Welcome to the Cameco Corporation's First Quarter 2021 Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Rachelle Girard, VP, Investor Relations, Treasury and Tax. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to Cameco’s first quarter conference call. Today’s call will focus on the trends we are seeing in the market and on our strategy, not on the details of our quarterly financial results. As always, our goal is to be open and transparent with our communications. Therefore, if you have detailed questions about our quarterly financial results or should your questions not be addressed on this call, we will be happy to followup with you after the call. There are a few ways to contact us. You can reach out to the contacts provided in our news release, you can submit a question through the Contact tab on our website, or you can use the Submit a Question Tab on the webcast, and we will be happy to follow up after. With us today on the call are Tim Gitzel, President and CEO; Grant Isaac, Senior Vice President and CFO; Brian Reilly, Senior Vice President and Chief Operating Officer; Sean Quinn, Senior Vice President, Chief Legal Officer and Corporate Secretary; and Alice Wong, Senior Vice President and Chief Corporate Officer. I'm going to hand it over to Tim to talk about the growing demand for nuclear power, uranium market fundamentals, and about Cameco’s strategy to add long-term value. After, we will open it up for your questions. If you have joined the conference call through our website Events page, there are slides available, which will be displayed during the call. In addition, for your reference, our quarterly investor handout is available for download in a PDF file on our website at cameco.com. Today’s conference call is open to all members of the investment community, including the media. During the question-and-answer session, please limit yourself to two questions and then return to the queue. Please note that this conference call will include forward-looking information, which is based on a number of assumptions, and actual results could differ materially. Please refer to our annual information form and MD&A for more information about the factors that could cause these different results and the assumptions we have made. With that, I'll turn it over to Tim.

