NexGen, Uranium, And The Future Of Energy

“Unlike gold, unlike copper, unlike any of these other commodities, where there is a million big companies before you get down to a development stage company, [in uranium] there’s not. There is Cameco and then us.”

Travis McPherson (VP Corp. Dev.) and Leigh Curyer (CEO) of NexGen Energy

Travis McPherson (@travmcph) is the 30-year-old Vice President of Corporate Development at NexGen Energy Ltd.

Hailing from a finance background, Travis built a relationship with NexGen CEO Leigh Curyer and was brought into the company just prior to the discovery of the Arrow project.

NexGen is now valued at close to $1 billion dollars, and Arrow is considered the world’s most valuable uranium deposit.

In this far reaching conversation we discuss:

  • What is corporate development & investor relations and what do these jobs actually entail?
  • Why is the structuring of a company and its board of directors critical to its success?
  • What is NexGen Energy, and how is the Arrow deposit a game changer for the uranium space?
  • How does the uranium market work? What are the opportunities and pitfalls the average investor tends to overlook?
  • What does a core sample of uranium equivalent to 60 g/t gold look like?
  • What was one of the best performing industrial metal companies in Canada this year?
  • And much more.

It was an eye-opening conversation and I hope you enjoy it as much as I did!

You can also follow this podcast via RSS

Jamie Keech

P.S. Chris and I believe we’re heading into a massive bull market in commodities. We’re currently putting the finishing touches to a service dedicated to investing in the very best private placement deals in the resource markets.

If you’re an accredited investor, seeking to profit from the coming commodities bull market, I strongly encourage you to sign up here and you’ll be the first to know when we launch.


Good afternoon everyone and welcome to the first episode of the Resource Insider podcast. Today, for our first episode, I got to sit down with Travis McPherson. Now, Travis is the VP Corp Dev for NexGen Energy. And if you haven’t heard of them NexGen Energy, it’s in the uranium space. They’re the biggest and most successful uranium explorer in the world right now. They have the Arrow deposit in the Athabasca Basin here in Canada. They’ve had tremendous success. They are nearly a billion dollar of market cap. So, today, Travis and I, we talked about what it actually means to work in Corp Dev, what that role has entailed for him personally. We talked about the uranium market, changes going on in the space right now, catalysts that he believes is going to move the uranium price over the coming year or so. We also of course talked about NexGen and their enormous Arrow deposit and the future for that. So, if you’re interested in exploration, uranium or asymmetric opportunities in the metals and mining space, this episode is for you. Without further ado, let me introduce Travis McPherson.

Alright, Travis. Thanks for joining us today and welcome to the show. How are you?

Travis: Yeah, good. Thank you, Jammie. Pleased to be here.

Jamie: Alright. So, Travis is the VP-Corporate Development from NexGen Energy and before I ask you anything about that, I want to start with a story usually. Now, story happened about a year and a half ago and I’ve never told you this, but you and I went for dinner with a mutual friend of ours, who is an investment banker at one of the big Canadian banks here and he will remain anonymous for this story. And afterwards, we went for a couple of drinks and our wives and girlfriends were there, and you ended up leaving and talking to some other people and his wife was like, “What… What is Travis’s job exactly?”, because we’re at the bar and about fifteen people came up and talked to you, and he was like, “You know, it’s hard to explain. He’s kind of like a minor celebrity of the mining industry. His job is to know a lot of people, talk to them, tell them about his company and build those relationships. And, I would say that’s somewhat of an apt description from the outside. So, I’m going to start with the question: If you meet someone at a party or a bar and they ask what you do, how would you actually describe that?

Travis: Yeah. That’s kind, I guess, for that person to say, but yeah, it obviously doesn’t capture the entire thing and I definitely don’t consider myself a celebrity in the mining world whatsoever. But yeah, I mean, a big part of it is definitely building relationships both with, you know, everyone on the street basically. So, whether that’s institutional investors, whether that’s our bankers, whether that’s our research analysts, whether that’s, you know, people that are just participating in the markets, retail investors, everything basically. So, just know everyone that we come in contact to make sure everyone has a positive experience interacting with myself because I’m representing NexGen. That’s kind of like a 10% of the job. The other 90% is really kind of all-encompassing with the business just because Leigh Curyer who’s the CEO and founder of NexGen has really exposed me to the entire business and kind of taken me under the wing to show me and expose me to everything. So, like whether it’s drill, like say, an exploration program gets proposed by our geological department, Leigh and myself and some of the other non-geological people will go through it and they present it basically as if they’re presenting to a board and we go through a hole by hole: what is out there, what’s the target, what are we trying to accomplish with each hole we drill, and the same goes for basically everything throughout the organisation – that process oriented approach to the business. So, you know, okay, say, we’re looking at a trade-off study. Okay, how much is that going to cost? What are we actually trying to do? Is that a need to have or a nice to have? Do we need it now or is it…? So, figuring out the right sequencing of events and spending throughout the lifespan of this company is something that we spend a lot of time on and figure out. So, I’m involved in all of that very heavily, and then kind of corporate strategy from really high level, and then obviously managing all the traditional kind of corporative development type things like any M&A type ‘behind the scenes’ stuff that needs to go on – database management, CAs, all that kind of stuff.

Jamie: And so, for those who don’t know, NexGen Energy is a uranium exploration company with projects in the Athabasca basin here in Canada.

Travis: Correct, yeah.

Jamie: And, how long have you been there for now?

Travis: Joined in like mid-2014. So, about 4 years.

