'Structural Tightness' in URANIUM Supply Driving 'Perfect Storm' For Prices
Summary
Uranium Market Outlook: The podcast discusses a bullish outlook for uranium due to increased demand from nuclear energy initiatives and structural supply tightness exacerbated by geopolitical tensions, particularly with Russia.
Supply Challenges: Major uranium producers like Kazatomprom and Cameco are revising production guidance downward, highlighting the fragility and underinvestment in the supply chain.
Geopolitical Impact: Russia's extension of its ban on enriched uranium exports to unfriendly countries until 2027 is reshaping the supply chain, pushing Western nations to increase their enrichment capacity.
Nuclear Renaissance: The global shift towards nuclear energy is described as a renaissance, with significant reactor construction plans in Russia, China, and the US, driven by the need for reliable, low-emission energy sources.
XU308 Platform: The platform offers a digital alternative for investing in physical uranium, featuring the world's first live uranium spot pricing Oracle, which updates every minute to provide transparency and attract capital.
Investment Opportunities: XU308 aims to improve market infrastructure by offering fractionalized, transparent, and globally accessible uranium trading, addressing inefficiencies in traditional investment vehicles like the Sprott Physical Uranium Trust.
Future Developments: Plans for 2025 include scaling liquidity, exchange integrations, and introducing financial products like swaps and perpetual futures, as well as enabling borrowing against XU308 holdings.
Transcript
Hello everybody and welcome into commodity culture where our goal is to make you a better investor in the commodities sector. My name is Jesse Day. Before we dive in, standard disclaimer, nothing here is investment advice. Do your own due diligence. And today's guest is the head of commercial applications at Trilletch and the product lead of XU308, a digital platform that powers your ownership and trading of physical uranium available at uranium.io. It's Ben Elvage. Great to have you on the program. >> Great to be here, Jesse. Thank you for having me and and appreciate you making the time to squeeze us in. >> Absolutely. And I definitely want to dive into XU308 in just a moment, but first I'd like to get your thoughts on the overall macro picture for uranium at present because there's just so much bullish news flow constantly hitting the headlines at this point in time when it comes to both nuclear energy and the uranium market. Um, I want to dive into some specific stories in a moment, but first, what what is top of mind for you right now when it comes to the uranium industry, nuclear energy, and the catalyst driving the market? >> Yeah, look, I think it's a great intro and framing question. I think you're absolutely right. I think the the narrative shift and policy shift that we've seen over the last decade back towards nuclear as as as a viable and realistically only option to meet the energy demands of society going forwards particularly with AI particularly with increased energy consumption from all facets of daily life means that that combined with the the kind of policy goals around decarbonization realistically the only proven solution is nuclear and what you're seeing Is is that structural shift play out at pace now with the the new administration or not so new administration now but the the the kind of Trump administration that's coming in the US have been very pro- nuclear and sort of not just nuclear but also uranium and uranium exploration from a US perspective that drives a lot of um a lot of additional attention of course but globally you know that that's that demand growth has been there you know we see that 60 plus reactors are under construction already notwithstanding every week seemingly new reactors are being green globally China's building out and what's really interesting is we're seeing not just new reactors but extensions of existing reactors but also wholesale shifts on nuclear policy take I mean Japan right now Japan's a great example of that in terms of obviously post Fukushima the impacts of that meant that nuclear was sort of dep prioritized that that policy shift in terms of rein invigorating or restarting the nuclear program in Japan is very much underway and the same in Europe and Germany as well. All that being said, the demand side looks very healthy and very bullish and very strong. At the same time, we're seeing a couple of challenges on the supply side and structural supply tightness, right? So whether that's you know not just the fragility in the supply chain given impacts of of Russia and we see then Russia have extended that unfriendly countries or not dealing with unfriendly countries kind of policy once more for another couple of years. Um obviously from a sanctions perspective the west western world is not dealing with Russia either. Um and so you're seeing this geopolitical reshaping of the supply chain. So reducing that dependence on Russian conversion enrichment um in particular and then the ramp up from a western perspective of that. But as many of your listeners and followers will know the supply side takes a while to get up to capacity. It's had a lot of underinvestment historically. You know new mines are slow and costly to develop. So actually what you've got is this storm, perfect storm really, where you know we already know from reporting last year that there was a a demand and supply gap to f to fuel a current fleet of about 50 million pounds of uranium um at a base material level. If demand is going one way, something needs to happen on the supply side to increase that. But if you're looking at it from a from an investment thesis perspective, the sort of big picture takeaway is really demand rising, supplies constrained, and policy and geopolitical perspectives are accelerating that bullish uranium outlook. And that's being further fueled by engagement of the private sector, the big tech companies primarily also investing in nuclear capacity as well as further down the supply chain as well at some point, we expect. >> That's a great summary. And speaking of supply squeezes, Kazadam Prom, the world's largest uranium producer in Kazakhstan, continues to put downward revisions on production guidance, now stating they are set to mine at least 8 million fewer pounds less than their original production guidance for 2026. with the biggest producer facing these type of production shortfalls and we're also seeing many other projects around the world facing issues. Where is the needed uranium going to come from in your view? >> Yeah, look, I think first and foremost, you know, let's not downplay that kazata cuts absolutely matter, right? they're them making cuts and to to their revised output for or or revising down their output for next year is absolutely it's a big thing. But let's not they're not the only ones, right? We see even this year that Kamico have reision revised down some of their estimates of what they expect to be producing as well. Um, and so I think it just highlights that structural fragility that I mentioned in that, you know, you you can run all of the reports and diagnostics you like, but there is an operational execution aspect, which means that expected supply is always going to be subject to the ability of you to execute on that kind of mining project for one of a better phrase. Um at the same time you know these other producers Kamako Paladin Orano that they're facing ramp up challenges cost inflation of course some of the regulatory hurdles admittedly you know the US administrations are focusing on that is doing its best to try and support and reduce some of that burden but again that takes time to get through Congress and get approved and everything else that goes around that. So near-term that supply gap's going to continue. Um that's further exacerbated because you know secondary supplies to inventory draw down inventory draw down sort of reuse of depleted material sort of underfeeding it enriches help but but that's being limited to a certain extent because it's being used more and more as these revisions come in. Um and and the mining expansion we talked about in the previous question. I think that is going to come through, but they take a while to restart or or get up to speed and and sort of reach capacity. Um, and it's very capital intensive. And that's one of the reasons that I think XG308 is interesting because how do you attract more capital to an asset that's historically been