Well, thank you, Rachelle, and welcome to everyone on the call today. We appreciate you taking the time to join us. I hope you and your families are doing well. Last quarter I talked to you about our excitement for the future of our industry and about the opportunity for nuclear power to play a pivotal role in the transition to a net zero carbon economy through both, traditional and non-traditional uses. I also talked about the excitement we have for the role that Cameco can play in that future as we executed on our tier 1 strategy which includes production discipline, marketing discipline, and conservative balance sheet management. I have to say that over the course of the last few months there has been nothing to dampen our enthusiasm, and in fact there have been a number of developments that continue to support our optimism. I'll get into those in a bit, but I'm going to provide a recap of what I saw were the three main drivers for our optimism. First, demand for nuclear power is becoming more certain as the megatrend of increasing electrification while phasing out carbon intensive sources of energy continues to take hold around the globe. Second, uranium supply is becoming less certain as years of persistently low prices have led to planned production curtailments, lack of investment, the end of reserve life for some mines, shrinking secondary supplies, and trade policy issues. And finally, that our long-term strategy positions us very well to sustainably deliver long-term value. Let's start with the macro view, the fundamentals for energy. As I said previously, we are seeing today a megatrend focused on increasing electrification, while at the same time achieving massive decarburization goals. This megatrend has led to a mega challenge. That challenge being three fold. First, to bring safe, clean and reliable baseload electricity to about one third of the population who currently have no access or limited access to electricity. Second, to cleanup and replace our existing sources of electricity with a safe, clean, reliable, affordable, and carbon free option. And finally, to transition away from the current use of thermal sources of energy for things like transportation and heating. This mega challenge of increasing electrification is occurring precisely while countries and companies around the world are fixated on reducing their carbon footprint. Many have announced net zero carbon targets and many more are expected to follow. Country after country is recognizing that in a world where 85% of our electricity still comes from fossil fuel sources, there's no clear pathway to sustainably achieve both electrification and decarbonization without nuclear in the toolbox. As I noted earlier, over the last few months there's been further support for nuclear's role in the clean energy transition. In Europe, we've see nuclear move another step closer to be included in the EU Sustainable Finance Taxonomy. A rigorous scientific full lifecycle assessment from the Joint Research Center concluded that there are no scientific arguments supporting the exclusion of nuclear energy from the taxonomy. The European Commission then proposed a supplement to current legislation that if passed will confirm nuclear as sustainable. In addition, in France the French Nuclear Safety Authority granted a 10-year extension to the operating lives of 32 of EDF's nuclear power plants. Conservatively, this could equate to at least 100 million pounds of additional uranium demand not previously accounted for. Over in China their Nuclear Energy Association confirmed that the country's 14th five-year plan targets 70 GW of nuclear power operating by 2025, an increase of approximately 20 GW from 2020 with another 50 GW under construction. It also indicated China could reach up to 120 GW in operation by 2030 as part of its plan to be carbon neutral by 2060. This would translate into annual consumption of about 60 million pounds of uranium per year. In Russia, Rosatom announced a target of 24 new reactors that will be needed by 2045 to increase Russia’s share of nuclear to 25% of the energy mix. This would add another 12 million pounds of annual demand to Russia's requirements. And at the recent Global Leaders Summit on Climate hosted by the United States, aggressive plans to reduced carbon emissions and achieve net zero carbons goals over the next 30 years were discussed and many commitments were made. For example, in the U.S. where nuclear energy is increasingly recognized as a major source of carbon free scalable energy the President announced a goal to cut up to 52% of U.S. greenhouse gas emissions by 2030, leveraging existing nuclear energy and advanced reactor technology in its clean energy initiatives. And he has promised to make the electricity system fossil fuel free by 2035. Japan has revealed plans to cut carbon emissions 46% from 2013 levels by 2030, maintaining its target for nuclear to provide 20% to 22% of its generating capacity. Furthermore, we're seeing momentum building for nontraditional commercial uses of nuclear power, such as the development of small modular reactors and advanced reactors. Nuclear is also the only low carbon source that can produce heat that along with its traditional uses can be used to produce clean hydrogen and fresh water. We're also seeing company after company announce net zero carbon targets. They recognize there is increasing scrutiny on their environmental performance. Investors are beginning to price climate related risks into their capital allocation decisions. Investors are not only looking to invest in those companies that can demonstrate improved environmental performance, the will look for those companies that are positioned to do it profitably and sustainably. Unlike in the past, companies will be accountable for where the energy to fuel their operations comes from. We like to think of it as electron accountability and they will have to make decisions that are economically sound to attract investment. When you look at levelized [ph] cost of nuclear compared to other low carbon sources, nuclear energy is that solution. It is the most cost-effective way to provide low carbon dispatch able 24/7 electricity. So the outlook for nuclear is very bright. Increasing demand for nuclear means increasing demand for uranium, which brings us to the second factor that I said is driving our growing optimism. Demand for uranium is rising at precisely the same time that supply is becoming less certain. One of the indicators we look at to illustrate the opportunity is uncovered requirements. We know that utilities have not been replacing what they consumer annually under long-term contracts. This has led to a growing wedge of uncovered uranium requirements. That wedge is now bigger than it was back in the early 2000s which was another period of complacency. There are only a couple of sources for this information and if we look for example at UXE which tends to be the most conservative view, they show that global cumulative uncovered uranium requirements are about 1.4 billion pounds to the end of 2035. If we back that up to when it is needed to be contracted, produced, and delivered, the challenge is to buy 1.4 billion pounds by 2030. That would require 140 million pounds of long-term contracting per year starting in 2020. Last year we saw 50 million pounds placed under long-term contracts, so that demand is piling up in a future window. Keep in mind this is just traditional demand we're talking about. It does not consider any of the alternative uses of nuclear I talked about earlier. We're also seeing increased demand for uranium from financial players, junior uranium companies who recognize that statistically the current uranium price has a much greater likelihood of going up than down. And this view is supported by the fundamentals. The growing uncovered requirements are occurring at a time when there are some big question marks about where the uranium will come from to fuel the world's expanding nuclear fleet. Cameco's supply curtailments alone, both planned and unplanned, along with our purchasing activity have resulted in at least a 145 million pound swing in the supply fundamentals since 2016. Since the end of 2020m, we’ve seen two long-term producing mines come to the end of their reserve life. The loss of the Ranger mine in Australia and the COMINAK mine in Niger will further reduce supply by about 7 million pounds per year. And our Cigar Lake mine is done about eight years from now. So right in that ten-year contracting window we're talking about, that's another 18 million pounds per year gone. Given the timelines it takes, we should be investing now to replace that lost production, but at today's prices that makes zero sense. In addition, as a highly trade dependent commodity, government driven policies can be particularly disruptive for the uranium market. Due to persistently low prices we’ve seen planned supply curtailments, lack of investment, the end of reserve life for some mines and shrinking secondary supplies, all of which have been amplified more recently by unplanned supply disruptions due to the COVID-19 pandemic. Consequently, primary supplies become concentrated, it is concentrated geographically with about 80% of primary supply coming from countries that consume little to no uranium and nearly 90% of consumption occurring in countries that have little to no primary production and it is highly concentrated by producer with about 70% of primary production in the hands of the top five producers and about 80% in the hands of state-owned entities. So we believe that in the current market the risk to uranium supply are far greater than the risk to uranium demand. These are the fundamentals that get us up in the morning and then why we remain a pure play supplier of the uranium fuel needed to produce clean carbon free baseload electricity. Which brings me to the final factor driving our optimism, our strategy, and why we remain committed to doing what we said we would do. Let me remind you what it is that we said we would do. First and foremost, and this is where it starts for us, we’re focused on protecting the health and safety of our workers, their families and their communities. We’re doing that. Every day we make decisions about how best to manage our operations and protect and support our workforce through the pandemic. In December, the trends we were seeing in the COVID-19 pandemic caused us to proactively pause Cigar Lake production for a second time as concerns about the availability of workers in critical areas was increasing. During the temporary shutdown we put further COVID related protocols in place. Combined with our on-site testing facility and the vaccine rollout in the province, we had the confidence to restart the mine in April with greater certainty that the mine will be able to operate safely and sustainably. We will continue to monitor the situation in our communities and will have regular dialogue with public health authorities. Pandemic or no pandemic, the health and safety of our workers will always be our priority. We will not hesitate to take further action if we feel our ability to operate safely is compromised. Second, apart from the COVID-19 disruptions to our operations, we have not wavered from the execution of our strategy. There are three fronts on which we were executing our strategy; operational, marketing and financial. On the operational side we have implemented our planned supply discipline cutting production well below our delivery commitments. This includes the curtailment of production at Rabbit Lake, our U.S. assets and of course at the MacArthur River/Key Lake operation. As I said earlier, these actions have left a lot of pounds in the ground and kept them off the market. Consequently, we've been purchasing material on the spot market to meet our committed deliveries. In addition, we’ve shown sales discipline, sticking to our value strategy. We've been strategically patient. We take a portfolio approach to building our contract book and much like building an investment portfolio it’s a balanced approach that manages risk and return. We like to layer in contracts where appropriate. We want to ensure we support the operating costs of our assets, while not committing our tier 1 pounds too far in the future under contracts that won’t generate an appropriate portfolio return, and we do not want to exhaust our tier 1 assets in a low price environment. We’re seeing out patience pay off. In April we successfully finalized and executed a number of sales contracts which had been under negotiation, adding 9 million pounds to our long-term contract portfolio, which together with recent long-term contracting totals almost 60 million pounds. And we continued to have a large pipeline of uranium business under negotiation. In fact, we continue to see off-market interest growing and historically it has been a leading indicator of broader demand for long-term contracting. We're having conversations with our biggest and best customers. These customers recognize the long-term fundamentals. They want access to long-lived tier 1 productive capacity from commercial suppliers who have a proven operating track record. They understand that from a security of supply perspective, today's prices do not reflect production economics. They recognize the first mover advantage gained from securing their future access to our tier 1 pounds today as opposed in the future. And we have some competitive advantages. We have significant idle tier 1 capacity that is fully licensed and fully permitted that will be among the first pounds to meet the growing demand in the market. We’re an independent commercial supplier and provide our customers supply diversity from state owned enterprises. With substantial Canadian productive capacity, we can help de-risk their future supply from trade policy exposure. And emerging is the focus on ESG matters which is great news for us. At Cameco, serving interests of our stakeholders has always been at the heart of what we do long before there was a focus on ESG issues because it’s the right thing to do and we recognize the significant business value it adds. Our board, our employees, contractors, communities, suppliers, customers, governments and our providers of capital expect us to manage this company in a long-term sustainable fashion. We're very proud of our over 30-year commitment to protect, engage and support development of our people and their communities and to protect the environment. The uranium fuel we supply plays a significant role in contributing to greenhouse gas mitigation efforts in Canada and abroad. In Canada alone, this uranium fuel provides greater than 30% of the province of Ontario's electricity every year avoiding more than 5 million tons of carbon dioxide from being emitted. Considering only the Canadian emissions avoided resulting from the use of nuclear power in Ontario, we like to think of ourselves as Canada's first net zero mining company. So we are well-positioned to meet our customer needs. And finally, on the financial side, we have been very deliberate in shoring up our balance sheet. At the end of the first quarter, we had negative net debt with $1 billion in cash and a $1 billion undrawn credit facility. As such, we have the financial capacity to self-manage risk and maintain our strategic resolve. Before I move on from the strength of our balance sheet, I do want to address what the Supreme Court of Canada decision means for us. First and foremost it means that this dispute is fully and finally resolved for 2003, 2005 and 2006, and that Cameco’s marketing structure and behavior through this period we’re in full compliance with the income tax act. In other words, Cameco followed the law and it was the CRA and its reassessments that were offside. And as stated many times with this decision we believe CRA should move quickly to resolve all subsequent years and return to us the $303 million of cash they are holding and release the $482 million in letters of credit that are tied up as security for all years. While this dispute has been before the courts, we’ve been accused of not paying our fair share of taxes. Now that this matter is no longer before the courts it gives me great satisfaction to know that the court system in Canada has unequivocally confirmed that we did pay our fair share of taxes, but there are elements of this that are not fair. It's not fair that we have to continue to wait for an indeterminate period for the CRA to make the decision to return our cash and credit capacity and it’s not fair to see Cameco disparities in the recent federal budget document as engaging in inappropriate profit shifting in light of what various court judgments actually say. Cameco has contributed to the health and safety of individuals around the world. We participated in the Megatons to Megawatts program that saw the dismantling of more than 20,000 nuclear weapons, converting 500 metric tons of highly enriched uranium into low enriched uranium for use as fuel in nuclear reactors. And we're proud to be part of the venture that makes Canada the world's leading supplier of Cobalt-60 for medical applications and other gamma technologies demonstrating the tremendous benefits the nuclear industry delivers to Canadians and others around the world. Cameco has contributed millions of dollars for community and infrastructure projects in northern Saskatchewan, including schools, housing, recreation facilities. Since 2009 we've invested nearly $10.5 million in support of infrastructure improvement projects in local communities, which have been targeted at youth, health and wellness including mental health, education and literacy, and community development. We're a leading industrial employer of indigenous peoples in Canada, providing well-paying jobs in northern Saskatchewan for over 30 years and we've helped establish and grow businesses in northern Saskatchewan by procuring almost $4 billion in services since 2004. We have reinvested billions of dollars in Canada building mines and mills, and filling voids and programs for some communities. So we take great exception to any claim that what we have done is in any way unfair when it is in accordance with the law. The facts show that Canada has benefited greatly from the profits we have generated and this distraction should be resolved immediately. Turning this issue to the side, I'm happy to say that we're performing well on all three strategic fronts. However, there are costs to our strategic decisions which are reflected in our financial results. But the good news is, this does not represent the run rate of our business and we expect much better days ahead once we return to a tier one cost structure. We're taking the steps today and incurring the costs we expect will allow us to restart or tier one assets with more flexibility in the production rate, to eliminate the care and maintenance costs incurred while our tier one production is suspended and to benefit from the very favorable life of mine economics they provide. We're confident in our ability to transition through this period and capture demand that will provide leverage to higher prices. And we have concluded that we have the right vision, strategy, and values to deliver long term sustainable value. Our vision which is to energize a clean air world recognizes that we have an important role to play in enabling the vast reductions in greenhouse gas emissions required to achieve a resilient net zero carbon economy. As we seek to achieve our vision, we're committed to doing it in a manner that reflects our values. Those values have not changed. They have always guided our actions and they place a priority on safety in the environment, on building and supporting a flexible, skilled, stable, and diverse workforce, on behaving with integrity and leading by example, on promoting equality and acting to eliminate racism wherever it exists and on pursuing excellence in all that we do and inspiring others to do the same. Our decisions are deliberate. We are a responsible, commercially motivated supplier with a diversified portfolio of assets including a tier one production portfolio that is among the best in the world. We're well positioned to take advantage of a market where demand for nuclear power both traditional and nontraditional is growing, where we believe the risk to uranium supply is greater than the risk to uranium demand. And where we believe our strategic decisions and strategic patience provide us with resiliency in the face of unprecedented challenges and will result in the rewards that will come from having low cost supply to deliver into strengthening market. So, thanks for joining our call today and operator with that we would be happy to answer any questions.