Jamie: So, I was thinking back in preparation for this about when you and I met, and that would have been just before maybe 6 months to a year before…

Travis: Yeah. Probably a year.

Jamie: …you started with NexGen. We got introduced through a mutual friend because we were both doing essentially writing and research and analysis in the mining industry, looking at different companies and I ended up going and working with the gold company, who I’d written extensively about and gotten to know. And you ended up with a uranium company.

Travis: Kind of the same process of how I got there, I guess, as you.

Jamie: So, you got there almost exactly the right time for NexGen, right? So, what stage was NexGen at when you entered the company, because there was only a handful of staff at that point, am I right?

Travis: Yeah, exactly. So, at that time, they made the official discovery of what is called the arrow deposit now, which is today kind of four years post discovery. It’s the largest global resource that’s undeveloped of high grade uranium and it’s been independently verified as being the largest lowest cost uranium, will be the lowest large cost uranium mine in the world, producing about 20-25% of global supply from this one mine. So, hugely strategic, but back in 2014, when I joined, it was about just before the 30th hole had been drilled on the project. But, I basically followed the company even previous to discovery, which was in February 2014.

Jamie: So, what drew you to NexGen as opposed to some of the other uranium explorers that were having, at the time, similar success in the basin?

Travis: Yeah. So, I didn’t know much about uranium at the time.

Jamie: That’s something that no one does and we’re going to get into later in this conversation.

Travis: Yeah, that’s a good point. So, I got introduced to them through a mutual friend at the time and interviewed Leigh as part of this, like what we were doing, writing about companies and analysing them. Went and met Leigh and just really over time probably met with him 6 or 7 times before going up to site with him. I kind of had, I guess, what I would say like red flags. I had worked at a couple of other companies and determined kind of as part of that experience that you learn a lot from good times, but even more from some bad experiences. And I had some bad experiences in the sense that the companies weren’t necessarily run the most efficiently or maybe used capital the best or managed the markets the best. So, I was really sensitive to that and Leigh was just kind of exhibiting all the right attributes like all those things that I had learned. “Okay, this is what you don’t want to do. Well, Leigh wasn’t doing that and then going above that with the whole organisation, his vision for the organisation, because at the time, it really was still a vision. Like, it was you made a discovery. Market didn’t really care. You know, it was a 30 million dollar company at the time, and you know, he’s talking about this process, process, process, you know, his background with the first reserve looking at every single Uranium company around the world asset, going to all of them, specifically looking at them taking down, and you know, trusting what he was saying about the uranium business if that’s all true and you are running this company the way you say you are, this is like a no-brainer. And so, you know, over time, you know, you go and talk to him. The same thing is being said. It’s clearly not lies. And then, I went up to site in late summer of 2014. Got invited up there for their first kind of investor analyst tour and met at the time the whole board. And Leigh had spent a lot of time with them and then really got to know the board and really like the board structure because the board of a public company is critical obviously, and that’s something that I probably underestimated prior to some of my other companies that I joined. Didn’t understand how critical it is to have a truly independent board and a board that is just there for governance and oversight, not day-to-day management. You have the management that does that. So, you had this board which I met, where none of them were too close, very objective. They were all, kind of, had a really long-term vision for this. Said, “Okay, this is the asset. We’ve got it. So, let’s do this right.” And everyone was kind of testing everyone. Good questions were being asked. Tough questions were being asked all the time. So, I felt really comfortable in that setting.

Jamie: So, is that something you’d seen in the companies you were covering or had previously worked for, perhaps that sometimes, there’s perhaps a grey area between management and director, and there’s no sort of strong captain, I guess, at the head of the ship making the decisions, and there’s maybe sort of hundred cooks in the kitchen and trying to go back and forth on a company, and there’s no clear direction on how to do it.

Travis: Yeah. I would say, I mean, you see the full spectrum, right? So, yeah, in my experience, I’ve seen ones where it’s like, you know, the worst of that, or you can go all the way to the far side where it’s basically one guy’s show. And it’s just one guy and he’s running everything, and there’s no objective process. What he says goes or she says goes. And so, I think, in my experience, you want that balance. You have to have the board. It just goes back to, like forget mining, just like a business, you want to have independent people to look at what you are saying because you as management are very close to the business. So, you have to have people there that can kind of not be too close to the business on a day to day level, so that when you propose things to them on an annual or a semi annual basis. Say, “Hey, this is what we’re seeing in the market. This is what’s going on and this is the strategy and this is why this is how much it’s going to cost.”They say, “Okay, and they can ask questions from a higher level.”If they’re, say, way too down in the deep end or vice-versa, they’re so removed they’re not even engaged, it doesn’t work. That process doesn’t work and then you basically will have a one man show.

Jamie: Right. Okay. So, this was 2013. At the time…

Travis: 2014.

Jamie: …2014, sorry, was mining was not a very sexy place to be at the time and uranium was even worse. So, I mean, what drew you to uranium in particular, after talking to Leigh and sort of getting to know the space, and you know, you could have gone into anything at that point. I know you’d worked with gold projects in the past as well. So, uranium – totally new space. Probably, arguably one of the least attractive commodities at the time, and we’ve seen that start to turn around. So, why uranium?

