace. And I think that this is something that anybody who follows our markets likes to know that there are the events coming in the months ahead that will influence our market. And I believe the first of those is that is supply and demand. What we have seen and what we witnessed throughout 2018 was a number of new players entering the market. We saw very real production cuts coming from Kazakhstan, and but most notably from Cameco. And so we're seeing the marketplace in general come back into equilibrium in very rapidly and this is something that we think needs to happen now. I wouldn't hang my hat on supply demand fundamentals the market has been broken for a long time. And the fact is, is that we simply don't know exactly what the inventories are out there. But it's nice to see that demand continue to ramp up while we continue to see supply diminishing. In fact we lost 20 million pounds of primary supply last year in 2018. Second bullet point current market forces where Cameco was a buyer in the market, this is something that has supported the market, we're happy to see it. Obviously, we like seeing higher prices in the market. But as the CEO of Cameco came out and said in the fourth quarter, they too very happy to see higher prices, which they had been supporting. But they are not nearly high enough to support restarts a vital properties or new starts of new properties that they wish to bring online. We believe that the most significant event for the upcoming year 2019 will be the outcome of Section 232. And so as John described, this is something that has a finite life, that's why we chose it. We believe that quote is, are the appropriate remedy there because we believe that those are the most benign of the remedies when it comes to our utility customers. And we believe that they would be very easy to implement. But one of the things that I would like to emphasize also is that you cannot underwrite the geopolitical risk of there. I don't believe that they can be overemphasized in fact. There are new round of sanctions coming against the Russians. Vladimir Putin has been very vocal of that, that he intends to respond and respond forcefully to any new sanctions that are placed - that are put in place against the Russians. So I think this is something that we have to be mindful of. And let's face it, whether anybody wants to really acknowledge this or not, if there was any disruption in the flow of that material that we have become so dependent upon from Russia, Kazakhstan, Uzbekistan and in the future China. This is something that would have a dramatic effect and would have a crisis. It would become a crisis event for us virtually overnight if that were to occur. The Chinese are already responding to terrorists that have been placed against them with higher prices on materials that are needed by our nuclear industry. So these are things that we have to be mindful, but any one of them can act as catalysts in the upcoming year 2019. So I believe the primary takeaway are these for our company that we find ourselves in a solid position having raised a nominal amount of money since 2000 - or at the end of last year in September. We find ourselves in a solid cash position. We have good contracts for the next couple of years that give us a bit of runway when the rest of the industry is virtually devoid of any remaining contracts. So I think that we're - we will continue to strike that balance between pounds that we purchase and pounds that we produce in the marketplace. We will continue to enjoy some of the lowest cost structures in the industry. But it doesn't do any good to have low costs if you don't have commensurate height, significant price contracts that maintain you alongside those. But we do believe that we are in a unique position where we are capable of ramping up faster and at lower cost and with less dilution and damage to our capital structure than any other company in the industry. And I believe that that is what distinguishes us. So with that, we will open it up to questions-and-answer. And hopefully we can come up with some answers any questions you may have.

[Operator:]

[Operator Instructions] The first question comes from Heiko Ihle of H.C. Wainwright. Please go ahead.

[Heiko Ihle:]

Hey, guys, this was quite comprehensive. Thank you.

[Jeffrey Klenda:]

Thanks Heiko.

[Heiko Ihle:]

Hey, on Section 232, we're a month away from getting the big news. And I'm obviously looking forward to seeing all that in April. And I mean, I guess it's more of a comment than a question. But I commend you and your peers for moving this whole thing forward protecting the national fuel cycle here, which is something fundamental for all of us that I think someone just keeps getting ignored in the mainstream media and in general by too many people. Anyways, moving along, you're off taking agreements. I just went through your 10-K earlier today, again. Just to clarify, you see 500,000 pounds this year and 390,000 pounds next year, then just the 25,000 '21 with absolutely nothing past, is that correct?

[Jeffrey Klenda:]

That's correct.

[Heiko Ihle:]

Okay. So you're getting the 25 million revenues from the sales this year. Can you just sort of provide us with the timing quarter-by-quarter of these cash flows?