Thank you. [Operator Instructions] The first question is from Orest Wowkodaw from Scotiabank. Please go ahead.

Hi, good morning. I am wondering if we can get some color on your -- the new contract that you disclosed in the results, the 9 million pounds. I realized some of this information is probably sensitive, but can you give us an idea of perhaps what region the customers from? What sort of time period the deliveries are over? And also on the pricing mechanism, we haven't seen any movement in the reported term price, call it by Ux and others. Can we assume that the contracting price was done at a premium to that or any color here will be really helpful? Thank you.

Thanks Orest. Thank for the question. So, I think you said contract, I would say contract with an S on the end of it would be a better description of what we've done. I'm going to ask Dr. Grant Isaac, our expert on the market to just give a bit of an update based on those pieces we'll will tell you what we can, and then just maybe grant a little overview on kind of the market what we're seeing today.

Yes, Sure, happy to do that. Thanks for your question Orest. As Tim noted in his opening comments that the 9 million pounds that we are announcing now add to what we announced in 2020 and in 2019, nearing about 60 million pounds under contract now since we started this supply discipline strategy. And what I think it reflects is, a couple of things that we've been saying and that is, yes, on one hand the term market, especially the on market RFP side of the business is not at the level it needs to be in terms of the demand coming to deal with that uncovered requirements wedge. But as we've been saying for a while now, there are some utilities who get it. They see the demand outlook improving. They see the supply outlook becoming more uncertain because today's prices are not incenting the investment in capacity. In the past they've relied extensively on secondary supply capacity and they see that falling too through the same cycle. So, there are some utilities who get it. And I would say the common denominator there is, these are the bigger utilities, the bigger company or country programs, more reactors and more certainty about how long they are going to run for. So, that tends to be the common denominator in this $60 million pounds. I think it also reflects that there has been an easing, not an elimination, but some of the easing of the COVID concerns that we saw in 2020 that we're delaying the completion of some of the negotiations. I think it also reflects the fact that some of the trade policy distractions have been cleared up. Utilities have a better sense of the origins that that they ought to be buying in a world where critical minerals and the role of state-owned enterprises is taking on a bigger role in sourcing decisions. It also reflects the role of ESG in procurement decisions going forward and making sure that supplies have a good chance of meeting the criteria that utilities are also going to be responsible for. I think for Cameco, this success reflects -- we're in the pull position when it comes to layering in new contracts. For all the reasons we've talked about in the past the incumbency factors that we have, permitted licensed facilities that are proven and are reliable and meet ESG criteria that we are a commercial supplier, that are -- we have a high proportion of Canadian origin which is a sought after origin in the markets for sure at the moment. So, I think it tends to reflect all of that. Just a quick reminder about sort of the portfolio as Tim said also in his comments, we try to build a contract portfolio that isn't dissimilar to our owners trying to build an investment portfolio. We have a number of criteria we try to meet. You asked about price and of course price is central to us building a contract portfolio. But what is central to us in the pricing discussion right now is the price mechanism. We look at a market where we believe that today's price is insufficient to generate the supply needed to meet the improving demand outlook. So, right now we're not really anxious to lock in today's price. In fact we would prefer market related price indicators. So, those utilities who get it and who are willing to give us more market related exposure, those are where we're having success in these off market contracts. So for us it really is a function of getting the pricing mechanism right, so we have exposure to what we think is an improving market. And of course, price matters, but so does volume. Certainly volume with respect to the time frame in which we'd be making deliveries and the duration, how long that contract is for. So, you asked about the window, I would say in that nearly 60 million pounds. Some of it is near term in the next 3 to 5 years, some of it is longer term outside 2025 and beyond which is really interesting. It's a reminder to all of us, that those folks that are planning their supply decisions believing there's going to be this gap in the market in 2027-2028 that won't be filled, well it will be filled, it'll be filled by this type of contracting over the next couple years. So, if you're not involved in it now you're going to end up with supply that doesn't have a home in the future. So, volume certainly matters to us. And then remember within volume there's flex and deferrals that we build into our contract portfolio to give us opportunity for more value. Product form matters, because we're not just uranium supplier, we have a fuel services group and we like to obviously underpin that activity. The customer matters as I think we discovered with our dispute with Tepco. Not all customers are the same in terms of their commitment to contracts that they sign. And so, making sure that those high quality tier one customers are well represented in our portfolio, and regions matter to us. So, like our owners, we're building a contract portfolio. The opportunities, the nearly 60 million that we've signed so far since we have embarked on this strategy reflect that balance of those criteria and very much in our interest when we look at it from a portfolio point of view.

Thanks Grant.

The next question is from Lawson Winder from Bank of America Securities. Please go ahead. Lawson Winder your line is open.

Oh shit, I was muted, I apologize. Good morning guys and thank you for the update today. I hope you all are well. So, is the high level of producer buying in late March and early April factor in at all to your decision to restart Cigar Lake?