Travis: Yeah. I think, first and foremost, it actually wasn’t about uranium. It was about the organisation and whether they were talking about uranium, gold or jelly beans didn’t really matter to me because I knew if that process was undertaken in the way that it was being described and you had this board in that way, whether it was this asset or whether it was another asset of a different kind, this group is going to be successful in doing that. And so, I wanted to be a part of that, and then, I mean, obviously, I fundamentally believed in uranium. It would be very hard to join that group, no matter how good that process is, if they’re going after something that clearly isn’t going to have a future, you know, and that process that I describe that they go through, it won’t result in that situation anyway. So, I would say, being that kind of counter-cyclical market, you know, coming into a company. I don’t want to come into a company as a new employee, a new partner in this business, essentially becoming a shareholder and everything at a time where, you know, I think it’s the top of the market. It doesn’t make any sense. So, now, coming in at the bottom, if I’m a long-term guy, I’m saying, “I’m willing to put a decade or more of my whole career into this, who cares if it’s going to take, like, I didn’t really have a view of whether it was going to take a year or five years for the market to turn in uranium. I just knew at some point, it would.

Jamie: Okay. When was the height of the uranium bull market? Was that 2012-ish?

Travis: 2007-2008. Yeah.

Jamie: So, at the height, I think there was something like 500+uranium companies on the TSX and the TSX-V. Now, we’re down to what, 50, something like that? 40?

Travis: Yeah, I think the entire capitalisation of all publicly listed uranium mining companies and exploration, everything is probably like 15 billion dollars. So, like, we are talking about less than tax market cap.

Jamie: 15 million. Now, I was talking to a mutual friend of ours about this the other day and he was saying, ‘of that total market cap for the space Cameco is like 50% of that or something’.

Travis: Yeah. There are about 5 or 6 billion dollars. So, yeah.

Jamie: And you guys are just 800 million-900 million dollars.

Travis: Yeah, about a billion.

Jamie: So, two companies hold almost over half of the market and then there’s the other 40 odd that have, what, another 5 billion dollars. So, it’s a tiny market right now.

Travis: Yeah, when you go down into the exploration, some of those other ones would be like some of the Chinese companies and like a BHP, which has uranium. But yeah, let’s put it this way. We hear this a lot. When an investor looks at the uranium space, they’re sitting in the US and they go, “Okay, it’s time. I want to invest in uranium.”They pull up Bloomberg and there’s two companies that have a market cap over a billion dollars that trade any decent dollar volume. Us and Cameco.

Jamie: And I mean, obviously Cameco is producing operation with multiple assets and you are still in the exploration stage. What’s the proposed timeline for Arrow and moving that forward?

Travis: Yeah, I mean that, you know, there’s timelines to kind of each gate, but in terms of the biggest unknown for us is time… and it’s all related to how long does it take to permit this mining mill, but in terms of the stage we’re at and kind of looking forward, we are exploration, but we’re truly into development now.

Jamie: So, what does that entail at this point?

Travis: Yeah. So, we’re doing a PFS (Pre-Feasibility Study) late Q3 or early Q4 this year, which will have an updated resource using about another 80,000 meters of drill core data over 2017 and the winter 2018. And then, we’re also going to be doing a program this summer, which some of that data will feed in. About half of that will feed into the PFS and further engineering studies like some of the Geo-Tech, hydro-geological work we’re doing. And then, there’s another part, which is exploration, because believe it or not, Arrows had over 230 kilometres of drill core put into it. Like, this isn’t like a copper deposit, right? Like these things are pretty tight, like there’s about ten billion dollars worth of material held within 400,000 tons of rock. So, it’s very, very small volumes because the grades are so incredibly high.

Jamie: You did this for me once before. Can you put that in terms of gold because we’re going to talk about this in a second, but I think that people have a hard time wrapping their head around uranium.

Travis: The value, yeah.

Jamie: I’m picturing that. So, what would that be? First, what are the grades you’re looking at in uranium and then how does that translate to gold, which people might have a better understanding of?

Travis: Yeah. So, I mean, we have our global average grades around 2.5%, but we have a high-grade core regarding the grade. So, when you’re talking about those types of grade, like 2.5% is the global average across the entire deposit including the high grade, low grade, everything. That is around like 60 grams per ton gold.

Jamie: 60?

Travis: 60 grams.

Jamie: 6-0?

Travis: 6-0.

Jamie: And will this be an open pit or an underground mine?

Travis: Underground mine and it’s actually a tiny little mine, like you’re talking about the Preliminary Economic Assessment was about 1,440 tons per day. That’s it and it produces around 20-25% of global uranium. So, a quarter of all uranium consumed on planet earth will come from a 1,440 ton per day mine up in northern Canada.

Jamie: So, to put that into perspective, 60 grams per ton gold. I mean, an underground gold mine tends to be 5 to 7 grams per ton gold, but this is an order of magnitude better than an average profitable mine.

Travis: Yeah. Well, let’s put it this way. Like, if you saw a really good, like some of the best copper deposits in the world that are getting drilled off, like, say Kamoa in Congo. You know, they might get intercepts of say 20 meters of 4% Copper, right? That would be great. That’s a high grade, crazy and world class hole. For us, on a copper equivalent, we’ve hit holes of like 70 meters of over almost 200% copper.

Jamie: 200%?

Travis: Yeah. 200% of copper. So, it doesn’t even like mathematically work.

Jamie: Yeah. I can’t even visualize what that would look like. It’s just like a tube of copper. What does your core look like when it comes out of the ground?

Travis: So, high grade uranium core. I mean, first thing, because we are in the basement rock, it’s extremely competent, which is unusual in uranium because the uranium mineralizing events that occur are so destructive when you get into these grades. So, they just blast the rock typically. And so, in other areas of other deposits, you might see like it’s always black. It’s like really black, but it will usually be like just destroyed, like it will look like, you know, kind of like asphalt that’s been like all…

Jamie: It’s very structurally destroyed.