illquid by by creating more of that flexibility around the way to express that thesis? And we can get to that in more detail, but I think long term, you know, it's going to need a lot of investment in the sector to sort of bolster that supply. Um, that's not quite there. So, you know, what that's meaning is is that utilities and we look at it right now and you look at the replacement rate and and the way the spot price has moved now to spots now as we're talking today above 80 or just slightly above $80 per pound, utilities have got a question that they need to start asking themselves, right? where when spot and term prices are at a similar level actually how do we best manage that operationally as a utility. Do we still continue with these aggressive long-term contracting policies that tie us in or actually given some of those near-term and medium-term constraints and the price parity between spot and term. Do we need more flexibility to be able to to express a view ensure that we've got the right amount of material right now to support our near-term requirements and and and and look maybe a little bit further down the line at the longer term contracting. So it's it is an interesting time in the market for sure and of course you know SPR is out there raising money hand over fist when the market's bullish the way it is and that they obviously take pounds off the market so potentially could exacerbate that problem. >> Absolutely. You spoke uh about Russia extending its ban earlier. Uh they have extended their ban of enriched uranium exports to quote unfriendly countries for an additional 2 years. This is out to December 2027. Waiverss can of course be granted in certain situations, but this certainly puts a strain on the uranium supply chain. How much do you think this could affect the market overall? And do you think we will eventually see more enrichment and conversion capacity coming to the United States and other Western nations? I'm I'm I'm not sure we we have a choice then other to figuring out how to attract that capital to to increase the capacity of of sort of enrichment um and supply on the on on the on the western in the western world rather um we don't really have a choice because you know even regardless of and I I don't have a crystal ball but regardless of what happens in regards to sanctions regimes that we're living very much more in a polarized world and and those negotiations will take time and you know you look at the relationship between from a geopolitical level you know Russia and the sort of recent summit with India and with with China not necessarily they not necessarily needed to come to the table as it stands right now so they have up to 40 you know close to 40% of the world's enrichment capacity so if we're you know big ambitious goals have been set which is great it's great for the industry it's great for a project operating in the industry that that governments like the US are setting big ambitious project goals by short-term targets like 2030. Um but that does put pressure on utilities on suppliers and on on also on the governments to attract that capital into the sector to build out those enrichment capabilities. You know you've got three converters in the western world in in in Kamako Arano and Comodine. there's only so much they can bring online without substantial investment or adding other firms into that mix to be able to to sort of meet that worst case scenario 40% shortfall in enrichment capacity. So I think it absolutely has an effect overall further down the supply chain and exacerbates that demand and supply gap I mentioned before of 50 million pounds in 2024 that was just for U308. So just the base pre-enrichment you then factor in the timelines it then takes potentially when you've got bottlenecks with enrichment capacity. It it it it can be if if you're sat in the seat of a utility or a fuel buyer right now, it's probably a pretty scary situation looking down the short-term picture there. Um from an investment perspective, there's obviously another another thesis you could have about the impact that that potentially has. >> Well, speaking of Russia, they have announced plans to build 38 new nuclear reactors. This is in addition to China planning 150 reactors by 2035. We are now seeing America stepping up, as you touched on earlier, passing legislation to get more reactors built as well as to incentivize domestic uranium production. We seem to, like you said, each week we're seeing new countries that are planning um or in the starting the construction phase when it comes to new nuclear reactors. It wasn't that long ago that nuclear energy was completely vilified and now the tables have totally turned. What are your thoughts on this flourishing nuclear renaissance? >> Yeah, I I think it's a great way of framing it in terms of a of a renaissance from a from a nuclear perspective. You know, it's it's pretty remarkable given, you know, it was about a decade ago that nuclear was was was sort of almost the villain in energy production. Um, and now, you know, you've mentioned some of the stats there. So 38 new reactors in in Russia 150 by 2035 in China the stats are and you that's not this that's not you know accounting for the innovation that's going on in the in the marketplace around small modular reactors and advanced reactors and and what that might mean in sort of bringing even more reactors online within that these are just the sort of more traditional large scale reactors. Um, so I mean the driver is pretty simple though, right? If you want reliable base load energy, energy security and that's as close to emission free as possible when not when fully operational. Nuclear is really the only answer. And so that's why I think it does feel like a true renaissance in that regard. And I think the the geopolitical dynamics from a demand perspective on in terms of energy consumption, but we haven't really talked about energy security. And as the world becomes less mobilized, rightly or wrongly, that's for people to other people to determine. And and you know, you can make an argument either way as whether that's a good thing or a bad thing. But it's undeniable therefore that energy security is important when countries are operating under their own steam that you want the the best pound-for-pound energy production out there and nuclear's proven to be that at scale. Um particularly compared to other low emission alternatives like wind or solar. Um so I think this bullish trend is here to stay. I think inevitably what we'll see is some some horror stories at some point, I expect, of people raising capital and and coming up with ideas that maybe aren't kind of as fully fledged as they could be. Um, as is the case with any market that's in high demand, but I think it's certainly an exciting time to be to be operating in this space. >> I want to shift to XU308 and how it fits into the picture. Now, we're going to dive into the details of the platform in just a moment. But first, some very exciting news, and that is you've launched the world's first live uranium spot pricing, Oracle, with a price update every minute. This is pretty amazing because previously the spot price was very hard to track, infrequently updated. Um, walk us through how this system prices uranium. How did you create it and and what are its implications for for the uranium market? Yeah. So, you know, the advantage of being sort of fully tech and you know, we're a research and development hub and so we we're we're fortunate that we have a lot of great software engineering and quantitative talent and so that have got pedigree in big investment banks and the like. And so actually what we've done here is some heavy duty analysis around while the spot price for for U308 and therefore uranium is is printed and fixed sort of daily there is some more frequent feeds that you can get that sort of print every 20 minutes or so during US and UK market hours. There's nothing much more than that. And so consequently that creates a a bit of a problem for attracting large scale capital that you would see in other markets and other asset classes because you don't have a clear benchmark or reference price. So we looked at that problem and we did some heavy duty analysis around while that price is hard to get at actually uranium doesn't operate in a vacuum and so there are plenty of listed vehicles and listed miners and adjacent assets that have some level of correlation with the price of uranium if you're looking at on a daily basis but trade live and therefore you've got