Good morning, Lawson. So, no, no we -- Cigar Lake is something we had always planned to run this year, we have been very clear about that, what set us back on that. In December it was COVID and the COVID that was sweeping the world and Saskatchewan as well. And we didn't have a huge problem with Cigar, but we could see a wave coming and we were having people have to sit out because they were at close contact for instance and then we'd be short of operators. And the GM, Lloyd Rowson was every day kind of looking to see what his roster looked like and whether we could put a team on the field at Cigar Lake to run the assets. And so, no that didn't factor into it at all. That was certainly interesting. I think we saw the [indiscernible] take about 10 million pounds or little bit more, maybe 10.5 million pounds off the market in the first quarter, but that was just added pressure on the market and wasn't related to our Cigar Lake decisions.

Great, thanks for that. And then my follow up would just be on the first question on the contracting. You gave us a lot of detail in your answer there, Grant, thank you for that. Now it wasn't entirely clear though if those 9 million pounds on average line up with your overall portfolio target of 60% market related and 40% base escalated?

It's a great question. Yes, they would largely. So, when we think about not just the 9, but the overall nearly 60, we're staying consistent with those goals as that framework that we put out, it hasn't changed, and if it does, we'll change the framework for you to reflect that maybe we'll have a different pricing balance going forward. But the key is to remember that the responsible producers are those that are building homes for their production and they're building homes now for their production. And the idea that that somebody is going to sit on a bunch of material and they're not going to put it into the term contract homes, they're just going to dump it into the spot market at a later date, well that's exactly what some fuel buyers want to hear, because they understand that the spot market is not capable of absorbing that level of uncommitted primary production and so really what you want to see is the building of the term contract homes, creating a market alignment with the production decisions.

Thank you very much.

Thanks Lawson.

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

Good morning. Thanks for taking my questions. Tim or Grant, it's been a while since Japan has been sort of top of mind and sort of a topical issue. You know the pace of restarts continues to, I guess lag expectations, but now we've had news recently that they're looking at bringing on or passing critical phase on three new reactors. Where does Japan stand on inventories? And are there material legacy contracts to which they continue to honor? Is that a significant part of the market?

Well, I don't, well I don't really think Japan is becoming a good story. I mean, yes, it's taken way longer than we ever thought it would. I remember back in 2011, them talking about you know right after the accident they talked about reviewing all of the units and then bringing them back on. Here we are 10 years plus or 10 years later and it's slowly coming back. But I can tell you they showed up at the Earth Summit last week with President Biden. They're making commitments to the carbon reduction that are very aggressive, I would say. And so, and I think the politicians are clear that they're never going to get there without nuclear. So, we're seeing it come back. We haven't seen a whole lot of Japanese material over those 10 years come into the market and now we think they're holding on to it, because they are restarting and they are going to need their fuel going forward. So, we see Japan as an improving story. It's been a long time, but we are pretty positive. Do they have long term contracts? Well you know it's been 10 years, so most of them at least I could speak for Cameco, have gone away and they haven't signed a whole lot of new ones, but we have seen them in the market from time to time. so Grant, I don’t know if you have anything to add?

Well, I would just say Ralph, you're right in that the Japanese fleet was a major theme and narrative in the market quarter-to-quarter, year-to-year for awhile, but that's kind of died away and it died away as the new regulatory authority really took root and started making approval decisions. And then that once -- that sort of created the impression that yes, Japan's got some material that they need to work through. But everybody kind of just lifted up that market and moved it to the side and focused on China and India and everywhere else. So Japan is kind of over on the side. Nobody expects the Japanese fuel buyers to be at the front of the line in the next buying cycle because of the inventory positions that you've talked about, but we don't see it as a risk of huge amounts of material coming to the market from Japan anymore either because of the restarts, because there seems to be a pathway and a renewed commitment to that baseload power that is absolutely fundamental to an economy that's an export driven industrial growth economy. It needs cheap baseload power and increasingly clean cheap baseload power to make that economic model work. And so nuclear is kind of back in the toolbox in a really important way. If we take a one level down look at Japan, remember it's kind of the tale of two worlds. You've got a couple of utilities Kyushu, Kansai and Chugoku approved reactors to run and have been running and have been consuming inventory and consuming material and in fact we've seen some new buying from that group. And then you have the others primarily with the boiling water reactors, the first generation reactors. There hasn't been one of those restarted yet. There has been a couple now approved. That group is sitting on an excess inventory relative to what they're producing today in terms of power output, but they also have an expectation that their reactors are coming online. It's why they've made the investments that they have to prepare for the new regulatory measures that are required in Japan. As the largest spot buyer of material in the market you can imagine we've asked, is there material available from those customers, and we get the same consistent message. Why would we sell it today in a low price to market only to have to buy it back in a higher priced market and it will be a higher priced market and it will be a higher priced market when their reactors are running. So we look at that as probably the most mobile source of utility inventory, but I can tell you we see no indication that it has been mobile.

Right, right. Well, that’s good color, thanks. I want to come back to the 60% market related, what would you need to see in the market to push that higher, right, in the previous uranium cycle, Cameco wasn’t able to fully capture the uranium price rise because of those legacy fixed price contracts. What are you going to need to see in the market to be able to push that to 70%, 80% and is that potentially part of the strategy?

Yes Ralph, I would say that balance is actually an important learning from exactly the scenario that you described. So, since Fukushima and especially with some folks who are kind of new to the uranium space, people will ask us about why would you have a 60%-40% portfolio split, why wouldn’t it all be a 100% market related because the price seems to be low right now. We came to be at a P10 or a P15 price. It’s got a 10% to 15% chance of going down and not very far, 85% to 90% chance of going up and probably a long way. But remember that ours is a market that moves more on sentiment than on, I would say fact, because if our market moved on fact, there would be a lot more contracting today. There would be a much more rational view of, hey, the demand outlook is improving, the supply outlook is far less certain, if price is low, now would be a good time to buy. But instead, we actually see a slightly different psychology. We see a psychology for some fuel buyers, not the ones that we’ve signed nearly 60 million pounds worth of new business with. But for others, they look at a low price of uranium and they say, well, uranium price must be low because it must be everywhere, and if it’s everywhere I don’t need to worry about buying it today, instead of saying a low price is not intending the investments in the capacity that’s needed to match the demand out into the future. So, for us, knowing that that psychology hasn’t changed, it reminds us that ours is a market that can go through some fairly significant price transitions and go through them quite rapidly. We saw it in 2010 in uranium, we saw it in 2006, in uranium. We saw it in the last 18 months in conversion, if you want a more recent data point that psychology is still there. So for us it’s important to make sure that we have the exposure to those moments where you see a rapid transition in the price. But then at some point you want to lock in some of that value recognizing that if there is a period of low below replacement level contracting followed by, an exuberant period of above replacement level contracting, utilities will then kind of fill up their requirements again and they’ll feel complacent, they’ll step out of the market and the price will consolidate, it will come off and you want to be protected for that. So, right now, we look at a price that it’s got to go up to incent future production. We want to be exposed to that. At some point, we then want to lock in value and when we lock in that value think about it as giving us this zip line protection that we’ve enjoyed since Fukushima. So that 60%-40% balance is actually the learning from where we were in the 2006 price spike as you say, uranium gets to a $136 a pound, I think our average realized price at the time was $36 a pound. And so 60%-40% has come out of that learning to say we’ve got a lock in value when we think we’re in the right price range, but until then we want to be market exposed, that’s the better play for us. So, Ralph, I think it actually reflects better the dynamics in the market and reduces the likelihood of the outcome that you were describing and hey, we want to learn from that. We’ve been on that side of the trade and it was very painful.

Understood, well said. Thanks Tim, thanks Grant.

Thanks, Ralph.

The next question is from Andrew Wong from RBC Capital Markets. Please go ahead.