Travis: Yeah, for us, you can hold a whole piece of core that’s just consistent and it will be like running 70%(7-0 %) uranium.

Jamie: Is there any safety concerns with having, you know, that high grade core coming out for your drillers and do they have to take precautions in technical equipment?

Travis: Yeah, I mean, Canada’s probably a world leader in terms of, you know, because we have a deep, deep history of uranium mining, especially obviously ____. And so, basically everyone wears dosimeters, which basically measure kind of exposure, general exposure, but then, the big thing really is just keeping everything segregated and hygiene. So, you just want to make sure there’s three different zones, like a hot zone moving towards a cold zone. So, it’s really about that contamination. You don’t want to like say, go from cutting core, give your hands a quick wash and then go eat food. Right? So, it’s just about separating all of those and then, yeah, monitoring dosimeter levels and everything. And then, as we progress into development and if we, you know, build the projects, build the mill, you know, obviously those measures go up each step you go and as you produce and actually refine the product, those will go up, but it’s very well understood and I would say Canada is the leader in that field, and I think the uranium mines in Canada are generally accepted as the world’s safest mines.

Jamie: Yeah. Now, I mean, I’m trying to think of something to compare it to. I guess the Athabasca basin would be comparable to the Witswatersrand or the Abitibi, like a whole district that is, what, I assume arguably the most valuable uranium district in the world.

Travis: Yeah. People call it kind of the Saudi Arabia of uranium.

Jamie: Yeah. How does it compare to Kazakhstan, which is probably, I think, the other biggest producer.

Travis: Yeah. So, Kazakhstan is a very large producer, but it’s a completely different setting. So, they don’t have very large individual mines like Canada has a few very large mines like, you have Cigar Lake and almost 20 million pounds. McArthur River before it shut down, kind of same level. Of ours, we’re talking about 25 million pounds a year. These are big, big projects. In Kazakhstan, you’re talking about kind of the biggest would probably be like 7 or 8 million pounds a year, maybe 10, tops. And there are ISL. So, in situ leaching. So, their grades are significantly lower, like you were talking about mining. A high grade one there might be like 0.2% uranium.

Jamie: 0.2%?

Travis: Compared to 2% or compared to 20%, which we have about 60% of our deposits is almost 20%. So, it’s a completely different game, but Kazakhstan does produce a lot of uranium for sure.

Jamie: So, uranium has kind of been the unloved stepchild of the market for a long time. But, talking to yourself and talking to a few other people, it sounds like, you know, globally, things are changing and there are some catalysts occurring right now that could potentially sort of spike the value of uranium. I say this with a grain of salt because there’s been people that have been pounding the uranium table for 10 years, saying it’s going to turn around at any moment essentially, but you know, what are some things that you see happening right now in this space and talking to buyers and talking to, you know, other people in the industry that you think are going to start turning the price of uranium around over the coming year or so?

Travis: Yes, there’s a few things. One is, like, since the disaster that happened in Fukushima, it’s been, you know, seven and a half years now.

Jamie: Yeah.

Travis: So, just that amount of time passing, where you have, say Japan, which came, basically the whole world after that, and rightly so, said, “Okay. Hold on.”

Jamie: Put the brakes on.

Travis: Let’s put the brakes on, everything, and let’s just look at these things, make sure they are safe, and that of course just takes time. And so, it has always just been this time thing. Nothing fundamentally has really changed. The growth of the industry demand wise is still pretty constant, like, 2-3% on an annual basis, for the next, say 20 years at least, but yeah, lots can increase that when you get to start talking about electric vehicles and that sort of stuff, but you know, the industry is always driven from, I would argue not even necessarily actual supply disruptions, but even perceptions of supply disruptions of material sources because unlike gold or copper, you have such a concentrated source of supply, like you have mines that produce 15% of global supply of this commodity. Right? Like copper, you don’t have that. Like, what’s Escondida? Like 4% or 3% of the whole copper market.

Jamie: Yeah. So, how many producing mines would there be in uranium today, would you say? Less than a dozen obviously?

Travis: Well, Kazakhstan probably has like 12, maybe some 15 that they were producing, but then, of material size and scale, yeah, they would be under 20, producing mines, and like, really, that’s concentrated too like the Canadian ones, like Cigar Lake and McArthur. And so, talking about these catalysts, you know, the word like, and I tell people this a lot, like, you don’t need to know a lot about uranium or anything to do with mining. It just goes back to Economics 101. McArthur River shut down. McArthur River prior to it shutting down….

Jamie: And this is in the basin as well, right? It’s a chemical mine in the Athabasca basin.

Travis: Chemical, predominantly, they own 70% of it, and then they have some partners. That was prior to it shut down the world’s largest high grade mine and the best the Western world has to offer.

Jamie: And they can’t make money at today’s prices, right?

Travis: No one can make money at today’s prices.

Jamie: So, what is the ballpark spot price right now?

Travis: It’s around 21-22 bucks a pound, but you know, most of it goes in the contracts and contracting is confidential between two parties, generally speaking.So, it’s a very opaque market, very hard to get a read on. So, you basically try to take. That’s why understanding the cost structure of mines is important.

Jamie: So, we’re kind of reaching a supply limit now with these mines shutting down and I think that’s something we should dig into a bit; the difference between spot price and the long term contracts and how in this industry, as opposed to gold or oil or pretty much anything else that spot price…It doesn’t really matter.It’s almost a pretend number because there’s not an open market to actually trade uranium on. To my understanding, almost all of the buyers are electrical utilities. Right?

