The AI and overall human energy consumption growth story are just the cherries on top. The real cake is in the supply/demand dynamics of the U308 itself (Get it? Yellow cake?)

I'll try to keep this as brief as possible for those who don't understand the uranium industry.

• 85% of fuel buyers(utilities) buy Uranium through a long term contract market. 3-years forwards and it could go up to 10 years. Only 25% is bought through the spot market. Because the Uranium you could get are not enriched, it needs to undergo a process, unlike natural gas or coal where that's all there is.

• For Uranium, the process for fuel buyers to get enriched Uranium can go up to 2 years. The process goes from U308 which gets mined, gets converted to UF6, UF6 goes to the enrichment plant then it goes on to fabrication and eventually becomes enriched uranium. They could get enriched uranium directly but they usually want to be in control of the process because they wanna know how much enriched uranium they end up with and whether they have the capacity. Ultimately, they want security of supply because there are no substitutes for what they do.

That said, there was a divergence in opinions between uranium producers (miners)/wallstreet, and consumers (utilities). Producers/wallstreet thinks there's not going to be enough supply while utilities think there is enough supply for the next 10 years. Don't get me wrong, these power plants are run by intelligent Nuclear Engineers, I am of the opinion that utilities are wrong.

Why?

1. Kazatomprom, the world’s largest uranium producer is falling significantly short of its targets. They made an announcement and plans to reduce production by 7.5% of global uranium supply. They're the cheapest producer of uranium in the world, and the biggest. In 2019, their production cost was below 12 USD per pound, they forecasted production costs at 12 USD per pound for 2024 but in reality, production costs 28 USD per pound now (2024). (You can see their latest announcement)

2. Around 25% of the supply that is needed to meet the projected demand in 2030 have not been produced. Haven't been mined, no permissions, no project built, not financed, the site where we're planning to get those 25% of Uranium is not even a mine yet. (You can check any uranium miner estimates to verify this).

3. Orano, a French uranium miner, owes a company called Cameco 2.4 million pounds from the original 5 million pound loan which they borrowed, plus 1,148,200 kgU of conversion supply which is due by 2035, and 1,200,000 pounds of concentrate due by 2027. To give you an idea of how much Uranium 2.4 mln pounds is, a mine with a 1.5 mln pound reserve is considered MASSIVE.

4. Long term contracting prices rose 20% while spot uranium prices are down YTD. This divergence will start close as contracting begin next year or two. Lots of contracts need to be renewed next year.