Hi, good morning and thanks for taking my questions. I just want to ask about Cigar Lake. So when would development of Phase 2 need to be accelerated to ensure production or is Cameco considering other options to maintain production later this decade? And I guess like how does the Cigar’s longer-term decision to factor into some of the contract discussion that you’re having with your customers?

Yes, thanks for the question Andrew. Cigar is an interesting piece. As we said that by the end of the decade if we continue to run it at normal rates, we will run out of ore there in Phase 1. Phase 2 is available, but we’re in that exact dilemma that I mentioned earlier that there’s no incentive price to be looking at new projects and making that eight-year investment, ten-year investment that you need on there. Well that one won’t take that long because it’s a brown field. You can imagine on a green field, it’s eight to ten years before you’re up and running, but if you walked into your Board of Directors, I can tell you for ours, and we said, well we’re going to start a new green field project today, they'd probably run you out of the boardroom. And so, there is just no incentive pricing there to put the large amounts of capital in to start a new project. So, for Cameco, I mean we’re looking at Phase 2, we’re doing studies on it and doing the math on it and doing projections, but there is no incentive today to move that forward. So I’d say the same with our Yeelirrie and Kintyre and Millennium and some of the other projects we have. They’re not at the same level as the MacArthur’s and the Cigar’s and some of the [indiscernible] production and new projects to start there and the unproven ones you’ll see some pretty interesting numbers coming out of some feasibility studies, but I can tell you after more than 30 years here it’s not an easy game building a new project. So that’s a concern. I think about that, we think about that all the time. We think about that 1.4 billion pounds that needs to be procured in the next what, nine years, ten years and where that’s going to come from and yet the market’s not giving anyone a signal to move ahead on the new projects. So it’s a dilemma we’re going to face and I think there’s got to be a realization of the urgency of this in the market at some time in the near future.

Okay, maybe I’ll just ask about some of the recent purchasing activity, would Cameco consider making strategic purchases similar to what the juniors have done recently, and I guess, just what’s your view on that kind of strategy that’s being employed to purchase excess material to help push prices higher? Thank you.

Well, Andrew thanks. I mean the purchasing we’ve been doing is to fill contracts that we have in our portfolio, you know, having shut in most of our production, McArthur in the U.S., Rabbit Lake, so Cigar has been due to COVID. We still have a very nice contract portfolio that we have to fill. So, our purchasing has been in that regard and not on speculation. But Grant, do you want to chip in?

Yes, that is absolutely right. So we continue to purchase. We’re -- Andrew rather than sort of buying on spec or by the whole, we’re the most inelastic buyer in the market if you think about it, because we have to buy to meet a committed sales portfolio. In some ways and I don’t mean to make this a cheeky comment, but we actually owe the trader community in the uranium space a big thank you, because instead of restricting pounds and holding them back and watching us chase the price up, because we got to buy anyway, they’ve been very willing sellers, and so we’ve been able to help clean up the market to meet our committed sales portfolio, but not at, you know, really punitive prices for us under our strategy. But having others step in like this, is an important fact changer, you’re absolutely right. I won’t make a comment about sort of whether it's wise or not for an advanced exploration company to buy material and hold onto it. I’ve heard the reasons and the reasons are theirs and their investors seem to by and large to agree with it. I think the buying showed what we’ve been saying. And that is, that the spot market, the true spot market, the material that’s available in the can or in the canister today, is very thin. And the reason I think it proved, it is because many of these purchases by the advanced exploration companies were out on the curve because they simply couldn’t find the material available today. So on one hand that’s quite positive isn’t it Andrew, because we’ve been saying a problem in our market is uncommitted primary production from producers who should be leaving it in the ground, because they don’t have a home for it, but they haven’t been. Buying along the curve basically creates homes for the uncommitted primary production and that’s great because it won’t be dumped into the market six-month out, nine months out, 12 months out. On the other hand, I wonder if there’s a bit of regret though on a missed opportunity and the missed opportunity is if that 10.5 million pounds stay dedicated to true true price formation in defining what really is the spot market, we'd be in a much different price formation right now. There would be a much different spot price if folks were holding out for what's available today. So, on one hand positive on the other hand probably a bit of a missed opportunity. Andrew, I -- just bear with me for a second. I want to take a step and distinguish too between the funds and the advanced exploration companies buying. Because I think there's a really important development in our market recently with the folks at spot taking over the management of UPC. I think there's just tremendous potential upside there, and it really comes in the form of bringing in an experienced professional manager in the physical metal space to bring active management truly into this. I think they've involved a group, very credible market liaison, some folks that Cameco knows, used to work for us, and so we think that brings instant market credibility to what they're doing. I think that that will bring access to a broad base of investors. But in terms of this price formation piece that I was talking about, I think there's real potential upside there too, because if you see a very active management from a fund, not a passive fund but an actively managed fund, we could get into a situation very quickly where the spot market isn't five traders offering against one person with a bid to buy. We could see some balance there, where the amount of bids equal the amount of offers. And it would really create transparency in the spot price and get us away a little bit from this ability of the intermediaries to offer down the market without actually making a transaction because there would be this present and persistent bid. So, I think there's tremendous upside here and we'll watch it really closely. Obviously we have some views on how to maximize it and we're going to be happy to share those at every turn and that would be really to focus on the spot market and not buy out. And if there are redemptions, have a very credible and value generated way to deal with the redemptions. And there's very little downside to it as far as I'm concerned, because at -- if they just, if they acquire it and sit on it, well that's what it was before, so that’s no different. So, we think that combined with some of the other demand has been a pleasant surprise to the market and it's proving some of the things we've been saying about just how thin the frontend of the spot market actually is.

Okay. Thanks for your comments.

Thanks Andrew.

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

Let me check, Grant, I think you just answered my question, but I was surprised that spot price didn’t do more with all that buying coming in, which suggests there is excess supply still out there. And I think that's the fundamental question everybody has, how much excess supply truly sits out there and willing to meet this demand when it comes in?

Yes. Great question Greg and so just to go over the ground again, I think the missed opportunity and the real proof would have been, if that buying had stayed restricted to what's truly available today, you would have seen a much greater impact. But I think there was just a desire to lock in some material to take advantage of these financings, take advantage of the window that these companies were looking at and they were willing to buy forward. And as soon as they bought forward they took the pressure off the spot market, didn't they? They just went out along the forward curve. In fact I think one of them didn't buy anything within the next 12 months and was actually buying in the beginning of the term market. And so that kind of took the pressure off, Greg, and had it been focused on the frontend, it really truly would have proven how thin the spot market was. What it did do though, as I said, and this is good news, is it's created homes for the problem as we've been identifying it, which is those producers who are producing material and they don't have a home for it, well now homes are being built. So, think of it instead of kind of pushing the near term of the spot price, they've supported the forward price of uranium because now we're not going to see material coming into the market six months, nine months, 12 months with the same weight for the same churn with traders than just offering the market down ahead of pricing those purchases. So, it really created a stronger floor if you will as opposed to kind of pushing the frontend of the spot market.

Okay, just want to investigate your purchases a little bit. You've raised the guidance range to 11 million to 13 million pounds, does that include 5 million pounds you get from Inkai?

Yes.

And you know they are going to buy some material and I guess it's internally shifting from NUKEM excess inventory into what you require. So, how much actual net buying is there from Cameco in the market?