Travis: Yeah.

Jamie: So, worldwide.

Travis: Or traders, yeah.

Jamie: And traders. And these utilities enter into long term contracts of miners and suppliers that are on the order of what, about ten years?

Travis: Yep.

Jamie: So, explain to us, if you can, the difference between the spot price and the long-term price and how that process generally works?

Travis: Yeah. So, I mean, that’s even in and of itself, the question shows that it’s really hard to understand because there is no long-term price. That doesn’t really exist. There is no one long term price because…

Jamie: Even within a long-term contract, there is not a X dollars for 10 years?

Travis: Well, there will be for specific contracts, but then you have 100s of contracts all over the world for different periods of time in different volumes, different delivery dates, everything. So, you have the spot price, which is what everyone watches. It’s what’s recorded widely by trading firms like that are out there that do that, but really, in that market, you are talking about maybe it representing 10-15% of all the consumed uranium globally. And of that, probably half is just pieces of paper going back and forth between parties, and then the other half is probably actual pounds. And the spot market is there for a good reason, like, in the event that, say, the whole market wants, like, in terms of fundamental users of uranium, you really have to understand what they want. So, they are running a big nuclear plant that costs 15 billion dollars to build. They need to keep that centrifuges running, keep the plant going. In order to do that, they obviously have to secure long-term supplies of stable, know what’s coming into the plant, uranium that they can enrich and convert into fuel bundles specific for their reactor. So, that’s all they care about really. Like, price, obviously, people like to say that price doesn’t matter. Price does matter. Price always matters, but their sensitivity to it is a lot less than what a gas plant would be.

Jamie: It’s somewhere, what, on the order of 3-5% of their costs?

Travis: Yeah, like, on an all in-basis when you are talking about, yeah, exactly. It’s probably 2%, 3%.

Jamie: So, consistency of supply is more important.

Travis: So, all they care about is getting the uranium and knowing they are going to get it. And so, why the small market exists there is in the event, let’s say, you know, where these guys get their uranium, like where these organisations get their uranium from is very risk, whether it’s technical risk or whether it’s solvent risk, like, you have people getting a lot of uranium from Kazakhstan. Now say, that’s been a very stable source of supply for a very long time, but say, that changes,

Jamie: Which it could, very easily.

Travis: which it could, very easily.Say, Niger or say in Canada, where you have, you know, like the mines that exist there, have flooded in the past, or almost flooded.And so, you could have that situation. And so, the spot market exists for, say, any of those little interim disruptions.So, say, they’re expecting to get 5 million pounds one year, but then one quarter, they don’t have a million pounds. They thought they were going to get, “Okay.We can go on the spot market and get it…Kind of a Band-Aid.

Jamie: But, that represents a pretty small portion.

Travis: That’s a tiny, tiny portion of this, even the spot market itself, that portion of it.So, and then, you get into the long term contracting market and that’s the market that, you know, can basically go to zero. If the whole world is contracted and covered, meaning all the requirements for all the reactors. They have all the uranium. They know where it’s coming from, and generally, they over cover themselves. They need to make sure that if there is any supply disruptions, they have more than they need.

Jamie: Have a stockpile.

Travis: Have a bit of a stockpile, yeah, reserves. And so, they’re basically waiting for that.

Jamie: Sorry, they are waiting for what? For?

Travis: Like we, how we’ll have to wait for the spot for the contracts to run through. And so, they can go to zero because if everyone has it, then, uranium price can go to zero. On the flip-side, it could basically go to… I mean, it went to $140 back in ’07, and inflation adjusted terms call it almost $200.

Jamie: Now, you might not know this, but are we seeing these reserves and these supplies dwindle recently? And we basically need to adjust the price and start the mines back up again or how does that exist with utilities right now?

Travis: Yeah, I mean, there hasn’t really been any material long-term contract signed since 2011. And even before that, the big contracting cycle previously was kind of late ’05 to kind of ’08. Then, it kind of went away with the financial crisis, obviously, and then kind of came back a little bit in ’10 and ’11. Yeah, but really, you’re talking about tenure contracts, the big ones, kind of ending in ’07-’08. We’re sitting here in 2018. Tenure contracts – So, those are basically rolling off. So, you’ve seen that.

Jamie: In the interim, you have had a bunch of mines shut down.You’ve had miners saying they can’t continue to actually operate at the price they are getting for this. Now, you’ve explained this to me before, but let’s go through it again. So, there’s like primary sources and secondary sources. Right?

Travis: Yeah.

Jamie: Uranium and… Can you explain that to people a bit, and I think there’s been in the past, a misunderstanding of these secondary sources and how much uranium these utilities actually have access to, and how that works.

Travis: Yeah. So like, primaries obviously for mines, and that’s been in a deficit to consumption for a really long time. There’s not enough mines to supply the amount that the world consumes on an annual basis by probably 25 or 30%. So, that make up ,a difference is being made up.Historically, it has been made up from a lot of places like, you know, Russia and the US had a down blending of warheads. I think that ended in 2012, but that was a big source of secondary supply that kind of came out of the blue. There was, you know, when reactors came down, there’s other sources, but generally, the inventories, like people always say like,“Oh, you know, the world must have a lot of inventories”, and they throw these numbers. From our perspective, we haven’t seen much in inventories being sold into the market and that’s for a number of reasons – national security. Why would a country like China want to start to sell a strategic stockpile of uranium that they’ve got? They won’t. They haven’t yet. Why would they start now when they are constructing more nuclear power plants than they ever have on an annual basis to bring them online.You know, Japan similarly, like, they haven’t been a major seller of uranium into the market. On the flip side, actually, they’ve been selling liquefied natural gas back into the small market because they are bringing their reactors back online. So, you have what’s said in the market very definitively by pundits in the market, and then you have the facts.

