TER: Uranerz already has a sales contract with major nuclear utilities. Does this give it an advantage in the market?
CB: Yes, it derisks the project substantially. One of the keys to remember in the energy-metals business is that securing an offtake agreement is essential to getting into production. These markets are very different from precious metals, which do not have the same variety of industrial uses. These metals are mined to be used rather than stored. Uranerz does have a leg up on the competition because it actually has two sales contracts in place, one with Exelon Corp. and one with another U.S.-based operator. These are five-year deals with set pricing structures, so both the company and investors can forecast cash flow with a heightened degree of certainty. That is a huge derisking milestone for the company.
This is not going to be an insignificant producer, either. Uranerz will produce 300,000 lb of yellowcake a year. It has a tolling agreement with Cameco Corp. to process resin and an offtake sales agreement with Exelon Generation Co. LLC, a subsidiary of Exelon Corp., to buy product for $65–75/lb. As I said, I believe all of this is potentially going to happen this year and it represents a fundamental change in the company's prospects. In an industry that is in a turnaround phase, as a contrarian investment, Uranerz represents probably the best value in the uranium sector today."