Yes. And that's -- we don't have that disclosure out there. So, once again we're in a partial outlook world, and we're in a partial outlook world because of Cigar Lake. So, we have a sense you know Cigar Lake was down for the first quarter of the year and it was ramped up through the first month of the second quarter, but that gives a sense of kind of what we're short, because Cigar Lake wasn't producing for us. Going forward we have question marks about Cigar Lake's run rate. So, while the date is now clarified of restart, the run rate isn't. That creates uncertainty about how much production we're going to have to our account and that uncertainty actually impacts our planned purchasing activities. So, our partial outlook has stayed away from making those determinations, but Greg, it's not just a Cigar Lake story, but NUKEM is also down. So, as long as we have that asset and care and maintenance for strategic reasons, we will be, I think probably the biggest spot buyer in the market I think once again. Timing is something where we have more control over, but did -- we will need those pounds and as I said to Andrew, we are the inelastic buyer in the market and we will buy, but we just have shied away from guidance at the moment because of this partial outlook scenario.

A quick follow up, how much will you transfer from NUKEM then, from their excess inventory?

It's just a couple million pounds, Greg. So, there is still a growing concern in terms of some legacy contracts, so it's just the inter company management of that.

Okay. Thank you.

Thank you.

The next question is from Ben Hatchet [ph] a private shareholder. Please go ahead.

My question was mainly with spot, it was somewhat answered. With the new trust and your knowledge with your relationship because that a problem, do you think that's going to influence you guys to buy your pounds quicker before they establish their trust?

I don't think it changes our behavior at all. I guess we will watch to see what they do. I think they have a bit of time in front of them just to set the whole thing up, I don’t think it closes for a while yet and those branches [ph] were pretty inelastic on our buying, we have to buy the fill [ph] contracts that are out there to meet them. So, you know we'll watch what they're doing and what happens, but I don't think it will influence our behavior.

Yes. It's important to remember that because we're buying not to hold uranium, but we're buying to meet a committed sales portfolio, our number one priority is actually making sure we have the product to deliver into the committed sales portfolio. And so we know the product forms we need. We know the origins we need. We know the timing that we need to buy that material. That's what drives our purchasing decision. So, when we think that we can't meet those criteria, we will buy and be a very aggressive buyer and when we think we can meet those criteria, we can be more opportunistic because remember our incentive is to keep the cost of purchasing down as low as possible, but our strategy is one then where it really doesn't matter to us if the price starts to move away. Because if the price starts to move away because buying is in front of us, well guess what, that's being picked up in our committed sales portfolio. So, we get the benefit of the rising price there offsetting the fact that we're buying some material in the market. So, our strategy is designed so that we can tolerate a market that price formation hasn't happened yet, but it's also designed so as the price starts to go up we're actually celebrating that as opposed to panicking and say we need to buy everything before someone else does. So, we'll watch how this unfolds. We do think it could be a game changer with lots of upside and then our inelastic demand I guess, would just be a leverage on that.

Okay. And also, are you guys going -- I know with the Biden administration and there, I don’t know if there is going to be uranium reserve or anything, are you guys going to be involved in that or any of the Canadian producers or do you know if it is just going to be Americans?

Well if you're talking about the purchases, strategic purchase of uranium, you know that was started even before the Biden administration. It looks like they're going to carry on with it. I think Secretary Granholm has committed to buy that. Of course we have several different options. We've got Canadian production, but we also have our U.S. assets that we were running that were the largest -- we were the largest producer up until a few years ago when the market kind of fell out. So, we're I can tell you -- we're in Washington as much as we can. We're talking to the Department of Energy and we'll see they haven't come clean and clear yet on whether they're going to spend that $150 million or $75 million to build that strategic reserve, but I can tell you we will be right there to offer our assistance in providing those pounds absolutely.

Okay, thank you, very much.

Thank you, Ben.

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

Hi, good morning. Just to follow up on the purchases by junior company discussion, in your strategy you talk about potential redemptions, it might I believe is, we look forward to next few years, do you worry about some of those pounds that are being bought out and the curve coming back to the market, that is to say maybe they buy them and the price goes up a little bit and they flip it back. So, all we've done is, delayed some of those pounds there in future, is that sort of what you're talking about, we go through that thinking process?

Yes. Grant, why don’t you, we just talked about that this morning.

Yes, Brian. So, it would certainly be a worry and it would be a worry rooted in what we've seen even last year. And let me make a distinction between the advanced exploration companies and the funds to start with. You know, like I said, I think it's an interesting strategy and I won't comment on it commercially. But it does concern me a little bit from the point of view of conviction. You know, I would be disappointed for example if we discovered that when -- you know the uranium price, we think it's got to go up, but it's not going to go up into the right constantly. It's going to sawtooth. And so we may see situations where some of these companies that are holding an asset on their balance sheet probably accounted for derivatively may have to take a mark-to-market loss at the end of any one quarter if the price is off a bit or if we've seen usual quarter end games from the traders, uranium price comes off, they might have to take a loss. And what are they going to do in that situation? Are they going to have the conviction and the support from their investors to hold through that? It would be disappointing if it simply came back into the market or if they said, hey we made 20% return on our uranium purchases. We're going to monetize that. Well, all we did then was just played a shell game with uranium. So, I have to be mindful of that. I'd like to believe that there's probably going to be conviction. I'd like to believe that it's probably linked to making good commercial decisions about funding their projects going forward. I have to believe that they understand how our market works and that if you're going to dispose off material, you should be disposing of it to an end user where it's never going to come back. If you're disposing it to a trader, they're just going to churn it in your face. So, I -- you know, but I have to separate what I believe is going to happen from what could happen and we've got to be mindful of that. With respect to the funds, we did see the redemption examples last year. And then we saw material coming out from the funds either being loaned or sold, and again not meeting I would say, good criteria. They were being loaned or sold to traders who again just churn it down. Traders make their margins by discounting the market, not by holding back material to get a premium price. So, you know what's going to happen if you put the material in the hands of traders. So, I raise it as a caution, Brian, it is not my expectation and it's not what they said they would do, but I just think it would be wise to be aware of it and probably wise to the best of our ability to signal to those who support those strategies, how do you sustain the best value going forward.

Yes, fair enough. My second question, just with the reopening of or expected reopening capacity of conversion in the United States, have you seen any changes in the conversion market? I mean, I just had it all tightened up with constrictions, but maybe we're getting back to the -- a little more balanced market, is there any update there?

I don't think we've seen, Grant, a lot of change in the market. I think it's a little early maybe, Brian that people are waiting to see. I think they said they'd come back on in 2023 sometime which is at the end of '23, which is a while from now. So far we haven't seen much change in the market. We are watching closely and they are presenting at all the conferences and trying to keep the market updated. But I think they're just getting started, so it might be a little bit early Brian, to have any views on how that will work.

No, and the forward looking in the market that's how [ph] I guess, yet?

That's ways away yet, Brian, and I think they have a significant amount of capital to put into the plant to get it up to speed, so we'll watch and see how that goes.

Thank you very much for all the color. I appreciate it.

Yes. Thank you, Brian.

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

Hi guys. Thanks for taking the questions. I guess the first question I have is and maybe you guys answered this, but I didn't catch it. I guess the ramping back up of Cigar Lake, there is some viewpoints that this is actually a positive, and the thought is that you guys are ramping this back up because you have a limited supply from Inkai due to the COVID cases et cetera there. And thus that's suggestive of increased demand for uranium and thus your need to ramp this back up and that the spot market remains under supplied. Can you address that? And can you also talk about, if you're seeing still excess inventory in the market or not? And then lastly, I know this was asked, but I didn't catch the answer. On the contract, which you guys signed, can you talk about the timing around that, the pricing, and what geography that's going in? Thank you a lot.