even small relationships and more correlations with with assets that trade 24/7 through the cryptocurrency assets. So leveraging all of that great quant and software engineering talent that we have. I don't want to give too much away, but in short, we built an algorithm that takes inputs from those correlated assets with various levels of correlations as well as inputs that we can get on the price of uranium. So those more frequently pricing feeds and then comes up with an estimate. And then as part of that, we do take in the uranium price. that we're able to benchmark at any given point in time when we get that reference price that's presented out to the market, whether that's daily or slightly more frequently during US and UK market hours. We're able to ascertain how far off the mark we are and pleased to say we haven't really been off the mark at all. It's been minimal if anything. And and so it's great that what we're seeing now is actually big commentators and influencers on the uranium sector referencing, we only launched this last week, last last Tuesday, referencing alongside, you know, what they're seeing in terms of bid asks from from brokers and things, referencing our price feed as another example of where the spot prices at any given point in time. And we think that's kind of another barrier if we think about where we started XU38 to do is to break down some of the barriers to investing in uranium as we saw them and be able to because those barriers have been broken down attract capital to the sector that's critically important and and and make it more easily accessible for the average investor. a clear reference price that's transparent and freely available and prints every minute is is something that we think is going to aid more people in feeling comfortable to make allocations to uranium. Um, what we eventually hope. >> No, no. I think I think what we eventually hope for is, you know, that the XQ308 token or or asset is traded enough that that becomes some another input into into this price feed and we can become the market through the trading of XU308 and getting those volumes increased in the trading of the asset itself. >> And so for people who want to view this price feed, they can find it at uranium.io. >> Uh, it's price.uranium.io, IO, but yeah, you can get to it from uranium.io, but you just put a price.uranium.io and you it's there and available and updates every minute. >> Great. Well, let's break down the XU308 platform for people out there wondering, okay, I want to invest in physical uranium. What separates your platform from an ETF like the SPAT physical uranium trust? And obviously people have concerns with validating the authenticity of uranium holdings, ensuring the physical pounds they see on their screens are stored somewhere and assigned to them. You did a whole interview about this with our friend Lucian at Triangle Investor discussing this topic. So I definitely recommend people pop over to his channel if you want more details. But could you break down the highlights and answer those concerns in addition to just kind of giving us an overall overview of how the platform works? >> Sure. Look, I I think you know the the concerns are are valid in in the sense of there have been previous attempts at at using blockchain technology and tokenization as a concept in the uranium market um a few years ago. I think that that's been well documented in terms of some of the pitfalls or failings of that, not least the fact that you didn't have the physical pounds in storage but purported to to be to be having the physical uranium there. Um to that end we went about it from the opposite perspective with XQU308 and very much started from the regulatory and legal standpoint. So actually how do we really improve the what this is about is about improving the market infrastructure around trading spot uranium. It's not about creating a new asset what's then investable. And so to that end, when you hold XU308, that's actually your beneficial ownership of physical pounds held in storage at Kamico, which is one of those three facilities I mentioned earlier. Um, and we we publish our monthly statements of of the pounds that are in storage at Kamico on our website again, uranium.io, you can if you go to proof of reserves, which is at the bottom of the page, you can see the monthly statement. So people can be rest assured that that the pounds are there. And then your XQ308 holding is proportional to that amount. So we have £100,000 in storage. We minted 1.6 million tokens. So each token is is worth an ounce of uranium as it stands right now. Um and the really important thing about the legal structure is we've used a legal framework that is hundreds of years old in sort of common law trust frameworks. That basically means you that's an insolveny remote structure. So we have a regulated trustee that's sat there kind of operating for one of a better phrase the register of of holders which is the XQ308 holder list that's on on on the blockchain. Um but but essentially there's no other intermediary in there. And so the really important factor there is if you wanted to take if you had a big enough position and you had an account with Kamico, a storage account, you could actually instruct physical delivery. And so you could say to us, I want to burn my tokens and actually I want you to deliver the physical pounds into my Kamico account, please, which we think is a is a dramatic difference to previous attempts where it's been based on forward sales agreements and things like that. and sort of not it's not an invalid use case by any stretch to want to use tokenization to raise capital but that's not the same as giving people and creating better market infrastructure around an opaque market as it stands right now which is where we've come at it from and legally it's enforcable because that trust framework is super important because under English law putting putting the blockchain rails to one side and blockchain technology to one side under English law you can assign your interest in a trust to another individual with a written instruction and a signature and it's broadly accepted precedent that um blockchain transfers and then because you sign the transfer with your wallet and you actually have to confirm that and that kind of sort of signature that that is accepted practice. So, we've been able to take legal frameworks from centuries ago and apply them to a market using modern technology and modern infrastructure to what we hope is eventually move this market forward where XU308 becomes the primary mechanism for trading spot uranium because you can do everything you currently do by phoning up a broker, filling out a book transfer form, etc., etc., But you can do it all in a much more seamless way and without at at smaller lot sizes than the the 50,000,000 minimums that we see in the current market. >> Great breakdown there. The platform launched very recently in December of 2024. You've kind of to many feels like you came out of nowhere and and you're kind of taking the market by storm in terms of offering this digital alternative for people who want to invest in the uranium space and have access to physical uranium directly. talk to us about the progress you've made since you launched the platform and what you're most excited about in terms of the milestones you've achieved. >> Yeah, I think you know like with any new product launch I think we have big ambitions and you know it starts small and then we start to we've really started to gain momentum since the start of the summer I think. So, you know, our average our average holding is over it's close close to $600 now, which is great because we wanted to target and bring more retail investors into this product and we're absolutely doing that. Um, and I think in terms of highlights, getting listed on on three exchanges, um, was was a big achievement and took a lot of work. And being able to pull that off on a single day, um, in in July and kind of have three exchanges go live at the same time without it can have a million dollars in trading volume on that first day. I think that's probably a pretty big highlight for me. Um, it took a lot of discussions to get to that point. Um but once they understood the structure and that it wasn't a different kind of asset, it wasn't it was just spot commodity trading that happened to be on blockchain rails. I think these exchanges which are crypto exchanges got very excited. Um, and I think that's meant that we've been able to open the door to lots of conversations with