[Jeffrey Klenda:]

You know what I am not - Roger on that, maybe you'd have a little better color on that, even if you just ballpark on, I think that's good.

[Heiko Ihle:]

Ballpark is definitely fine.

[Roger Smith:]

Well, I don't really like to ballpark things to be honest. I can get that figure for you very quickly Heiko.

[Heiko Ihle:]

Okay. We have a call with Jeff later today, anyways.

[Roger Smith:]

And they are spread out throughout the year. So we have some in the first quarter, again some in the second quarter and then final batch towards the end of the year. And I'll be happy to get the information.

[Heiko Ihle:]

I appreciate that. Thank you. And then just sort of philosophically. I mean, assuming we get some favorable 232 results, which I think everybody on this call expect. Do you think you'd be willing to take on more off take agreements, even certain pricing or is there like a price where you willing - where you would be willing to do it. Can you just sort of walk us through your expectations please?

[Roger Smith:]

Well, for me personally look, you've had even Tim Gitzel, Cameco has come out and said that basically if the contracts were to incentivize him to do so, he would restart production in the United States and that they could ramp production over a three four year period of time. And I think he's said to us upwards of a 3 million, 4 million pound per year run rate. We find ourselves in a similar position. It's not just - I guess I would emphasize this it's not just a function of what your cost is per pound, obviously we have to justify the front end CapEx that goes into it. And remember that it's not just a matter of ramping up to a certain level of production, you have to maintain it. So there's also sustaining CapEx as well. So the contracts and I would not be comfortable discussing any numbers that might be appropriate on this call. But keep in mind that whatever those contracts would be, would have to be able to meet and anticipated initial CapEx run rate and production, operational costs and sustaining CapEx as we move forward. So, we're all in the same boat, whether it's us or Cameco or anybody else, we're all going to be looking at it the same way the contracts are going to have to incentivize us to be able to begin production and to ramp up production.

[Heiko Ihle:]

Fair enough. If your answer was essentially, a yeah.

[Roger Smith:]

Yeah, absolutely.

[Heiko Ihle:]

Okay. Perfect. Very helpful. Thank you. guys.

[Roger Smith:]

Thank you.

[Operator:]

Our next question comes from Joseph Reagor of Roth Capital Partners. Please go ahead.

[Joseph Reagor:]

Hi, guys, and thanks for taking the questions. I guess the first thing is just in general, what are your thoughts, just ignore the Section 232, just as pricing keeps kind of creeping up, at what point would you be willing to make sales that were beyond the pounds you purchased?

[Jeffrey Klenda:]

Well, I'll tell you this. I think that's something where we haven't really put a number on that internally. And I think that it would depend on a couple of things. First of all, I just don't think that we'd be looking to sell inventory at current pricing, we'll maintain it. A lot of it's going to depend, look, we don't get to control this thing. And we get press for answers and details and color on Section 232 all the time. The truth of the matter is that government agencies have their own timelines. They have their own agenda. They have their own way of doing things. And that's just fine, but they don't often share them with us. And so even though we are the co-petitioners that it doesn't necessarily mean that we know more than the next guy. It's going to depend on where we think the markets going. I don't believe that there will be a negative outcome on Section 232. But in the event that there is then we will have to resign ourselves to whatever prices prevailed in the marketplace and we would likely select the best prices and sell into those and probably discord our inventories at that time. But we do believe that there will be a successful outcome in which case our U.S. produced pounds would be held in advance to be delivered to U.S. utility customers to satisfy their obligations to purchase domestically. So I don't mean to be evasive. The answer is we really don't know at this point. And it's just going to - so much of this is going to depend on the outcome. And even when we get the report made to the President, which is right now slated to be on April 14, we will not or necessarily know what that recommendation is immediately. That's something that we will have to rely on government entities to disclose. So we're kind of waiting and watching like everybody else.

[Joseph Reagor:]

Okay. And then maybe a second thing with the timing of contract deliveries is here, are you seeing anything from the utilities with them wanting to push the delivery into the second half of the year with essentially them anticipating that Section 232 I is getting your way and they want their - they want all their domestic pounds to be after that decision. Have you seen any of that yet or is it too early to tell?