Yes, thanks Gordan. And let me take the Cigar part and then I will pass it to Grant on the market question. You know, Cigar for us, when it's going to double hit for us. So, we have care and maintenance costs in the $8 million to $10 million a month category, well that's down. Those are significant costs for us to have that down and at the same time we don't have access to a low cost source of production that we need to put into our contract portfolio. So, it is expensive for us to keep that down. And so, you know as I said before a little bit earlier, we didn't plan to take it down. It was COVID and our super precaution and our concern for employees and the communities that COVID not be spread around, that it caused us and our lack of, on a day-to-day basis qualified operators to run some of the circuits that really kept it down. It wasn't really a market related issue. And so, that's why when we felt it was safe and we have all the protocols and procedures in place to protect the workers, we were able to bring it back up in April and it's back up running now and producing. And so, for Cameco, that's a good story. Grant, do you want to take the rest of that?

Yes. Gordon I think that's an interesting way to describe it as sort of a positive to bring Cigar Lake back. And really, let me just map it back to our strategy. The reason we want to run Cigar Lake is for the reasons you talked about, because we have supply discipline going on. We've turned our production down well below our committed sales and we made the determination that we'll be able to buy some material, but we won't be able to buy all of it because the market is not that deep. So, Cigar Lake coming back, I think you've got an interesting spin on it. It's positive because it's a return to our strategy and our strategy built in the idea that the market isn't deep enough for us to buy everything in it. So, I would agree with you from that perspective, haven't thought about it that way before, but it's probably a good way to think about it. In terms of excess inventories, we no longer see the uranium market being an inventory story. This kind of ended about two or three years ago when we saw the enricher underfeed be spoken for. Yes, enricher is still underfeed but most of that is going into the uranium needs for their longer term enrichment contracts. So, we're not seeing enricher underfeed being dumped into the market. We aren't seeing inventory come to the mark, excess inventory. Where inventory is playing a role is, clearly some utilities, they've been consuming off their term contracts, but they haven't been replacing them. So where's that coming from? Well that's coming from their inventory, mobilizing their own inventory, chewing down a little bit of their strategic inventory position. But that's defers demand, but it doesn't add to supply. It's not like we can buy that material. That utility is just chosen to consume a little bit more before they start their buying campaign. So, for us, the issue in the market is not inventory. It really is the last of this uncommitted primary production. You know Tim mentioned, the Cominak mine coming down, the Ranger mine coming down. That's great, because those were two sources of uncommitted primary production, pounds that should've been left in the ground but weren’t, they were being produced and then they had no place to go but to the spot market and contributed to this notion of the spot market being for surplus disposal. So, we’ve got to work through the last bit of this uncommitted primary production coming into the spot market to tighten that up. I talked about some of the new demand creating homes for that, that’s good news, but for us, it just -- it isn't an inventory issue, we don't sit and worry about inventories coming into the market. So, I would say that feature of the markets dramatically improved over the last couple of years.

Actually, if I could get one more in, so given that you guys are saying that there’s not an inventory issue, I know you get this question a lot, but maybe if you could talk around it or address it, is there a point at which you guys expect to see some type of price inflection, because I guess the push back on the comment that inventory hasn’t been a problem for two years would be spot prices have been steady to flat. So, is there a point at which you guys expect to see an inflection? And then lastly, on the China contracts, those contracts are ten years dated, a lot of people expect imminent renewals. Can you guys address that, discuss that, do you see anything going on there? And thanks again for the questions.

Yes, on the spot market, great points. I think our observation would be, remember when we started our supply disciplined strategy, especially in earnest with McArthur coming down, we were below $20 in the spot market, in fact, I think for one moment there it tucked below $18 and was like $17.75 a pound, that was inventory, that was inventory coming into the market. We started our supply discipline strategy as Tim noted in his comments, having our assets down and our purchasing has led to about a 145 million pounds swing in the market dynamics. It’s bridged us through that inventory challenge, the spot market is at what, about 65% since those days. So it's not where it needs to be in terms of incenting primary production and the investment in new capacity, but it has come a long way from those inventory mobilization days. So, I would say that the first move was to go from a market that was inventory and primary production driven to one that's just uncommitted primary production driven at the moment. The net inflection of course comes with demand. It comes with enough fuel buyers looking at the improving demand outlook that we start to see an acceleration of the completion of contracts not just off market, but a steady drumbeat of on-market RFPs. And then that demand signal will begin to build more confidence in the producers, who right now, when they see an RFP come into the market, they're very aggressive going after it. They’ll be able to step back a little bit. So the next leg up I would say is, there's no substitute to end-user utility demand and we’re not quite there yet, but that's what creates that inflection point that you talked about. The spot market is no longer inventory driven and that's why it’s kind of hanging around $30 instead of below $20. The China story is very interesting. Obviously Tim identified some statistics on just the improvement in their outlook for the role of nuclear power as part of their net carbon zero by 2060. We’ve seen a bit of an evolution among the customers in China. We no longer sort of think of them as one group anymore. They behaved very differently. One of our customers has gone out and acquired assets, is running assets in Namibia for example and that supply is going back to meet some of their needs. Another customer has, instead of building their own assets, they’ve taken equity positions in other assets, but they're not running, so we actually see it as being a bit different. We see one has kind of been more proactive in meeting some of its own needs with some of its own investments and the other probably being more uncovered and probably will be the first to come to the market in light of these new plans. Because when you're building a reactor fleet that’s going to run for 60 years or 80 years, it is probably an insufficient answer to go back to those that are planning power and saying, yes but I've only got the fuel procured for another five. So there's probably, there probably is a cycle coming to start to match up the commitment to 60 years to 80 years of power production with the fuel to supply 60 years to 80 years of power production, so we’re optimistic on the China situation.

Thanks again guys.

Thanks, Gordon.

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

Thank you very much. I have a first question and then a follow-up from it. At first glance Tim, it looks really good that the cash balance is one up a $107 million in the quarter, but there were six one-time benefits to cash without which it would have fallen $135 million. The inventories fell. There was a $49 million credit for long-term receivables. You got the legal fees back in a tax dispute. The CapEx was way, way below trend. Money came in from stock and you recorded it as short-term investments. So how do you look at the cash flow first? And then second, does that mean that you need to restart production to generate cash rather than having all in owing costs or else slim-down real deep, take your pay in stock or do things to save cash?

Yes, thanks John for the question. And you’re right, we did have a lot of kind of one off in the notes during the quarter on the cash side of the CRA and some other government payments and ---Grant just ask the CFO if there was anything abnormal about it and it’s kind of how we operate, so…

Yes, I mean, John, interesting take on it. Couple of clarifications, so for example, the cash from the CRA is actually not in that quarter end number, that was a subsequent event. But of your puts and takes, the main point is, we've said all along as part of our strategy, we would take supply discipline, we would embark on market discipline which had both a purchase in the markets, I mean our committed sales as well as being very strategically patient on layering in new business which we spent a lot of time talking about today and it would be backed up by a very conservative financial management that gave our owners the confidence that we could self-manage risk. Whether we’re sitting at $1 billion or $900 million we’re still achieving that. So, for me there's no danger here about our financial capacity slipping into a zone where we don't have strategic resolve anymore. So you raised some interesting points, but I would just counter by saying we’re still absolutely on track with the third pillar of our strategy that we have talked about which is to be financially conservative and be in a position to self-manage the risk of this strategy and the risk of the market transition.