more traditional investment platforms where commodities and traditional commodity structures like ETPs are traded more frequently because as I just said, you know, this isn't about a new asset, a new crypto asset that changes the profile of it. It is just easier spot commodity trading than you have by doing things OTC. Um I also think the other big highlight for me as I look back over the past almost a year that's a sort of eight nine months now um was sort of getting our membership of the of the World Nuclear Association and being at the World Nuclear Symposium at the start of September. It one it's a it's a big endorsement because for for any of you sort of listeners and followers that don't sort of know about the World Nuclear Association, it's not just a case of paying a membership fee and you're a member, right? you actually have to be they vet you and validate you with other existing members. And so actually being able to get membership on in the first place was was great. But then two being at the symposium um at the start of September having having our kind of stall there and and being able to talk to the industry directly and the primary actors in the industry was was a big highlight for me because it was overwhelmingly positive. Of course with anything there are skeptics and and and you know it's great to be able to have these conversations and address some of those things head on and you mentioned Lucian earlier and we did a great followup um with him a couple of weeks ago addressing some of those direct feedback points because we want to be transparent. We we want people to really understand what we're doing and see the benefits of what we're doing and we're happy to have those conversations. So being able to do that in person and face to face was great. I also think it opened up lots of interesting avenues of future development and opportunity which is which is really exciting as well. >> Well, now looking forward to the future of XU308, what are your plans for the remainder of 2025 and into next year and what do you think uranium investors should be paying attention to when it comes to the platform up ahead? >> Yeah. So, I think that I might I might kind of answer that in reverse order almost. So I think you mentioned SPRA earlier and and I think it would be remiss to not talk about it, right, as the primary mechanism most people will use to gain exposure to uranium and how this is different. So I think in terms of paying attention to the the bullish sentiment is great, but that obviously attracts a lot of different kinds of investors and and a lot of that has gone into spraw. I think the reason uranium was interesting as an asset class for tokenization as we saw it was because some of the challenges not just in the physical market with the high barriers to entry. you take £100,000 that's like what $8 million on current spot but also some of the inefficiency with a vehicle like sprock um which is a closed lended investment trust um and so you know actually with its closed structure and is even more of an institutional vehicle really um but but the most important point as we saw it is and you've seen this play out over over this week you know with with all this bullish sentiment is is the premium and discount because it is a closed ended investment trust. And so actually what you're seeing is much greater volatility in spot than you are in the underlying uranium one and two not necessarily particularly over a short-term horizon seeing the efficacy in tracking the underlying spot price. So just as an example, right, the the premium to discount swings even with positive sentiment and we know that spot uranium is up and likely to be up again today if I'm looking at our price feed, but you know, it closed the day on on Monday at a 4.1 4.01% premium for NAV and yet yesterday it closed at a minus 1.28% discount because it's got a cash cash on the balance sheet or for whatever reason, right? And I think that is the challenge with other if I think about what uranium investors are paying attention to you've seen for the past week all the uranium min stocks globally move into very bullish territory but again with anything where you don't have the direct access to the the underlying you're picking up all kinds of other effects on on that and whether that's you know US equity Australian equity market beta effects whether that's the premium discount effects for investment trust more broadly. Um whereas what we built for tokenized uranium is is just direct exposure to that spot price. It's fractionalized, transparent, it's available 24/7 and globally as long as you're not sat in a sanctioned country. And so our key focus for for 2025 and 2026 is really about scaling liquidity, the exchange integrations and the market access particularly for those in the in the supply chain as well because you know it a lot of SMRs aren't going to come online next year. But actually being able to prove that you can have a market that is more flexible and trade in smaller lot sizes does make it interesting for for the innovation around reactor technology because they they need flexible smaller contracts. They don't need these big long-term contracts that the sort of traditional reactor model goes on. So big picture I think what we built with XU308 is positioned to serve both financial investors at the retail and institutional level and the evolving physical fuel market. Um and and next year is all about building upon the momentum and the foundations that we've had this year. So, you know, we're looking at financial products like a swap product for institutional investors that can't hold tokenized assets right now. Um we're looking again at how we can use that price as it gains more traction and validation for other financial products. So, perpetual futures, things like that. Um it tra again trade 24/7 and settle intraday becomes quite interesting. Um, I think also what we what I expect we'll see before the end of the year, I hope is that because we are on blockchain infrastructure, it makes adding additional utility to holding uranium much easier. And what I mean by that is if you hold X308, what we hope to be able to offer holders of X308 before the end of the year is that they'll be able to borrow against that. So they'll be able to borrow US dollars and use that ex uranium as collateral. And from a protocol or business perspective in terms of the ones lending, absolutely you'd want something like uranium that's high quality, very bullish sentiment, but has about 10%, you know, it's got it's got about 10% higher volatility than the S&P 500. That's much better than some of the crypto assets that you would previously be taking as collateral. So, I think that's really interesting. And then from a primary actor participant perspective, the one thing that's going live next month is we currently support this. So the sort of I mentioned the redemption piece, but also the tokenization of existing inventory. We can do that very manually right now with the legal structure and our trustee, but what what we'll launch next month is that in app. So, if you're uh if you've got a small amount of inventory, say 10,000 or 20,000, you need to wait until you build that up to be able to trade a minimum lot size, right? As it currently stands. What we're offering people is the ability to tokenize that inventory, transfer it into our Kamico account. they'll receive XU308 which is their proportional ownership of those those physical pounds in their digital wallet and then they can monetize that or sit on that do whatever they want to do with it in the secondary markets and it's traded on four venues right now. So we think that's something that's really interesting in in sort of bridging some of the challenges with those involved in the physical market as well. So it's a lot it's a lot on our a lot on our slate but we uh we're very excited about what that can become. Well, this has been a fantastic conversation, Ben. You've shared so many great insights into the uranium market and xu308. I'm going to put a link in the description to uranium.io as well as uh your new pricing, Oracle, and your account on X. Uh you post a lot of great content there, so I recommend people follow along. Thank you so much, Ben, for coming on the show. >> No, thanks for thanks for having me. It's been great to be here. >> Commodity Culture is a series on commodities and natural resources. If you would like to see more, be sure to subscribe and hit the bell notification so you're always up todate with the latest episodes.