[Jeffrey Klenda:]

No, we haven't seen that. I mean well we have more than 50% of our deliveries this year occur after July 1. So that's something that we actually don't mind telling. I prefer earlier in the year deliveries just so that Roger can maintain some sort of reasonable budget and spending guidelines throughout the year, it makes his job much easier. But no, I think that the contracts that you're referring to and the deliveries that are being made, keep in mind those contracts were entered into a number of years ago. In fact, we have not signed a new contract since the - I think first quarter of 2015. So it's been at least four years. So those contracts are set they have their own guidelines as to what type of material can be delivered, where it is to be delivered, and at what price. And so any new conditions, market conditions that may come about as a result of a successful outcome on Section 232 will not necessarily impact those contracts.

[Joseph Reagor:]

Okay, thanks. I turn it over.

[Jeffrey Klenda:]

Great. Thanks, Joe.

[Operator:]

[Operator Instructions] Our next question comes from Mike Kozak of Cantor Fitzgerald. Please go ahead.

[Mike Kozak:]

Yeah. Good morning, Jeff and team. Thanks for hosting the call. I think it's important that you did. My question is, let's say Section 232 goes forward as proposed. And one way or another, you guys do get higher prices for your domestically produced material. My question is, what would the extra cost be to the U.S. utilities and then by extension, would the average American families' monthly utility bill go up in any material way?

[Jeffrey Klenda:]

Well, first of all, it's hard to say, it's hard to put an exact number on what the additional cost would be to the utilities. But as I mentioned before, first of all, I think that if we were to get our wish, let's just - let's play the, what if, game here, okay. If we get our vision and the domestic producers are granted 25% of our own market, which I don't think is first of all a big ask when you consider that under international contract or contract that we currently have with the Russians, they are guaranteed 20% of our markets. So the idea that the domestic producers would have the effrontery to actually request that they'd be able to provide 25% of the market, I don't think is a big ask to begin with it. And frankly, I think it's completely inadequate. The utilities made their comments like everybody else to the Department of Commerce and in their Commerce, they played the, what if, game and said, well, if there were a crisis event, their term that first they would depend on government to back up their needs. And secondly, they would rely on our allies. I think both are our fantasies. The government stockpiles are simply not in a position to be used as fuel and certainly not for an extended period of time. And our allies, as John Cash pointed out, are dropping off and dropping off rapidly. So I think that's where - it's hard to say exactly what those prices need to be, they would be negotiated. And that would be done under the watchful eye of Commerce. So that's something that we will have to wait and see. But one of the things that I would also comment on is that we all saw that the contacts went public with [indiscernible] in the fourth quarter of last year where they sold 15% of themselves. They had intended it to be a 25% financing instead because of low market prices, they did 15%. And in that, document, their offering document, they essentially made a big deal of the fact that they are now in market economy. Well, I would suggest to you that their ramp up in production is not the actions of either a full profit corporation or a sovereign entity that hopes to remain physically or financially solvent but has rather been done for geopolitical purposes. I think that what we would see is that we would see that other 75% the global market, I believe those prices would ultimately drop and that our domestic utilities would benefit tremendously from those lower prices. So my takeaway from this would be while yes, they might be paying more for roughly say 12 million pounds, which, by the way, we'd have to ramp up to over a period of time. So this would not have the terrible impact that it is purported to have to them from the outset and even after we're ramped up to 25% is going to be significantly less than then what they have howled about. But I believe that they would, I think in many ways commensurately benefit from lower prices globally, and I think that it would be largely an offset. So in terms of projecting those future prices, I'm sorry, I don't have much of a crystal ball when it comes to that. But I think that overall, this is not going to have the traumatic impact that some of the detractors of Section 232 would have you believe that it will.

[Mike Kozak:]

Got it. Thanks, Jeff. Listen, that's all, no more questions. I think you guys are doing the right thing with Section 232. I think it's important. And I wish you the best of luck.

[Jeffrey Klenda:]

Thank you, Mike. I appreciate it.