Jamie: Well, something interesting about that. I mean, the sexy part of gold is the gold mining, right? But, the sexy part of uranium is not the uranium mining, right? Like the people that go into that industry are nuclear scientists generally, and they’re more interested in nuclear power and building the reactors.

Travis: Like the end users, you mean?

Jamie: Yeah, exactly, but it sounds like the mining is for that industry as a whole, has kind of ignored, right, because it makes up such a small part of the cost. So, you don’t have that champion and that transparency that you receive in other industries or other sectors in mining.

Travis: Other sectors, yeah, but I would definitely want to be blaming the utilities for that. I think it’s our side – the mining and kind of exploration and development. We need to get together and come up with a way to really… because the fundamentals are so strong for uranium, but if you go and ask someone right now, they’d probably tell you it’s totally hooped. There’s no chance it’s coming back and there’s tons of supply.Anyone that kind of knows a little bit will tell you, “Oh, there’s tons of supply out there and everything.” Okay, our question is simple.Where is it? Who holds it? How much of it is mobile? No one can answer those questions.

Jamie: So, how much of your job is just education, because I would guess, I mean,99% of, you know, retail investors know next to nothing about uranium, but even most funds, I would assume, do not have a uranium specific person that is in any way knowledgeable as they might be in gold or base metal or something like that.

Travis: Yeah. Definitely, I mean, because the asset that we have is very simple, like we’re not talking about any new mining method, anything, you know, there’s nothing with it that people go, “Oh, wait.Can you explain that again?” They kind of understand, “Okay, you’re talking about going underground. It’s a very small mine, super high grade, lowest cost in the world, largest volumes….”

Jamie: Is it soft rock mining? Will you use some sort of continuous miner or is it drill and blast or what’s the plan?

Travis: Yeah, no, the PEA states like long haul stoping and transverse stopping in the high-grade areas, but we’re looking at all kind of innovative ways to speed up development trips and things like that and shaft sinking with some of those continuous miners that they have, but yeah, the education part of it. So, like, say, the average meeting, institutional meeting we go into, first question is, “Okay, yeah, tell us a little bit about the asset. We tell them.” They go, “Okay, yeah. We get it, like it’s the best.” Like it’s undeniable, right?

Jamie: So, if someone wants exposure to uranium, you guys are an obvious choice.

Travis: Obvious choice, and again, it just goes back to that like, I would argue they probably when they take a meeting with us for the first time, they probably don’t even know anything about us, but they just know,‘Okay, there’s two options of the size that we could actually theoretically invest in.’ There’s Cameco. We know them, producing long history. What’s this NexGen? How are they a billion dollars? I’ve never heard of them. And then, we go and tell them, “Okay, differences between us and the competitors” and competitive advantages. And that takes kind of 15 minutes. It’s really simple to go through, and then they ask, “Okay. So, tell me about the market, because as far as I understand, it’s this, this and this.” And so, the bulk majority of every meeting now is about the market, what’s going on in the spot market, when is the spot market going to change?” So, it’s about educating them that, “Okay. The spot market is actually pretty irrelevant.” Obviously, it drives investor sentiment, which is obviously important. But, not important from our side running a business or where we say would sell a lot of our material if it was in production today, but it’s important from that driving of investor sentiment.

Jamie: So, okay. I’m an investor. I’m a retail investor. I’m interested in getting exposure to uranium. I know Cameco is a producer. It’s a massive company – multibillions of dollars. So, I can see the appeal there. Very safe, right very, you know, sure thing. Then, you’ve got the juniors, the super juniors that, you know, they might have anywhere between a few tens of millions to probably not much more of a market cap there. They’re looking for the next big discovery, either in the basin or somewhere else, and you’ve got you guys, which is kind of your verging on a development play. Right? So, you’re almost a billion dollars. You’re about 900 million dollars as of now. Why are investors choosing NexGen as opposed to the safety of Cameco or the potential huge leverage of some tiny junior that’s out to make a discovery?

Travis: Yeah. I think it’s kind of a balance in between the two really, like, I wouldn’t say that the argument isn’t so much like ‘choose one or the other’, like people often ask us, “Okay. Like, say we’re invested in Cameco, who else should we own? You know, we heard your story.” I was like, “Just buy them all.” You should buy like a lot of these companies because…

Jamie: Because there is almost no commodity that when it runs, it runs like uranium. Right?

Travis: …because you just don’t have that many doors for money to go through. There’s not that many companies out there, but realistically, for an institution, we’re as small as they can kind of get into, because of the dollar volume, like, they can’t go to, like big institutions, generalists can’t go into exploration like tiny exploration companies, just because the size of ticket they need to buy is the size of the whole company. So, they can’t do it.

Jamie: So, has that been primarily your bread and butter in terms of investors and financing? It’s these institutions that are looking for exposure that’s not Cameco, but obviously somewhere they can write a big enough check and get the volume they need to actually get in there?