'Structural Tightness' in URANIUM Supply Driving 'Perfect Storm' For Prices
Summary
Transcript
Hello everybody and welcome into commodity culture where our goal is to make you a better investor in the commodities sector. My name is Jesse Day. Before we dive in, standard disclaimer, nothing here is investment advice. Do your own due diligence. And today's guest is the head of commercial applications at Trilletch and the product lead of XU308, a digital platform that powers your ownership and trading of physical uranium available at uranium.io. It's Ben Elvage. Great to have you on the program. >> Great to be here, Jesse. Thank you for having me and and appreciate you making the time to squeeze us in. >> Absolutely. And I definitely want to dive into XU308 in just a moment, but first I'd like to get your thoughts on the overall macro picture for uranium at present because there's just so much bullish news flow constantly hitting the headlines at this point in time when it comes to both nuclear energy and the uranium market. Um, I want to dive into some specific stories in a moment, but first, what what is top of mind for you right now when it comes to the uranium industry, nuclear energy, and the catalyst driving the market? >> Yeah, look, I think it's a great intro and framing question. I think you're absolutely right. I think the the narrative shift and policy shift that we've seen over the last decade back towards nuclear as as as a viable and realistically only option to meet the energy demands of society going forwards particularly with AI particularly with increased energy consumption from all facets of daily life means that that combined with the the kind of policy goals around decarbonization realistically the only proven solution is nuclear and what you're seeing Is is that structural shift play out at pace now with the the new administration or not so new administration now but the the the kind of Trump administration that's coming in the US have been very pro- nuclear and sort of not just nuclear but also uranium and uranium exploration from a US perspective that drives a lot of um a lot of additional attention of course but globally you know that that's that demand growth has been there you know we see that 60 plus reactors are under construction already notwithstanding every week seemingly new reactors are being green globally China's building out and what's really interesting is we're seeing not just new reactors but extensions of existing reactors but also wholesale shifts on nuclear policy take I mean Japan right now Japan's a great example of that in terms of obviously post Fukushima the impacts of that meant that nuclear was sort of dep prioritized that that policy shift in terms of rein invigorating or restarting the nuclear program in Japan is very much underway and the same in Europe and Germany as well. All that being said, the demand side looks very healthy and very bullish and very strong. At the same time, we're seeing a couple of challenges on the supply side and structural supply tightness, right? So whether that's you know not just the fragility in the supply chain given impacts of of Russia and we see then Russia have extended that unfriendly countries or not dealing with unfriendly countries kind of policy once more for another couple of years. Um obviously from a sanctions perspective the west western world is not dealing with Russia either. Um and so you're seeing this geopolitical reshaping of the supply chain. So reducing that dependence on Russian conversion enrichment um in particular and then the ramp up from a western perspective of that. But as many of your listeners and followers will know the supply side takes a while to get up to capacity. It's had a lot of underinvestment historically. You know new mines are slow and costly to develop. So actually what you've got is this storm, perfect storm really, where you know we already know from reporting last year that there was a a demand and supply gap to f to fuel a current fleet of about 50 million pounds of uranium um at a base material level. If demand is going one way, something needs to happen on the supply side to increase that. But if you're looking at it from a from an investment thesis perspective, the sort of big picture takeaway is really demand rising, supplies constrained, and policy and geopolitical perspectives are accelerating that bullish uranium outlook. And that's being further fueled by engagement of the private sector, the big tech companies primarily also investing in nuclear capacity as well as further down the supply chain as well at some point, we expect. >> That's a great summary. And speaking of supply squeezes, Kazadam Prom, the world's largest uranium producer in Kazakhstan, continues to put downward revisions on production guidance, now stating they are set to mine at least 8 million fewer pounds less than their original production guidance for 2026. with the biggest producer facing these type of production shortfalls and we're also seeing many other projects around the world facing issues. Where is the needed uranium going to come from in your view? >> Yeah, look, I think first and foremost, you know, let's not downplay that kazata cuts absolutely matter, right? they're them making cuts and to to their revised output for or or revising down their output for next year is absolutely it's a big thing. But let's not they're not the only ones, right? We see even this year that Kamico have reision revised down some of their estimates of what they expect to be producing as well. Um, and so I think it just highlights that structural fragility that I mentioned in that, you know, you you can run all of the reports and diagnostics you like, but there is an operational execution aspect, which means that expected supply is always going to be subject to the ability of you to execute on that kind of mining project for one of a better phrase. Um at the same time you know these other producers Kamako Paladin Orano that they're facing ramp up challenges cost inflation of course some of the regulatory hurdles admittedly you know the US administrations are focusing on that is doing its best to try and support and reduce some of that burden but again that takes time to get through Congress and get approved and everything else that goes around that. So near-term that supply gap's going to continue. Um that's further exacerbated because you know secondary supplies to inventory draw down inventory draw down sort of reuse of depleted material sort of underfeeding it enriches help but but that's being limited to a certain extent because it's being used more and more as these revisions come in. Um and and the mining expansion we talked about in the previous question. I think that is going to come through, but they take a while to restart or or get up to speed and and sort of reach capacity. Um, and it's very capital intensive. And that's one of the reasons that I think XG308 is interesting because how do you attract more capital to an asset that's historically been illquid by by creating more of that flexibility around the way to express that thesis? And we can get to that in more detail, but I think long term, you know, it's going to need a lot of investment in the sector to sort of bolster that supply. Um, that's not quite there. So, you know, what that's meaning is is that utilities and we look at it right now and you look at the replacement rate and and the way the spot price has moved now to spots now as we're talking today above 80 or just slightly above $80 per pound, utilities have got a question that they need to start asking themselves, right? where when spot and term prices are at a similar level actually how do we best manage that operationally as a utility. Do we still continue with these aggressive long-term contracting policies that tie us in or actually given some of those near-term and medium-term constraints and the price parity between spot and term. Do we need more flexibility to be able to to express a view ensure that we've got the right amount of material right now to support our near-term requirements and and and and look maybe a little bit further down the line at the