[Operator:]

Our next question comes from Gram Seneca [ph] of Seneca Capital Management. Please go ahead.

[Unidentified Analyst:]

Oh, Jeff, again, congratulations on the progress you've made.

[Jeffrey Klenda:]

Thank you, Gram.

[Unidentified Analyst:]

Any indication as to what be considered domestic supply and whether any Canadian would be considered as friendly enough for the U.S. government purposes?

[Jeffrey Klenda:]

Well, you know that's actually a great question. And frankly, it's a bit difficult to answer in some ways, because the only producer in Canada right now, of course is Cameco. And when Section 232 was filed, they were adamantly opposed to it. Then we got into the third quarter and we saw much more rational and reasonable comments out of Cameco, where they said well basically this doesn't apply to us. We don't see it having a tremendous impact on us. And we are a strategic ally of the United States. And we see where we would likely be exempted either in full or in part to whatever this remedy may be. I think that those were very reasonable and rational comments. Now, over the last three, four months, we have seen much more strident comments come out of Cameco, apparently they have been going in another direction. And more than likely, I'm sure in collaboration with those that will be impacted by Section 232. And now they are voicing strenuous opposition once again. So where Cameco is on this as the friendly producer, I honestly don't know whether it's regard them as friendly or unfriendly. At this point, I guess we'd have to just kind of wait and see what comments come out of Cameco next and judge it by kind of week by week. But I frankly regard them as a critical ally to the United States. They have been throughout the many decades past where our government has relied on them strategically and they have come through for us in a number of occasions. So I think that it's difficult to regard Cameco and Canadian producers in general as anything other than staunch and necessary allies. The idea that they would be granted some sort of an exemption under a Section 232 remedy, I would have to say, for me personally, is one that I find reasonable and probably necessary to limited extent. So I think that they will - my feeling is, and this is why I don't understand half the time the negative comments that come out of Cameco. I can't envision anybody else that's going to benefit more from Section 232 then Cameco. If you believe that they are critical allies, and that they'll at least get some sort of an exemption either in part or in full and that they've got probably the strongest portfolio of assets and resources in the United States that can be ramped up to their benefits, they are probably the greatest beneficiary. Why they would be opposed to this? I can't imagine this would have to reflect a strategy, frankly, that they've entered into with our counter parties that we are simply not privy to. Otherwise, their current position makes no sense to me.

[Unidentified Analyst:]

But the other question I had is - thank you, but the other question is, realistically, how would the utility eco break contract to comply, I know some of the contracts are firing but some utilities will have been fully loaded and have to cancel I guess, the range for domestic supply. Is that...?

[Jeffrey Klenda:]

Well, any contracts that they have remaining with U.S. producers are so nominal that they would have to be classified as immaterial to the utilities in the United States. The large contracts that they have are of course with foreign providers, foreign producers. And you know, it's interesting, it kind of brings you back to that point, well, we rely on our allies. Well, you know, it's interesting because our allies have long term off take agreements with foreign entities in China and India and elsewhere in Europe. And so the idea that those contracts would be broken to accommodate the now what would be crisis needs of our own U.S. utilities is something that I just don't see happening. So I think that the idea that the utilities or the producers that are providing product to the United States market to the tune of 99%, they're virtually all foreign producers at this point in time would be broken, you know, toward our utilities. But our utilities would in turn break contracts toward the very minimal quantities that they have with U.S. producers, I just don't see that is happening overall and through the years, they have been honorable counter parties, and I don't see them varying from that. So I don't view that as much of a risk.

[Unidentified Analyst:]

So, I was actually asking about them having to break contract with non-domestic, in other words with these large suppliers?

[Jeffrey Klenda:]

Well, I don't think that that's the case. And again, I don't - first of all, these are these are very large and reputable companies that run these nuclear utilities. They have and this has been something that's been quite well known. They have been doing some buying over the course of the last year since 232 was filed. But the reality is that they have been largely out of the market and this has been well known. So I think that they have been anticipating that they have to keep their inventories in such manner and maintain their off take booking in and delivery book in such a way that they would be able to accommodate a domestic production coming in. So I'm going to say that no, they would not be breaking those contracts as a result of a favorable outcome on Section 232 rather it's my assumption that they've been planning for that.

