I get asked somewhat frequently how I conceptualize the #uranium market with respect to different projects. It's very fluid, but my thinking descends from the uranium cost curve, a way to look at many projects together in the context of the market. All data here is made up.(1/12)

From cheapest to the most expensive, I stack best estimates for different mines. At a given cumulative market demand (this could be usage or it could be purchasing - two different things), I can think about which mines might be close to marginal in terms of production cost.(2/12)

For a future year, this curve isn't static. Mines deplete over time. Their production decreases or maybe increases, or the results of high-grading make the mine more expensive. Cumulative market demand could change production cost. For example: (3/12)

Now, those last two pictures don't actually change the marginal mine in this formulation. But a whole mine coming offline could bring new production online which shifts production dynamics in the market. (4/12)

Anyway, projects are only one way to look at it. We can also base our cost curve on producers. Golden Mining Corp. owns the most expensive producing asset (Athabasca Magnus), but it also owns Soggy Depths and so its total production cost is below market marginal cost. (5/12)

Often in the past, an inefficient asset can be kept online because of the strength of the owner's contract book or a dollar-cost-average of production below that most expensive mine. This can occasionally explain how a specific mine can operate at a loss. (6/12)

On the future side, there is a lot of uranium out there. Dozens of characterized projects, many of them very expensive and pretty undesirable. A curve of prospective projects is very noisy, changes frequently, and always has new additions as explorers drill new holes. (7/12)

These numbers bounce around. Currency rates change, high-grade intercepts improve economics, labor and capital becomes more/less expensive, etc. etc. Most prospective projects have some kind of sensitivity study as to how project cost changes w.r.t. these factors. (8/12)

Let us not forget that a thoughtful mgmt team can adjust a mining plan and come up with a better solution. Take the Jefferson Airplane project - at a lower rate per yr, perhaps by going after more high-grade ore first, the Jefferson Starship version has better economics. (9/12)

The synthesis of these two ideas is a projected cost curve for a future year. New projects come on to meet new demand and the market dynamics shift. Maybe a cheaper-than-marginal mine doesn't make it online, or the market produces just a little too much uranium. (10/12)

This is all guesswork. We can't exactly predict where demand will land in an out year or which projects will succeed. But we can at least narrow the list down to which projects are in the ballpark, and which are not close to where we think clearing cost might be. (11/12)

There's a lot more to this, of course. Market buying behavior (or psychology) shapes the cost of uranium just as much as production economics do, but this is at least a methodology by which we can separate the (pardon my French) potential winners from the bullshitters. (12/12)

(PS/12) The market isn’t efficient and so this methodology isn’t *predictive* but it can give us a rough estimate as to where the incentive price for an incremental producer might be in an out year (profit, G&A, etc. all baked in). We can see transients which upset the...

...economics as supply gets out of whack with demand, but the gravity of the market should always pull the price towards the incremental mine, especially if there are many mines like our ill-fated Turkey project which can profitably produce below market rates.