longer term contracting. So it's it is an interesting time in the market for sure and of course you know SPR is out there raising money hand over fist when the market's bullish the way it is and that they obviously take pounds off the market so potentially could exacerbate that problem. >> Absolutely. You spoke uh about Russia extending its ban earlier. Uh they have extended their ban of enriched uranium exports to quote unfriendly countries for an additional 2 years. This is out to December 2027. Waiverss can of course be granted in certain situations, but this certainly puts a strain on the uranium supply chain. How much do you think this could affect the market overall? And do you think we will eventually see more enrichment and conversion capacity coming to the United States and other Western nations? I'm I'm I'm not sure we we have a choice then other to figuring out how to attract that capital to to increase the capacity of of sort of enrichment um and supply on the on on the on the western in the western world rather um we don't really have a choice because you know even regardless of and I I don't have a crystal ball but regardless of what happens in regards to sanctions regimes that we're living very much more in a polarized world and and those negotiations will take time and you know you look at the relationship between from a geopolitical level you know Russia and the sort of recent summit with India and with with China not necessarily they not necessarily needed to come to the table as it stands right now so they have up to 40 you know close to 40% of the world's enrichment capacity so if we're you know big ambitious goals have been set which is great it's great for the industry it's great for a project operating in the industry that that governments like the US are setting big ambitious project goals by short-term targets like 2030. Um but that does put pressure on utilities on suppliers and on on also on the governments to attract that capital into the sector to build out those enrichment capabilities. You know you've got three converters in the western world in in in Kamako Arano and Comodine. there's only so much they can bring online without substantial investment or adding other firms into that mix to be able to to sort of meet that worst case scenario 40% shortfall in enrichment capacity. So I think it absolutely has an effect overall further down the supply chain and exacerbates that demand and supply gap I mentioned before of 50 million pounds in 2024 that was just for U308. So just the base pre-enrichment you then factor in the timelines it then takes potentially when you've got bottlenecks with enrichment capacity. It it it it can be if if you're sat in the seat of a utility or a fuel buyer right now, it's probably a pretty scary situation looking down the short-term picture there. Um from an investment perspective, there's obviously another another thesis you could have about the impact that that potentially has. >> Well, speaking of Russia, they have announced plans to build 38 new nuclear reactors. This is in addition to China planning 150 reactors by 2035. We are now seeing America stepping up, as you touched on earlier, passing legislation to get more reactors built as well as to incentivize domestic uranium production. We seem to, like you said, each week we're seeing new countries that are planning um or in the starting the construction phase when it comes to new nuclear reactors. It wasn't that long ago that nuclear energy was completely vilified and now the tables have totally turned. What are your thoughts on this flourishing nuclear renaissance? >> Yeah, I I think it's a great way of framing it in terms of a of a renaissance from a from a nuclear perspective. You know, it's it's pretty remarkable given, you know, it was about a decade ago that nuclear was was was sort of almost the villain in energy production. Um, and now, you know, you've mentioned some of the stats there. So 38 new reactors in in Russia 150 by 2035 in China the stats are and you that's not this that's not you know accounting for the innovation that's going on in the in the marketplace around small modular reactors and advanced reactors and and what that might mean in sort of bringing even more reactors online within that these are just the sort of more traditional large scale reactors. Um, so I mean the driver is pretty simple though, right? If you want reliable base load energy, energy security and that's as close to emission free as possible when not when fully operational. Nuclear is really the only answer. And so that's why I think it does feel like a true renaissance in that regard. And I think the the geopolitical dynamics from a demand perspective on in terms of energy consumption, but we haven't really talked about energy security. And as the world becomes less mobilized, rightly or wrongly, that's for people to other people to determine. And and you know, you can make an argument either way as whether that's a good thing or a bad thing. But it's undeniable therefore that energy security is important when countries are operating under their own steam that you want the the best pound-for-pound energy production out there and nuclear's proven to be that at scale. Um particularly compared to other low emission alternatives like wind or solar. Um so I think this bullish trend is here to stay. I think inevitably what we'll see is some some horror stories at some point, I expect, of people raising capital and and coming up with ideas that maybe aren't kind of as fully fledged as they could be. Um, as is the case with any market that's in high demand, but I think it's certainly an exciting time to be to be operating in this space. >> I want to shift to XU308 and how it fits into the picture. Now, we're going to dive into the details of the platform in just a moment. But first, some very exciting news, and that is you've launched the world's first live uranium spot pricing, Oracle, with a price update every minute. This is pretty amazing because previously the spot price was very hard to track, infrequently updated. Um, walk us through how this system prices uranium. How did you create it and and what are its implications for for the uranium market? Yeah. So, you know, the advantage of being sort of fully tech and you know, we're a research and development hub and so we we're we're fortunate that we have a lot of great software engineering and quantitative talent and so that have got pedigree in big investment banks and the like. And so actually what we've done here is some heavy duty analysis around while the spot price for for U308 and therefore uranium is is printed and fixed sort of daily there is some more frequent feeds that you can get that sort of print every 20 minutes or so during US and UK market hours. There's nothing much more than that. And so consequently that creates a a bit of a problem for attracting large scale capital that you would see in other markets and other asset classes because you don't have a clear benchmark or reference price. So we looked at that problem and we did some heavy duty analysis around while that price is hard to get at actually uranium doesn't operate in a vacuum and so there are plenty of listed vehicles and listed miners and adjacent assets that have some level of correlation with the price of uranium if you're looking at on a daily basis but trade live and therefore you've got even small relationships and more correlations with with assets that trade 24/7 through the cryptocurrency assets. So leveraging all of that great quant and software engineering talent that we have. I don't want to give too much away, but in short, we built an algorithm that takes inputs from those correlated assets with various levels of correlations as well as inputs that we can get on the price of uranium. So those more frequently pricing feeds and then comes up with an estimate. And then as part of that, we do take in the uranium price. that we're able to benchmark at any given point in time when we get that reference price that's presented out to the market, whether that's daily or slightly more frequently during US and UK market hours. We're able to