Travis: Yeah, and not even like, “Okay, you know, we don’t want to be investing in Cameco. We have a lot of cross ownership, where they own Cameco and they say, “Okay, yeah. What’s next? Like, we want Cameco for a long time. We want to keep owning Cameco for a long time, but we want some more leverage maybe.” And like, we saw it back in November 2016 when the spot price bottomed out like $17.50, we got down to a low of about a $1.50 from a high in August of around $2.80. So, we dropped a dollar a share by November with the spot price plummeting. And then the spot price went up to $26.50 from $17.50 by kind of January, and we were up to $4.50 by mid February. So, in say, 8 to 10 weeks, we had gone from a $1.50 to $4.50 on a spot price move of $17 to $27. So, we have the most leverage for a share because we’ve positioned ourselves in such a way that all the investors… like it’s not reflected today, the investor demand that’s out there for us, because they’re waiting to see the spot market. Institutional investors don’t want debt. Generally speaking, like when you’re talking about US generalist investors, they don’t want a lot of dead money. They are not going to take… They are not going to say, “Okay. We don’t know if it’s in 6 months or in 5 years, but we’re willing to do it.” There are ones that do that and those institutions generally speaking are investors and us. But, the ones that we speak to, for example, they say, “Yeah, undeniably, this is the best project we’ll probably ever see in mining”,

Jamie: But they want to get the right time.

Travis: And they say, “But, can you tell me if in 6 months, the spot price is going to be higher or lower?” and of course, we can’t.

Jamie: It’s like, what’s the expression, ‘rising tide floats all boats’? I mean, people who want exposure to uranium, people who think that uranium spot price is going to run, NexGen is one of the best ways to get leverage to that.

Travis: Yeah, I mean, I think you’re already seeing it happen with Cameco, where Cameco is, I think, the best performing base metal stock in Canada this year. So, I think you’re seeing that investor demand coming into the sector currently and that’s coming into Cameco first. So, I actually think, like some of our investors say, “Oh, well, you guys are underperforming Cameco.” I say, “I think that’s actually a really good thing because they are the natural leader.” We go market to everyone that they are marketing too. They used to say, “Yeah, we get it. We got to buy Cameco.” And now, tell us about you. And so, it’s always starting from that position. Cameco is the market leader. I get it. They have been in production.

Jamie: Yeah, as they should be.

Travis: Yeah, they’re there. They’re, you know, whatever it is, like call it the Barrick of gold. Right? Like, people want gold exposure, they’re going to Barrick first or whatever in gold. We’re next. The point is we’re the logical next step. Unlike gold, unlike copper, unlike any of these other commodities, where it’s like there’s a million big companies before you get down to, say, a development stage company. There’s not. It’s Cameco, and then us. And then, the next one is basically un-investable from an institutional perspective, from any kind of meaningful scale because they trade maybe a million dollars a day, where these guys need 5 to 10 million dollars of volume a day in order to invest.

Jamie: Okay. So, I want to switch track a little bit. So, beyond NexGen and Arrow, you guys also have something called Iso.

Travis: IsoEnergy, yeah.

Jamie: So, what is IsoEnergy?

Travis: So, IsoEnergy was created back in 2016, I believe.

Jamie: And is that a publicly trading company?

Travis: Yeah, it’s a public company.

Jamie: And you own 60% of it?

Travis: We own about 65% of it, I think now. And it was a carve out basically. So, we had these really good assets that actually NexGen went public with originally, but they were all in the eastern part of the basin. The flagship there was one called Radio. We had gone public with that project. It was right next door to Hathor. We acquired it prior to Cameco and Rio Tinto battling it out for Hathor back in 2011. And then that bidding process started getting going. We drilled about 3,300 meters on that project and then we had acquired all of this 260,000 hectares in the southwestern part of the basin. And then, about three months after these boulders and stuff were found in that part of the basin, the discovery was made at Fission and Alpha’s property called Triple R, which is right next door to our project. So, we went over there. It’s easier to raise money. We already had those projects, went over there, raised a little bit of money, drilled some holes and then didn’t really hit. We hit some good structure, good alteration and then we moved up to the Arrow target, which was a geophysical target, a walk-up target, and we hit it on the first hole and then obviously since then is history, but IsoEnergy has just the eastern Basin ones, because we were sitting there, that Thorburn lake, which had a bunch of holes that ended in mineralisation in the basement rock because they were drilled historically, and historically, no one thought that this is the thing about Arrow. Nobody believed, including us, that you could get a deposit of over 300 million pounds of high grade uranium sitting in the basement rock. They just thought, “No, it’s too constrained.” That’s kind of the geological dogma of the basin would tell you, “Okay. No, you need unconformity. You have to be in the sandstone”… whatever it is in those areas… Obviously, they’re all completely flipped on its head. No, you can get these massive, high-grade, and because they’re in the basement rock, which is very common, it doesn’t have a lot of water in-flow, very, very stable ground conditions. They’re actually very economic to take out and very simple to take out extract. And clean metallurgy as a result of less fluids travelling through the deposit, things like that. So, a lot of ticks in these basements of most deposits. Now, what we put into IsoEnergy at the time had some of these, where the previous owners of these projects were drilling vertical holes, trying to touch the unconformity, where the sandstone meets the basement rock. They drilled into that. Didn’t get anything in that finish the hole, say 25 meters into the basement rock in mineralization.

Jamie: And that’s where they found… I mean, okay, yeah.

Travis: But then, they said, “Well, you know, that must be just coming from somewhere. It doesn’t matter because you can’t have uranium in the basement rock.”

Jamie: So, is there any exploration going to be done this summer on the Iso projects?