[Unidentified Analyst:]

Okay. And have you seen anybody that done any price volume sort of calculations algorithms to suggest at what level production purchases from domestic manufacturers - producers would produce what price level, I mean it got to be volume sensitive right. So I'm just wondering if you any third party or consultants analysis? Thanks.

[Jeffrey Klenda:]

We have not and I have not seen this on an industry level and the thing that I would have to comment on there would be that we're - every project is different, so every company is different. And those of - those volume weighted price metrics would vary company by company. And so that's really, that would be something that would be extremely difficult to try and evaluate and to put a number on. I think the guys are probably come closest to doing that type of assessment might be the folks at WNA will nuclear association or perhaps UXC and you might take a look at their websites and try to see to what extent perhaps they've attempted to try and attach metrics to some of those things and valuations. It would be extremely difficult for our small company to do that.

[Unidentified Analyst:]

Wait, wait. Well, good luck. Thank you.

[Jeffrey Klenda:]

Great Gram. Thank you so much. Ladies and gentlemen, I think with that I think that's - that concludes our questions. And I would just make a couple of closing comments. And I'd like to say this, this has not been easy. First of all, we began this process in July of 2017. And we did it after having a meeting at the Department of Energy with Rick Perry, where I think he became aware for the first time what a dire situation this is actually become. I think he was - I think it's to say that he was literally shocked is not an understatement. We decided that we had to do something or that the demise and the extinction of the field cycle in the United States was absolutely a foregone conclusion. Bringing this in January of last year was not easy. It was a shock to our utility customers. And I emphasize that we couldn't have maintained ourselves over the last several years without the long term contracts that they entered into with this many years ago started in 2010 and '11 and we are exceedingly grateful. This was not done out of any form of maliciousness toward our utility customers, but rather for two reasons. One, first and foremost, our own survival as a company, those that would suggest that we are profiteering in some way by asking that 25% of the domestic market be preserved for domestic producers. I don't know how to respond to that, other than to say they're absolutely out of their minds. Profiteering is the furthest thing from our minds. We're talking about our survival here. But more importantly, as John spoke about, we're losing our seat at the table. This is something we cannot allow to happen. Most notably, very recently, you saw where the Saudis in negotiations with our own department of state have essentially said, look, if we don't come to an agreement with you on enrichment, in other words, if I want to enrich beyond low enriched uranium to weaponized grade then we don't care what you think about it, because I've got Mr. Lab Rob from Russia sitting right down the hall in another office and he's willing to see this whole thing through cradle to grave. They'll provide designs, they will provide consultation on build out. They'll see this through to full operation. They'll provide the fuel all the way through to reclamation and decommissioning. And by the way, they'll pay for the first few of them. Then who you going to do business with? We find ourselves in a world right now that's increasingly dangerous. And we've got countries like India, Argentina and certainly China that are going to great lengths to make sure that they are reliant on no one for their fuel cycle. Should we here in the United States the largest consumer of uranium on the planet, the gatekeeper for all things nonproliferation, should we expect anything less from ourselves? Should this be an acceptable condition by any responsible party here in the United States? With the people that we have done business with it with our utility. Look they're good folks, they're all God fearing, patriotic, Americans just as we all believe that we are as well. I don't believe that this is anything that they've entered into maliciously either, I think it's just unfortunately a sad state of affairs where former administrations have favored their competitors over them and given them massive credits and incentives to ramp up production in some cases have rendered them on economic and so it forces them to fight for their lives. And their opposition to Section 230 to know better, how reasonable and how right and just that cause may be, they have to fight it and I understand that. But I also believe that this is something that is a right and just battle. It's one that we simply cannot lose. And it's not just for the benefit of a couple of small companies. The United States cannot afford to lose this battle. The western world cannot afford to lose this battle. There's a great deal at stake here. Section 232 is the right fight. And it's one that we simply must not lose. And with that, I'll say thank you and we'll talk to you again next quarter. Thank you for attending

[Operator:]

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.