ascertain how far off the mark we are and pleased to say we haven't really been off the mark at all. It's been minimal if anything. And and so it's great that what we're seeing now is actually big commentators and influencers on the uranium sector referencing, we only launched this last week, last last Tuesday, referencing alongside, you know, what they're seeing in terms of bid asks from from brokers and things, referencing our price feed as another example of where the spot prices at any given point in time. And we think that's kind of another barrier if we think about where we started XU38 to do is to break down some of the barriers to investing in uranium as we saw them and be able to because those barriers have been broken down attract capital to the sector that's critically important and and and make it more easily accessible for the average investor. a clear reference price that's transparent and freely available and prints every minute is is something that we think is going to aid more people in feeling comfortable to make allocations to uranium. Um, what we eventually hope. >> No, no. I think I think what we eventually hope for is, you know, that the XQ308 token or or asset is traded enough that that becomes some another input into into this price feed and we can become the market through the trading of XU308 and getting those volumes increased in the trading of the asset itself. >> And so for people who want to view this price feed, they can find it at uranium.io. >> Uh, it's price.uranium.io, IO, but yeah, you can get to it from uranium.io, but you just put a price.uranium.io and you it's there and available and updates every minute. >> Great. Well, let's break down the XU308 platform for people out there wondering, okay, I want to invest in physical uranium. What separates your platform from an ETF like the SPAT physical uranium trust? And obviously people have concerns with validating the authenticity of uranium holdings, ensuring the physical pounds they see on their screens are stored somewhere and assigned to them. You did a whole interview about this with our friend Lucian at Triangle Investor discussing this topic. So I definitely recommend people pop over to his channel if you want more details. But could you break down the highlights and answer those concerns in addition to just kind of giving us an overall overview of how the platform works? >> Sure. Look, I I think you know the the concerns are are valid in in the sense of there have been previous attempts at at using blockchain technology and tokenization as a concept in the uranium market um a few years ago. I think that that's been well documented in terms of some of the pitfalls or failings of that, not least the fact that you didn't have the physical pounds in storage but purported to to be to be having the physical uranium there. Um to that end we went about it from the opposite perspective with XQU308 and very much started from the regulatory and legal standpoint. So actually how do we really improve the what this is about is about improving the market infrastructure around trading spot uranium. It's not about creating a new asset what's then investable. And so to that end, when you hold XU308, that's actually your beneficial ownership of physical pounds held in storage at Kamico, which is one of those three facilities I mentioned earlier. Um, and we we publish our monthly statements of of the pounds that are in storage at Kamico on our website again, uranium.io, you can if you go to proof of reserves, which is at the bottom of the page, you can see the monthly statement. So people can be rest assured that that the pounds are there. And then your XQ308 holding is proportional to that amount. So we have £100,000 in storage. We minted 1.6 million tokens. So each token is is worth an ounce of uranium as it stands right now. Um and the really important thing about the legal structure is we've used a legal framework that is hundreds of years old in sort of common law trust frameworks. That basically means you that's an insolveny remote structure. So we have a regulated trustee that's sat there kind of operating for one of a better phrase the register of of holders which is the XQ308 holder list that's on on on the blockchain. Um but but essentially there's no other intermediary in there. And so the really important factor there is if you wanted to take if you had a big enough position and you had an account with Kamico, a storage account, you could actually instruct physical delivery. And so you could say to us, I want to burn my tokens and actually I want you to deliver the physical pounds into my Kamico account, please, which we think is a is a dramatic difference to previous attempts where it's been based on forward sales agreements and things like that. and sort of not it's not an invalid use case by any stretch to want to use tokenization to raise capital but that's not the same as giving people and creating better market infrastructure around an opaque market as it stands right now which is where we've come at it from and legally it's enforcable because that trust framework is super important because under English law putting putting the blockchain rails to one side and blockchain technology to one side under English law you can assign your interest in a trust to another individual with a written instruction and a signature and it's broadly accepted precedent that um blockchain transfers and then because you sign the transfer with your wallet and you actually have to confirm that and that kind of sort of signature that that is accepted practice. So, we've been able to take legal frameworks from centuries ago and apply them to a market using modern technology and modern infrastructure to what we hope is eventually move this market forward where XU308 becomes the primary mechanism for trading spot uranium because you can do everything you currently do by phoning up a broker, filling out a book transfer form, etc., etc., But you can do it all in a much more seamless way and without at at smaller lot sizes than the the 50,000,000 minimums that we see in the current market. >> Great breakdown there. The platform launched very recently in December of 2024. You've kind of to many feels like you came out of nowhere and and you're kind of taking the market by storm in terms of offering this digital alternative for people who want to invest in the uranium space and have access to physical uranium directly. talk to us about the progress you've made since you launched the platform and what you're most excited about in terms of the milestones you've achieved. >> Yeah, I think you know like with any new product launch I think we have big ambitions and you know it starts small and then we start to we've really started to gain momentum since the start of the summer I think. So, you know, our average our average holding is over it's close close to $600 now, which is great because we wanted to target and bring more retail investors into this product and we're absolutely doing that. Um, and I think in terms of highlights, getting listed on on three exchanges, um, was was a big achievement and took a lot of work. And being able to pull that off on a single day, um, in in July and kind of have three exchanges go live at the same time without it can have a million dollars in trading volume on that first day. I think that's probably a pretty big highlight for me. Um, it took a lot of discussions to get to that point. Um but once they understood the structure and that it wasn't a different kind of asset, it wasn't it was just spot commodity trading that happened to be on blockchain rails. I think these exchanges which are crypto exchanges got very excited. Um, and I think that's meant that we've been able to open the door to lots of conversations with more traditional investment platforms where commodities and traditional commodity structures like ETPs are traded more frequently because as I just said, you know, this isn't about a new asset, a new crypto asset that changes the profile of it. It is just easier spot commodity trading than you have by doing things OTC. Um I also think the other big highlight for me as I look back