Thank you.

Thanks, John.

The next question is from Jessica Sondgeroth from Nuclear Intelligence Weekly. Please go ahead.

Hi, Tim, hi Grant, thank you for taking this call. I just wanted to ask about the 9 million pounds of term sales in April and the balance you had I think 17 million per year for the first quarter for 2021 to 2025, and you noted commitment higher in 2021 and 2022 and now let us include the 9 million, but I'm wondering if you can add a little color to what the 9 million adds to that balance, if it's material [indiscernible] or intermediary anything you can kind of share?

Yes, thanks you for the question Jessica. That we were happy to get those extra sales - we were happy to get those extra sales, you know, and there are more to come where it has been said that many, many times our pipeline is busy, that COVID related things have slow down, I think in 2020 was slow due to everyone’s focused on their own operations and not particularly adding to their long-term contract in their portfolio, but now we’re seeing a few things free up, those 9 million pounds, those are included by the way in the 17 million, those are not included, I’m sorry, Rachelle says they’re not included in the 17 million per year [ph] period and so, yes I think Grant gave a little bit of color on those pounds earlier. They fit what we want to see in our portfolio, the ratio that makes between fixed price and market price have done delivery and so I, Grant if you have something to add to?

Yes, I think there’s an important tie here between you’re question Jessica and when that was asked quite a bit earlier by Ralph and that is, there's no doubt that our contract portfolio is opening up in sort of the later years of that five year window and I don’t want anybody to have the impression that, you know, like we’re not aware of that and in fact, that isn't a strategic position. We want to be more exposed to the market that we think that needs to be transitioned. The situation that Ralph was asking us about, that's the one we've learned from. We've layered in a lot of volumes in the past. We've layered demand at the indexed pricing such that when the market did transition we didn't really participate in that. We don't want to do that again. So yes, we had more deliveries, that's 17 million pounds on average per year for five years, is more heavily weighted to the frontend. It's you know less deliveries in the backend. That's exactly where we want to be looking at a market that's sitting at P5 or P 10 price with a much greater chance of going up than going down. You also asked the question about to whom are we entering into contracts. Not intermediaries at all. I mean, we're not selling to traders. These are end-users. These are utility contracts. These are kind of the classic term business and between 1920 and now that's nearly 60 million pounds of new business we've added to that pipeline reflecting that broader portfolio criteria that we have when we layer in contracts.

Okay great. Thank you Grant, thank you Tim. And just one more followup, oh not a followup, but a separate question on the Cigar Lake run rate uncertainty, can you clarify that a little more, is that anything that requires investments or what's the issue really?

No, just normal operations. When you take an operation down like that, you know, we kept all of the workers and we kept obviously the facility in good shape on care and maintenance and so, we just are being ultra cautious as we ramp back up. The COVID situation isn’t gone into Saskatch and we've been very fortunate and I think managing quite well at the site, but we just are not sure what kind of production level we can ramp up to this year and we're just getting started now. We're just sending some uranium down the road over to the McClean Lake facility and so just lots of questions marks, nothing that we're seeing that's out of the ordinary, but we just want to be very prudent and not really out numbers that we can't back up right now. And so we'll see on the next quarter once -- once -- hopefully we can get them up and running and running normally and then we'll be able to give some better guidance going forward. But right now we're just being cautious.

Okay great, thank you.

Thank you.

Next is a followup question from Orest Wowkodaw. Please go ahead.

Hey, good morning, thanks for taking the followup. Grant, I just had a question about your uranium inventories. I mean based on your guidance, updated guidance for purchases and your unchanged sales guidance, I mean my mental math would tell me that you plan to exit this year with markedly lower inventories, closer to that 9 million to 10 million pound range versus 15 million exiting 2020. I was just curious if you think that's a good targeted run rate for inventories or whether we could actually see chemical be more opportunistic and buy more purchases than you are guiding?

Can I answer yes to both Orest? Just a reminder of how we got there. So you go back to last March, last April, COVID starts rolling out around the world. We started to see real supply uncertainty, not just in Canada, but places like Kazakhstan. You will remember the actions that [indiscernible] took and countries like Uzbekistan, Namibia, COVID cases in Niger. As the largest buyer in the market and the largest inactive or inelastic buyer in the market, because we had a committed sales portfolio to deliver into, think of it as we bought some risk material. It wasn’t, we were building up an inventory to hold, it was as we looked out at that our committed sales portfolio and knew what we had to deliver, we bought what we needed when we saw it was available, because of that uncertainty. But as the COVID situation began to stabilize and we brought Cigar Lake back and we saw the measures that [indiscernible] were taking, we weren’t really in that world anymore, thinking we needed to buy ahead and buy some risk pounds. So we ended 2020 with a higher inventory than we would have otherwise enjoyed. When we brought it down back more in line with what you've traditionally seen. But for some of the, I would say new factors, not COVID-19 related but if we do see a piling on, fund start to invest more. We talked quite a bit about the spot vehicle and the opportunity for that to be more active. If that vehicle starts buying more pounds we'll get to so are we, because we're not going to be completely left out of that because we need it for our committed sales. So historically you know what our inventory targets have been. We sort of navigate by those inventory targets, but we call it deliver into our community sales portfolios. So it really is going to depend always on the buying behavior of others and what we see in the market we're not be left with no material and having to default on a committed sales, and that is absolutely not going to happen. So in really a helpful way, my answer is yes to both.

And then a second followup, just coming back again to your new contracts, like we saw in your April representing 9 million pounds, do you think that represents in your view some kind of inflexion point in the recontracting market like, do you think that opens the door now or paves the way for others to nurses are piling on or you view this more as sort of an isolated event.

Well, again I'm a little tempted to say it is a bit of both. I mean the real inflection point as I said earlier, it comes when we start to see greater frequency of the on market RFPs going along with the kind off market business. The off market business has historically been a leading indicator, a necessary condition, but it kind of hasn’t been in the sufficient condition for a full blown term contracting cycle. But here is why we view it as position because utilities, yes they are watching the supply/demand dynamic, but the other thing we know they are watching is each other. You know, it's tempting to sort of say, well if my big neighbor here isn't buying, maybe I don't need to be buy. But then when the word gets out some are starting to buy and they are starting to buy out in more of that classic term window. If you think about the summer 2010, when the Chinese stepped into the term market for the first time and contracted 150 million pounds basically for kind of 2013, 2014 to 2024. Everybody else who was sitting on the sidelines feeling they were well covered for 2011 to 2015, saw the big new entrant come into the market and start gobbling up the pound, but hadn't yet been called for and that triggered a contracting cycle. So we do think maybe it is a drip in the bucket, but it is a big drip in a bucket that's getting pretty for worse.

Thanks Grant.

Thanks for your question, Orest.

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

Well, thank you very much, operator. And with that, I just want to say thanks to everybody who is on the call today. We as always appreciate your interest and support. And I just have to tell you, we're pretty excited about the future and what we're seeing for nuclear power generation and we're excited about the fundamentals of uranium supply and demand and we think our company is in a great spot. We continue to be a responsible commercial supplier with strong balance sheet, long tier one assets and a proven operating track record. And I can just assure everyone that we will continue to make the health and safety of our workers, their families and their communities are a priority. So, with that, thanks again. Everybody stay safe and healthy and talk to you again soon. Thank you.

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