Travis: Yeah, and Iso has done a really good job of acquiring a bunch of other projects as well, out of Cameco and some of the Japanese partners in the eastern Athabasca. So, they’ve really beefed up that portfolio they have, and you know, we’re a big shareholder of it. All of NexGen’s management board is a personal shareholder with that one. You know, right now, uranium is not a good sector to be in. Still, even though you have all these things that are so obviously bullish, but people, because there’s been a couple of head fakes in the market, where you’ve seen, “Okay, Kazakhstan back in 2016 announced a cut.” Spot price ran up, then it came down slowly. Then, you had to kind of, late last year, same thing and it kind of came down slowly. This time, it’s different though because you have the world’s best largest mine shutting down or it’s shut down now, and you have Cameco has to go into the spot market and buy a lot of material and that spot market is not very thick. It’s a thin market.

Jamie: Good. So, it’s a pretty unique opportunity for people who are paying attention.

Travis: Yeah, it doesn’t trade a lot.

Jamie: I had a friend say to me the other day, “So, everyone in mining talks about, you know, buying counter-cyclical. You know, buying when it’s low and selling when it’s high.” I almost no one does it and he made the point. He’s like, “you know, buying low and selling high doesn’t count when everybody thinks a metal or a commodity is going to rise because then that it’s already priced down.” He’s like, “buying low really means people hate that commodity.” When funds don’t look at it, when no one wants to run a company, and uranium is kind of in that ballpark now that people hate it or they’re convinced that there will never be a uranium market again. And, I mean, I’m of the opinion that that’s not true. It’s basically bullshit, and you know, now is probably the time if you’re ever going to get into uranium to start looking at it now.

Travis: Yeah, exactly.

Jamie: And that’s been largely the basis of your career in a lot of time.

Travis: Yeah, I mean 2016, when that spot price bottomed at that price, I can tell you that was the moment that you kind of hear about in movies and stuff, where it’s like, literally, everyone I spoke to said, “Oh, uranium.” I heard there’s never going to be another nuclear power plant built in the world. Yet, 2016 and 2017, from a demand perspective were the two best years of nuclear growth in the world in the preceding 25 years. So, there’s just really misinformation in the market that it just goes back to the old thing like motives and why don’t people know about nuclear, why do people think it’s glowing fish. Well, think about watching The Simpsons.

Jamie: That three-eyed fish,

Travis: Yeah, three-eyed fish, Mr. Burns, glowing green, you know, the oil. The industry, historically, has really wanted to crush a cheap, carbon-free, almost infinite source of energy. Who would that be? The oil and gas.

Jamie: Of course.

Travis: And who has the highest lobbying power in the US and probably the world? Oil and gas, historically. So, this misinformation campaign has gone on for so long. It’s generational. Even my family, when I told them we’re going uranium, they’re like, “Oh, my God. Be careful”, like, you know, blah, blah, blah. And you know, now, you know, you just see the people that are investing in uranium and in nuclear are some of the smartest people in the world. You talk about Bill Gates, investing huge into nuclear.

Jamie: Really?

Travis: Nuclear, new scale, new generation nuclear.

Jamie: I did not know that

Travis: Because nuclear power, as it sits today, hasn’t really changed materially since basically the 60s. It’s the same kind of technology.

Jamie: Is there a research going on in there or is there…?

Travis: There hasn’t been because, again, the oil and gas industry had basically crushed any of the funding, but you know, whatever, I won’t blame the oil and gas industry. Some party that was interested in doing this…

Jamie: It’s heavily lobbied for.

Travis: Heavily lobbied to get the funding cut from it for a bunch of reasons, but really, now so you have private interests doing it. So, you have this big group Terra Power out of Seattle, which is funded by Bill Gates, developing new generation. So, you’re talking about a lot smaller reactors, where it doesn’t cost 20 billion dollars and take 15 years in the western world to build one. You know, you can build. It maybe cost 2 billion dollars and each municipality has it, and they actually use it to back up, say wind and solar power. Right? So, that’s what the UK is talking about. They’re developing these and these things are kind of coming in the next kind of 5 to 10 years, these new generation ones that are much smaller, that I think will completely change the world. That’s the only way you can get the world off carbon, the only way. It might not be the ultimate, kind of source, ultimately long term, but the transition…

Jamie: The stopgap for the next 25 years…

Travis: Or 50 years, whatever, I mean, the reality is you just, like, no matter how fast anyone thinks, like us sitting here in Vancouver or sitting in San Francisco or sitting in New York, no matter how fast you think the world can change from carbon to non-carbon to wind and solar, that transition won’t happen, baton passing each plant over to those two things. Right? It just won’t. No matter what battery technology comes up, it doesn’t matter. You’re just talking about the scale. Nuclear is so dense in terms of the power generation it creates and it’s the only one that’s actually carbon free.

Jamie: So, if anyone wants to learn more about NexGen or you personally, where should they have a look?

Travis: It’s probably the best place.

Jamie: For our listeners, any messages on NexGen or uranium?

Travis: It’s really hard to get good information in the uranium business. I think the IAEA does a good job of describing kind of the electricity, what’s going on in electricity globally. I would just say, just like anything, take everything with a grain of salt, do your own work, figure it out for yourself. If it doesn’t make sense, don’t just take what people say, because in this business, more than any business I’ve seen, people speak very, very factually. And then, you know, the next day, something happens that is just completely counterintuitive to these facts that they have. So, I’d say, just look at things and be very, very diligent about them.

Jamie: Alright. I think that’s a good note to end on. Thanks for taking the time to today, Travis.

Travis: Thanks Jim. I appreciate it.