over the past almost a year that's a sort of eight nine months now um was sort of getting our membership of the of the World Nuclear Association and being at the World Nuclear Symposium at the start of September. It one it's a it's a big endorsement because for for any of you sort of listeners and followers that don't sort of know about the World Nuclear Association, it's not just a case of paying a membership fee and you're a member, right? you actually have to be they vet you and validate you with other existing members. And so actually being able to get membership on in the first place was was great. But then two being at the symposium um at the start of September having having our kind of stall there and and being able to talk to the industry directly and the primary actors in the industry was was a big highlight for me because it was overwhelmingly positive. Of course with anything there are skeptics and and and you know it's great to be able to have these conversations and address some of those things head on and you mentioned Lucian earlier and we did a great followup um with him a couple of weeks ago addressing some of those direct feedback points because we want to be transparent. We we want people to really understand what we're doing and see the benefits of what we're doing and we're happy to have those conversations. So being able to do that in person and face to face was great. I also think it opened up lots of interesting avenues of future development and opportunity which is which is really exciting as well. >> Well, now looking forward to the future of XU308, what are your plans for the remainder of 2025 and into next year and what do you think uranium investors should be paying attention to when it comes to the platform up ahead? >> Yeah. So, I think that I might I might kind of answer that in reverse order almost. So I think you mentioned SPRA earlier and and I think it would be remiss to not talk about it, right, as the primary mechanism most people will use to gain exposure to uranium and how this is different. So I think in terms of paying attention to the the bullish sentiment is great, but that obviously attracts a lot of different kinds of investors and and a lot of that has gone into spraw. I think the reason uranium was interesting as an asset class for tokenization as we saw it was because some of the challenges not just in the physical market with the high barriers to entry. you take £100,000 that's like what $8 million on current spot but also some of the inefficiency with a vehicle like sprock um which is a closed lended investment trust um and so you know actually with its closed structure and is even more of an institutional vehicle really um but but the most important point as we saw it is and you've seen this play out over over this week you know with with all this bullish sentiment is is the premium and discount because it is a closed ended investment trust. And so actually what you're seeing is much greater volatility in spot than you are in the underlying uranium one and two not necessarily particularly over a short-term horizon seeing the efficacy in tracking the underlying spot price. So just as an example, right, the the premium to discount swings even with positive sentiment and we know that spot uranium is up and likely to be up again today if I'm looking at our price feed, but you know, it closed the day on on Monday at a 4.1 4.01% premium for NAV and yet yesterday it closed at a minus 1.28% discount because it's got a cash cash on the balance sheet or for whatever reason, right? And I think that is the challenge with other if I think about what uranium investors are paying attention to you've seen for the past week all the uranium min stocks globally move into very bullish territory but again with anything where you don't have the direct access to the the underlying you're picking up all kinds of other effects on on that and whether that's you know US equity Australian equity market beta effects whether that's the premium discount effects for investment trust more broadly. Um whereas what we built for tokenized uranium is is just direct exposure to that spot price. It's fractionalized, transparent, it's available 24/7 and globally as long as you're not sat in a sanctioned country. And so our key focus for for 2025 and 2026 is really about scaling liquidity, the exchange integrations and the market access particularly for those in the in the supply chain as well because you know it a lot of SMRs aren't going to come online next year. But actually being able to prove that you can have a market that is more flexible and trade in smaller lot sizes does make it interesting for for the innovation around reactor technology because they they need flexible smaller contracts. They don't need these big long-term contracts that the sort of traditional reactor model goes on. So big picture I think what we built with XU308 is positioned to serve both financial investors at the retail and institutional level and the evolving physical fuel market. Um and and next year is all about building upon the momentum and the foundations that we've had this year. So, you know, we're looking at financial products like a swap product for institutional investors that can't hold tokenized assets right now. Um we're looking again at how we can use that price as it gains more traction and validation for other financial products. So, perpetual futures, things like that. Um it tra again trade 24/7 and settle intraday becomes quite interesting. Um, I think also what we what I expect we'll see before the end of the year, I hope is that because we are on blockchain infrastructure, it makes adding additional utility to holding uranium much easier. And what I mean by that is if you hold X308, what we hope to be able to offer holders of X308 before the end of the year is that they'll be able to borrow against that. So they'll be able to borrow US dollars and use that ex uranium as collateral. And from a protocol or business perspective in terms of the ones lending, absolutely you'd want something like uranium that's high quality, very bullish sentiment, but has about 10%, you know, it's got it's got about 10% higher volatility than the S&P 500. That's much better than some of the crypto assets that you would previously be taking as collateral. So, I think that's really interesting. And then from a primary actor participant perspective, the one thing that's going live next month is we currently support this. So the sort of I mentioned the redemption piece, but also the tokenization of existing inventory. We can do that very manually right now with the legal structure and our trustee, but what what we'll launch next month is that in app. So, if you're uh if you've got a small amount of inventory, say 10,000 or 20,000, you need to wait until you build that up to be able to trade a minimum lot size, right? As it currently stands. What we're offering people is the ability to tokenize that inventory, transfer it into our Kamico account. they'll receive XU308 which is their proportional ownership of those those physical pounds in their digital wallet and then they can monetize that or sit on that do whatever they want to do with it in the secondary markets and it's traded on four venues right now. So we think that's something that's really interesting in in sort of bridging some of the challenges with those involved in the physical market as well. So it's a lot it's a lot on our a lot on our slate but we uh we're very excited about what that can become. Well, this has been a fantastic conversation, Ben. You've shared so many great insights into the uranium market and xu308. I'm going to put a link in the description to uranium.io as well as uh your new pricing, Oracle, and your account on X. Uh you post a lot of great content there, so I recommend people follow along. Thank you so much, Ben, for coming on the show. >> No, thanks for thanks for having me. It's been great to be here. >> Commodity Culture is a series on commodities and natural resources. If you would like to see more, be sure to subscribe and hit the bell notification so you're always up todate with the latest episodes.